The retail mammoth, Walmart, holds $32 billion in inventory and still upsurging. Walmart's supply chain management is often flaunted as one among the most efficient supply chains globally and a key contributor to its operational success. Nevertheless, Amazon is presently the largest retailer in the world, Walmart stays to a noteworthy challenger in the next place. It has been well-known to get the better of Amazon in the supply chain management strategy.
Walmart's core mission is to support people to save money and live well. In other words, it means looking out for more efficient supply chain strategies so that Walmart can hand the savings along to the customer.
Here are some of the strategies adopted by Walmart to reach its supply chain management potential.
Data Sharing
The suppliers are shared with Walmart inventory data in order to keep up better stock levels. This data helps the suppliers to form more precise forecasts and get ready more efficiently to encounter the retail giant's requirements.
The association between Proctor and Gamble (P&G) and Walmart is an excellent case in how the company has been capable of leveraging data sharing to generate efficiencies. Walmart has an automated order management software that re-orders by making use of satellite communication to inform P&G's portfolio of companies whenever any product is required. The products are then delivered to a circulation center or the particular store that is in need.
Bargaining Power
Walmart deals with manufacturers directly without any supply-chain middleman intervention. They are well-aware that being among the world's largest retailers, they can wield massive bargaining power and can demand lesser wholesale prices from the suppliers. These are the savings that are then passed down to its customers as a portion of Walmart's Everyday Low Price assurance. Walmart compensates for its low price offerings and lesser margins with its total volume of sales.
The company puts forth stringent policies in place to make sure that the suppliers deliver in full on time (DIFOT), and if the deliveries aren't done as expected, they charge 3% of the cost of goods from the vendors.
Warehousing Efficiency
Walmart practices a cross-docking system wherein maximum freight comes into its distribution centers and goes onto the conveyor belts leading straight to trailers being loaded for separate stores. It shrinks the warehouse space requirements for storage.
Also, Walmart uses a consolidation method that permits huge product shipments in one area to be split down and spread throughout the distribution hubs throughout the company. It ensures jam-packed truckloads to bring down transportation expenses.
Adapting innovative Technology
Walmart has an extensive history of leveraging technology to advance its operations. Some of the various technologies that Walmart implemented in the latest years include the following:
- RFID tracking.
- Smart tags that let store employees track inventory better.
- A consolidated database that holds all inventory related data.
- Retail Link database to enhance communication with suppliers and helps in predictions.
- An app called My Productivity for all store managers to minimalize store room tasks.
- Inventive patent filings consist of electronic imaging devices to sense dropping inventory levels, smart shopping carts, order management software, and in-store customer support drones.
Beyond Technology
Walmart supply chain management processes are not solely dependent on technology. The company possesses an extensive network of about 160 distribution centers covering the ground of almost 120 million square feet and increasing.
The retailer has also brought about cross-docking at its warehouses, a technique that transfers inventory directly from arriving trucks to stores. It saves a lot of space in warehouses. It results in lower inventory storage expenses, lowered transportation costs, and products spend not as much time in transit.
Walmart also utilizes its trucking fleet and drivers to make it happen. It maintains very high minimum standard requirements for all its drivers, including an experience of a minimum of three years and 250,000 miles of driving experience. No avoidable accidents must have occurred in three years, says TruckersLogic.
Coming up Next for Walmart
e-Commerce Boom and Ship-from-store
Walmart has amplified its ship-from-store volume to manage the e-commerce boom greater than before. It means that Walmart is using stores as warehouses for online sales delivery. Due to the COVID-19 pandemic situation, Walmart's online sales have soared 25% year-on-year.
Walmart seems to have a clear lead over Amazon, with approximately 5000 stores present in 49 states. Shipping costs are less for the reason that 90% of Americans reside within a 10-mile radius of a Walmart store.
Improved Sustainability
Walmart's Sustainability Hub has dedicated to decreasing direct greenhouse discharges and cutting down the releases produced by the company's supply chain. The initiative called Project Gigaton targets to avert one billion metric tons of greenhouse gas emissions belonging to Walmart's global supply chain from inflowing into the atmosphere by 2030.
Walmart is presently on track to grasp that goal. We can presume to see increased usage of renewable energy sources and several recycling programs to decrease wastage.