Running Head: SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS

SCM 800 Walmart Supply Chain Management Case Analysis

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SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS 2

Introduction: Walmart’s supply chain overview

Walmart Stores, Inc. is a globally operating retail enterprise running mega-stores and
warehouses with discounted goods. They were founded in Arkansas (USA) by Sam and Bud
Walton. With annual sales of more than $514 billion in 2019, Walmart is considered the largest
retail giant globally, followed by Amazon with $160 billion in 2018. The company’s portfolio is
currently presented by general merchandised stores, gasoline, food and beverage, furniture,
building materials and gardening equipment, electronics and appliances, sporting wear, clothing
and accessories, books, and music.
The purpose of this paper is to give an overview of Walmart’s Supply Chain. It will
describe the organization’s business model concerning its supply chain management. The paper
will analyze the company’s supply chain capabilities and its source of Walmart's competitive
advantage, and it will compare and contrast the organization’s supply chain strategy with other
organization’s strategies. It will also analyze the biggest challenge the company is facing and the
implications of this challenge. The paper will also focus on ways Doug McMillon, the
company’s CEO and the president can improve Walmart’s supply chain. Finally, it will validate
the importance of aggregate planning to Walmart's supply chain.

Q1. Were the company’s supply chain capabilities a source of competitive advantage? Why
or Why Not? Explain: Use examples to help support your answer!
Walmart is doing great when it comes to supply chain management. According to the
case study Walmart build distribution centers one day away from its store locations. This
allowed for the “just-in-time” system to work, especially on the scarce or low inventory items.
During its early development, Walmart targeted to make its stores in rural cheap rent areas near a
major route. It still holds a great logistics team consisting of over 75,000 employees, more than
6,000 tractors, over 53,500 trailers, and 5,600 refrigerated trailers. The company has 173
distribution channels across the United States. The distribution channels are approximately 173
miles apart across the entire country.
Therefore, the company holds a competitive advantage in many aspects of the supply
chain. For example, Walmart’s supply chain's main competitive advantage is the removal of a
few supply chain links. Ben Franklin and Sam Walton offered bulk delivery to small stores what
decreased links in their supply chain. The second action moved Walmart to work directly with
manufacturers, and they achieved an additional cost cut.
The third activity is yield management. When Walmart came up with Vendor Managed
inventory system (VMI), manufacturers were responsible for managing their inventory in
Walmart warehouses. Then Walmart decided to focus on strategic vendor partnerships to
enhance sourcing to find products with the best price and ensure that they can meet demand.
Strategic collaboration with vendors by assuring long-lasting relationship and promising
inevitable turnovers brought the possibility to get the lowest prices in the market. Walmart's
retail store's competitive advantage is the focus on cost structures that allowed them to develop
any day's short price concept. Walmart's streamlined supply chained management used
constructed communication and relationship networks to help achieve smooth information flow.
Cross-docking and restocking are other new ideas invented by Walmart means direct restock
from one truck to another without reloading in warehouses. This allows better demand and
supply planning by the suppliers to meet the needs rather than be reactive to the demand. The
SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS 3

high-velocity distribution centers at Walmart were another great idea and had a major impact on
its competitive advantage.
Technology plays a crucial role in Walmart`s supply chain efficiency by investing in the
largest information technology chain within all retail stores. Network design helps to accurately
forecast expected demand, track inventory movements, create transportation routes, and respond
to customer inquiries. Some specific ways Walmart uses technology to improve its processes
include a centralized inventory management system bringing all store’s data such as point-of-
sale, inventory in warehouses, and sales in real-time into one massive database for collation and
coordination is shared with suppliers who are signaled by a direct tie-in from the system to ship
more goods when inventory is needed and almost out. Decades ago, Walmart launched its private
satellites to enable data and voice communication among every part of the firm.

