walmart case study supply chain

Already on SCMDOJO? Log in

I accept SCMDOJO'S Terms of Use and Privacy Notice .

Walmart Supply Chain: Building a Successful Integrated Supply Chain for Sustainable Competitive Advantage

• Case Studies

Introduction

The global business landscape has witnessed an increasingly fierce competition, pushing companies to seek effective strategies to maintain and enhance their competitiveness. Among these strategies, the role of supply chain capability stands out as a key factor in driving success. A well-optimized supply chain not only ensures efficient delivery and cost-effectiveness but also provides companies with a competitive advantage in the market. In this context, Walmart, the world’s largest retailer, has demonstrated a highly successful and integrated Walmart supply chain, propelling its growth and dominance in the retail industry.

This case study aims to delve into the significance of supply chain capability for enhancing a company’s competitiveness and how it serves as a competitive advantage for companies. Additionally, we will explore the imperative need for supply chain redesign in the global economy to adapt to the challenges of the modern era of globalization. Focusing on Walmart’s exemplary supply chain practices, the purpose of this case study is to analyze the features of its successful integrated supply chain while identifying relevant issues in the context of the current globalized market.

[Read More: Rivian: Navigating Supply Chain and Operational Challenges and Embracing Growth ]

Walmart’s Supply Chain: Integrated Supply Chain Success

Data-driven success factors.

In the realm of modern supply chain management, data-driven strategies play a pivotal role in enhancing a company’s competitiveness. Walmart’s remarkable success as the world’s largest retailer can be attributed to its astute utilization of data analysis and advanced technologies within its integrated supply chain. This section delves into the key data-driven success factors that have propelled Walmart’s supply chain to the forefront of the retail industry.

[Read More: ERP Master Data: A Guide to Improve Quality & Governance ]

Role of Data Analysis through Barcode Scanning and Point-of-Sale Systems

Data analysis is at the core of Walmart’s supply chain prowess. The company has implemented sophisticated barcode scanning and point-of-sale systems to collect real-time data from its stores. By employing these technologies, Walmart gains valuable insights into customer buying behavior, sales trends, and inventory levels. The ability to analyze this data enables the retail giant to make informed decisions on product procurement, inventory management, and demand forecasting.

Efficient Supply Chain Practices: Automated Distribution Centers and Computerized Inventory Systems

Automation is a key component of Walmart’s efficient supply chain practices. The company has strategically invested in automated distribution centers, streamlining the flow of products from manufacturers to stores. These automated facilities not only optimize the handling and movement of goods but also enable faster order fulfillment and replenishment. Additionally, computerized inventory systems provide Walmart with accurate and up-to-date information about stock levels, allowing for precise inventory control and reducing the risk of stockouts or excess inventory.

Utilizing Walmart’s Own Trucking System and Cross-Docking Logistics

Another critical factor contributing to Walmart’s supply chain success is the utilization of its private trucking system and cross-docking logistics. By maintaining its own trucking fleet, Walmart gains greater control over transportation and delivery schedules, leading to improved efficiency and timely product replenishment. Furthermore, the adoption of cross-docking logistics techniques has enabled Walmart to minimize the need for intermediate storage, leading to reduced handling costs and faster product movement through the supply chain.

[Read More: The Ultimate Guide to Contract Logistics: What You Need to Know ]

Information Technologies Driving Efficiency

In Walmart’s journey towards becoming a global leader, information technologies have played a pivotal role in driving efficiency within the integrated Walmart supply chain. The retail giant has strategically adopted various IT initiatives to optimize its operations, enhance collaboration with suppliers, and achieve real-time inventory targeting. These technologies have contributed significantly to Walmart’s supply chain success, allowing them to maintain a competitive edge in the retail industry.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

One of the key information technologies that have bolstered Walmart’s supply chain efficiency is the implementation of Collaborative Planning, Forecasting, and Replenishment (CPFR). This system facilitates seamless communication and coordination between Walmart and its supply chain partners, including suppliers and distributors. By sharing real-time sales data and demand information, CPFR enables accurate forecasting and demand planning, minimizing information distortion, and promoting synchronized inventory replenishment. The CPFR program has been instrumental in enhancing overall supply chain visibility and efficiency, allowing Walmart to respond promptly to fluctuations in demand and supply, reducing stockouts, and optimizing inventory levels.

Vendor-Managed Inventory (VMI) and Its Benefits

Walmart’s adoption of Vendor-Managed Inventory (VMI) has been another critical information technology-driven initiative. Through VMI, Walmart empowers its suppliers to take on the responsibility of managing their inventory stored in Walmart’s warehouses. By granting suppliers access to real-time inventory data and sales information, Walmart facilitates efficient inventory tracking and replenishment. This hands-on approach by suppliers results in streamlined inventory management, reduced delays in replenishment, and lower stockouts. The VMI model has proved particularly advantageous for Walmart due to its vast product range and numerous suppliers, making inventory management complex and costly if managed solely by the retailer.

[Read More: Vendor Managed Inventory: A Comprehensive Guide ]

Leveraging RFID Technology for Real-Time Inventory Targeting

RFID (Radio Frequency Identification) technology has been a game-changer in Walmart’s pursuit of real-time inventory targeting and enhanced supply chain visibility. By employing RFID tags on products, Walmart can track the movement of inventory throughout the supply chain in real-time. RFID enables accurate and automated inventory tracking, reducing the need for manual counting and minimizing errors in inventory management. The technology also provides crucial details, such as production time, location, and expiry dates of goods, allowing for efficient inventory targeting and better control over inventory turnover. RFID technology has been instrumental in Walmart’s cost reduction efforts, ensuring optimal stock levels while avoiding overstocking and unnecessary inventory holding costs.

Achieving Competitive Advantage through Strategy

Walmart’s competitive strategy: “everyday low prices” (edlp).

Walmart’s competitive advantage is deeply rooted in its strategic focus on offering “Everyday Low Prices” (EDLP) to its customers. The EDLP strategy revolves around providing high-quality products and services at the lowest possible prices, ensuring that customers can benefit from affordable prices every day. This approach sets Walmart apart from its competitors and has been instrumental in establishing the company as a dominant force in the retail industry.

Implementing the “Everyday Low Costs” (EDLC) Policy through Direct Procurement

To support its EDLP strategy, Walmart follows an “Everyday Low Costs” (EDLC) policy in its supply chain management. One of the key elements of the EDLC policy is the direct procurement of items from suppliers, eliminating intermediaries in the process. By procuring directly from manufacturers, Walmart can negotiate and understand their cost structure, enabling them to make informed purchasing decisions and obtain the best prices for their products.

Walmart’s emphasis on direct procurement is further bolstered by the use of technology and information systems. The company has implemented a central database, store-level point-of-sale systems, and a satellite network, along with barcodes and RFID technology as previously mentioned. These technologies allow Walmart to gather and analyze real-time store-level information, including sales data and external factors like weather forecasts, to enhance the accuracy of purchasing predictions. This integration of information technology helps Walmart optimize its procurement process and maintain low costs throughout the supply chain.

Utilizing Information Systems for Better Inventory Management

Effective inventory management is critical for Walmart to sustain its competitive advantage through the EDLP strategy. The company relies on information systems and information technology (IT) capabilities to control inventory levels efficiently. By capturing customers’ demand information, Walmart can identify popular products and stock them adequately, leading to an overall reduction in inventory.

One notable example of Walmart’s successful utilization of information systems is its collaboration with Procter & Gamble (P&G) through the Collaborative Planning, Forecasting, and Replenishment (CPFR) program. This program links all computers of P&G to Walmart’s stores and warehouses, allowing for efficient replenishment orders based on real-time inventory needs. Additionally, Walmart’s Retail Link , developed in the early 1990s, serves as another vital IT application for storing data, sharing it with vendors, and aiding in shipment routing assignments.

Challenges and Opportunities

Supplier cooperation and collaboration.

Walmart’s supply chain success can be attributed to its strong relationships with suppliers, but achieving and maintaining supplier cooperation and collaboration is not without challenges. Let’s explore the challenges and opportunities in this area:

Challenges in Obtaining Suppliers’ Cooperation

• Supplier Resistance to Direct Procurement: Walmart follows an “Everyday Low Costs” (EDLC) policy by directly procuring items from suppliers, eliminating intermediaries. However, some suppliers may be reluctant to cooperate with this approach as it can disrupt existing distribution channels and potentially reduce their bargaining power.
• Complex Supplier Networks: With thousands of suppliers across various product categories, managing diverse supplier networks can be challenging. Each supplier may have different production and delivery schedules, making coordination difficult.
• Balancing Profit Margins: As Walmart emphasizes low prices, maintaining a balance between cost savings and ensuring suppliers’ profitability can be a delicate task. Suppliers may resist pressure to reduce prices further to maintain their margins.

Opportunities for Enhanced Supplier Cooperation and Collaboration

• Establishing Transparent Communication Channels: Walmart can create transparent and open communication channels with its suppliers to foster better cooperation. Clear communication regarding demand forecasts, inventory levels, and potential disruptions can help suppliers plan their production and deliveries more efficiently.
• Supplier Incentive Programs: Introducing incentive programs that reward suppliers for meeting certain performance metrics, such as on-time delivery or cost reduction, can motivate suppliers to actively collaborate and improve their supply chain capabilities.
• Collaborative Planning, Forecasting, and Replenishment (CPFR): Walmart can leverage technology, such as CPFR, to share real-time sales data and demand forecasts with its suppliers. This collaborative approach allows suppliers to align their production and inventory management with actual market demand, reducing the bullwhip effect and optimizing the supply chain.
• Sharing Inventory Visibility: Providing suppliers with access to inventory data, including stock levels and sales information, can help them plan production and deliveries more effectively. This visibility can prevent stockouts and overstocking issues.
• Long-term Partnerships: Building long-term strategic partnerships with key suppliers can create a sense of mutual commitment and trust. By assuring consistent business over an extended period, Walmart can foster stronger relationships and supplier loyalty.

[Read More: 3 Types of Supplier Segmentation Matrix You Can Use to Classify Suppliers ]

Importance of Collaboration to Enhance Supply Chain Efficiency

• Reducing Lead Times: Effective collaboration with suppliers can help shorten lead times by streamlining production and transportation processes. Faster lead times enables Walmart to respond quickly to changes in demand, reducing the risk of stockouts.
• Efficient Inventory Management: Collaborative efforts with suppliers enable better inventory planning and management. Suppliers can adjust production based on actual demand, reducing excess inventory and associated costs.
• Supply Chain Flexibility: Collaboration fosters agility and adaptability in the supply chain. When Walmart and its suppliers work together closely, they can quickly adjust to market changes, supply disruptions, or new opportunities.
• Cost Reduction: Improved supplier collaboration can lead to cost-saving opportunities. By eliminating unnecessary intermediaries and optimizing production and transportation, overall supply chain costs can be minimized.

