Financial Daily from THE HINDU group of publications
Sunday, Jul 17, 2005
Satellite adds speed to Wal-Mart
Chennai , July 16
THE latest issue of Fortune magazine has a story about Wal-Mart founder Sam Walton that runs something like this.
Twenty-two years ago one of his subordinates proposed a $24-million investment to put a satellite network in an outer space orbit, in order to enable Sam Walton to keep in touch with his rapidly expanding business.
Sam Walton insisted on visiting every store personally.
However, the growing number of stores was making this harder and harder. Satellites would let him beam pep talks to his associates.
The second selling point, says the Fortune article, was data.
Walton simply couldn't get enough of it, and the company's jammed telephone lines wouldn't allow him to get as much of it as he wanted.
Satellites allowed him to check on how inventory was piling up, track a day's sales at a particular store, see whether a new product was simply sitting on the shelves.
In 1987, when Sam Walton addressed a video-camera in an old Wal-Mart warehouse, the broadcast was beamed 22,300 miles (35,689 km) skyward and received at roughly 1,000 Wal-Mart stores.
The world's biggest private satellite network gave Wal-Mart a huge informational advantage and the power to combine size with speed.
Sales growth, already stunning, now simply went through the roof.
In 1985, two years before the system was in place, Wal-Mart's sales were $8.4 billion. By 1995, they were up more than 10-fold to $93.6 billion. The latest figure? $288 billion.
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