It is significant for businesses and companies to deal with their supply chain network and process effectively to make sure that they have the right stock of products and safely deliver it to the customers on time. Often, they employ inventory management software or technology to manage and track their SC efficiently. Today, we’ll discuss Walmart supply chain management; its key successful elements, and challenges to the company.
Some of the key statistical facts and figures about Walmart SCM are as follows;
- Walmart generates revenue of more than 570 billion dollars
- Ranks at the top positions of Fortune’s Global 500
- Maintained the top position for 9 consecutive years
What is Walmart Supply Chain Management?
Walmart follows successful and efficient supply chain management, and it plays a significant role in the growth and profitability of the company in the retail sector. The SCM network of Walmart comprises resources, information, activities, people, and organization and they engage in the following areas;
- Production & Manufacturing
- Handling & Assembling goods
Successful Elements of Walmart SCM
Some of the main elements for the success of Walmart supply chain management are as follows;
Walmart invests a lot of resources in the digital transformation of SCM infrastructure. According to an estimate, 72% of the capital infrastructure of Walmart worth 11 billion US dollars contributed to the SCM transformation. The retail brand invested in the technologies like e-commerce and infrastructure. The digital transformational investment of Walmart resulted in the form of the following;
- Accurate demand forecasting
- Flexible fulfillment
- Decreased packaging wastage
- Developing right sized packaging for every product
- Warehouse management system
- Autonomous mobile robots
- Automated product sorting and allocation
Outsourcing Inventory Control
Walmart follows “vendor management inventory” (VMI), which means that the suppliers manage their own inventory and stock in the warehouses of the company. The company imposes inventory management obligations on suppliers through this approach. However, it helps the company to save capital resources and time for inventory management.
The company gives real-time access to the inventory data to the supplier so that they could track sales and beware of the inventory levels. It helps them to monitor and evaluate the available stock and the sale of particular products. However, the VMI helps the company in the following ways;
- Fewer delays in inventory replenishment
- Limited stockouts
- Giving inventory control to vendors and suppliers
- Saving time
- Managing tasks in-house
- Low cost
- Monitoring and evaluating the transport of inventory
Establishing Relationships with Suppliers
Walmart establishes a strong and powerful relationship with suppliers and vendors. They’re the key source and recognize vendors and suppliers and offer them the best price to meet their high volume. However, the strategic partnership and alliance with vendors and suppliers guarantee the company for long-term procurement.
Better SCM System
The focus of Walmart is to amplify the SCM system. The retail company collaborates with distributors and manufacturers to remove the middlemen in order to streamline the SCM network. However, it plays a significant role in the growth and success of the SCM process. It helps the company to decrease lead time and cost.
Investing in SC Optimization
SC optimization plays a significant role in the growth and success of Walmart supply chain process. Out of SCM optimization strategies, the emphasis of the company is to make various channels for customers. However, the goal and objective of the retail brand is to save time and resources for customers. The company offers various marketplace fulfillment options like the following;
- Digital pharmacy fulfillment
- Ship from stores
- In-store pickups
The focus of Walmart is to achieve sustainable supply chain processes and networks. Some of the main SC sustainable goals and objectives are as follows;
- Decreasing greenhouse gas emission
- Sustainable packaging
- Renewable source of energy
- Implementing sustainable strategies
Partnership & Alliance
Walmart establishes strategic partnerships and alliances with other businesses and companies. It helps the company to share knowledge, expertise, and resources, and it allows the company to deal with the SC challenges. For instance, the retail brand Walmart partners up with IBM for the development of blockchain technology, and it helps the company to amplify SC traceability and transparency.
Challenges to Walmart SCM
Some of the key challenges to Walmart supply chain management are as follows;
Changing Retail Industry
The thing about the e-commerce retail industry is highly competitive and trends are always changing. It pushes the company to invest in the latest technology for the efficiency of SC processes and integrate the online store with the offline store. However, it is good for the growth and efficiency of the SCM system, and staying ahead of the competition is very difficult.
Managing inventory is very difficult for Walmart, and it makes the company establish a balance of in-hold inventory without allocating and tying up resources for unsold inventory. The company needs integration of online and offline functions and operations and real-time access to the inventory.
Products and goods sourcing is the other main challenge that Walmart faces because there are various suppliers and vendors offering the same products and goods. The company should carefully develop relationships with vendors and suppliers to make sure that it has the right stock of goods that customers demand. However, it requires a complicated product purchasing process for the company to follow and later analyze its performance.
Size & Scale
Walmart has a network of more than 10000 stores and operates its business in more than 24 countries. The multinational retail brand faces various types of logistical problems and issues. Managing such a large and sheer size organization is highly difficult because it deals with various types of suppliers, vendors, stores, distributors, and so many products and goods lines in various niches and categories.
Conclusion: Walmart Supply Chain Management
After an in-depth study of Walmart supply chain management; we have realized that Walmart is the world’s leading retail brand with an advanced SCM model. If you are learning about the SCM operations of Walmart, then you should keep in mind the abovementioned advantages and disadvantages.
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