Executive summary
Walmart, one of the globe’s top retailers, endures supply chain buffers. The present study aims to explain Walmart’s success by investigating the effectiveness of the retailer’s handling of its supply chain. Walmart is altering its approach to supply chain management to favour its booming online business as retail expansion throughout the United States slows and its expulsion from global markets continues. Logistics, information technology, and collaboration support Walmart’s supply chain system. Data interchange, automation, and optimization may improve operational performance, customer happiness, lowered expenditures, brand management, and staff productivity; this is demonstrated in Walmart’s information-based logistics supply chain partnerships. Walmart achieved its most excellent sequential performance at the end of January 31, 2019, with sales of $514 billion. The firm also saw a 4.2% increase in comparable sales in the United States.
Walmart can run its global business with the lowest probable expenses, the most excellent quality of service, and the quickest possible reaction from management. Therefore, this case explores Walmart’s information management system. Looking at Walmart’s strategy and the external environment through a business lens, this analysis employs supply chain analysis and organizational and operational approaches to yield excellent consultancy on operational issues. The report continues with an in-depth technical analysis of the company’s supply chain management method. Local American retailers may benefit from the article’s good insights from various viewpoints, which might help them meet customer requests and stay competitive. According to this analysis, Walmart’s supply chain operating strategies specify the organization’s aims and goals and critically affirm how to manage these operational issues successfully.
Walmart Supply Chain Case Analysis
While maximizing efficiency at every stage of the supply chain, Walmart’s supply chain information management relies on information technology as both a foundation and a tool. Walmart is constantly improving its supply chain through this method. Walmart had many rivals in the U.S. market (Mark, 2019). Online shops like Amazon.com and other big-ticket general market items were also becoming more competitive for the corporation. Mark (2019) states that in 1962, ‘founder Walton could buy things in bulk from other suppliers and have them delivered directly to his stores.’ Opening massive warehouse-style stores under the moniker “Walmart Discount City,” which would later become Walmart, was Walton’s response to a new national retail trend: discounting, which relies on selling vast quantities of products at low prices. The company reaped the benefits thanks to better national transit and its rivals’ sluggish reaction to legislative changes like repealing “resale price maintenance,” which barred stores from reducing merchandise.
Walmart’s strategic position may be evaluated using a SWOT analysis of the company’s plan (Mark, 2019). Thanks to the SWOT analysis model, worldwide support for Walmart’s management information system is robust. A standard computer system links a company’s worldwide locations and vendors to the primary office. With these databases, Walmart and its partners may easily access product details and track sales, inventory, and associated order data trends (Herrera, 2019). By facilitating better data exchange, Walmart can boost its strategic decision-making and collaboration capabilities across all its business modules and operations.
Supply Chain Capabilities as a Source of Competitive Advantage
An organization’s Competitive Advantage is its detailed plan outlining its objectives and goals, with a deadline and available resources for completion. It is a strategy devised by upper management to ensure the company’s smooth operation (Mark, 2019). Regarding international retail, Walmart had two main approaches: dynamic pricing and daily discounted prices, which entailed changing the selling prices of products. However, to attract many customers, everyday cheap pricing meant that prices were kept as low as possible and mainly were constant from week to week (Sarac et al., 2020). Retailers were typically expected to concentrate on ways to cut operational and supply chain expenses as part of the plan, which resulted in reduced retail pricing.
Many customers have long believed that Walmart’s supply chain gives the corporation a significant competitive edge since it has been critical in the company’s rise from its rural Arkansas roots (Mark, 2019; Vincent, 2019). It employed ‘bar codes, shared sales data with suppliers, managed its transportation and logistics, and was an early adopter of point-of-sale information systems that captured item-level data in real-time (Sarac et al., 2020).’ Many of Walmart’s supply chain procedures became industry standards once the company’s actions were publicized.
Walmart’s Actions in Comparison to Its Competitors
Effective Procurement Strategy. Effective procurement is Walmart’s robust supply chain management system, which uses numerous information technologies. Bentonville-based Walmart buyers coordinated with vendors to get the right combination of new and old products. Bentonville became home to analysts and managers who supported Walmart’s operations as the retail giant expanded, thanks to the presence of numerous significant suppliers to Walmart (Mark, 2019). Each quarter, purchasers gathered in Bentonville to examine newly arrived goods, share details, and see a fully stocked model store housed in a warehouse. To collect data from the field, buyers accompanied colleagues on store tours and assisted with inventory and sales (Sarac et al., 2020). Walmart collaborated with suppliers on supply chain strategies for the medium to long term and coordinated short-term inventory and delivery plans.