The Incentives Alignment Issue

In any supply chain, maintaining a balance of profit margins among different parties is essential for efficient collaboration and sustained success. However, achieving incentives alignment can be challenging, and this issue is particularly relevant in the case of Walmart supply chain. Addressing misalignment of interests between Walmart and its suppliers is crucial for optimizing the overall performance of the supply chain and ensuring long-term success. The following points highlight the incentives alignment issue faced by Walmart:

1. Balancing Profit Margins Among Different Supply Chain Parties:

Walmart’s success is attributed to its ability to offer high-quality products and services at the lowest affordable prices. To achieve this, Walmart employs various cost-cutting strategies, such as direct procurement from suppliers and streamlined distribution practices. While these strategies help Walmart maintain competitive prices, they can create challenges for suppliers who may face pressure to lower their own profit margins to meet Walmart’s demands. This misalignment of profit margins can lead to strained relationships and potentially impact the overall efficiency of the supply chain.

2. Misalignment of Interests Between Walmart and Suppliers:

Walmart’s size and market dominance can lead to power imbalances in supplier relationships. Suppliers may feel compelled to comply with Walmart’s demands to maintain access to its large customer base. However, this can lead to situations where suppliers may not have enough leverage to negotiate favorable terms, impacting their own profitability. As a result, suppliers may be less inclined to invest in innovations or improvements that would benefit the supply chain as a whole.

3. Conflict Between Inventory Growth and Sales Growth:

Walmart faced inventory growth issues in the past, with the inventory growth rate outpacing the sales growth rate. This can be indicative of conflicting incentives between Walmart and its suppliers. Suppliers may prioritize producing and delivering more inventory to ensure they meet Walmart’s demands, even if the sales growth does not keep up with the increased inventory. This misalignment can lead to excess inventory, increased carrying costs, and potential stockouts.

4. The Need for a New Triple-A Supply Chain:

Addressing the incentives alignment issue requires a fundamental shift in the supply chain strategy. Lee (2004) proposed the concept of a new Triple-A supply chain for Walmart and other companies in the 21st century. The Triple-A supply chain emphasizes agility, adaptability, and alignment to create a sustainable competitive advantage. Achieving alignment among all participating parties is crucial to optimize supply chain performance and ensure that risks and rewards are distributed fairly.

The Triple-A Supply Chain Approach

In today’s competitive business landscape, companies like Walmart recognize that a successful supply chain is not just about having a fast and cost-effective system. To maintain a sustainable competitive advantage and address the challenges of the global economy, it is essential to redesign supply chains that incorporate agility, adaptability, and alignment. This section explores the concept of the Triple-A Supply Chain Approach, which emphasizes these three key qualities that an ideal supply chain should possess: agility, adaptability, and alignment of interests among all participating parties.

The Three Qualities of an Ideal Supply Chain

Agility for quick and cost-effective responses:.

Agility refers to a supply chain’s ability to respond quickly and cost-effectively to sudden changes in demand, supply, and external disruptions. In the fast-paced business environment, companies must be able to adapt swiftly to fluctuations in customer preferences, market conditions, and unforeseen events. For Walmart, agility has been a critical factor in maintaining its leadership position in the retail industry. The company’s investments in technology and supply chain optimization strategies have allowed them to optimize inventory levels and respond rapidly to changing customer demands, ensuring the availability of products while minimizing inventory costs.

Adaptability to Handle Changes in Demand and Supply:

Supply chains should be adaptable and flexible enough to handle variations in demand and supply patterns. Demand forecasts can be uncertain, and unexpected supply chain disruptions may occur, making adaptability a vital quality. Walmart’s focus on omnichannel and various fulfillment options, such as in-store pickup and ship from store, demonstrates their commitment to adaptability. By utilizing multiple channels, Walmart can cater to diverse customer preferences, ensuring an uninterrupted flow of products to meet demand.

Alignment of Interests among All Participating Parties:

One of the significant challenges in supply chain management is ensuring alignment of interests among all parties involved, including suppliers, manufacturers, distributors, and retailers. Walmart’s scale and dominance in the retail market have allowed them to establish strong relationships with vendors, enabling strategic partnerships with vendors who can meet their high-volume demands. Additionally, Walmart’s adoption of Vendor Managed Inventory (VMI) allows suppliers to manage their own inventory stored in Walmart’s warehouses. This collaboration aligns the incentives of suppliers and Walmart, streamlining inventory management and ensuring timely replenishment.

In conclusion, Walmart’s integrated supply chain has been a crucial factor in the company’s global dominance and sustained competitive advantage. By strategically investing in technology and optimizing its supply chain, Walmart has managed to maintain its position as the world’s largest retailer with over $572 billion in revenue in 2022.

Walmart’s success serves as a compelling example of the importance of a well-integrated supply chain in achieving and sustaining competitive advantage in the global market. As businesses continue to navigate the complexities of the 21st-century economy, building and enhancing supply chain capabilities will remain a critical aspect of ensuring sustainable growth and profitability. By prioritizing agility, adaptability, and alignment, companies can follow in Walmart’s footsteps and position themselves for continued success in the dynamic and ever-evolving global marketplace.

References:

• Lee H.L. (2004): The triple A supply chain. “Harvard Business Review”, Vol. 82, No. 10, pp. 102-112. 
• Nguyen T.T.H. (2017): Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century. “Journal of Economics and Management”, Vol. 29(3), pp. 102-117

About the Author – Dr. Muddassir Ahmed

Dr. Muddassir Ahmed is the Founder & CEO of SCMDOJO. He is a global speaker , vlogger , and supply chain industry expert with 19 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East, and South East Asia in various Supply Chain leadership roles. Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and has founded the leading supply chain platform SCMDOJO to enable supply chain professionals and supply chain teams to thrive by providing best-in-class knowledge content, tools, and access to experts. You can follow him on  LinkedIn ,  Facebook ,  Twitter  or  Instagram.

• Walmart Walmart Supply Chain

Download Indirect Procurement Assessment

An Indirect Procurement Best Practices Assessment is a valuable process for organisations to evaluate and optimise their indirect procurement functions.

• Platform Carrier Suite Yard Management
• Supply Chain
• Transportation

Logistics, transportation, and warehouse insights

Our integrations with other platforms

Insightful interviews with SMEs

Customer success stories

Learn about Vector

We are hiring

We can't wait to hear from you

Download our app in Apple Store

Download our app in Google Play

Walmart’s Supply Chain: A Detailed Look at How They Manage It

Sam Walton said, “People think we got big by putting big stores in small towns. Really we got big by replacing inventory with information.” It is information, and especially information sharing, that lets Walmart constantly increase efficiency at every step, from replenishment planning and production to shipping, distribution, delivery, and stocking.

Studying the nuts and bolts of how Walmart uses information—data—to make that happen can help shippers and other retailers optimize their supply chains with digital data sharing.

Walmart is big, racking up $555 billion in sales in fiscal 2021, so it can seem like a behemoth with no lessons for the rest of us. But we can learn valuable lessons from Walmart’s focus on efficiency and automation, its nuanced approach to  supply chain  sustainability and social responsibility, and how digital data sharing underlies it all.

Size Matters

Walmart has 5,300-plus stores in the United States employing nearly 1.6 million people, and 5,100-odd stores in 23 other countries employing another 550,000.

These, together with Walmart’s family of e-commerce websites, are served by 210 distribution centers. Every one of them unloads and ships at least 200 trailers a day. They encompass at least 1 million square feet each—and 42 of them are U.S. regional distribution centers that dwarf the others.

Their shipping fleet musters 9,000 tractors and 80,000 trailers and drives more than 1 billion miles per year. Walmart even dealt with the Covid supply chain crunch of 2021 by chartering its own ships to unload at less-busy ports . Who can say the same?

Data Matters More

But Walmart succeeds and grows because of a relentless focus on efficiency and transparency in its supply chain, even in packing pallets and stocking shelves, as we shall see.

They continuously find ways to optimize their supply chain to control or reduce costs, and they never let up. Walmart believes that it’s that focus that underlies all their success and guarantees that, even as inflation and wages and other costs of doing business rise, Walmart continues to be the low-price leader.

Walmart’s policy is to offer Everyday Low Prices—lower than everyone else’s—year-round, instead of competing on price only during seasonal sales. Walmart can do that and still hit its margin targets because it is so successful in building visibility and transparency into every scrap of data in their supply chain.

Walmart Supply Chain: Visibility, Transparency and Collaboration

At Walmart, demand forecasting and inventory-level prediction are obsessions. Walmart was the first company in the world to use barcodes on 100% of its products, way back in 1983.

In 2015 alone it spent $10.5 billion on IT, a lot even for a company that booked $486 billion of revenue that year. And nothing has changed. In 2021, Walmart CFO Brett M. Biggs said, “From a position of great strength, we’re now going to accelerate investments in supply chain, technology, automation, and our associates.…we remain laser-focused on operating efficiency .”

Though not yet a 100% mandate, radio frequency identification (RFID) tags are encouraged for suppliers. These tags can be scanned from a distance with radio waves, so that pallets and boxes don’t have to be approached with a handheld laser scanner for their data to be captured and shared. In fact, pallets and boxes don’t even need to stop moving to be scanned; RFID tags can be read as they’re moving through a gate on a loading dock.

Making data sharing that easy provides a great benefit: Walmart products with RFID are replenished three times as fast as those that only carry barcodes, and out-of-stocks are down 16% since the company started using them.

But make no mistake: It isn’t gadgets, but rather Walmart’s transparency and visibility at every step of its supply chain that is the real secret of its success. The first step is perhaps the most radical: All of Walmart’s suppliers are responsible for their own replenishment planning, and the company gives each of them the tools and data to successfully manage the inventory levels of their own products in Walmart’s stores and  warehouses .

True Collaboration With Vendors and Suppliers

Walmart began dealing directly with the firms that produce its assortment in the 1980s, and found it profitable to cut out distributors in the middle. Over time, advances in IT made it possible to share so much timely data with vendors that the company could relieve itself of the cost of managing its own inventory.

The result is a digital vendor-managed inventory system called Retail Link® that gives suppliers access to real-time store-by-store point of sale data, whether they are making furniture in China or frozen food in California.

Analysts working for suppliers don’t just react to falling inventory levels, they forecast demand patterns—which are ultra-stable due to Walmart’s Everyday Low Prices policy of avoiding seasonal sales—and collaborate with other suppliers and with Walmart to decide when to ship products to Walmart distribution centers.

And benefits beyond avoiding out-of-stocks are made possible by the system’s openness and collaboration with suppliers. Walmart doesn’t drip-feed information to its suppliers, it opens its books to them.

A tool within Retail Link called Market Basket allows suppliers visibility into what products are routinely combined with their own in the same purchase. This gives vendors the opportunity to produce their own versions of those frequent companion products, or to ask Walmart to place their products where they’ll be seen by buyers of those companions.

No Wasted Time—or Space

Once a product is shipped, the vendor’s responsibility ends and Walmart takes charge. But the same data sharing and visibility, aided by satellite tracking, allows Walmart to precisely schedule just-in-time handling of goods as they are received.

Walmart coordinates each unloading of a supplier’s truck with the loading of an outbound Walmart truck at the same distribution center within about a day. This practice, known as cross-docking, minimizes both inventory carrying costs and the duration of the Walmart assortment’s journey from factory to customer.

Goods are only warehoused at the big box stores, which further minimizes the duration of a product’s journey to the customer. The stores are sized for the purpose both in area and in height; the towering upper shelves hold as much as or more inventory than the shelves that customers shop from.

In-store warehousing also allows for fewer and larger deliveries from distribution centers to stores, an efficiency that saves more than money. Filling trucks and minimizing miles traveled also reduces Walmart’s carbon footprint. This contributes to the company’s impressive gains in sustainability, as we’ll see below.

