This paper examines Walmart's supply chain management (SCM) practices and how they have contributed to the company's position as one of the world's leading retailers. The paper defines SCM and traces the key operational strategies Walmart employs, including highly automated distribution centers, computerized inventory systems, direct manufacturer procurement, and a proprietary satellite communication network. It also explores how technologies such as barcodes, hand-held computers, radio frequency networks, and the Retail Link system enable Walmart to monitor sales, replenish inventory, and minimize costs — ultimately allowing the company to offer consistently low prices to consumers.
This paper examines Walmart and how, over the years, the company has managed its supply chain operations. As one of the leading and most successful companies in the world — ranking first on the Fortune 500 in 2011 for the second consecutive year — Walmart's success can be attributed to its continued focus on customer needs and its relentless effort to reduce costs through efficient supply chain management practices.
Supply Chain Management (SCM) can be defined as the coordination of a network of interrelated businesses with the ultimate goal of providing products and services at the right time, to the right customers, and through the most efficient means available (Harland, 1996). Walmart has been widely commended for doing this exceptionally well. SCM can also be understood as the process by which a company designs, plans, executes, controls, and monitors supply chain activities with the objectives of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.
"Walmart has been proficient in delivering a vast range of products at the lowest costs in the shortest time possible. Its success is the result of having highly automated distribution centers, which radically reduce shipping costs and time while ensuring a steady and consistent flow of products to support the supply function" (Hanna et al., 2006). Another key factor in this success is the use of computerized inventory systems, which speed up checkout times and transaction recording. Walmart's decision to reduce purchasing costs — and thereby offer the best prices to its customers — has also been instrumental, largely achieved through procuring goods directly from manufacturers.
Walmart has also been able to replenish its goods and services more quickly than competitors, thanks in large part to its transport system. For instance, shipping costs for Walmart stand at approximately 3 percent, compared to 5 percent for competitors. Each distribution center is organized into different sections according to the quantity of goods received. Walmart is also a tough negotiator on prices, enabling it to sell products at lower prices than its rivals.
"Barcodes and computers streamline store operations"
"Retail Link and satellite systems enable inventory control"
Walmart has been able to achieve leadership status in the retail industry because of its efficient supply chain management practices. This success is largely attributed to the vision of its founder, Sam Walton, who focused on improving sales, reducing costs, adopting efficient distribution and logistics management systems, and embracing innovative information technology tools.
You’re 49% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.