Examples of Procurement Activities 

Procurement is the method of sourcing, purchasing, and tracking raw supplies and materials from various suppliers across the world. Walmart is the best of example of performing various procurement activities; because Walmart is the world’s leading retail brand with a chain network of 12000 stores worldwide. Today, we’ll discuss the examples of procurement activities in Walmart; Walmart procurement activities; and what you can learn about its procuring processes.

Examples of Procurement Activities in Walmart 

Let’s discuss the examples of procurement activities in Walmart; or Walmart procurement activities; they are as follows;

RFID Technology

Walmart employs RFID (radio frequency identification) technology and barcode scanning. It allows the company to receive in-depth information about every product in different stores worldwide. However, it transmits information to the company’s database and from where it goes to the inventory management system.

Walmart is aware of how much quantity of a particular product is lacking at the particular, and when the company should fulfill it. Without RFID technology, the retail brand would face a lot of stocking issues that would jeopardize the company’s reputation and customer satisfaction level. If customers can’t receive the desired products at the Walmart stores, they would go to the competitor stores. 

Sourcing & Dealing With Manufacturers

While sourcing the right suppliers and manufacturers, the focus of Walmart is to kick out all the intermediaries and directly connect with the manufacturers and producers. This approach makes sure that the suppliers would have the obligation to deal with inventory in their warehouses. However, the retail brand won’t have to carry the inventory and warehouse management costs.

The inventory managed by suppliers and vendors would streamline the inventory flow of activities and processes. It makes sure of the availability of the products and stocks in the company when customers want them. However, it also benefits the company in reducing the cost and the company could offer low prices to the customers.

Bargaining Power

Walmart is the world’s leading retail giant and many supplier companies rely on the retail store brands as the main source of their revenue and sale. It provides significant bargaining power to Walmart, and the company takes advantage of the situation and receives the best-negotiated price.

For instance, the price of the 20-inch fan was 20 USD in the 90s, but Walmart wanted the low price. It pushed the company Lakewood to implement automated production and manufacturing processes and laid off its workforce. The mass volume buyer would pressure the suppliers to make changes in their production processes. Ultimately, it benefited the customers and they got the low-price fans.

Lower Operational Cost

Walmart has established a cost-efficient distribution network and it helps the company to develop 160 distribution centers. Their location is within the distance of 130-mile radius from where they supply it to the store. Regional distribution centers offer the benefit of lower transportation costs and limited labor supply.

It has made the cross-docking process easier and more convenient because it saves costs on inventory storage and transportation. The retail brand saves a lot of capital resources by managing the trucking fleet and hiring drivers on the company’s payroll. According to an estimate, the distribution cost is roundabout 1.7% of the retail brand’s total sales.

Process Automation

Walmart automates its procurement and supply acquisition process by implementing the 3-way matching process. It helps the company to make sure that you have received the right order and that you have paid for it. However, procuring automation is a key area of ERP software and it allows you to save the cost in various ways.

It allows you to have better control over cost because you are removing all the manual processes and it helps you to reduce human error. It makes sure the payment of invoices is on time by employing the buying power and receiving discounts.

Dealing with Pre-approved Suppliers

In order to decrease the risk factor due to various procuring practices and strategies; the focus of Walmart is to deal with already approved suppliers and vendors. Working with new suppliers would require a lot of paperwork to perform.

Trade & Exchange

The procuring automation process would help Walmart to be aware of the boundaries that the suppliers are accepting and in exchange what the retail brand has to do. The company’s AI chatbots should be aware of all the details; when to apply for the full payment within 10 or 20 days; what the company should do in return.

Scaling

The objective of Walmart is to scale it and nail it. It helps the company to improve productivity because the automation software learns from every business deal and contract. However, it decreases time in the development of new segments and categories.

Conclusion: Examples of Procurement Activities in Walmart 

After an in-depth study of the examples of procurement activities in Walmart; Walmart procurement activities offer a great learning experience. If you are learning about the Walmart procurement activities Example; then you should keep in mind the abovementioned processes and steps.

References 

  1. https://hbr.org/2022/11/how-walmart-automated-supplier-negotiations
  2. https://planergy.com/blog/walmart-procurement-strategy/
  3. https://emeritus.org/blog/finance-what-is-procurement/
  4. https://simplicable.com/new/procurement
  5. https://www.lucidchart.com/blog/steps-in-the-procurement-process-flow
  6. https://oboloo.com/blog/what-are-the-main-procurement-activities/
  7. https://www.netsuite.com/portal/resource/articles/accounting/procurement.shtml
  8. https://drydengroup.com/what-is-procurement-with-examples/