Looking for the Keys to Supply Chain Success? Look no Further Than Walmart
Walmart has reported gross income of $486 billion in the year to January 2015, off the back of a six year trend of rises, and showed an increase of $10 billion over the same time last year. The increase over the last five years is $408 billion, according to MarketWatch from the Wall St. Journal.
4,500 stores in the US contributed greatly to generating the income, and this is a network being fed by an enormous supply chain. In Gartner’s annual ranking for supply chains, Walmart moved up to number 13 from 14 last year, and has been a fixture in the top 20 for the last five years.
Walmart puts its incredible leverage to work when purchasing from suppliers in order to influence their behavior and cut costs. They have not only been excelling in traditional modes of supply chain management over the years, but also when it comes to improving and investing in emerging technologies and markets such as e-commerce.
Walmart’s supply chain has evolved based on three pillars: technology, distribution practices and operating their own fleet. This benefits their supply chain by saving time, money, and allowing for improved forecasting.
They have been dealing directly with their manufacturers since the 80’s, and have assigned the work of managing warehouse inventory to suppliers. The outcome is a “vendor managed inventory” (VMI), which has helped to smooth the passage of inventory throughout their supply chain and led to a much lower rate of irregularities, meaning the products are always on the shelf when they are needed.
The key to the success of this model is collaboration and cooperation with their suppliers, who have contributed to building an increasingly efficient supply chain with technology as the cement.
Walmart’s dedication to developing technology goes all the way back to 1975 when they were founded, using a computer system to control inventory in warehouses and distribution centers.
Currently, their inventory management practices include collecting information from real-time sales, warehouse inventory and point of sale (POS) transactions into a central database. This data is then provided to their suppliers who can identify what needs to be shipped and when.
By the 80’s, Wallmart was operating it’s own satellite system, allowing the passage of voice and data across their network, proving that the key to a successful large-scale supply chain is to innovate early.