A Report on

Supply Chain Management Process of

Walmart
&
Its Uniqueness

Prepared For: Ankur Sandal

Prepared By Amit Kumar ( A00106100)
 Introduction of the most giant retailer in retail
sector:
Walmart is considered one of the most powerful and influential retail outlets, which
has made its special place in the heart of customers in the market. Moving towards
its launch, the two brothers named Sam and James “Bud” Walton founded the
company 58 years ago, which became the biggest owned retail company in the
public sector across the world.

Globally recognized Chains and Stores:

There are nearly 6,300 International Walmarts across the globe, and over

11,700 retail units, all of which operates in 28 different countries, making it one of
the biggest International brands. Moreover, the e-commerce space that Walmart
owes is incredible to be recognized in the commerce industry.

In the United States of America alone, this company works under various banners,
like Walmart Supercenters, Walmart discount stores, and Sam’s Club warehouse
membership clubs. Internationally also, this company operates successfully under
59 other banners. 

Employment rate:

This organization is a powerhouse in employing approximately 2.3 million employers

globally, with 1.5 million of those living in the United States itself.
Milestones:
1. More to it, this retail giant hit 1 billion dollars in sales soon after 17 years,
which was the fastest billion-dollar milestone to hit in the United States at the
time.

2. Walmart earned nearly $519 billion dollars in revenue in the year 2019.

3. The retail world has considered Walmart a powerful company in the retail
sector with startling statistics of profits achieved in very few years after its
launch. 
I. The Supply Chain Management System
Walmart implements its functionality under supply chain management
systems, which is quite effective, efficient, and advanced in technology.
Walmart clearly understands and believes in following ideology about SCM,
"supply chain management is moving the right items to the right customer at
the right time by the most efficient means".
It has evolved ways to manage inventory electronically & master
distribution practices to know what products are needed, how much
products are needed, and when these products are needed.
Therefore, these evolving ideas always guarantee that Walmart customers
always get, what they need every time after stepping foot in a Walmart store,
meanwhile keeping overhead costs to a minimum.
II. The Supply Chain Link

The founder San Walton in beginning went for purchasing bulk merchandise on
his own and transported directly to his stores for resale, for the reason to buy
products on the shelves of the store at a very economical rate.

Moving ahead towards the initiative taken for the progress of the company,
Walmart decided to develop a decent system for stocking products on its
shelves. 

In the 1980s, Walmart effectively removed the middleman and began dealing
straight with the manufacturers directly so that it could cut costs and more
efficiently manage the supply chain, keeping prices offered to customers as low.

Walmart went straight to the source and presented consistent and guaranteed
business to vendors in exchange for low, wholesale prices.

Walmart also implemented an electronically backed vendor managed inventory

(VMI) system, so suppliers could be responsible for managing their inventory in
large warehouses at Walmart.

By sending raw facts and figures to centralized databases of stock inventory,

manufacturers were able to convey exactly when the quantity of goods is getting
low and when to send more to Walmart stores.

This strategy worked exquisitely by eliminating work-load from Walmart itself,

thereby reducing the problems of managing inventory from multiple suppliers,
and nearly guaranteed items were in stock at all times, which made SCM, a more
successful and effective strategy.
 Consequently, Walmart continued to progress and make more money, even
while distributing a lot of the work to others.

Retailers were able to monitor the online inventory online, thus determining,
when stock is low, and send additional goods to Walmart stores that need it.

Walmart also carefully monitored the shipment of these goods from their
warehouses to the retail outlets.

III. Types of Inventory operated at Walmart

To manage roles within the supply chain, Walmart utilizes 4 distinct types of
inventory to be more accomplished and successful from a business point of
view.

 Finished Goods: The main type of inventory used by Walmart is

"Finished goods" for the overall success.
In this inventory, the goods directly arrive at Walmart outlets and are
replenished regularly, and are always ready for the final consumers to
purchase.
 Transit Inventory: Goods that are held in inventory called transit
remains for a longer period, eventually arrives at Walmart stores to
replenish the furnished goods mentioned above.

 Buffer Inventory- This type of inventory is designed and planned at

Walmart stores for some unexpected times when there is a high demand
for certain goods, which are currently unavailable.
Thus, to maintain stocked shelves, this buffer inventory is utilized for
immediate re-shelving.
 Anticipation Inventory
Finally, Walmart also uses a similar inventory like buffer inventory, named
as anticipation inventory. This inventory is only available for seasonal
changes and is ready to address increased on-demand when the time
comes.
To exemplify, anticipation inventory is most likely on hand during the
holiday season or the event like Black Friday.

In 1989, the company was able to secure a position of Retailer of the

Decade because of these innovational and originative ways of
handling inventory, in addition to the successful VMI system. 
Walmart is a company, which is on its way to make history as the most
successful across the globe.
 IV. Cross-Docking
 
A technique called cross-docking is central to Walmart’s inventory
replenishment system and distribution strategies.

To be more precise, one of the biggest hindrances retailers faces while

dealing with large amounts of inventory is the storage of that inventory.

When inventory is not functional on the shelves at a retail store, it has

to be stored at some place by paying some additional cost. Moreover,
without an efficient inventory management system in place, there is a
huge risk of being overstocked and paying too much for storage.

In response, Walmart developed an efficient procedure to minimize

these storage needs and prevent the bullwhip effect by executing the
concept of cross-docking into their distribution practices.

To implement the above procedure, suppliers who want to deliver

goods in Walmart stores based on inventory needs to upload their
products to Walmart delivery trailers.

As a result, they are brought directly to Walmart warehouses where

they are repackaged and immediately distributed without sitting in
inventory.

Sometimes, at Walmart distribution centers, trucks with products

unload directly onto trucks headed straight for Walmart stores,
especially in the case of P&G products.