Data Enables Precision

Walmart’s mastery of real-time information allows it to mingle the very different assortments of products that are sold through its various channels. If you walk inside a Walmart store, you can lay your hands on fewer than 200,000 items immediately. But Walmart’s online storefronts offer millions of items, and Walmart wants to get those to you as quickly as possible.

They’re able to do so because 90% of Americans live within 10 miles of their stores, which are also their warehouses.

Omnichannel, Brought to You by Omniscience

Walmart combines e-commerce with its bricks and mortar stores in omnichannel retail. Keeping all the products straight, and keeping them moving on time, requires even greater precision and flexibility .

Accurate forecasting of what items in its online assortment will be wanted—and when they will be wanted—is needed for the right online-only products to be warehoused closest to customers.

Online sales were less than 10% of Walmart’s total sales in 2020 but they are rising, and so is the need for dedicated warehouse space for those online-only assortments.

To meet this growing need, Walmart is rolling out dozens of in-store or store-adjacent warehouses known as market fulfillment centers (MFCs), after building their first in New Hampshire in 2019.

Each MFC can dispatch deliveries either directly to customers or to nearby Walmart stores to fulfill store-pickup orders from the online assortment. And if your store-pickup order combines online-only items with products stocked on the store’s shelves, it will all be waiting for you in one neat pile when you get there.

That takes a lot of timely information sharing to accomplish, and Walmart is committed: it spent $11 billion in 2019–2021 on technology, e-commerce and its supply chain.

Data Increasingly Enables Automation

What’s more, Walmart spent $14 billion in 2021 on supply chain automation . This begins with automated warehouse management and control systems, which are software, and automated picking, sorting and putting systems, which are hardware.

The software handles inventory control of the bewilderingly large assortment of Walmart’s various online and in-store channels. It even forecasts labor needs to ensure that staffing levels exactly match the need for each shift, bringing in more hands when large deliveries and shipments are expected and keeping a smaller crew for quieter hours.

Because all the relevant data in Walmart warehouses is transparent and interoperable, that labor can be provided by machines as well as people. High-speed robots are already loading and moving pallets, and automated sortation equipment is sorting products along conveyers and chutes. These technologies, together with data sharing, underpin automated consolidation centers , the first of which opened in 2019 in Colton, California, with more to come.

At only 340,000 square feet, it receives, sorts and ships freight for all 42 of Walmart’s U.S. regional distribution centers (RDCs). It uses automated technology that triples throughput.

The status quo is for suppliers to manage 42 separate orders—one for each RDC—usually shipping them as soon as they are ready in trucks that are not full. Walmart consolidation centers always took less-than-truckload shipments and consolidated them in full truckloads, but everything was done by hand and, crucially, shipments were not received and counted until they arrived at the RDCs.

Demand Forecasting and Predictive Distribution

With the new system, suppliers fill only one order, instead of 42. This allows them to save money on order management and to dispatch fewer less-than-truckload shipments. More important to Walmart’s bottom line, all the container loads are scanned and counted as soon as they arrive at consolidation centers, upstream from the RDCs. The scanning and counting are done automatically on arrival.

This allows the entire system to adjust to the unexpected that much sooner. With complete visibility, the system can even respond to sudden shifts in regional demand, for example, due to a heat wave driving air-conditioner sales in certain states, and rebalance shipments to the various RDCs. As Geno Bell, Walmart’s senior director of its consolidation centers, put it, “With this new technology, we can be surgical and responsive in getting merchandise into stores.”

After the products have been received, counted and assigned to destinations, the automated warehouse management system is used to sort and separate the arrivals and load the products into new truckloads according to how they are stocked downstream, speeding and simplifying unloading at the destination.

Things get even more high-tech at the new automated RDCs, where high-speed palletizing robots unload and sort product. These tireless workers can use every inch of available warehouse space because they never lose track of where a product is stored, no matter how deep it is buried or how high it is stacked.

When it’s time to load it out, the robots retrieve the product and make up individual pallets designed for easy unloading at the other end. The new pallets are packed by how products are stocked in the destination stores, down to specific aisles, in a tour de force of precision and integration. Work on the first of these automated marvels began in 2017 in Brooksville, Florida. Now Walmart is rolling out the automated system to 25 of its 42 RDCs.

How Walmart Supply Chain is Sustainable

Walmart first focused on the sustainability and environmental, social and governance (ESG) aspects of its direct operations, making its first environmental sustainability pledge in 2005. Among its early targets were increasing the efficiency of its trucking fleet. In the years since, Walmart has committed to achieving zero waste in its U.S. and Canada operations by 2025, and to powering its global operations by 100% renewable energy by 2035.

Walmart was the single largest procurer of solar and wind power in the United States in 2019, and currently gets 36% of the electricity that it uses around the world from renewable sources.

Once its own sustainability journey was underway, Walmart expanded its efforts to the sustainability of its assortment and of its supply chains . It paid for expert advisors to work with its suppliers to help them reduce their greenhouse gas emissions, drawing on Walmart’s now-considerable experience in the field. And through Walmart’s Project Gigaton, it is offering a power-purchasing facility to its suppliers whereby they can pool their electricity purchases to bring massive new renewable energy projects onto the electric grid in very sunny and windy areas that will offset the power they use locally (all electrons being interchangeable).

Walmart’s efforts to increase its supply chain’s sustainability are extensive, but they focus on a few critical ESG issues including climate, waste and working conditions. Walmart clearly lays out its expectations of suppliers in regards to worker well-being in a Standards for Suppliers publication, and lets them know that they are expected to hold their own suppliers to the same standards. Walmart then actively monitors the areas that pose the highest risks, especially to worker dignity.

Accountability Begins With Reporting

When it comes to environmental sustainability, Walmart uses a mix of mandatory and voluntary mechanisms. Suppliers of some commodities, including coffee, cotton, palm oil, pulp and paper, and tuna, are required by Walmart to meet specific certification standards and to validate that they have done so.

These products can then carry a certification logo on their packaging, which Walmart sometimes draws attention to. For example, a sign on a shelf might alert customers to sustainable seafood that carries the Marine Stewardship Council logo.

Other ESG efforts among Walmart’s vendors are voluntary . For example, Project Gigaton , which aims to avoid 1 billion tons of greenhouse gases from Walmart’s supply chain by 2030, is a program that Walmart encourages its suppliers to participate in, but participation is not mandatory.

Upwards of 3,100 suppliers (out of more than 100,000 total) are taking part in this effort. As always, Walmart is obsessed with information sharing in the ESG arena, and suppliers who report to Walmart’s sustainability surveys account for 70% of Walmart’s net sales in the United States.

It All Begins With Digitization

We all aspire to succeed like Walmart, but no fleets of automated warehouse robots are coming to sort and pack aisle-ready pallets for the rest of us—and that’s okay. Every supply chain can realize serious efficiency gains through better data sharing. The road to Walmart-quality data, and real-time data sharing between supply chain partners, starts with making the entire shipping process digital.

A good end-to-end digital solution can capture all the information generated in a shipment’s lifecycle and make it immediately available to everyone concerned. Vector Software’s contactless solution is a good example.

A supplier’s bills of lading, pick sheets and anything else are sent by email or uploaded to Vector’s system and automatically ingested. When a carrier driver arrives for pick-up, a smartphone scan of a QR code checks the driver in, enters the driver’s info, and assigns a dock door.

From there, the system routes the shipment’s documents to the driver, shipping clerk, and security guard, who might use a smartphone to verify the container’s seal or temperature and add that information to the system. En route, the shipper and the carrier get real-time updates, including details of any overage, shortage, or damage.

Digitization speeds and eases every trip. But the real efficiencies come in because digitization is the crucial first step in leveling up a company’s data quality. Every shipment’s data is made completely visible. Any patterns that arise in the inevitable glitches and hitches are laid out where you can see them as they emerge and solve them promptly. And that gets you closer to using information like Sam Walton for a world-class supply chain.

Back to the Future

The future of Walmart’s Supply chain is sure to include more dazzling innovations, but the fundamentals of efficiency, visibility, and sustainability will remain. For instance, the company’s autonomous robots whizzing around inside its distribution centers may soon be picking and packing containers hauled by autonomous trucks.

Walmart is testing such vehicles to haul freight around their own yards and on public road networks. They are also experimenting with management systems to control and coordinate these autonomous vehicles.

Who knows what the future of Walmart’s supply chain will look like? But even if they someday deliver goods in flying cars, one thing is certain: The secret of Walmart’s success will always be information.

If you liked this article you might be interested in these too:

Digital workflows across the supply chain.

• Solutions for Shippers
• Solutions for Carriers
• Case Studies
• [email protected]
• +1 (855) 442-5623
• Privacy Policy
• Terms of Services

© 2024 Vector, Inc. All rights reserved

Schedule a demo call today

Subscribe to AI in Action – your guide to AI transformation >

• August 16, 2023
• AI Case Studies

Case Study: Walmart’s AI-Enhanced Supply Chain Operations

Walmart, the world’s largest retailer, has been at the forefront of utilizing innovative technologies to optimize its supply chain management. Its investment in technology spans automation, machine learning, AI-driven chatbots, and leveraging models like GPT-4 to enhance both internal processes and customer experience. The multifaceted approach encompasses not only internal management systems but also reaches into the supplier negotiations, enhancing various dimensions of the business.

Key Takeaways

• The implementation of AI in Walmart’s supply chain management encompasses various aspects including procurement, storage, and distribution, demonstrating a comprehensive approach to leveraging technology.
• By partnering with startups like Pactum, Walmart has begun to utilize AI for contract negotiations, showcasing innovation in non-traditional areas.
• With a strong focus on automation, Walmart has outlined ambitious plans to power 65% of its stores with automation technologies by 2026, a move that reflects the retailer’s forward-thinking strategy.

Deep Dive: Walmart’s AI-Enhanced Supply Chain Operations

Walmart’s approach to implementing AI in its supply chain is comprehensive, focusing on automation, negotiations, procurement, and customer interaction. From investing in Pactum’s negotiation bot to automating 55% of the fulfillment center volume, the approach spans various facets of the supply chain.

Implementation

The implementation of AI has been progressive, with Walmart first starting with Google’s BERT models and then advancing to GPT-4. They are using AI to negotiate contracts with suppliers, as well as for forecasting, procurement, and inventory management. Automation technologies have been rolled out to enhance storing, retrieving, and packing for merchandise. Walmart also employs chatbots for customer care and natural language understanding at a retail-specific level.

Walmart’s AI initiatives have yielded significant results. The chatbot, for instance, negotiated with 68% of suppliers approached, gaining 1.5% in savings and extending payment terms. Automation in supply chain is estimated to improve unit cost averages by around 20%. A notable customer-centric result is the development of platforms like Text to Shop that utilizes natural language understanding to enhance the shopping experience.

Challenges and Barriers

The implementation of AI in supply chain management has not been without challenges. There is a concern about trust and possible erosion of relationships in bot-to-bot negotiations. There is also a need to carefully navigate the “creepiness” of anticipating customer needs too accurately. The rapid change in technology requires Walmart to remain agile to avoid unnecessary technological lock-ins.

