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WalmartsKeystoSuccessfulSupplyChainManagement

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Walmart:KeystoSuccessfulSupplyChainManagement

Walmart:KeystoSuccessfulSupplyChain
Management
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WalmartsKeystoSuccessfulSupplyChainManagement

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LearntheKeyTrendsinWorldClassSupplyChains

WalmartsSupplyChainForgedOverDecades
Ridingarisingsixyeartrend,retailjuggernautWalmartreportedgrossesof$486billioninthefiscalyear
thatendedinJanuary2015,anincreaseofalmost$10billionfromfiscal2014.That'supfrom$408billion
overthepastfiveyears,accordingtoTheWallStreetJournalsMarketWatch.
Thatincomewasgeneratedbymorethan4,500storesintheU.S.alone,andfedbyasprawlingsupplychain,
whichmovedfromNo.14toNo.13onresearchandanalystcompanyGartner'sannualranking.Walmarthas
heldaplaceamongGartnerstop20supplychainsforhalfadecade.
Walmartusesitsmammothpurchasingpowertoshapesuppliersbehaviorwhichalsodrivesdowncosts,
Gartnersaid.
AccordingtoanarticleonthewebsitelogisticscompanyCerasis,"NotonlyhasWalmartexcelledoverthe
decadesintraditionalsupplychainmanagementbut...isalsofocusedoncontinuousimprovementby
investingmoreintoemergingtechnologiestocapturemoreoftheecommercemarket...."
TheevolutionofWalmartssupplychainincludesthreeelements,accordingtoanArkansasBusinessarticle:
distributionpractices,operatingitsownfleetoftrucksandtechnology.Benefitsfromitssupplychain
efficiencyresultintimesavings,morecosteffectiveinventorymanagementandimprovedproduct
forecasting,thearticlesaid.

RequestMoreInfoOnSupplyChainCourses

DecadesintheMaking
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WalmartsKeystoSuccessfulSupplyChainManagement

Theretailerstarteddealingdirectlywithmanufacturersinthe1980s,givingsuppliersthejobofmanaging
inventoryinitswarehouses,theArkansasBusinessarticlesaid.Theresultwassomethingcalledvendor
managedinventory,orVMI,thatsmoothedirregularitiesofinventoryflowwhichhelpedensureproducts
werealwaysavailableonstoreshelves.
Theprocessinvolvedcooperationandcollaborationwithsuppliersthatproducedamoreefficientsupply
chainwithtechnologyconnectingeverything.
WalmartwastappingtechnologyevenbeforeitdevelopedVMIwhenin1975thecompanystartedusinga
computersystemforinventorycontrolinitsdistributioncentersandwarehouses,accordingtoatimelineof
WalmartshistoryfromSupplyChainDigest.
Walmartsinventorymanagementnowfunnelsinformationfromstoressuchaspointofsaledata,warehouse
inventoryandrealtimesalesintoacentralizeddatabase.Thedataissharedwithsupplierswhoknowwhento
shipmoreproducts.
By1987,Walmarthaditsownsatellitesystemthatallowedvoiceanddatacommunicationbetweenall
segmentsofthecompany,accordingtoCIOOnline,awebsiteforchiefinformationofficers.
By1989,Walmartsawthebenefitsofitssupplychainmanagementwhenitsdistributioncostswere1.7%of
itssales,orlessthanhalfKmartscostandjustunderathirdofwhatSearswasspendingatthetime,
accordingtoArkansasBusiness.

BeyondTechnology
WalmartsSCMprocessisnotbasedentirelyontechnology.Thecompanyhasasprawlingnetworkofnearly
160distributioncenterscoveringalmost120millionsquarefeetandallwithin130milesofthestoresit
supplies,accordingtoMWPVLInternational,asupplychainandlogisticsconsultingcompany.
Theretaileralsoinstitutedcrossdockingatitswarehouses,amethodthatmovesinventorydirectlyfrom
arrivingordepartingtrucks.Productsaretakenfromanarrivingtruckandpackedinatruckboundforastore
withoutlengthystorageinthewarehouse,saidinventorymanagementsoftwarecompanyTradeGecko.
Theresultislowercostsforinventorystorage,reducedtransportationcostsandproductsspendlesstimein
transit,TradeGeckosaid.
Walmartalsousesitsowntruckingfleetanddrivers,maintaininghighminimumstandardsforitsthousandsof
drivers,includingthreeyearsand250,000milesofdrivingexperienceandnopreventableaccidentsinthree
years,accordingtoTruckersLogic.