Approach to distribution. Walmart’s distribution strategy was the primary factor in opening its stores. On average, there were 173 Walmart sites in the United States in 2019 (Mark, 2019). The supply chain stores offered various tasks, including regional consumer goods, full-line groceries, and perishable goods. Walmart introduced combination centres to its supply chain in January 2019 to increase operational effectiveness. Previously, any of the 42 locations served by the corporation might have received shipments from domestic vendors with stock goods (Sarac et al., 2020). Walmart planned to construct a 340,000-square-foot state-of-the-art distribution hub in July 2019 to receive products from suppliers.
Another critical component of operational strategy is information systems. In addition to point-of-sale systems, a satellite network and a central database were in place for the retailer by the 1980s (Mark, 2019; Vincent, 2019). Originally developed to facilitate inventory data exchange with essential suppliers, it debuted its now-dominant Retail Link system in 1992. All suppliers had access to information and decision-support tools through Retail Link 2019, a complete information system. Through Retail Link, vendors may view up-to-the-minute sales and inventory data down to the stock-keeping unit level and download this data to use with purchase orders—the emphasis on information technology allowed even Walmart’s tiniest suppliers to use previously available capabilities. The greater supplier accountability that comes with access to the Retail Link resources was another perk (Sarac et al., 2020). Suppliers were entrusted with constantly monitoring and restocking inventory, defining goals for supply chain inventories and service levels, and allowing Walmart to delegate data analysis.
Store Networks strategy with hi-low pricing. Because of its store networks, Walmart could keep its prices low. Management was able to keep inventory under control and cut down on stock-outs since product demand was steady (Mark, 2019). Spending on advertising was reduced due to the need for promos and discounts. The business then used the money it saved to cut prices. As other businesses failed, Walmart’s assortment of low-priced products drew customers, and the company developed swiftly. The company’s goal in trying to maximize the efficiency of its stores was to continuously lower expenses, just like it did with its shipping operations. All of its U.S. stores had their lighting and temperature settings managed centrally from Bentonville, and the stores were built and furnished using standard materials.
Technology. Retailers now have access to technological support thanks to advancements in computer technology (Mark, 2019). In addition to establishing an interactive communication system that combines computers and satellites, Walmart also operates the most extensive private satellite network in the U.S. This ensures that the company’s retail locations and internal distribution centres share data. Automatic restocking of low-stock items is possible because of Walmart’s information technology, which can send scanned data immediately to corporate headquarters via satellite (Chung & Guo, 2023; Jain, 2021). Thanks to I.T., many module functions of logistics management are now more efficient.
Challenges Facing Walmart
Regarding the many manufacturing aspects of running a business, supplier resources are just as necessary as capital and management. Regarding international vendors, Walmart’s pricing strategy has never remained strong, 2019). As a company, Walmart has always adhered to the low-price principle. The suppliers, though, are under no such pressure. Then Walmart’s connection with its suppliers would suffer, and the suppliers would react by producing low-quality goods, which would have a domino effect on Walmart’s sales (Chung & Guo, 2023). Walmart is vulnerable in the event of a significant contraction in one of its markets since it has outsourced a large percentage of its manufacturing to China in recent decades.
Implications of Walmart’s Challenges to Its Supply
Considering the fierce rivalry in the global retail sector and the realization that other major merchants have set up buying centres in China, Walmart’s low-cost advantage is vulnerable to rivalries. Walmart faces an expanding number of rivals due to its size and significance in retail (Mark, 2019; Redman, 2019). It is limited to staying ahead of its opponents by creating novel products. Meanwhile, subscribers to Walmart receive complimentary two-day delivery on all items over $35, plus access to a slew of additional online amenities, namely video and music broadcasting, for $119 per year. Amazon Prime customers could get them for free.