Future Outlook

The future for Walmart’s AI in the supply chain looks promising. With plans for more automation and a focus on generative AI for new customer experiences, Walmart is set to continue leading in technological innovation. Opportunities such as the potential creation of a ChatGPT plugin, 3D product generation, and multimodal applications are indicative of an expansive and ambitious future path.

Walmart’s extensive use of AI in its supply chain represents a model for how retail giants can leverage technology for efficiency, customer engagement, and cost savings. The case of Walmart demonstrates both the potential rewards and the inherent challenges of integrating AI into complex business processes. Their willingness to innovate and take calculated risks, coupled with a commitment to ethical implementation, sets a precedent that other businesses may well seek to follow. As technology evolves, so too will Walmart’s strategies, solidifying their position as a leader in using AI to transform the retail landscape.

To get the latest AI case studies straight to your inbox, subscribe to  AI in Action  by AIX — your weekly newsletter dedicated to the exploration of AI implementation and adoption in business.

Elevate your understanding of AI applications. Browse  case studies  searchable by company, industry, use case, and technology.

Sources: Multinationals turn to generative AI to manage supply chains Walmart VP confirms retailer is building on GPT-4, says generative AI is ‘as big a shift as mobile’ Negotiating With A Chatbot: A Walmart Procurement Case Study Walmart Accelerates Investment in Supply Chain Technologies

Let’s talk

Whether you’re looking for expert guidance on AI transformation or want to share your AI knowledge with others, our network is the place for you. Let’s work together to build a brighter future powered by AI.

Related Posts

Case Study: The Role of AI at CB Insights

• August 25, 2024

Case Study: The Future of Venture Capital at Earlybird VC

• August 24, 2024

Case Study: How Claudia is Guiding Investors at Axevil Capital

• August 23, 2024

The marketplace for case solutions.

Walmart: Supply Chain Management – Case Solution

The Walmart: Supply Chain Management case study discusses the cost-saving strategy of the company and its supply chain management strategy. It focuses on how the company manages its supply chain in comparison with its competitors.

​P. Fraser Johnson and Ken Mark Harvard Business Review ( W19317-PDF-ENG ) July 08, 2019

Case questions answered:

• Analyze the Walmart supply chain. Do you think their capabilities are a competitive advantage for Walmart? Why yes or why not?
• How is Walmart managing its supply chain? Compared it with its competitors?
• What are the most important business challenges Walmart faces and what implications do they have have for its supply chain?
• If you were Doug McMillon, president, and CEO of Walmart, what would be your strategic plan to improve Walmart’s supply chain and why?
• Where are the greatest opportunities to improve efficiency?
• How do you think this plan would help Walmart to compete against Amazon?

Not the questions you were looking for? Submit your own questions & get answers .

Walmart: Supply Chain Management Case Answers

1. analyze the walmart supply chain. do you think their capabilities are a competitive advantage for walmart why yes or why not.

According to Barnes (2001), capabilities can be understood as a certain set of business developments that are being understood strategically. Every firm delivers value to its customers through these business developments. Stalk et al. (2015) dispute that a firm’s business processes can be used to achieve a competitive advantage, provided that they are being seen as strategic capabilities. As such, Walmart’s supply chain practices assist in attaining multiple competitive advantages, such as cost-saving strategies and better client service and solutions delivery procedures.

Walmart implemented an ¨everyday low-price¨ (EDLP) strategy as its business model to reduce the costs and investments related to its operations.

Thus, Walmart’s supply chain plays a major role in maintaining this “good-deal” strategy. This strategy consists of the following key practices:

The primary and fundamental reason behind Walmart’s successful competitive advantage relates to the intensive involvement of customers, partners, suppliers, and management.

For instance, Walmart has an excellent and long-term affiliation with its suppliers due to two reasons. Walmart offers suppliers large orders and commits to them for a relatively long time. by using Electronic Data Interchange with its suppliers (EDI).

EDI is a standard format used for exchanging firm documents and making up communication and translation (8th and Walton, 2013). Thanks to this, Walmart creates coordination between suppliers tightly in product delivery schedules, thus minimizing potential risks involved.

Walmart’s second strategy involves utilizing global merchandising centers to acquire merchandise in bulk for lower prices. The company adopts the cross-docking strategy, in which the company avoids the storage of goods during the transportation process.

Instead, the company transfers the products between trucks. Right before the products reach these trucks, the packaging is changed. The tags are being attached to save on the inventory costs and the transportation itself and save on transportation time. This strategy allows Walmart to send unsold products (Black hauls) back to its suppliers, a cost-saving method (Lu, 2018).

Finally, Walmart is the first company to incorporate UPCs (Universal Product Codes) for their transactions to enhance the quality of inventory and supply chain.

The codes will be transferred into a collection of data connected to the global satellite system. Lu (2018) believes that this data collection provides multiple benefits in forecasting the demand and telling the real-time sales from the registers in the stores.

Moreover, thanks to the invention of the RFID (Radio Frequency Identification) tags in shelves, docks, recycled areas, and docks, Walmart managed to save $500 million a year on average. This inventory reduction has made the communication process easier at the same time.

Applying and managing the inventory with the newest technology in distribution methods, for example, the implementation of ¨shelf-scanning¨ robots, etc., will result in a highly efficient supply chain process and a low rate of the ¨bullwhip effect¨.

This occurs when a lack of communication between the supply links causes the inventory to pile up as a reaction to demand ¨spikes¨.

Clayton M. Christensen (2001) provides some insights regarding Walmart’s Supply Chain in his book, ¨The Past and Future of Competitive Advantage¨. He states that ¨competitive advantage is a concept that often inspires in strategists a form of idol worship – a desire to imitate the strategies that make the most successful companies successful¨.

The fact that Walmart was one of the first companies to (successfully) implement data-based decisions regarding their operations processes led to a ¨copycat¨ trigger in other comparable companies, according to Ken Mark (2019). The latter confirms that the capabilities of Walmart are indeed a competitive advantage for the company.

2. How is Walmart managing its supply chain? And compared with their competitors?

Walmart believes in selling merchandise to customers at discounted prices or below standard to gain profit, using developed structure and advanced supply chain management strategies as a competitive strategy. Thus, Walmart has become one of the market leaders and has maintained its status for a long period.

The company applies…

Unlock Case Solution Now!

Get instant access to this case solution with a simple, one-time payment ($24.90).

After purchase:

• You'll be redirected to the full case solution.
• You will receive an access link to the solution via email.

Best decision to get my homework done faster! Michael MBA student, Boston

How do I get access?

Upon purchase, you are forwarded to the full solution and also receive access via email.

Is it safe to pay?

Yes! We use Paypal and Stripe as our secure payment providers of choice.

What is Casehero?

We are the marketplace for case solutions - created by students, for students.

More From Forbes

Walmart’s massive investment in a supply chain transformation.

• Share to Facebook
• Share to Twitter
• Share to Linkedin

David Guggina, SVP Supply Chain at Walmart, speaking at the virtual Blue Yonder Icon Conference

Walmart WMT has been very open about what it takes to better compete with Amazon AMZN . Following their fourth quarter results, top executives talked about their supply chain and omnichannel strategy at a high level. Brett Biggs, an executive vice president at Walmart, summarized the investments by saying the retailer is spending on increased fulfillment capacity, supply chain, automation, and technology. This new infrastructure will allow the retailer to expand ecommerce assortment while reducing both shipping time and cost. Walmart is making investments in warehouse automation in distribution centers to deliver aisle and department-ready pallets to stores. Walmart is also investing pickup and delivery capacity.

On March 21st, David Guggina - the senior vice president supply chain, product, and engineering -  filled in more detail on the specifics of their supply chain journey while speaking at Blue Yonder’s virtual Icon user conference. Blue Yonder is a leading provider of supply chain software solutions including several solutions that will be mentioned in this article - demand management, inventory optimization, replenishment, warehouse management, warehouse control systems, yard management, and transportation management.

Walmart’s fiscal 2021 ended on January 31 st . With $555 billion in sales, the world’s largest retailer grew by 6.8%. Walmart’s operating income was $22.5 billion, 4.1% of sales.

Amazon is smaller. Amazon’s fiscal year ended on December 31 st . The company had $341 billion in retail revenues. Amazon is less profitable. Retail operations had an operating income of $9.4 billion, just 2.8% of sales. But with 38% year over year growth, they are growing much faster than Walmart. If this continues, it will not be too many years before Amazon is the world’s largest retailer.

Around the world, ecommerce is growing much faster than in-store sales. Walmart knows this. Brick and mortar retailers that do not have a strategy to grow sales based on an omnichannel strategy are going out of business with an increasing frequency. Walmart has been working to pivot to omnichannel for several years to help speed growth. For Walmart, “omnichannel” is defined as a customer-centric experience that seamlessly integrates ecommerce and retail stores into an offering that saves time for consumer.

Walmart’s U.S. ecommerce sales contributed approximately 5.4% of comparable sales last year. Walmart defines ecommerce sales as those that originate online but which be fulfilled by either dedicated ecommerce fulfillment sites or by leveraging their stores. The store omnichannel services include pickup at store, ship from store, and digital pharmacy fulfillment options. The company has 7,300 pickup and 5,200 delivery locations globally.

Best Travel Insurance Companies

Best covid-19 travel insurance plans.

The US is where Walmart’s digital transformation is centered. Walmart’s investment in ecommerce, supply chain, and technology in the US was over $11 billion over the last two years. For retailers, remodeling stores and building new stores is usually where most of the capital has historically been spent. At Walmart, their digital transformation – spending on ecommerce and supply chain technologies, combined with new investments in supply chain infrastructure – represented 72% of their strategic capital expenditure in the US for their 2020 and 2021 fiscal years.

Mr. Guggina talked about how Walmart is approaching their supply chain transformation. “For many of our customers, saving time is as important as saving money.” That has led to growth in ecommerce. But Walmart will not abandon their strategy of being a low-cost provider – what the company calls “everyday low prices.” Low prices translate into having a focus on cutting costs; this in turn means having an efficient supply chain.

But there is tension between price leadership and service. In a store, customers have access to 100 to 150,000 stock keeping units (SKUs). But when a consumer goes online, they can access hundreds of millions of items. But there is a challenge around slow selling items. Where should slow movers be held so that orders can be fulfilled both economically and with speed.

Delivering many items ordered online quickly depends upon shorter lead times and the ability to support a variety of fulfillment options such as curbside pickup or ship from store. Distribution centers that traditionally just replenished a given set of stores will be increasingly asked to also fulfill ecommerce orders. Mid-mile and last mile transportation capabilities need to be improved. “That is a steep ask for any supply chain,” Mr. Guggina stated.

This is where Walmart seeks more “precision.” The use of demand management, inventory optimization, and replenishment applications can help this retail behemoth achieve much better inventory placement and fulfillment flexibility. Investing in supply chain applications also, Mr. Guggina asserts, helps them with their “relentless cost focus.”

The pandemic created a challenging year for their supply chain. “I’m glad we had our leadership and strategy in place,” Mr. Guffina said. “The pandemic propelled our omni strategy ahead by 3 to 5 years.” Pick up at store and home deliveries grew quickly because of the pandemic.

So besides forecasting, inventory optimization, and replenishment, how are those billions of dollars being spent in the supply chain area? 

Walmart is reducing packaging waste by right sizing packaging; for some products packaging might not be required at all. This initiative requires capturing product dimensions and other product attributes with higher accuracy. The packaging algorithms do not work if this data is not up to date.