ComponentsofSupplyChainManagement(SCM)
Walmartsoverallmethodsofsupplychainmanagementdifferlittlefromthemaincomponentsofmost
supplychains:purchasing,operations,distribution,andintegration.Buttheretailerhasrefinedthemethods.
Asupplychainbeginswithpurchasingmanagerswhodeterminewhichproductswillsell,findvendorsand
arrangedealsfortheproducts.
Theoperationsportionofasupplychainfocusesondemandplanning,forecastingandinventory
management.Forecastsestimateconsumerdemandforaproductbasedonhistoricaldata,externaldrivers
suchassalesandpromotionsandchangesintrendsorcompetition.
Demandplanningisusedtocreateaccurateforecasts,acriticalsteptowardeffectiveinventorymanagement.
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Forecastsarecomparedtoinventorylevelstoensurewarehouseshaveenough,butnottoomuch,inventoryto
meetdemand.
Movingtheproductfromwarehousesormanufacturingplantstostoresandultimatelytocustomersisthe
distributionfunctionofthesupplychain.
Supplychainintegrationconnectstheflowofworkandinformationamongalllinksinthesupplychainto
maximizeefficiencies.
ForWalmart,itsSCMmethodsyieldlowercostsforproductsandinventory,bettercontroloverselectionin
itsstoresandtheultimateresultoflowerpricesthatcanbepassedtocustomers,TradeGeckosaid.
Disclaimer:
ThisresearchhasbeendoneonbehalfoftheUniversityofSanFranciscoOnline.Anynames,logos,and
othertrademarksthathavebeenreferencedbelongtotheirrespectivetrademarkowners,whoarenotaffiliated
with,norendorseorsponsor,theinstitution,itsprograms,oritsmaterials.
Sources:
1.AnnualFinancialsforWalMartStoresInc.marketwatch.com.MarketWatch,Inc.LastRef.Oct.9,
2014.
2.FactsataGlance.restaurant.org.NationalRestaurantAssociation.LastRef.Oct.9,2014.
3.Aronow,Stan.TheGartnerSupplyChainTop25for2014.gartner.com.Gartner,Inc.LastRef.Oct.
9,2014.
4.Top100RetailersChart2014.nrf.comNationalRetailFederation.LastRef.Oct.9,2014.
5.Traub,Todd.WalMartUsedTechnologytoBecomeSupplyChainLeader.
arkansasbusiness.comArkansasBusinessLimitedPartnership,July2,2012.LastRef.Oct.9,2014.
6.Gilmore,Dan.50YearsofWalmartsSupplyChain.scdigest.comSupplyChainDigest,July26,
2012.LastRef.Oct.9,2014.
7.Wailgum,Thomas.45YearsofWalMartHistory:ATechnologyTimeLine.cio.comCXOMedia,
Oct.17,2007.LastRef.Oct.9,2014.
8.TheWalmartDistributionCenterNetworkintheUnitedStates.mwpvl.comMWPVLInternational,
Inc.LastRef.Oct.9,2014.
9.Lu,Clara.IncrediblySuccessfulSupplyChainManagement:HowDoesWalmartDoIt?
blog.tradegecko.comTradeGeckoInventoryManagement,May7,2014.LastRef.Oct.9,2014.
10.Spencer.WalmartTruckingJobs.truckerslogic.comTruckersLogic,March23,2014.LastRef.Oct.9,
2014.
11."GartnerAnnouncesRankingsofIts2015SupplyChainTop25,"gartner.com.Gartner,Inc.,May14,
2015.LastRef.July10,2015.
12."NumberofWalmartStoresWorldwideFrom2006to2015,ByDivision,"statista.com,Statista,Inc.
LastRef.July10,2015.
13."Walmart:3KeystoSuccessfulSupplyChainManagementAnyBusinessCanFollow,"Adam
Robinson,cerasis.com.Cerasis,Inc.May13,2015.LastRef.July10,2015.
Category:SupplyChainManagement

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LearnmoreaboutWalmart'ssupplychain.

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WhatistheImportanceofSupplyChainManagement?
Supplychainmanagementisanessentialcomponenttooperationalefficiency.Thisarticleoffersexamples
whySCMisimportantinsocietyandinbusiness.

RFIDTechnologyBoostsWalmartsSupplyChainManagement

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WalmartsKeystoSuccessfulSupplyChainManagement

Walmart'sRFIDtechnology10yearsoldandprovidesefficientinventorymanagement,trackingmerchandise
alongitssupplychain.

3DPrintingandItsImpactontheSupplyChain
3Dprinting,oradditivemanufacturing,holdsthepotentialtomeetconsumerdemandmorerapidly,cut
developmentandmanufacturingleadtimesdramaticallyandallowdesignerstocreateandtestne...
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