Q2: How was Walmart doing? How did it compare to its competitors?
Walmart is performing exemplary well compared to its competitors. Walmart is the
world’s most revenue making organization with revenue of more than 514 billion USD. Other
competitors like Amazon, Schwarz, Carrefour, and Ahold Delhaize are nowhere near Walmart’s
market share. If we consider target retail Walmart market share is 20 times more than that. In the
United States, Walmart account for approximately 40% of the total market share. In E-
commerce, Walmart is trying to recover missed opportunities. Amazon is one of the strongest
market players in online shopping; that is why Walmart introduces “Walmart +” membership
with annual $98, which gives next day delivery offers and special offers to members, in
comparison with Amazon prime for $21 and additional TV shows and music offers.
Walmart controls many supercenters, sometimes approximately 180,000 square feet,
aiming to offer the lowest price possible to their customers. Enhancing the shopping experience's
service flexibility is one of the competitive advantages that the company has over its
competitors. When it comes to supply chain management, Walmart is better in VMI (Vendor
Managed Inventories). The system requires suppliers to manage levels of inventory at Walmart’s
distribution channels. Compared to Amazon, Walmart's technology advancement is slow but
catching up with. They have a clear focus on brick and mortar stores as well as e-commerce
opportunities. Advanced AI and machine learning tools have successfully been incorporated into
building customer analytics (Weber & Schutte, 2019). The company is now utilizing robotic
floor scrubbers in more than 1,500 stores after being successfully tested in 2018. Brand
recognition, global expansions are the key strategies of Walmart and competitive price which
other retailers could not match with Walmart price strategy, such as the EDLP, which originated
by the company’s founder Sam Walton.
Information Technology/Information Systems (IT & IS) is very vital to any company.
They ensure that once the amounts of data generated by a company’s organization are huge, it
can be centrally recorded and stored in one place. Information technology helps Walmart run its
daily operations in the whole company, especially managing its supply chain. For example,
through VMI, the company can retrieve information about its suppliers, and they can replenish
their stocks when finished.
Walmart's E-commerce turnover gradually grew over the years showing $52.18 million
for the 2019 year. The advantage of Walmart over Amazon is related to infrastructure. Amazon
has 75 fulfillment, 25 sortation centers; a store network of Walmart is in the United States was
within 10 miles of 90 percent of the U.S. population (CSI Market, 2019). According to CSI
SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS 4

Market (2019), Walmart's revenue increased by 2.07% in the first quarter of 2019, while its
competitors in the retail industry increased by 5.98% in the same period.

Q3. What is the single biggest challenge facing Walmart? What are the implications for its
supply chain?
The single biggest challenge facing Walmart at the moment is increased costs throughout
the supply chain. This has created an impact on supply chain volatility. Although Walmart's
suggested that the supply chain was quick and cost-efficient, it faced severe problems concerning
its inability to "keep inventory production to half the revenue point "Development" 2006.
Production development levels have been higher than in 2010, development in revenue, resulting
in compensation differences between the involved suppliers (Shin & Tucci, 2015).
As indicated, the misalignment of the company's supply chain is the biggest challenge
facing Walmart. The organization’s operations usually seek to optimize the interests of the
shareholders, and therefore, misalignment amongst participants may lead to the collapse of
supply chain processes due to supply chain volatility. The company needs to create a correct
alliance with manufacturers, suppliers, distributors, and retailers to optimize its supply chain
performance. According to Lee (2014), Walmart needs to apply Triple-A supply chain to adapt
to its volatile supply chain. Triple-A supply chain is agile, adaptable, and can be aligned with the
companies’ operations.
Triple-A: Supply Chain features
 Adaptability: Adapt the supply chain to respond to long-term volatility, and adjust the
supply network to policies, goods, and technologies (Lee, 2014).
 Agility: React to short-term demand or rapid distribution adjustments, manage external
disturbance smoothly (Lee, 2014)
 Alignment: Align the priorities of all supply chain members for optimal results (Lee,
2014).
Walmart can effectively adapt this system to create an agile supply chain. Firstly, the
organization must provide its stakeholders with data on supply volatility and demand to respond
rapidly to changes. Secondly, the organization and its manufacturer will work closely to
restructure the systems, materials, and goods to offer this enterprise a market advantage over its
rivals. Thirdly, to reduce the pause in production, the business can retain a limited inventory of
non-bulky commodity parts to complete goods even though supply chains are broken down (Lee,
2014).