In their distribution centers, Walmart is modernizing their warehouse management system (WMS). The system, which will launch later this year, will have better labor planning, as well as providing better inventory control.

Walmart is making extensive investments in warehouse automation. The company has deployed autonomous mobile robots for moving pallets. The retailer is also investing in the use of automation for picking/putting to and from containers. There are large investments in sortation equipment; sortation systems automatically sort products down the correct shute as they move through a warehouse on a conveyor. When it comes to these projects, warehouse control systems are used to interconnect the automation assets – the hardware - with the warehouse management system software.

Investment is being made in a highly automated warehousing solution from Witron surrounding produce. Vegetables and fruits will be able to be delivered more quickly and cheaply as a result.

In transportation, Walmart is engaged in numerous projects. The company is doing a proof of concept to see if trucks can move about autonomously in their yards. The autonomous trucks will need to be integrated to an improved yard management system for this. That will lead to better flow in their yards.

There are experiments with over the road autonomous trucks. There is work being done to improve optimization associated with trucks moving inbound from suppliers to their distribution centers. There is also a project surrounding freight matching and freight pay. Not surprisingly, a command center visibility solution is being developed.

There are also new tools and applications for the cab of a truck. Their 11,000 drivers will have new onboard computers. Last mile will be improved as stores increasingly become a starting point for consumer deliveries.   

“We are moving faster than ever, Mr. Guggina said. “We are partnering with Blue Yonder to help to continue to transform our supply chain.” Walmart has been known as a company that developed many of their applications in-house. “The days of buy versus build are over.” Walmart has shifted being a buyer of supply chain software.

Over my 25-year career, I have heard executives from several supply chain software vendors say that Walmart was using their solution in some part of their operations. Unfortunately, they said, they were not allowed to publicly name Walmart as a customer. Having a Walmart executive give the keynote at the Blue Yonder user conference, and publicly name Blue Yonder as a key solution partner, is a noteworthy occurrence.

• Editorial Standards
• Reprints & Permissions

MBA Knowledge Base

Business • Management • Technology

Home » Management Case Studies » Case Study: Supply Chain Management of Walmart

Case Study: Supply Chain Management of Walmart

The world’s largest retailer Wal-Mart was founded by Sam Walton in the year 1962. He opened his first store in Rogers, Ark. On 31st October 1969, the company was incorporated as Wal-Mart Stores. Key success factor was the guidance of Sam. Presently they are operating in fifteen countries with more than 8,000 stores with 2.1 million employees (2009). Major features of Wal-Mart stores are its store area, cleanliness and its shelves which is filled with varieties of quality items that includes health care products, family apparels, electronic items, automotive products, hardware items, jewelry etc.

Wal-Mart is giving more emphasis for customer needs and tried to reduce cost through the effective usage of supply chain management system . In the year 2009, Fortune Magazine ranked Wal-Mart as first among other retailers in its survey. Sales were about 401 billion U.S dollars in the FY 2009. Sam Walton claims that Wal-Mart’s vision had always been to increase sales through lowering the costs through organized distribution system with the help of the Information Technology. It is said that Wal-Mart’s extreme success could be attributed to its effective supply chain management.

Wal-Mart’s focus has always been to sell goods at a lower price to the customers. They ensured direct purchase form the companies bypassing the intermediaries. This by passing is one of the ways to reduce cost. Wal-Mart preferred small vendors to the big players however the vendor who provides the best price qualifies and gets the deal. This applies to the giants like P& G as well. Their practice these days had been choosing few vendors and they literally negotiate the best price the one that comes up with the best price qualifies. This does not blindly mean that they have been ruthless. Wal-Mart also work with the vendors for improving its supply chain efficiency.

Wal-Mart with its power distribution system made quite innovative changes like reducing paper work, reduced its lead time drastically, used bar codes to bill which recorded inventory levels and the access to the stock levels served as the valuable data for management. The movements of products are systematic and strategically aliened in a way that it reduces the most valuable time and cost and results in efficiency. Wal-Mart had a very effective rather responsive and flexible distribution system to transport goods from docks to stores. It educated the drives with the ethics and code of conduct which pictures their supply chain responsibility. Cross docking is one lethal weapon that was used by Wal-Mart in their SCM.

Cross-docking is one of the techniques used by Wal-Mart. It means there is no unnecessary storage or little storage in between the loading and unloading of goods so that customer can enjoy the quality of the goods by first hand. Wal-Mart have logistics infrastructure which is very fast transportation system wherein the distribution centers are being serviced. Wal-Mart assured that their drivers are capable of doing their jobs accordingly and do not cause unnecessary delays that can hamper the efficiency of the distribution operations. To deliver it on time, the coordinators give information to the driver the expected time of arrival or delivery of the goods.

Point Of Sale: Information sharing is one of the most important things when it comes to SCM. P&G with its Pampers requested Wal-Mart to share its point of sale so that it could predict its demand more or less and work on the information to bring in efficiency. When Wal-Mart shared this information P&G could plan in advance and it with its efficient supply chain management could supply pampers to Wal-Mart on time.

Related posts:

• Case Study: How Walmart Enhances Supply Chain Management with ERP Initiatives?
• Case Study: Zara’s Supply Chain Success Story
• Case Study of Cisco: Transformation of Entire Supply Chain into an Extended Enterprise System
• Global Supply Chain Management – Drivers and Activities of Global Supply Chain
• Case Study: Inventory Management Practices at Walmart
• Supply Chain Management Processes
• Introduction to Supply Chain Management (SCM)
• Green and Sustainable Supply Chain Management
• Postponement Strategy in Supply Chain Management
• Importance of Customer Service in Supply Chain Management

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

The Secret to Managing the Walmart Supply Chain, One of the Most Effective Supply Chains in the World

Holding $32 billion in inventory, Walmart’s supply chain is often touted as one of the most effective in the world and a major contributor to the organization’s operational success. Though Amazon is now the world’s largest retailer , Walmart remains a significant challenger in second place and has been known to outmaneuver Amazon in terms of supply-chain strategy .

Walmart’s mission is to help people save money and live better. In practical terms, this means seeking out more efficient supply chain strategies so savings can be passed along to the customer.

Data Sharing

Walmart shares inventory data with suppliers to maintain better stock levels. Suppliers use this data to form more accurate forecasts and prepare more effectively to meet the retail giant’s needs.

The relationship between Walmart and Proctor and Gamble (P&G) is a great example of how the company has been able to leverage data-sharing to create efficiencies. Walmart has set up an automated re-ordering system that uses satellite communication to tell P&G’s portfolio of companies when an item is needed. The item is then delivered to a distribution center or the store in need.

Bargaining Power

Walmart deals directly with manufacturers without any need for a supply-chain middleman. As the world’s second-largest retailer, the company wields enormous bargaining power and can demand lower wholesale prices from suppliers. These savings are then passed onto customers as part of Walmart’s  Every Day Low Price guarantee. Walmart makes up for its low prices and smaller margins with its sheer volume of sales .

The company has strict policies in place to ensure suppliers deliver in full on time (DIFOT), charging vendors 3% of the cost of goods if deliveries aren’t made as expected.

Warehousing Efficiency

Walmart uses a cross-docking system whereby most freight that enters its distribution centers goes onto conveyor belts that lead directly to trailers being loaded for individual stores. This reduces warehouse space requirements.

Walmart uses a consolidation system that allows large shipments of products in one region to be broken down and dispersed throughout the distribution centers across the company. This ensures fuller truckloads to cut down transportation costs.

Walmart has a long history of leveraging technology to improve operations. Some of the technology implemented in recent years includes:

• RFID tracking.
• Smart tags that allow store employees to better track inventory.
• A centralized database that houses all inventory information.
• Retail Link database to improve communication with suppliers and forecasting .
• My Productivity App for store managers to minimize backroom tasks.
• Innovative patent filings including smart shopping carts, electronic imaging devices that sense when inventory levels are dropping, and in-store customer assistance drones.

What’s Next for Walmart?

E-commerce boom and ship-from-store.

Walmart has increased its ship-from-store capacity to handle the e-commerce boom . Walmart’s online sales have jumped 25% year-on-year due to the COVID-19 pandemic.    

“Ship from store” means using stores themselves as warehouses for online sales. Walmart has a clear advantage over Amazon with nearly 5000 stores in 49 states. Shipping costs are low because 90% of Americans live within 10 miles of a Walmart store. 

Improved Sustainability

Walmart’s Sustainability Hub has not only committed to reducing direct greenhouse emissions but also to slash the emissions created by the company’s supply chain. The Project Gigaton initiative aims to prevent one billion metric tons of greenhouse gases from Walmart’s global supply chain from entering the atmosphere by 2030.

Walmart is currently on track to reach that goal . We can expect to see increased use of renewable energy sources and recycling programs to reduce waste.

Tech Savvy Warehouses

Walmart is already in the process of building futuristic warehouses and consolidation centers that can move more volume with fewer workers. Technology includes automated item identification and self-driving delivery vehicles. It is likely that Walmart will also upgrade existing facilities with these technological improvements.

2 LEGO Removes Oil from Blocks: All About LEGO Manufacturing

3 The Complete List of Nestlé Brands

4 The Complete List of Kraft Heinz Brands

5 10 Space Companies Changing Aerospace

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

How Walmart Canada Uses Blockchain to Solve Supply-Chain Challenges

• Kate Vitasek,
• John Bayliss,
• Loudon Owen,
• Neeraj Srivastava

The system has drastically reduced payment disputes with freight carriers.

Walmart Canada applied blockchain to solve a common logistics nightmare: payment disputes with its 70 third-party freight carriers. To solve the problem it built a blockchain network. The system has not only virtually eliminated the payments problem; it also has led to significant operational efficiencies. This article offers five lessons on how to create a blockchain network for improving business processes.

Walmart has long been known as a leader in supply chain management. However, its prowess could not insulate it from a problem plaguing the transportation industry for decades: vast data discrepancies in the invoice and payment process for freight carriers, which required costly reconciliation efforts and caused long payment delays. Then Walmart Canada pioneered a solution: It employed blockchain, a distributed-ledger technology, to create an automated system for managing invoices from and payments to its 70 third-party freight carriers.

• Kate Vitasek is a member of the graduate and executive education faculty of the University of Tennessee, Knoxville’s Haslam College of Business, where she leads the university’s research and courses on highly collaborative win-win “vested” strategic business relationships.
• JB John Bayliss is an executive vice president and the chief transformation officer at Walmart Canada.
• LO Loudon Owen is chief executive officer of DLT Labs, a next-generation data management software company specializing in supply chain management and financial services.
• NS Neeraj Srivastava is a founder and the chief technology officer of DLT Labs, a next-generation data management software company specializing in supply chain management and financial services.

Partner Center

Hyperledger Web3j in 2024: Updates for Blockchain Developers > Read on

How Walmart brought unprecedented transparency to the food supply chain with Hyperledger Fabric

Download Printable Case Study

When an outbreak of a food-borne disease happens, it can take days, if not weeks, to find its source. Better traceability could help save lives by allowing companies to act faster and protect the livelihoods of farmers by only discarding produce from the affected farms.

