Important Lessons Learnt from Walmart Supply Chain Strategy

on August 5 | in Business | by | with No Comments

Walmart is the most successful retail giant ever to grace the corporate word. The company has been successful over decades due to its effective supply chain strategy. Experts say that it uses its huge buying power to influence supplier behavior as well as drive down prices.

Through a focus on continuous improvement in the supply chain, Walmart has excelled and boosted its profits to incredible levels. The company invested in the latest technologies to capture supply chain efficiencies and capture more market.

According to marketing pundits, there are three important elements of the company’s supply chain that has allowed it to reach the heights of corporate success. These include:

  • managing its own fleet of trucks,
  • implementation of efficient distribution practices, and
  • effective use of technology

The above-mentioned elements have provided benefits to the company in multiple ways. It has led to improved product forecasting, better inventory management, and cost savings. As a result, the company has been able to serve its customers in a more efficient and productive manner.

A Detailed Look at Components of Supply Chain Activity

The supply chain of Walmart is not revolutionary per se, similar to that of Dell. In fact, its overall supply chain strategy differs little from the traditional supply chain activities of procurements, distribution, operations, and integration. However, what the company has done differently than its competitors is that it refined the process and fine-tuned the activities to get ahead of the competitors.

The supply chain activity at Walmart starts with the purchase managers that determine the products that will sell with the customers. Afterward, the vendors are contacted to arrange for the supply of the products.

Next, the operations managers focus on forecasting, demand planning, and inventory management. They estimate the demand for the products based on different facts such as external drivers, historical data, and changes in competitive trends.

Demand forecasting helps in creating accurate predictions about customer demand that proves critical for efficient inventory management. The forecasts made by the operational managers are compared with the inventory levels and adequate steps taken to meet the shortfall. Lastly, the company’s own fleets of trucks are used to route the products to the various stores located all over the world.

All the components of the supply chain are linked through the latest technological tools. This increases the accuracy of the planning and execution of order with almost zero chance of error. For Walmart, the efficient supply chain network yields better price efficiencies that are passed to the customers.

Conclusion!

The meteoric rise to success of the retail giant Walmart serves as a real-life lesson for any supply chain executive. Using the strategy implemented by the retail firm, FMCG retail companies can greatly improve the effectiveness of their supply chain.

The company is facing increased competition from other retail firms such as Target, Tesco, and others. However, the efficient supply chain network of the company has allowed it to take a brave stand, and even thrive in the intense competition.

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