Walmart’s Supply Chain Management

In the fiscal year of January 2015, Walmart had grosses of 486$ billion. That income came from more than its 4,500 stores in the U.S. They were able to jump from the 14th to the 13th position in research and analysis company Gartner’s annual ranking. That jump was mainly due to their well functioning and innovating supply chain.

As Walmart stocks products made in more than 70 countries and at any moment, operates more than 11,000 stores in 27 countries around the world, having an effective and efficient supply chain management is imperative for the survival of the Walmart brand.

Walmart’s has around 160 distribution centers of almost 120 million square feet and all within 130 miles of the stores it supplies.

Sam Walton opened the first Walmart in 1962, and even in the first years the management of their supply chain was impressive. In the 1980’s Walmart began working directly with the manufactures in order to reduce costs. They introduced what they called the Vendor Managed Inventory (VMI), each manufacturer was responsible for their own products in Walmart’s warehouse.

Furthermore, in order to reduce even further their costs, Walmart pursued strategic partnerships with most of its vendors, who where promised long term and high volume purchase in exchange of low costs. They also benefit from economies of scales; the volume purchased each year is so immense, that it gives huge bargaining power with its suppliers.

They also used cross docking as inventory tactic. Cross docking consists in directly transferring products from inbound or outbound truck by eliminating extra storage. Items are unloaded and directly reloaded on another truck, another benefit is the gain in time, and transportation time is reduced.

Technology is also a main driver to their efficient supply chain. Walmart has the largest information