Walmart thought that blockchain technology might be a good fit for the decentralized food supply ecosystem. To test this hypothesis, the company created a food traceability system based on Hyperledger Fabric. Walmart, together with its technology partner IBM, ran two proof of concept projects to test the system. One project was about tracing mangos sold in Walmart’s US stores and the other aimed to trace pork sold in its China stores.

The Hyperledger Fabric blockchain-based food traceability system built for the two products worked. For pork in China, it allowed uploading certificates of authenticity to the blockchain, bringing more trust to a system where that used to be a serious issue. And for mangoes in the US, the time needed to trace their provenance went from 7 days to… 2.2 seconds!

Walmart can now trace the origin of over 25 products from 5 different suppliers using a system powered by Hyperledger Fabric. The company plans to roll out the system to more products and categories in the near future. In fact, it has recently   announced   that it will start requiring all of its suppliers of fresh leafy greens (like salad and spinach) to trace their products using the system.

Tracking food for better safety

We rarely think about it, but the modern food system is a marvel. We have access to fresh produce all year round, buy exotic food from all around the world, and have more variety than our ancestors could ever dream of.

Our food is generally safe to eat. Still, occasionally it can make us sick. Last year in 2018 there were at least   18 reported outbreaks   of foodborne illnesses in the USA, including the E. coli found in romaine lettuce.

“People talk about the food supply chain,” says Frank Yiannas, former Vice President of Food Safety at Walmart. “But it is not actually a chain, it’s a complex network.” When an outbreak of a food-borne disease does happen, it can take days, if not weeks, to find its source. If investigators cannot point to a specific farm or farms, the government usually advises consumers to avoid products grown in a certain area (as   happened   with romaine lettuce from Yuma, Arizona), or even to avoid the type of product altogether. According to   Walmart , millions of bags or heads of lettuce had to be removed, and consumers lost confidence in romaine lettuce altogether. Better traceability could help save lives by allowing companies to act faster and protect the livelihoods of farmers by only discarding produce from the affected farms.

For this reason, Walmart has always been interested in enhancing transparency and traceability in the food system. Mr. Yiannas explains that the company has tried many systems and approaches to solving this problem over the years; none had brought them the kind of results they were after. When Yiannas first heard about blockchain and the idea of using it to trace food in the supply chain, he was skeptical.

From blockchain skeptic to believer

Karl Bedwell, Senior Director at Walmart Technology, explains, “Creating a (traceability) system for the entire food supply ecosystem has been a challenge for years, and no one had figured it out. We thought that blockchain technology might be a good fit for this problem, because of its focus on trust, immutability, and transparency.”

Bedwell and his team introduced Yiannas to the possibilities of blockchain technologies for enterprise solutions. Says Yiannas, “I really had an “aha” moment once I deeply understood the technology. I had been hesitant about creating yet another traceability system – the ones we had tried in the past never scaled. Now I understand that was because they were centralized databases. Blockchain, with its decentralized, shared ledger felt like it was made for the food system!”

With the business interest in blockchain technology confirmed, Walmart started working on two proof of concept (POC) projects with their technology partner IBM.

Choosing the blockchain

Walmart Technology considered several blockchain technologies but ultimately decided to go for Hyperledger Fabric.

“IBM brought Hyperledger Fabric to us. We looked into Ethereum, Burrow project and others. Ultimately, we decided to go with Hyperledger Fabric because it met most of our needs for a blockchain technology,” Bedwell said. “We felt that it best met our needs. It is an enterprise-grade blockchain technology, and it is permissioned.”

The team also found it important to work with an open-source, vendor-neutral blockchain. Since the food traceability system was meant to be used by many parties, including Walmart’s suppliers and even direct competitors, the technology ecosystem underlying it needed to be open.

Hyperledger Fabric is a blockchain framework implementation and one of the Hyperledger projects hosted by The Linux Foundation. Intended as a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to be plug-and-play. Hyperledger Fabric leverages container technology to host smart contracts called “chaincode” that comprise the application logic of the system.

For mangoes in the US, the time needed to trace their provenance went from 7 days to… 2.2 seconds!

In October 2016, Walmart, together with its technology partner IBM, announced the two projects: one was about tracing the origin of mangos sold in Walmart’s US stores and the other aimed to trace pork sold in its China stores.

For the mango POC, Yiannas started by creating a benchmark. He bought a packet of sliced mangoes at a nearby Walmart store and asked his team to identify which farm they had come from – as fast as possible. The team started calling and emailing distributors and suppliers, and eventually had an answer almost seven days later. This was not bad by industry standards, but Walmart wanted to do much better. So together with IBM, they got to work building a blockchain-based food traceability system.

The Walmart Technology team looked at their own processes as well as those of their suppliers to design the application. Archana Sristy, Director of Engineering at Walmart, explains, “[Our team at Walmart Technology] co-led the core design and setup of the application (with IBM), as well as built the integration with the enterprise systems. We worked with GS1 (the standards authority in barcodes and labeling) to define the data attributes for upload to the blockchain. IBM wrote the chaincode.

Suppliers used new labels and uploaded their data through a web-based interface.

From POC to production, from Walmart to IBM Food Trust

Once Walmart saw that the system worked, they wanted to expand it – and not just within Walmart. Given the interconnected nature of the food system and the company’s negative experience with closed systems, Walmart wanted to make sure that this time, many players were involved. Says Yiannas, “(Walmart’s) CEO was reaching out to other food companies the next day, including other retailers!” Wal-Mart collaborated with IBM and others to set up   IBM Food Trust , involving prominent players in the food industry, like Nestle and Unilever.

The Walmart team had a positive experience working with Hyperledger. “Every question that we had, it looked like the Hyperledger community had already been working on addressing that,” says Bedwell. For example, in building a truly open system, the Walmart team worried about interoperability with other blockchain-based traceability systems. And as if in answer to their concern, Hyperledger recently   announced   its collaboration with Ethereum. He adds, “It seems that the Hyperledger community is addressing everything that enterprises would be concerned about.”

Says Yiannas, “I really had an ‘aha’ moment once I deeply understood the technology. I had been hesitant about creating yet another traceability system – the ones we had tried in the past never scaled. Now I understand that was because they were centralized databases. Blockchain, with its decentralized, shared ledger felt like it was made for the food system!”

Tips from Frank Yiannas on implementing your blockchain project

1. Let the business lead the project , not the IT department.

2. Understand the business case deeply.  Make sure that you know and can explain why blockchain is the right solution.

3.   In a large organization, you need to   bring a lot of people along.  Think about all the different departments that will be affected by the projects. Meet with these stakeholders early on and explain what you are trying to do.

4. Have your soundbite!   People don’t get inspired by technology, but by a vision. For us, it was the story of mangoes – 7 days vs. 2.2 seconds with blockchain.

5. Participate in forums   that allow you to speak to other companies who have launched similar projects successfully. It helps if you help an expert in the field who’s willing to come in and educate fellow members.

6. Start small, with a POC.  And when you’ve run your pilots and are convinced about the business value, go ahead and scale. After all, Yiannas says, “Walmart is a pretty big lab! If it can scale at Walmart, it can scale anywhere!”

Looking forward

Walmart now traces over 25 products from 5 different suppliers using IBM Blockchain which is built atop Hyperledger Fabric. The products include produce such as mangoes, strawberries and leafy greens; meat and poultry such as chicken and pork; dairy such as yogurt and almond milk; and even multi-ingredient products such as packaged salads and baby foods.

Yiannas says of the impact, “This solution allows us to see the whole chain in seconds! We can take a jar of baby food and see where it was manufactured and trace back all the ingredients to the farms!”

Walmart plans to roll out the system to more products and categories in the near future in cooperation with IBM Food Trust.. In fact, the company recently   announced   that it will start requiring all of its suppliers of fresh leafy greens (like salad and spinach) to trace their products using the system.

“Using the IBM Food Trust network that relies on blockchain technology, we have shown that we can reduce the amount of time it takes to track a food item from a Walmart Store back to source in seconds, as compared to days or sometimes weeks,” Walmart wrote in a   letter   to suppliers.

Beyond tracing the products’ journey, the company might start tracing other data, like sustainability.

About Walmart

Walmart Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices. Each week, nearly 265 million customers and members visit our more than 11,200 stores under 55 banners in 27 countries and eCommerce websites. With fiscal year 2018 revenue of $500.3 billion, Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://corporate.walmart.com .

About Hyperledger

Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration including leaders in banking, finance, Internet of Things, manufacturing, supply chain, and technology. The Linux Foundation hosts Hyperledger under the foundation. To learn more, visit hyperledger.org

Sign up for the monthly Hyperledger Horizon & /dev/weekly newsletters 

By signing up, you acknowledge that your information is subject to The Linux Foundation's Privacy Policy

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

A Case Study of Wal-Mart's "Green" Supply Chain Management

Related Papers

Paper to be presented at conference on Global …

Barry Eidlin

Canadian Journal of Economics/Revue canadienne d'économique

Amanda Pyman

Patrick Hayden

Neeraj Anand

Supply Chain Management has emerged as one of the major key area for companies to gain competitive advantage in the market. It has been identified to have a significant impact on the natural environment and has resulted in a growing need for integrating environmental thinking into supply chain management and its processes, hence the companies are getting more attention as a sustainable development mode for modern enterprises, increasingly a part of Corporate Social Responsibility (CSR) initiatives and investing to achieve greener supply chain which can be waste eliminating, productivity improving and resource saving. This paper study the Green supply chain practices and green initiatives by an American multinational retailer Wal-Mart (World's largest public corporation & retailer in the world), who has strengthened their supply chain management and coordination across the supply chain elements such as strategic sourcing, logistics management, supply chain information systems, an...

Walmart Policy and Sustainability Challenges

Oketch Michael

Global companies' primary goals are global expansion, sustainability, and considerable market. Sam Walton founded the US retail giant Walmart in 1962. It manages widespread networks of discounted retail warehouses and stores (Williams, 2019). In 2022, Walmart took first in Forbes's Top 500 Fortune companies in market capitalization (Struckell et al., 2022). It is in several nations, including the USA, Argentina, Canada, and Brazil (Williams, 2019). For an extended period, Walmart has endured criticism for its dismal employee treatment, which has been the primary reason for global complaints. This international attention has hindered its global expansion, such as the failure t penetrate the German market. Several factors, including the company's supposedly poor pricing policies and low wages, have contributed to Walmart's rising negative brand image. Despite the company's critics, economists maintain that Walmart has a net beneficial impact on the global economy because it is the largest employer worldwide, with about 2.2 million employees (Alshahari, 2021). The company should re-evaluate its policy to curb growing competition and consumer-changing behavior. Policy and operational adjustment provide a solution to Walmart achieving its sustainability goals and retaining its market share.

Journal of Business Case Studies

Bahaudin Mujtaba

Marisa Avila

Seyad Subuhan

Rudresh Pandey

Walmart was established by Sam Walton and beginning as a small discount retailer in Rogers, Arkansas in 1962. This paper investigates how Walmart become popular and successful in retail business around the world and how they perform well in sales. This study found that some factors were leading to the success of Walmart. Since then, Walmart has become the most trusted retailer that creates value for business and society.

Murray Rice

This research aims to provide insight regarding Wal-Mart’s retail development strategy in its expansion across the continental United States. The study examines store location patterns and relationships between Wal-Mart’s store and distribution center locations and markets. The study shows that, although radial expansion is broadly characteristic of the dense store patterns that have been well established for Wal-Mart at the national level, expansion patterns at the regional level are consistent with a selective process based on factors other than store density. These results provide a new perspective on Wal-Mart’s expansion, providing insights of value to retail practitioners and local government. Key Words: distribution center location, location intelligence, retail chain expansion, store location, Wal-Mart.