Steps to Improve Walmart Supply Chain
New apps for consumers and retailers were in the works at the time. Furthermore, the company takes pride in its robust logistics infrastructure, which its subsidiaries back. Further proof of Walmart’s strong capital system is the company’s meteoric rise in sales and international expansion in the last several years. According to Mark (2019) and Redman (2019), Walmart also has an established method for managing human resources. When implementing a system to track product cases, Walmart was an early user of radio frequency identification tags. With the ability to coordinate and deploy the entire fleet as needed, Walmart invested in capabilities to improve delivery operations. Misunderstandings among traffic coordinators, truck drivers, and associates at the store level were reduced thanks to standard operating procedures (Jain, 2021). To better serve its customers and cut expenses, Walmart was involved in several tech-related projects.
Worldwide, there are 248 Walmart retail malls, 469 Sam’s Club locations, and Walmart store networks. A company’s client base and market share can grow through market expansion. By capitalizing on its e-commerce platform, Walmart can grow its company and implement cutting-edge tech like A.I. to serve its customers better. Furthermore, suppliers could track product sales with the help of store-level information systems (Mark, 2019). As a precaution against fluctuations in demand, colleagues could manually enter orders or cancel upcoming deliveries. Managers ensured all employees were up-to-date by sharing specifics on daily, weekly, and monthly sales figures during 10-minute “standing” meetings.
Recommendations
A few things could be improved in Walmart’s supply chain management. The study may need to be more generalizable to other businesses or sectors due to its exclusive emphasis on Walmart’s operations. In addition, data privacy issues and the effects on employees are not mentioned in the Walmart supply chain management report as possible negative repercussions of the company’s management information systems. The analysis must also carefully weigh the advantages and disadvantages of establishing and running the supply chain activities. If this is the case, the results may not apply to other companies considering making similar technological investments.
Additionally, it should be noted that the external analysis for Walmart in this study is subject to specific time and geographical limits, and it solely portrays the present situation, including regulation or changes in economic conditions. It was unable to depict events in other countries or the future. Because of this, the results may not apply to other organizations in similar situations.
Consider the case study’s limitations before extrapolating its conclusions to other organizations or industries. It does a great job of highlighting the benefits of Walmart’s supply chain management.
Conclusions
Walmart’s supply chain management techniques have been critical to its achievement, allowing it to operate more efficiently, make accurate choices, and preserve a competitive advantage. Working ‘effectively’ is an essential feature of every business, and Walmart’s functional supply chain management is a significant factor in its ongoing profitability. Walmart used these solutions to simplify and consolidate its supply chain, resulting in a better consumer experience and lower costs. Their operational strategy is based on minimizing expenditures, improving the quality of the goods, fulfilling customer time constraints, and boosting the operational effectiveness of all business activities. Effective procurement, information systems, distribution, retail networks, technology, and an omnichannel customer operation strategy are just a few of the supply chain management tools that Walmart has employed to construct formidable operational management.
References
Chung, S. H., & Guo, S. (2023). Collaborative-commerce in supply chains: A review and classification of analytical models. International Journal of Production Economics, 108922.
Herrera, S. (2019). In Amazon vs. Walmart Delivery Battle and A Fresh Salvo. The Wall Street Journal, 3(6), 20–27. www.wsj.com/articles/amazon-in-war-with-walmart-touts-one-day-delivery-gains-11559563200.
Jain, V. (2021). An overview of Walmart, Amazon, and its supply chain. ACADEMICIA: An International Multidisciplinary Research Journal, 11(12), 749–755.
Mark, K. (2019). Walmart: Supply Chain Management. Ivey publishing.
Redman, R. (2019). Walmart Tests No-Limit Online Grocery Delivery Service. Supermarket News, 12(14), 171–178.
Sarac, A., Absi, N., & Dauzère-Pérès, S. (2020). A literature review on the impact of RFID technologies on supply chain management. International journal of production economics, 128(1), 77-95.
Vincent, J (2019). Amazon and Walmart Hit Hard after New E-Commerce Rules in India Restrict Sales. The Verge, 13(19), 28–33. www.theverge.com//2/1/18206538/amazon-walmart-flipkart-india-e-commerce-rules-regulation-chaos.
Appendix
SWOT Analysis
Strengths
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Weaknesses
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Opportunity
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Threats
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