Q4. If you were Doug McMillon (President and CEO? What one major step would you
take to improve the company’s supply chain?
As the President of Walmart, one of the steps that I will use to improve its supply chain is
utilizing information systems like the Omni-channel to boost customer interaction. Walmart has
been using technology extensively for better supply management, customer service, and sales. A
range of technical methods is used to hold administrators up-to-date and well-delivered shops
(Inventory checking shelves and crates removed from trucks; robotic floor scrubber).
Technology has become imperative for retail business efficiency.
Also, improving brick and mortar stores will help increase sales and hence, increase
distribution channels. Customers come to shops to collect orders, which helps to reduce the cost
of distribution. Meanwhile, items will be the cheapest. There’s no better way to bring these items
to shoppers if they've come to the shop to pick it up from the retailer themselves. "900 pick-up
SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS 5

towers in the supermarket parking lots encourage buyers to pick up online purchases by talking
to a retail representative. This that Walmart's profits, so the savings will be passed down to the
customers.
Information systems will be a profitable e-commerce business and will help the company
compete with Amazon, which is currently dominating in this sector. Online stores tend to play a
significant position, and e-commerce will help sustain the same shop Sales rise, which is an asset
for Walmart. Through better order tracking software to e-commerce websites, it's been
leveraging innovations to improve productivity.
Automation of systems will be essential in the company's delivery since they align with
its delivery network—Walmart ships directly to a customer's fridge through home store
distribution. Development of last-mile delivery operations in urban areas experience and
infrastructure are limited. Autonomous cargo ships to supply food in Surprise, Arizona9, and
collaborated with Ford to develop self-driving cars for food supplies. Those were only a couple
of Walmart's improvements when it reshaped the supply chain approach to combat the "fifth
mile.” Therefore, investing in information technology will be vital to the company’s growth.

Q5. Describe one area that we did not explore in this presentation and describe a concept
studied this semester in SCM 800 that connects to the case. Explain.

Aggregate planning importance in supply chain

In terms of aggregate planning, Walmart’s in-place information feedback
infrastructure gives it a formidable advantage over its rival, one that it is likely to maintain. It has
been suggested that Walmart could do a better job forecasting as part of aggregate demand
planning. Undoubtedly, Walmart pays for most up-to-date quantitative models to forecast
demand using all the data it has as feedback, models that have gone beyond time series and
moving average models given how fine-grained Walmart’s data is and how the adapted that
feedback must be too particular markets (Nash, 2016). The technical aspects of Walmart’s
system, but the Collaborative Planning, Forecasting and Replenishment (CPFR) scheme allows
analysts get direct sore feedback via satellite form a Retail Link Database System which links
database and these analysts forecast supplier demands to the supplier network which compares
and updates these continuously with real-time data straight from store money registers then these
are conveyed to Walmart’s distribution centers (Kumar, 2014).
When we consider the global dimension Walmart faces with its chain of suppliers and
distributors, the firm should continuously forecast and calibrate demand even in micro-markets
in many countries (these might even be individual stores where managers are aided in forecasts
by powerful computer models using up-to-date machine learning, where the algorithms
continuously improve themselves in forecasting ability. That should not leave out the common-
sense and qualitative dimension, even though analysts like Nash (2015) consider that necessary
only when data is too incomplete for qualitative forecasting. Walmart keeps its low margins in
part with demand forecasting, focusing on historical data, predicted sales in the short-run, and
industry trends to figure out inventory levels needed and when. It will help the company
maintain its low prices while keeping its supply chain active.
SCM 800 WALMART SUPPLY CHAIN MANAGEMENT CASE ANALYSIS 6

References
CSI Market (2019). Walmart Inc Comparisons to its Competitors, Market share, and
Competitiveness by Segment - CSImarket.Com.
https://csimarket.com/stocks/compet_glance.php?code=WMT
Lee, H.L. (2004). The triple-A supply chain. Harvard Business Review, 82(10), 102-112.
Nash, K. (2015, May 7). Wal-Mart builds a supply chain to meet e-commerce demands. Wall
Street Journal Logistics Report. Retrieved from: http://www.wsj.com/articles/wal-mart-
builds-supply-chain-to-meet-e-commerce-demands-1431016708
Shin, S., & Tucci J.E. (2015). Wal-Mart’s dilemma in the 21st century: Sales growth
vs. Inventory growth. The Journal of Applied Business Research, 31(1), 37-45
Weber, F. & Schutte, R. (2019). State of the art and adoption of artificial intelligence in retail.
Digital Policy Regulation and Governance, 21(3). Doi: 10.1108/DPRG-09-2018-0050