Supply Network Management in Walmart

Running head: SUPPLY NETWORK MANAGEMENT IN WALMART
Supply Network Management in Walmart
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Executive Summary
This paper demonstrates and overview of the issues arising in Walmart’s attempt to maintain
sustainability in its supply network. From the past studies it is evident that Walmart has
considered the impact of its operations on the people and environment. The paper illustrates
Walmart’s successful integration of supply chain contributing its dominant position in the retailer
market and identifies challenges in the globalization era. It also discusses the some of the
specific issues identified about the sustainability of their supply network of Walmart.
Introduction
Supply chain management is the major source for the company’s’ growth and
achievements in the market. The economic activities of entities have expanded globally and are
regarded as the supply chain. The rapid changes have caused businesses to seek to develop and
survive under the new economic order. Supply chain management has developed into the
competition between different enterprises. The international purchasing of goods has become a
major strategy for companies. Companies consider supply chain as a major competitive
advantage leading to sustainability management as they are able to develop a supply network.
Background Information of Walmart
Walmart is one of the largest retail stores operating in different countries over the world.
It runs over 10,000 retail stores in different countries. According to Traub (2012), the success of
Walmart is attributed to its effective supply network. It has a highly integrated supply chain
which is cost effective and speed efficacy. Walmart’s growth over its competitors has been due
to its supply chain management and retail strategy which has gained it a competitive advantage

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in the market. To facilitate the supply chain, information technology initiatives were used to
enable innovation and creativity. Integrated supply chain, cost-effective and speed brings success
for the company, but Natto (2014) emphasizes that there is a need to develop agility and
adaptability to maintain a sustainable competitive advantage in the market.
The global manufacturing has switched to Asia, specifically China. It plays a crucial role
in the multinational procurement network/chain. It has become the world’s processing plant and
is very important to the world’s supply chain. Many multinational companies consider China as
the source of global sourcing as it is the direct supply of the multinational products.
Multinational retailing companies cooperate with the Chinese enterprises due to the large
consumer market in China and also the cheap raw materials and labor. Walmart set strategy of
low-cost goods by turning to countries offering low-cost production of goods such as China. For
instance, Walmart has virtually centralized its procurement operations to be done through Global
Procurement Centers. Its major centers are located in China and account for 70% of worldwide
purchases (Chuang, Donegan , Michele & Kan, 2011) . This paper focuses on analyzing the
Walmart’s successful integration of supply chain resulting in its retail market dominance its and
identifies challenges in the globalization era. It also discusses the specific issues identified about
the sustainability of their supply network.
Issues existing in the Walmart supply network
A collaborative supply chain/network is very important for the growth of Walmart. Their
vendors differ in the company size and quantity of products sold. Therefore it is important for the
company to collaborate with its suppliers to produce the goods and services at lower prices.
However, it is challenging for Walmart to maintain the equal profit margins among different

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vendors. This might lead to conflicts and lack of collaboration between partners leading to
excess inventories. According to Shin and Tucci (2015), despite a faster and cost-effective
supply chain, the company faces challenges when it comes to inventory growth to the level of
sales growth. The inventory growth is higher than that of sales.
Another challenge is the inventory problem arising from misalignment of the interests of
Walmart and that of the suppliers. Due to the global competitive environment, Walmart should
consider handling the inventory problems and focus on other alternative supply chains. Walmart
should not only focus on the cost-effectiveness and speed but also customer satisfaction.
Globalization has made easy access to products, and lack of customer satisfaction will lead to
losing customers to the competitors.
Walmart also faced another challenge with the Chinese market due to the cultural
differences. The areas where Walmart set there stores were the high-end class where people were
aware of the different brands and the quality of the products they require. The ‘everyday low
cost’ Walmart slogan did not work in the high-end communities as they favored quality than low
prices Chuang et al., 2011). Therefore, Walmart needs to strategize differently in different
cultures depending on the needs of the target market.
Walmart should reduce on partnership and information’s shared to with the suppliers.
Walmart only depends on their supplier networks for some products. For example, selling fish
which are MSC-certified. This might bounce on them as the suppliers might use the information
against them to increase their prices especially in times of scarcity when the demand is high
(Lockamy & McCormack, 2010).