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

RELATED PAPERS

Annual Review of Sociology

Michelle Christian

Astha Singh

New Labor Forum

Jake Alimahomed-Wilson

Gene Garcia

Thomas J Adams

Pranjali Galgali

Review of Capital as Power

Joseph Baines

Journal of Business Research

Sandra Mottner

casestudies journal , K. Fatima

Vishal Singh

Manu Vincent

Russian Journal of Linguistics

Lucia Abbamonte

leigh sparks

Philip Kamenov

Nana Serwaa Ofori-Nyarko

Environment and Planning A

alan Hallsworth

Urban/Regional

Michael Hicks

bryson kiptum

Journal of Retailing

Patrick Kaufmann

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

Digital Transformation at Walmart: A case study.

Walmart (NYSE: WMT), the largest physical retailer based in the United States, has achieved enormous growth over the years through its EDLP pricing strategy and a customer-friendly brand image. In recent years, the company has focused on digitalization to grow sales and improve customer service. Its e-commerce sales have continued to strengthen worldwide.

Physical retailers in the US are turning to digitalization to serve their customers better, whose lifestyles are now heavily influenced by digital technology. Walmart acquired the Indian online retail brand Flipkart in 2018. Since then, it has also made a significant investment in its US e-commerce infrastructure.

While investing in technology is essential for retailers to serve their customers more efficiently, Amazon’s growing influence in the retail industry has also proved to be a key driver of digitalization across the US-based retail brands. The need to focus on digital technology was never more highlighted than during the pandemic. Customer behavior changed profoundly with the spread of the Covid-19 pandemic . Customers mostly switched to online shopping during lockdowns. These changes will last longer since the impact on people’s lifestyle has been profound. 

Walmart has been investing in e-commerce over the past several years and is reaping its benefits now. However, Walmart’s focus is not just on e-commerce but on a complete digital transformation that drives superior associate performance while driving higher customer satisfaction also apart from stronger financial returns. Cloud technology is driving similar transformations across other retailers too. Walmart is leveraging cloud technology to strengthen its competitive position and accelerate its growth momentum.

Back in 2018, Walmart partnered with Microsoft to accelerate its cloud journey and more expeditiously deliver on changing customer expectations. Walmart’s digital transformation has also come in the face of growing competitive pressure from the e-commerce giant Amazon. From its online store to supply chain and logistics, digital technology, AI, IoT, and Machine Learning are driving rapid changes. Walmart’s continuous growth in the future depends on its ability to leverage technology to swiftly respond to the changing market scenario and customers’ purchasing habits.

Table of Contents

Factors that drove rapid digitalization at Walmart.

Walmart is the largest physical retailer in the United States. The company has been enjoying enormous growth over the last several years. However, the retail landscape in the United States is changing swiftly.  Five main factors drove digitalization at Walmart: 

• Demographic changes in the US population.
• Changing consumer habits and expectations.
• Rise of mobile computing.
• Need for more speed and efficiency.
• Growing challenge from Amazon

Demographic changes and other changes like the rise of e-commerce has also changed how people shopped. Since the retail landscape is changing, Walmart’s traditional operating model was insufficient to serve the customers’ evolving needs in the US. Millennials are now the largest segment of the US adult population (Pew Research, 2020). 

They are also the most important customer segment for retail brands like Walmart. The expectations of the millennial generation are very different from the  Baby Boomers. The millennials are tech savvier and live highly digital lives. They like to shop online for a large range of products and services. Apart from their general needs, these people also depend on online channels for their daily entertainment and various other needs like music and fashion.

The rise of social media and the millennials’ consumption habits all required the businesses that wanted to serve them to adopt a better model driven by technology. Walmart’s competitive moat lay in its pricing strategy mainly apart from the large array of products it sells. However, these things are no longer sufficient to cater to the millennial generation’s expectations fully. Walmart needed to transition to a better model that could handle things with higher speed and efficiency.

 Both these things are important for maximizing customer satisfaction in an era driven by computers, the internet, data and analytics. The dependence of retail brands on technology was also destined to grow because of the growing use of mobile computing. The need for higher mobility also drove higher investment into technology. Digital technology has altered the buying habits of the customers, who like to compare prices on their smartphones before they go for the final purchase.

Lower prices attract the millennials but there are more factors they consider before making a purchase. Customer convenience matters more than ever to win in a highly competitive retail landscape. It affects demand and sales. However, to grow the level of customer convenience requires a focus on digital technology which saves time and also helps reduce costs.

Another important factor that drove Walmart towards rapid digitalization was the rise of the e-commerce giant Amazon. Prior to that, Walmart was the undisputed leader in the US retail sector. Amazon is right next to Walmart on the Fortune 500 list, where the physical retail giant has managed to remain at the top for several years. In 2020, Walmart is on the top of the list for the eighth time (Fortune, 2020).

In terms of e-commerce sales in the US, Walmart is just next to Amazon (despite the substantial gap). There is still a substantial difference in the market shares of the two in the e-commerce industry but Walmart is trying to strengthen its position through continuous investment in digital technology. Amazon poses a major challenge before the other  US-based retailers whose continuous growth now depends on how well they can serve their tech-savvy consumers.

The drive towards a highly digital future has accelerated with the pandemic. People’s buying habits are being reshaped, and consumers will likely depend more on online shopping in the future. Walmart needed to take Amazon’s challenge since, over time, Walmart’s influence could substantially reduce due to the growth in Amazon’s, which is aggressively demanding lower prices from its sellers using its clout in e-commerce. Leveraging its existing competitive strengths for superior results was only possible if Walmart invested in digitalization.

Supply chain digitalization at Walmart

Walmart has focused on higher digitalization in nearly all areas of its business system. From the supply chain to sales, customer service, marketing, and store operations, the company has steadily been investing in digitalization to grow its operational efficiency and cost-efficiency. Walmart’s supply chain digitalization was an important pillar of its omnichannel strategy.

Digitalizing the supply chain was the first important step towards making its omnichannel strategy a success. To really gain from its investment in technology and digitalization, Walmart first needed to leverage the strength of its supply chain. A highly optimized supply chain is a critical source of competitive advantage for the retail brand. It has helped Walmart maintain consistently lower prices and could be further optimized using digital tools to gain higher cost-efficiency and derive better employee performance. 

Moreover, the traditional supply chain management model was insufficient to serve the evolving needs of US customers. Digitalizing the supply chain has enabled the retail giant to pursue its omnichannel strategy with a higher success rate. Walmart is leveraging digital technology to share information across the supply chain, and for tracking and managing inventory across its stores and warehouses in the United States.

An efficient and modernized supply chain has played a critical role in helping the company gain higher cost-efficiency. Walmart’s competitive position as the leading physical retailer in the US has strengthened with growing digitalization across its supply chain, which also helped it access a large pool of data. It gains valuable insights from the data to understand consumer behavior. Walmart’s large supply chain produces tons of data daily used to make important inventory management decisions. It also helped the company grow its supply chain resilience to serve customer needs better during a crisis like a hurricane or in the event of a pandemic like Coronavirus.

Walmart also secured its supply chain against fast-changing market conditions by leveraging data and analytics. In 2017, it invested in Data Cafe, one of the largest private clouds in the world to grow its data and analytics capabilities and process more than 40 Petabytes of data being generated from internal and external sources daily (Marr, 2017). Walmart’s data cafe is its analytics hub located at its headquarters in Bentonville, Arkansas. Data Cafe allows Walmart to model, manipulate, and visualize recent transactional data, it collects from more than 200 internal and external streams.

It enabled faster decision making at Walmart and provided solutions to several critical supply chain management related problems that could otherwise take a lot longer to answer. Walmart made Data Cafe available to its suppliers so they could gain free insights into customer demand and manage their supply and inventory better. 

In 2018, Walmart introduced its Connected Content Provider Program, whose main focus was to help suppliers scale content to Walmart’s catalog and other retailers (Ogura, 2018). The program aimed to bring harmony between retailers, suppliers, and content. With its syndication partners like Salsify, the company aimed to help its suppliers deliver content with higher speed and agility. Suppose a customer comes to Walmart looking for a particular product that is not available at the time. Walmart looks up its syndication providers like ‘Salsify’ to find which supplier has the product and then arranges for home delivery. 

Walmart is also using other latest technologies like AI and Blockchain to track inventory down its supply chain (Aitken, 2017). The retail brand partnered with IBM to leverage blockchain technology and leverage and track food products’ movement across its supply chain to ensure their quality and authenticity. The use of IBM blockchain allowed Walmart to track the movement of goods in its supply chain faster. Something that could take days or weeks to trace using the traditional tracking methods was now possible in seconds. Blockchain -based decentralized ledgers have simplified the process of tracking goods in Walmart’s supply chain.

Digital Transformation through Cloud Technology

Cloud technology is also driving rapid transformation across the retail landscape. Retailers turn to cloud technologies to grow their efficiency and transform a large pool of data they generate daily into actionable insights. 

In 2018, when Walmart was already using a large set of Microsoft services for critical workloads, the company announced a strategic five-year partnership with the cloud leader to make its digital transformation possible. This partnership with Microsoft allowed Walmart to leverage machine learning, artificial intelligence, and data platform solutions for a wide range of external customer-facing services and internal business applications (Walmart, 2018).

Walmart aimed to transform digitally, bring innovations that saved its customers time and money, and change how work was carried out inside the organization for increased productivity. To achieve its target, the company selected a full range of Microsoft cloud solutions that included Microsoft Azure and Microsoft 365. The main advantages of using cloud technology for Walmart were going to be as follows:

• Leverage the capacity of Microsoft’s enormous compute capacity.
• Ability to manage workloads seamlessly in an elastic environment.
• Bring innovations faster through the new toolsets
• Drive costs lower through a cloud native environment.

From reducing energy consumption in the Walmart stores to managing logistics, the company uses cloud technology to make its work processes more efficient and save time and money. The company uses machine learning to route thousands of trucks in its supply chain. Apart from that, Walmart gained access to various tools that allow its associates to improve their productivity and collaborate on projects. Tools like Microsoft workplace analytics, Microsoft Stream, and Microsoft One Drive allow associates to collaborate, save time, and work better.

Walmart owned Jet.com also uses cloud technologies heavily to serve customers efficiently. It has built an innovative eCommerce engine on the Azure cloud platform in less than 12 months. The Jet.com platform is composed of open-source software, Visual F#, and Azure Platform as a service (PaaS) like Azure Cosmos DB. The next-generation architecture of Jet.com is built for speed. It uses Panther, Azure’s next-generation inventory processing system to make its service faster, smarter, and more efficient. 

