walmart supply chain management essay

walmart supply chain management essay

Optimizing Supply Chain Management Practices in Walmart: A Comprehensive Analysis

1. Introduction to Walmart’s Supply Chain Management

A competitive supply chain system can significantly improve logistics practices and provide accurate information flows. Consequently, it is very critical for an efficient supply chain management system to be established in the firm. To achieve advanced supply chain management practices, firms usually apply the radio frequency identification system as well as automated technologies. However, automating these practices can sometimes lead to challenges in managing the flow of goods, services, finance, and information between the suppliers and customers of an organization.

Supply chain management is the core of an organization’s business transaction. It encompasses the flow of goods, services, finance, and information between the suppliers and customers of an organization. As an integrated system, an effective supply chain management system can greatly enhance operational efficiencies and satisfy customers by delivering goods at the right time, in the correct condition in which they were ordered, and at competitive market prices. As one of the largest retail companies in Southeast Asia, Walmart, Inc. not only has the advanced practices of supply chain management, but it has also continually improved its supply chain management procedures by optimizing the supply chain processes.

2. Key Strategies and Innovations in Walmart’s Supply Chain Management

Another option which both retailers and carriers can take is when it comes to delivery lockers. Retailers need to consider installing delivery lockers or parcel shops for last-mile delivery, which will give more control over the delivery. Carriers need to offer micro-delivery warehouses or microhubs that ensure customer fulfillment. One example is Walmart’s Pickup Tower. This tower is located within the store. The customer can order anything online and then drive to the Walmart store and pick up the order. They don’t even have to leave the car to pick up their purchase. They drive up to the tower, enter their information, collect their purchase, and drive back without having to set foot in the store. It works like a vending machine, and the machine is built inside the store. You can order anything online and go to the store to collect it. It brings the curve a bit closer to the customer, and it is less expensive than a delivery because it is a click-and-collect option.

One of Walmart’s strengths in supply chain management is its Walmart Advanced Vehicle Experience (WAVE) truck. It offers a whole new experience in trucking, which is actually a first in the industry. It saves quite a lot of money on diesel, as it is a mixture of jet, diesel, and natural gas. This saves 30% of the fuel costs for a freight company. The truck has a gas-turbine engine in the middle, and the trailer is Duralite and very light, which makes it very efficient in terms of aerodynamics. The driver can enter the vehicle through the central entrance. The inside is designed for comfort for the driver, while outside is designed to ensure efficiency. Inside, drivers will find advanced technology, comfortable settings, better aerodynamics, with a more stable cab to drive. Carriers will benefit from this vehicle, but so will consumers and other vehicle users, as it is designed for safety, comfort, and efficiency.

3. Challenges and Solutions in Walmart’s Supply Chain Management

The company’s growth trajectory and success are due to stock turns and inventory velocity, characterized by the shortest stock lead time, minimum stock-out days, and the lowest stock level that an organization can afford and manage. To achieve its objective, Walmart collaborates with suppliers through an underlying process—associates shipping products to the company’s distribution center. The stock ordering or the shipments from suppliers to Walmart is analogous to Walmart replenishing its stores. With its tremendous success and high volume split from other players, Walmart’s suppliers have been pressured into understanding how to work with practical applications of cutting-edge technology. Small suppliers often find it hard to navigate the toy chest of retail requirements specified by electronic data interchange/advanced ship notice (EDI/ASN). As a result, Walmart has noticed that and has successfully launched a growth engine in the form of vendor-managed inventory (VMI). By integrating suppliers with Walmart’s information systems, VMI has helped Walmart stay ahead of vendors with better velocity and cost efficiency than other retailers. With seven distribution centers servicing 92 stores, inventory turnover is further guaranteed. As a result, suppliers have been encouraged to fetch merchandise directly to the distribution center, as Walmart stocks less and demands frequent replenishment.

Walmart has taken several market-oriented steps to gain a competitive advantage and sustain its position. It started its business on the promise of providing low prices to its customers at their doorstep so that they do not have to travel long distances. Today, Walmart is considered the store for the lowest prices. This claim is further substantiated by the fact that by increasing its presence in the market, Walmart has been able to attain a large market share and become the low-cost leader. Since the company’s business model is based on minimal cost by increasing stock turns and inventory velocity, managing the supply chain effectively is crucial to maintain low prices. Walmart encounters challenges such as stockouts, overstock, stock shrink, low levels of customer service, lack of transportation and efficient transportation costs, and inventory reduction. The holistic analysis of Walmart’s supply chain management, including replenishment methods, channels, inventory control, and information technology, shows the pros and cons of the management practices.

4. Impact of Effective Supply Chain Management on Walmart’s Success

Walmart’s Information Systems Division has developed an array of applications that provide enhanced supply chain management capabilities. The operations support systems also play a part in supply chain management. As simple as it looks, Walmart’s Inventory Rule is the amazing supply chain management at its best. The regulation provides consummate effectiveness attuned to Walmart’s financial results and its revenue increases at $285 billion. Moreover, its human resources and technology capabilities were heavily invested in. Those mainstay investments have been key to Walmart’s cost leadership. Moreover, its proprietary technology infrastructure, that includes powerful information and communications system, radio frequency (RF) fingerprinting that replaces manual barcode scanning, is the key differentiator for powerful efficiency. Considering that supply chain management forms the foundation and substructure on which Walmart’s business depends, this then causes the need to conduct a detailed analysis of the company’s supply chain model from the viewpoint of its underlying operational and technological variables.

Supply chain management directly impacts the success of an enterprise. Effective SCM can lead to market share gain, sales growth, enhanced customer loyalty, new customer demand, significant cost reduction, improved profit margins, speeded inventory distortions, and enhanced brand reputation. Effective supply chain management practices such as adopting innovative transportation technology, harnessing renewable energy sources, creating demand-driven supply chain, embracing the environmental sustainability issue, efficient inventory management, aligning supply chain designs with product characteristics, vendor-managed inventory, third-party logistics provider, information sharing, effective utilization of retail links, enhanced data transparency, strong inventory management programs, quick response, just-in-time processing, collaborative intermodalism, quick replenishment, frequent product turnover, responsive replenishment, implementing RFID technology, reduced drugstore replenishment cycle time, synchronous transport operations, managing truckload logistics, building dedicated private truck fleets, establishing a formidable logistics network, and effective routes optimization have been continuously harnessed by Walmart Stores, Inc.

5. Future Trends and Recommendations for Walmart’s Supply Chain Management

As Walmart pivots to make decisions more quickly about inventory management (what, when, and where to allow for rapid delivery to customers), this will help ensure a customer-centric strategy. Walmart will continue to be well positioned for multi-market channel strategies. Value over cost metrics is already a focus for this year and the future, but by the second half of the year, the logistics group will be looking at inventory from a different lens – strategic customer fulfillment. Fulfillment constraints may include location, partial orders, and shipping requests. In support of the customer journey and inventory management, algorithms will consider both fulfillment insight and customer insights. This will allow Walmart to exceed customer expectations and satisfy their evolving preferences thanks to predictive analytical models driven by data at scale.

Walmart will continue to expand its use of data and technology within its supply chains. This will enable the company to make AI-infused decisions about stocking shelves, charging electronics, and marking down merchandise. Thus, it will have the potential to change the way people around the world shop for the better, ultimately creating a better customer experience. Newer fast fashion models are already impressing the industry. As it moves to become a more technology-driven and customer-centered business, Walmart’s commitment to data and technology in its supply chains will be critical to long-term success.

5.1 Future Trends