Walmart – The big daddy of offline retail:

Walmart with a motto “Save money Live better” is a retail giant

with over $450 billion revenue focussed on providing the lowest
price possible for the end consumer. Walmart over the years has
developed its logistics, distribution and supply chain ecosystem
to address the lowest price concept. The word clouds on the right
signify the issues and strengths of Walmart as portrayed by
Global source. Sustainability and supply chain are the strengths
of Walmart. The company has created an incredibly efficient
supply chain eliminating bull whip effect and mastering the art
of vendor managed inventory to create an impactful reduction
in cost and lead time. The following table provides an overview
of the Supply Chain Metrics of Walmart.

Metrics Value The efficiency of Walmart’s supply chain is seen very

Cash to cash cycle clearly, the company is in a position to leverage both
economies of scale and scope. To illustrate they have a
Days Sales Outstanding 4.34 days
$175 billion inventory which they turn over 8 times a
Days Inventory 46.64 days
year, this shows the volume that Walmart can provide.
Days Payable 47.73 days The company thus enabled vendor managed inventory
Replenishment cycle time 48 hours (down (VMI) for most of its products. Walmart also acquired an
from 96 hours) army of tens of thousands of trucks and trailers to
Inventory turn over 8.19 cycles/year optimize the US supply chain. To completely eliminate
the inefficiencies, they acquired their own satellite
Inventory days of supply 34.66 days
through which any Walmart store can send the
Freight cost per unit 3% of total cost
requirement directly to the 4000 vendors. The system will
convey the distribution channel to the vendor and the warehouse to enable the double whammy of hub and
spoke as well as cross docking. This enabled Walmart to use Full Truck Loads(FTL) almost all the time. Their
huge size also enabled global sourcing strategy and economies of scale in shipping.

New Efforts Implement Results /Targets

ation
Project Gigaton 2015-21 Reduce emissions from Walmart vehicles by 1 gigaton. All the FTF efforts
and cross-docking are being further improved to reduce emissions from
Walmart vehicles.
Life Cycle 2011-16 Walmart developed and launched application through which the total life
Assessment cycle of the product could be seen and impact analysed and minimized.
Three strike policy Since 2002 All suppliers of Walmart have 3 strikes
a) 1st- - Pay fine
b) 2nd – Pay fine + compensation
c) 3rd – Removed from list retraining cost to be borne again
Block chain 2016 Partnering with IBM to implement block chain and IOT in supply chain.
implementation onwards Meat monitoring in Taiwan with block chain to detect early spoilage.
OTIF (One time in 2014 The on time perfect delivery ratings of Walmart changed from 75%
Full) onwards minimum levels to 90% in 2014 to curb any inefficiencies and reverse
logistics
Collaborative 2011 With vertical integration, Walmart now only allows forecasts done by the
forecasting onwards manufacturer and shipped to vendor managed locations for Walmart
store transport. This is achieved using a single window ERP system.
Communication 2016 Daily communication and life history profiles of employees to improve
network onwards image.
Looming threats for Walmart:
Labour issues- Underpaid and overworked employees of Walmart are demanding for more wages but affording
them at every day low price(EDLP) is a problem for Walmart. The image issues rise here.
US market saturation- The growth rate in North America is 2%.
Failure in International Expansion – Walmart has made some good acquisitions but has lost money in most
global trades. Their strategy of low price ecosystem is problematic.

Although the supply chain is right now Valuable, Inimitable, Rare and Non-Substitutable it won’t remain for
much longer. All bad image issues need to be addressed and employees need to be made happy for
sustenance.