Walmart is the world’s leading retail chain store with a network of more than 11300 retail stores in more than 28 countries across the world. The brand has earned a great reputation for selling high-quality products at the lowest possible price. Efficient supply chain processes have allowed the company to earn profit and revenue at a low price. Today, we’ll discuss Walmart supply chain strategy; its definition, and key elements of its SC strategy.
What is Walmart Supply Chain Strategy?
Walmart supply chain strategy focuses on decreasing the operational expense of the company; offering low prices to customers, and automating the order fulfillment process. The strategic approach of Walmart comprises of following;
- Establishing strong relationships with suppliers
- Launching tech software to amplify SC efficiency
- Employing logistical processes effectively
- Expanding globally to exploit new opportunities
Elements of Walmart Supply Chain Strategy
Some of the key elements of Walmart supply chain strategy are as follows;
Walmart has earned a great reputation for employing the latest technological tools and software to amplify its sales and operations. The retail brand has invested a significant amount of resources in the automation of SC processes like supporting order picking and VOS (voice-based order-filling system).
However, EDI has allowed the company to develop quick communication between stores and suppliers, and it helps them to stock their shelves. The other technological development is that the company transformed from bar code verification to RFID (radio frequency identification) technology. It helps the company to amplify the productivity of labor and remove the need for physical scanning.
Optimizing SC Process
Walmart has optimized its SC processes and it contributed significantly to its growth and development. The focus of the retail brand is always on improving its existing system and processes and optimizing the efficiency of its SC operations to offer low prices to the customers.
However, the emphasis of the SC optimization strategy of Walmart is the availability of multiple channels to the customers. Thousands of retailers have established their stores on the platform of Walmart with the objective of offering low costs to the customers. The marketplace Walmart offers multiple order fulfillment options and they’re as follows;
- In-store pickups (7000 pickup locations)
- Shipping from stores
- Digital pharmacy fulfillment
- Over 5000 delivery location points
Walmart has successfully moved its stock and merchandise from the distribution centers to the shelves of the stores. It helps the in-house logistics to employ its private fleet of trucks and hire skilled drivers. However, the logistics hub of the retail brand analyzes the entire shipping process, avoids wasting the time of drivers, and finds the most efficient routes for drivers. Resultantly, it helps the retail brand in the following ways;
- Low carbon emission and carbon footprint
- Maximum delivery of the stock and merchandise
- Driving limited distance
- Low fuel consumption
Cross docking employs the JIT (just-in-time) inventory software of the Walmart SCM system. The retail brand transfers its inventory from inbound trucks to outbound trucks without employing any intermediary storage during the cross-docking process. As a result, it delivers the products directly to the stores and the distribution centers of the brands.
The benefit of cross-docking is decreasing the overall size of the inventory. When you store limited products in the warehouses, then it decreases the wastage due to low expired products. However, it helps the company speed up the delivery of products at its stores.
Cross docking depends on effective communication between distribution centers, vendors, and every point-of-sale of the company. The retail brand has established its own satellite network, and it plays a key role in swift communication.
Walmart follows the VMI (vendor-managed inventory) system, which means the company’s vendors have the obligation to manage and optimize the inventory. VMI has proven to be the most efficient strategy for Walmart because it helps the company in the following ways;
- Amplifying the replenishment rate
- Increasing the distribution speed
- Low unforeseen errors
- Limited inventory cost
- Not managing the inventory
Walmart employs four main types of inventory and they’re as follows;
- Finished Goods Inventory – readily available for sale, directly delivered to stores, and frequent replenishment
- Transit Inventory – takes a lot of time to reach stores and supports the replenishment of finished goods
- Buffer Inventory – products would go out of stock and the sudden increase its demand
- Anticipation Inventory – keeping it for seasonal fluctuations like holiday sales
Walmart removes all intermediary links in the SC network by removing the middlemen by directly purchasing products and goods from the manufacturers. The retail brand invests a significant amount of time in establishing relationships with manufacturers and comprehending their cost structure to make sure that they are decreasing their costs efficiently.
The distribution process of Walmart comprises shipping goods from the manufacturing facility to the distribution, and that’s where the company sends them to the retail stores. The distribution centers of the company keep moving the products throughout the day. However, the retail brand has a network of roundabout 210 distribution centers across the world. Out of which, 6 of them quickly respond to the changing needs of customers in case of emergency.
Conclusion: Walmart Supply Chain Strategy
After an in-depth study of Walmart supply chain strategy; we have realized that Walmart is the world’s leading retail brand with an efficient SCM system. If you are learning about the SC strategy of Walmart, then you should keep in mind the abovementioned elements and components.
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