Walmart Case Study: Half a Century of Supply Chain Management
Dr. John Wu
March 15, 2014
Table of Contents
Walmart Case Study: Half a Century of Supply Chain Management INTRODUCTION
Walmart dominates the retailing industry in terms of its sales revenue, its customer base, and its ability to drive down costs and deliver good value to its customers. After all, the world’s largest corporation, employing 1.8 million associates worldwide, takes pride in having received numerous accolades for its ability to continuously improve efficiency in the supply chain while meeting its corporate mandate of offering customers everyday low prices. Walmart demonstrates how a physical product retailer can create and leverage a data asset to achieve world-class supply chain efficiencies targeted primarily at driving down costs. BACKGROUND OF THE COMPANY
Sam Walton opened the firs Walmart in 1962 in Rogers, Arkansas with the foundation being that it would offer “The Lowest Prices Anytime, Anywhere” (Walmart Corporate, 2014c), and by 1967 it had over 24 stores and $12.7 million in sales. By 1969, the company was officially incorporated and offered an initial public offering to raise funds to build a distribution center in Bentonville, Arkansas (Johnson & Mark, 2013, p. 3). Walmart grew in large part by leveraging information systems to an extent never before seen in the retail industry. Technology tightly coordinates the Walmart value chain from tip to tail, while these systems also deliver a mineable data asset that is unmatched in U.S. retail. Tight inventory management is legendary at Walmart through its just-in-time techniques that allow the firm to boast one of the best supply chains in the world. Walmart has not only transformed its own supply chain, but also influenced how vendors throughout the world operate because the company has the economic clout to request changes from its vendor partners and to receive them. Recognized for its ability to obtain merchandise from global sources, Walmart also pioneered the strategy of achieving high levels of growth and profitability through its precision control of manufacturing, inventory, and distribution. Although the company is not unique in this regard, it is by far the most successful and most influential corporation of its kind and has put into practice various innovative techniques. To get a sense of the firm’s overall efficiencies, at the end of the prior decade a study found that Walmart was responsible for some 12% of the productivity gains in the entire U.S. economy. GOALS AND OBJECTIVES
When Walmart does something, it does it on a massive scale. Walmart’s computer system, for example, is second only to that of the Pentagon in storage capacity. Its information systems analyze more than 10 million daily transactions from point-of-sale data and distribute their analysis in real time both internally to its managers and externally via a satellite network to Walmart’s many suppliers, who use the information for their production planning and order shipment. Much of the popularity of supply chain management has been attributed to the success of Walmart’s partnership with Procter & Gamble (P&G). During the 1980s, the two collaborated in building one of the first Collaborative Planning, Forecasting, and Replenishment (CPFR) systems, a software system that linked P&G to Walmart’s distribution centers, taking advantage of advances in the world’s telecommunications infrastructure. When a Walmart store sold a particular P&G item, the information flowed directly to P&G’s planning and control systems. When the inventory level of P&G’s products at Walmart’s distribution center got to the point where it needed to reorder, the system automatically alerted P&G to ship more products. This information helped P&G plan its production. Walmart was also able to track when a P&G shipment arrived at one of its distribution warehouses, which enabled it...
References: Huffington Post. (2013, November 6). Walmart workers are striking today in Southern California. Retrieved from http://www.huffingtonpost.com/2013/11/06/Walmart-workers- california_n_4226285.html
Johnson, J.F., & Mark, K. (2013, November 12). Half a century of supply chain management at Walmart. Ivey Publishing.
Walmart. (2014). Home page. Retrieved from Walmart.com.
Walmart Corporate. (2014a). Our ad match guarantee. Retrieved from http://corporate.walmart.com/ad-match-guarantee
Walmart Corporate. (2014b). Our business. Retrieved from http://corporate.walmart.com/our-story/our-business/
Walmart Corporate. (2014c). Our History. Retrieved from http://corporate.walmart.com/our-story/history/history-timeline
Walmart Corporate. (2014d). Our locations. Retrieved from http://corporate.walmart.com/our-story/locations
Wu, J. (2014). Sustainability power point. Supply Chain Management. CSU San Bernardino
Please join StudyMode to read the full document