Furthermore, there is zero storage of these products, which eliminates

the need for any in-between storage or having to store the product at
the stores themselves, which automatically reduces the damage done
to perishable products and also reduces overhead costs to a great
extent.

It also keeps an eye on the fact that only the inventory which is
required at stores is being delivered, because vendors know what
products are needed (thanks to the VMI system) and restocks their
products only when necessary.

Thus, the money saved is then turned over to the customer by the
implementation of low prices.
 Cross-docking also manages to reduce transportation time as the
matter of fact that each distribution warehouse is within 130
miles of any Walmart store, and also allows Walmart to negotiate
better pricing margins with vendors.

Consequently, increased shelf space has resulted in the ability to buy

higher volumes of products, at lower prices.

Therefore, it is a win-win for both parties as Walmart reduces the cost

of doing business with vendors, and vendors sell more products.

V. Advanced Technology used in Walmart.

Since its establishment, Walmart has been using technology as a
powerful source to update and smoothen their supply chain process
and offer products and services to its customers at the lowest possible
prices. Moreover, collaboration was the key to success in this initiative.

In 1975, Walmart became the first retail outlet to utilize the power of a
computer system in a revolutionary way.

The technology was used by Walmart in capturing POS data, creating

income statements in stores for inventory, and even linking to
distribution warehouses for management of supplier inventory.

In the early 80s, Walmart began using barcodes for scanning POS
data. With these new barcodes, Walmart employees would scan
products and delivering the data to a large database to be used for
inventory means.

By the late 80s, Walmart had its satellite system that allowed for two-
way voice and data communication between all segments of the
stores.

This technology even connected Walmart to CIO Online, a website

dedicated to CIOs of companies for discussing events with the help of
collaboration efforts.

By the 1990s, Walmart wanted to strengthen the teamwork

collaborated with suppliers for having tight control over inventory.

Walmart’s ideal way of monitoring the sales of goods and making sure
the inventory was replenished was to deploy the Retail Link system in
1990, which connected expert analysts forecasting for suppliers
demand, real-time POS sales data, and the information at distribution
centers.
 Consequently, at the end of the 1990s, approximately 90% of all
Walmart suppliers were doing business using the exclusive Retail Link
system.

In addition to this, the barcode system launched by Walmart in

the early 80s was soon replaced with RFID technology so employees
no longer had to manually scan barcodes of products coming to stores
or warehouses, which saved time and money by making Walmart as
the king of the retail sector.

Furthermore, this prevented items from going out of stock by nearly

16%, also tracked real-time consumer behavior, and helped Walmart
to further develop its already extensive technology management
system.

Thus Walmart spent many years enhancing productivity from this

entire process by using advanced technology, and no other retail giant
has been able to replicate the system entirely.

Uniqueness in Walmart’s Supply chain

Management:
Companies within the supply chain of Walmart integrated their projected sales
through effective strategies like collaborative, planning, forecasting, and
replenishment system. 
The companies were linked via a store-level point of sale system, a centralized
database system, and a satellite system. 
Walmart was among the first company to execute a Universal Product Code for
barcodes, where information at the store level was collected and analyzed to
improve its functionality.
Walmart also created a database named Bentonville database, Retail Link,
which displays real-time sales data from cash registers to their distribution
centers.

During the implementation of the above-mentioned strategies, other companies

weren’t involved in the business of collaborating and sharing information with third
parties. However, Walmart was able to transform the retail industry by following an
approach to sharing information between distinct stores, distributors, and suppliers. 

Improvement in collaboration strategy helped Walmart to predict accurately and

manage inventory.
Walmart is also well-known for cost reduction while working directly with
manufacturers, which removes the problem of human error. 
 Walmart is recently working on executing the latest technologies to improve the
in-store customer experience as without customers, this efficient supply chain
would be wasted.

Important areas excelled by Walmart to achieve Supply Chain

Management strategies.

It’s irrefutable that not every organization in business has the monetary potential and
resources to be a king in the market as Walmart. However, many of the companies
dealing with e-commerce can learn from this organization to improve supply chain
management. There are three main areas where Walmart have excelled in SCM, which
are the following:

1. Huge investment in IT Sector: 

Walmart has successfully and consistently eager to invest in Information technology
from beginning to support the process of the supply chain by implementing the use of
hand-held devices in the store, to analytical software to improvise collaboration.
Moreover, Walmart was able to start long-standing practices in the retail sector and also
delivered low prices for its customers. In addition to this, Global Business industries
have a lot to seek advice from this successful organization on the investments made in
the IT sector and the success it got.

2. Transformation & Innovation

During its journey of success, the company always withstand against its retailer
competitors, namely Amazon and Flipkart by the implementation of low prices products
and fast delivery. Moreover, it always figured out a way of competing with an
extraordinary customer experience by transforming many of its policies and launching
many new products.
In previous years, Walmart has expanded its click and collect service, which is a
unique strategy opted by the company to 30 new markets and another service named
as pickup service to 60 US markets at more than 400 locations. Walmart always tries to
adjust its supply chain process accordingly by constantly searching out new methods of
driving new profits.
It can be fairly said that Walmart doesn’t consider its competition in the market, and
although it has a lot to learn in the e-commerce industry, it’s going in the right direction
to achieve growth in this area.

3. Cooperation, Collaboration, and Teamwork. (CCT)

Wallmart is considered one of the organizations, which effectively executed data
sharing between retailers and suppliers in the market. The new world of co-operation
and teamwork has helped organizations across the globe to improve forecasting and
marketing, but when Walmart first opted this in the 1980s, since then, they haven’t
looked back.

References:

https://www.skubana.com/walmart-leading-way/

http://blog.cemat.com.au/walmarts-supply-chain