“Within just a few weeks, a prototype based on Service Fabric proved that Panther could support the massive scale and the functionality Jet needed plus high availability and blazing fast performance across multiple regions. But what really made Panther possible was adding Azure Cosmos DB for the event store. Coupling an event-sourcing pattern with a microservices-based architecture gave them the flexibility they needed to keep improving Jet.com and delight their customers.” (Microsoft, 2020)

Sources Used:

Pew Research. (2020, April 28). Millennials overtake Baby Boomers as America’s largest generation . PewResearch. Retrieved 2020, from https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

Fortune. (2020). Fortune 500 . Fortune. Retrieved 2020, from https://fortune.com/fortune500/2020/search/

Marr, B. (2017). Really Big Data At Walmart: Real-Time Insights From Their 40+ Petabyte Data Cloud . Forbes. Retrieved 2020, from https://www.forbes.com/sites/bernardmarr/2017/01/23/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/?sh=1c6727f26c10

Ogura, F. (2018, September). Introducing the Connected Content Partner Program . LinkedIn. Retrieved 2020, from https://www.linkedin.com/pulse/introducing-connected-content-partner-program-frank-ogura/

Salsify. (2018). Salsify Selected By Walmart To Join Its Connected Content Partner Program . Salsify. Retrieved 2020, from

Aitken, R. (2017). IBM Forges Blockchain Collaboration With Nestlé & Walmart In Global Food Safety . Forbes. Retrieved 2020, from https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/?sh=66710fac3d36

Microsoft. (2020, June). Jet.com powers innovative e-commerce engine on Azure in less than 12 months . Microsoft Azure. Retrieved 2020, from https://customers.microsoft.com/en-in/story/822088-jet-com-powers-innovative-e-commerce-engine-on-azure-in-less-than-12-months

Walmart. (2018, July). Walmart establishes strategic partnership with Microsoft to further accelerate digital innovation in retail . Walmart Newsroom. Retrieved 2020, from https://corporate.walmart.com/newsroom/2018/07/17/walmart-establishes-strategic-partnership-with-microsoft-to-further-accelerate-digital-innovation-in-retail

Abhijeet Pratap is a passionate blogger with seven years of experience in the field. Specializing in business management and digital marketing, he has developed a keen understanding of the intricacies of these domains. Through his insightful articles, Abhijeet shares his knowledge, helping readers navigate the complexities of modern business landscapes and digital strategies.

• Café con Logística
• Episode Highlights
• Global Trade
• Industry Trends
• Logistics Leaders for T1D Cure Team
• Regulations
• Transportation Management
• Descartes Channel
• E2open Channel
• Uber Freight Channel
• Infor Nexus Channel
• Transporeon Channel
• Manhattan Associates Channel
• JBF Consulting Channel
• Loadsmart Channel
• Parcel Perform Channel

Negotiating With A Chatbot: A Walmart Procurement Case Study

• By Adrian Gonzalez

As one Indago supply chain executive put it, “I look forward to utilizing AI in the future for more agile decision making with the understanding that it is a ‘crawl, walk, run’ journey, as AI further evolves.”

Software vendors, of course, are investing heavily in this area — both in research and development and in marketing (no press release is complete these days without AI and machine learning being mentioned). As Liz Young wrote in a recent Wall Street Journal article , “Big software providers including Blue Yonder Group Inc., SAP SE and Manhattan Associates Inc. have research programs underway looking at how the tech known as generative AI can improve forecasting, procurement, inventory management and even the nuts and bolts of shipping decisions.”

As is always the case with emerging technologies, the hype around AI far exceeds current reality. But this gap will close over time, and probably faster than many of us expect.

An early case study of how AI (and chatbots in particular) can be used in supply chain management is Walmart’s use of the technology in procurement, as detailed in a November 2022 Harvard Business Review article (“ How Walmart Automated Supplier Negotiations ”). Here’s an excerpt of the summary:

It’s an age-old problem in procurement: Corporate buyers lack the time to negotiate fully with all suppliers. Historically this has left untapped value on the table for both buyers and suppliers. To address this challenge, Walmart deployed AI-powered negotiations software with a text-based interface (i.e., a chatbot) to connect with suppliers. So far, the chatbot is negotiating and closing agreements with 68% of suppliers approached, with each side gaining something it values.

According to the article, Walmart conducted a pilot, “which lasted three months, included a variety of stakeholders — 89 suppliers, five buyers, and representatives from Walmart Canada’s finance, treasury, and legal departments — and Pactum , the company that had created the underlying AI technology.” Walmart focused the pilot on “tail-end suppliers” and “goods not for resale” — that is, on products not sold to consumers (e.g., fleet services, carts, and other equipment used in retail stores) procured from the tail end of its supplier base that “have signed agreements with cookie-cutter terms that are often not negotiated.”

You can read the article for all the details, but here are the net results:

The chatbot was successful in reaching an agreement with 64% of [the 100 tail-end suppliers invited to participate] — well above the 20% target — and with an average negotiation turnaround of 11 days. Walmart gained, on average, 1.5% in savings on the spend negotiated and an extension of payment terms to an average of 35 days.

Since this pilot was completed, Walmart has expanded its use of the solution to other categories such as “route rate negotiations for transportation and some goods for resale. Some mid-tier suppliers now use the system, and the chatbot is multilingual.”

Where is this leading to? Here’s how the authors of the HBR paper see it:

One can see the trajectory: As terms and conditions become more algorithmic, fewer suppliers and parts of spend pools will go unmanaged. Procurement professionals will focus less on negotiating agreements and more on strategic relationships, exceptions, and continuous improvement.

Will this technology ultimately be used beyond “tail-end suppliers” — that is, used with more strategic suppliers down the road too? It’s not out of the question considering that Walmart has already expanded the scope to mid-tier suppliers. What happens when suppliers start using chatbots too, resulting in bot-to-bot negotiations?

We already have a trust problem in supply chain management . Will this technology improve trust between trading partners or erode it further? If the latter, will the negative consequences outweigh the benefits?

Do these chatbots have names? Families? Hobbies?

I fear that we focus too much on what we gain when we remove humans from a process and not enough on what we lose.

• chatbots , Indago , Pactum , procurement , supplier negotiations , trust , Walmart

Subscribe to Our YouTube Channel

• Above the Fold (18)
• April Fools (3)
• Business Advice (17)
• Business Intelligence (35)
• Case Study (34)
• Cloud/SaaS (71)
• Editor's Pick (85)
• Educator Perspective (3)
• Episode Highlights (339)
• Executive Perspective (10)
• Global Trade (153)
• Global Trade Management (78)
• Guest Commentary (442)
• Guest Commentary – 3Gtms (14)
• Guest Commentary – Amber Road (11)
• Guest Commentary – AXIT (4)
• Guest Commentary – BluJay Solutions (3)
• Guest Commentary – Blume Global (10)
• Guest Commentary – Breakthrough (5)
• Guest Commentary – CH Robinson (31)
• Guest Commentary – ClearMetal (3)
• Guest Commentary – CLX Logistics (8)
• Guest Commentary – Command Alkon (6)
• Guest Commentary – Descartes (32)
• Guest Commentary – E2open (49)
• Guest Commentary – Elemica (25)
• Guest Commentary – Emerge (4)
• Guest Commentary – enVista (12)
• Guest Commentary – GEODIS (9)
• Guest Commentary – Grand Junction (4)
• Guest Commentary – GT Nexus (8)
• Guest Commentary – Infor (2)
• Guest Commentary – JBF Consulting (7)
• Guest Commentary – JDA Software (4)
• Guest Commentary – Kenco Group (14)
• Guest Commentary – Kewill (10)
• Guest Commentary – Kuebix (10)
• Guest Commentary – LeanLogistics (13)
• Guest Commentary – LEGACY SCS (2)
• Guest Commentary – LLamasoft (8)
• Guest Commentary – Loadsmart (1)
• Guest Commentary – Manhattan Associates (7)
• Guest Commentary – MercuryGate (26)
• Guest Commentary – MP Objects (11)
• Guest Commentary – Parcel Perform (2)
• Guest Commentary – PINC Solutions (13)
• Guest Commentary – Quintiq (5)
• Guest Commentary – ReverseLogix (1)
• Guest Commentary – RouteSmart (8)
• Guest Commentary – Ryder (4)
• Guest Commentary – SAP (4)
• Guest Commentary – Tive (1)
• Guest Commentary – Transplace (48)
• Guest Commentary – Transportation Insight (7)
• Guest Commentary – UltraShipTMS (9)
• Guest Commentary- Command Alkon (1)
• Indago (108)
• Industry Trends (545)
• IT Trends (9)
• Just for Fun (33)
• Latin America (2)
• Leadership Development (57)
• Life Stories (28)
• Mergers/Acquisitions (110)
• Outsourcing (36)
• Packaging (6)
• Past Episode (391)
• Past Episode – 3Gtms (13)
• Past Episode – Amber Road (8)
• Past Episode – Axit (4)
• Past Episode – BluJay Solutions (21)
• Past Episode – Blume Global (8)
• Past Episode – Breakthrough (4)
• Past Episode – CH Robinson (29)
• Past Episode – ClearMetal (4)
• Past Episode – CLX Logistics (4)
• Past Episode – Command Alkon (5)
• Past Episode – Descartes (24)
• Past Episode – E2open (34)
• Past Episode – Elemica (18)
• Past Episode – Emerge (6)
• Past Episode – enVista (12)
• Past Episode – GEODIS (7)
• Past Episode – GT Nexus (8)
• Past Episode – Infor (1)
• Past Episode – JDA Software (6)
• Past Episode – Kenco Logistics (9)
• Past Episode – Kewill (8)
• Past Episode – LeanLogistics (12)
• Past Episode – LEGACY SCS (2)
• Past Episode – LLamasoft (4)
• Past Episode – MacroPoint (1)
• Past Episode – Manhattan Associates (5)
• Past Episode – MercuryGate (20)
• Past Episode – MP Objects (6)
• Past Episode – Nulogy (1)
• Past Episode – PINC Solutions (2)
• Past Episode – project44 (3)
• Past Episode – Quintiq (3)
• Past Episode – RouteSmart (4)
• Past Episode – Ryder (5)
• Past Episode – SAP (1)
• Past Episode – Transplace (29)
• Past Episode – Transporeon (1)
• Past Episode – Transportation Insight (3)
• Past Episode – TranzAct (3)
• Past Episode – Trucker Tools (19)
• Past Episode – UltraShipTMS (8)
• Quick Poll (1)
• Regulations (71)
• Research in Focus (11)
• Retail (80)
• Retail Trends (77)
• Robots (89)
• Social Media (32)
• Supply Chain & Logistics Books (6)
• Supply Chain & Logistics Trends (324)
• Supply Chain and Logistics Predictions (6)
• Supply Chain Risk Management (115)
• Supply Chain Technology Trends (368)
• Sustainability (40)
• Technology (391)
• Thanksgiving (1)
• This Week in News (537)
• Transportation Management (795)
• Transportation Management Systems (398)
• Uncategorized (7)
• Upcoming Episodes (1)
• Warehouse Management (41)
• Young Professionals (6)

Subscribe to Our Podcast

Trending posts.

• Walmart Launches Multichannel Logistics and Cross-Border Fulfillment Services
• Above the Fold: Supply Chain Logistics News (August 30, 2024)
• Supply Chain and Logistics Conferences to Attend in 2024
• Above the Fold: Supply Chain Logistics News (August 23, 2024)
• Walmart and IKEA: Drone Delivery vs. Drones in the Warehouse
• How Stressful Is Working in Supply Chain Management?

©2012-2024 Adelante SCM. All Rights Reserved. The content of Talking Logistics may not be reproduced or distributed without prior written approval. Please read our Terms of Use for more details.