Analysis Of Walmart's Supply Chain Strategy

Table of Contents

Introduction 2

International Trade & Supply Chain Excellence 3

Supply Chain Strategy 5

Procurement & Logistics 7

Fewer links in the Supply chain 7

Establishing Strategic Vendor Partnerships 8

Cross Docking 8

Technological advancements in production and operational excellence 9

Conclusion 11

References 12

Walmart International Trade and Supply Chain Management

Introduction

Walmart is an American retail giant that operates a chain of hypermarkets, discount department stores and grocery stores. Its Headquarters is located in Bentonville, Arkansas. The company was founded by Sam Walton in 1962 and incorporated on October 31, 1969.

As of the quarter ending March 31, 2016, Walmart has 11,527 stores and clubs

This made manufacturers responsible for managing their stocks in Walmart’s warehouses and stores. This resulted in, Walmart being able to expect almost a 100% order fulfilment on merchandise.

Walmart was so aggressive on these supply chain techniques that it drove down its distribution costs to a mere 1.7% of its cost of sales which was better than its competitors like Kmart (3.5%) and Sears (5%). (LU, 2014)

Establishing Strategic Vendor Partnerships

Walmart focused on strategic sourcing to find products at the best and lowest price from suppliers who are have the capacity to manage the demand requirements. Walmart then establishes strategic partnerships with these vendors by offering them commitments of long term high volume purchase in exchange to the lowest possible prices streamlining the unwanted links in between.

Furthermore they streamlined supply chain management by building relationships & communication networks with suppliers to improve material flow to lower inventories. The network of global suppliers, warehouses, and retail stores work on optimizing its inventory levels and focus one a just in time mechanism almost working like one single entity. (LU, 2014)

Cross

This has helped Walmart to become a dominant retailer in the global arena. With the rapid increase and evolving of technology Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.

Conclusion

The evolution of Walmart’s supply chain includes three elements, according to an Arkansas Business article: distribution practices, operating its own fleet of trucks and technology. Benefits from its supply chain efficiency result in time savings, more cost-effective inventory management and improved product forecasting.

Walmart demonstrates the complementary use of lean and agile design principles hand in hand when designing a supply chain that is highly efficient while Walmart uses inventory optimization and transportation optimization processes to reduce the costs (lean), it also uses cross-docking to actively respond to the latest store demand (agile).

Thus, the question of whether the supply chain should be lean or agile becomes rhetorical. An organization cannot really have a rigidly designed supply chain strategy that is either lean or agile. Both of these aspects of lean and agile are required in designing an effective supply chain to support the