Walmart's Supply Chain Strategy

Introduction

Every day, numerous products are produced and consumed in the market. From the manufacturer’s factory to the customer’s hand, a product makes a long journey through a multi- dimensional network. The mechanism to control this network is Supply Chain Management (Miguel & Brito, 2011). It is nothing but the management of relationship, both upstream and downstream, to deliver value to the customer in a cost- effective manner (Kampstra et al., 2006). Here, the supply chain strategy of Wal-Mart, the retail giant having more than one million stores in 27 countries, will be analysed (Wal-Mart, 2014) with a vision of ‘everyday low prices’.

International Strategy

Sam Walmart established the company in 1962 with a focus on the untapped

The company follows ‘Distributor Storage with Career Delivery’ model where the manufactured products are assembled to the warehouses and then are distributed to the end users. Thus it is evident that they use hub and spoke model which is effective in terms of time saving. Forecasting plays important roles in determining the inventory level in the stores.

Elements of global supply chain

Inventory

The major way in which Walmart kept the price under control was by cutting down the inventory cost. The cross docking mechanism, Walmart’s inventory management system with real time data, etc. helps them to keep the inventory level in control. A complete ERP along with VMI (Vendor Managed Inventory) system, made the sales figure and inventory requirement data seamless. Thus lower level of inventory impacts positively with lower maintenance cost, less control and hence less overall cost.

Facilities

As the processes followed in Walmart are standardized, the decision making is centralized in nature, taken by the top management. The mid-level managers mainly look after the operational aspects. As mentioned below, the ERP system with a centralized data base, maintaining all the modules like the procurement, sales, finance, inventory, human resource, etc. has helped the company to be efficient and ahead of its competitors (Gartner, Inc.,

Being the world’s biggest retail chain with a great brand value, Walmart enjoys a huge purchasing power that helps it to control the suppliers, thus help to drive down the cost. They also have their own set of branded products. In order to mitigate the risk and to keep the suppliers in a check, Walmart has maintained multiple sources

Integration among the elements

All the above mentioned components are different pieces of the same puzzle i.e. Supply chain. The main objective of the company to sell in cheaper price is only possible by keeping the inventory cost low which again is possible if the information system is utilized properly, cross docking method is followed and the suppliers are given responsibility to maintain the inventory in warehouses.

Recommendation

With the international strategy shifting from a ‘Global Standardized Strategy’ to ‘Transitional Strategy’, ownership distribution has become important to the local managers. Walmart has become a vast multi-national organization and it is difficult to control by the hierarchical structure. Also, the emergence of online players like Amazon, Flipkart, eBay, etc. has raised the bar for the retailers like Walmart. To counter their rapid growth, Walmart should look for new strategies like last mile delivery and reduction of distribution