Supply Chain Comparison: Walmart vs. Amazon

This assignment delves into a comparative analysis of the supply chains employed by Walmart and Amazon. It examines the distinct logistical approaches utilized by both retail giants, emphasizing Walmart's traditional supply chain model versus Amazon's innovative e-procurement-based approach within its ecommerce platform. The analysis explores key differences in their operations, strategies, and impact on customer experience.

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Logistics and Supply Chain Management
Name of the Student:
Name of the University:
Author Note:

1LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
SECTION 1.....................................................................................................................................2
Supply Chain of Walmart............................................................................................................2
SECTION 2:....................................................................................................................................4
Amazon’s Supply Chain..............................................................................................................4
SECTION 3.....................................................................................................................................5
Summary of the two Supply Chains............................................................................................5
SECTION 4:....................................................................................................................................7
Explanation of 3rd party and 4th party logistics............................................................................7
SECTION 5:....................................................................................................................................8
Impact of Traditional and Online Supply-chain..........................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

2LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Introduction:
The report discusses elaborately about Wamart’s Supply chain in the context of how they
work with the suppliers, address issues, level of information shares, centralized distribution and
the complexity in the technology. There is a section 2 in the report that deals with supply chain
of Amazon that helps one to understand how they undertake operation in the online space, how
they differ from the bricks and mortar perspective, how they are different from an online
purchasing perspective. The report has a section 3 that deals with the summary of both the
supply chain. There is also discussion on the logistics of third and fourth party logistics and its
impact on the online and traditional supply chain.
SECTION 1:
Supply Chain of Walmart
Walmart is the most powerful and largest retailer that started with the aim of providing
customers with goods irrespective of the time and place. Therefore, the company mainly focused
on the development of cost structures that ensured it to offer minimum pricing on a daily basis.
Further, to accomplish this company also concentrated on the development of an advanced and
highly structured strategy for supply chain management. The incorporation of an effective supply
chain not only helped the company in enhancing its competitive advantage but a position in the
market leadership (Barney, 2012).
Walmart believes in sourcing strategically so that products are available at the best
possible price from suppliers thus ensuring their demands remain fulfilled. The company also

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builds up strategic partnership with the vendors thereby assuring them the potential for high
volume and long-term purchases in return of minimum prices (Christopher, 2016). The company
also streamlined the strategies for supply chain management for improving communication and
relationship networks with the suppliers for improving flow of material and lower inventory
stock.
The retailing giant Walmart also follows cross docking as an inventory tactic. Cross
docking is a practice of logistics that remains the core to Walmart’s strategy for efficiently
replenishing its inventory (Zhang, 2012). This tactic enables the company in direct transferring
of products from outbound or inbound truck without maintaining extra storage. In other words,
the company ensures that loading and unloading of items done without any storage in between.
The process of cross docking not only lowers inventory and transportation cost but also reduce
transportation time thereby eliminating inefficiencies.
Walmart , the world biggest retailer chain has been a leader in embracing technology and
using it in a manner that it is able to track the company’s inventory stock and thereby enabling in
restocking the shelves thereby resulting in cost cut(Gordon, 2014). Therefore, technology plays a
key role in laying the foundation of company’s supply chain. The company boost of having the
largest infrastructure for information technology compared to any private holding company. The
network design and state of the art technology that enables Walmart to predict and track
inventory levels, forecast demand with accuracy, ensure efficiency in transportation routes,
servicing response logistics and management of effective customer relationships(Davenport,
Dalle & Lucker, 2014).

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SECTION 2:
Amazon’s Supply Chain
Amazon believes in merging its competitive strategy with the strategic fit of the supply
chain management in becoming the preferred choice of its customers. The company ensures that
a combination of multi-tier inventory management, information technology, and superlative
transportation along with wide warehouse network will work together in order to help align the
supply chain management with the competitive strategy(Barney, 2012).
Amazon also undertakes the aspect of outsourcing the company’s inventory. This implies
that the company believes in outsourcing the distribution and storage of products not meant for
frequent purchases or for immediate delivery. Amazon also does this for products where
expenses for storing them exceed marginal returns on the sales.
Amazon puts up a stock of the items frequently purchased or ordered as an inventory in
its own warehouses. This strategy is undertaken so that the company is able to respond to the
customers on an immediate basis. The segregation of the inventories is thus enabling Amazon to
become a pro as far as customer responsiveness is concerned but also cut down their expenses
(Li et al., 2012).
Therefore, Amazon not only follows a price differentiation strategy and but also believes
in segregation of its customers. However, the various forms of delivery undertaken by the
company are free delivery of the super saver type, delivery of first class, delivery of one day and
delivery for prime customers (Pandit & Poojari, 2014). Amazon makes an offering to the
customer to pay more if they want fast delivery otherwise; they maintain their normal pace of
delivery. Outsourcing of inventory and segmentation of the customers into price differentiation

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makes the company more agile and nimble in markets that undergo changes with demand
fluctuations.
Therefore, the key feature of Amazon’s Supply Chain Management is it has evolved in
with the growth in the market. Initially Amazon was a bookstore that acted as intermediary
between the sellers and buyers and thus did not have a stock of its own. This allowed the
company to hold certain items in its warehouses. Thus, Amazon believes in a strategy of push
pull where inventory belongs to the push strategy and the shipment of orders represented the pull
strategy. Thus, Amazon believes in following a pure pull strategy for the items that it does not
hold a stock (Peppard & Ward, 2016).
The discussion on supply chain management of Amazon remains incomplete without
mentioning an analysis on the inventory system that is multi tier. The first tier represents an
aggregation of the distribution centers that ensures Amazon holds lesser inventories and ensures
dynamic response to the demands. The second tier deals with distribution centers of wholesalers
and collaborates so that the company can rely on them just in case a product is unavailable in
Amazon stock of supply. Further, the company also makes use of real time information
technologies for leveraging the efficiencies of distribution. The third tier of Amazon deals with
third party publishers, vendors, sellers and manufacturers who makes sure that the company acts
an intermediary in fulfilling the customer demand.
SECTION 3:
Summary of the two Supply Chains
Though online selling has been a growing phenomenon in the retail chain, the brick and
mortar stores are not something to do away with as they do well in certain sectors of the

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economy. However, there are innumerable differences between customer experiences in online
selling where they have intangible product interaction compared to products sold in stores where
customers can handle merchandise personally (Dinner et al., 2014). One can look at how the two
procedures lead to different customer experience.
In Terms of Research:
Consumers remain more confident about purchasing a product online as they have scope
for research. The process not only saves times but also energy. However, if there is any
confusion regarding the product they cannot instantly clear their doubts, as they would do it in a
store.
In Terms of Sensory Information:
Retail customers analyze and gather information regarding the product visually.
However, there are some products that customer needs to feel, hear, smell or taste before taking a
decision. Online sites are somewhat similar to brick and mortar stores in allowing customers to
take a decision based on identification. Thus, when purchase requires touch, hearing, smell or
taste then stores have an advantage.
In Terms of Cost:
Online retailers have inventory costs that are lower so they can offer products at
considerable low prices. Stores maintain physical inventory, and so they cannot lower prices
beyond a certain limit
In Terms of Fulfillment:

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The online customer only see images of products and have to wait for sometime before
possessing it. Compared to this the customer satisfaction in store is greater as the customer get
have an immediate possession.
In Terms of Tax Treatment:
Stores charges local and state sales taxes for their products while for online operations
only sales tax is levied whenever they have physical presence in specified jurisdiction
SECTION 4:
Explanation of 3rd party and 4th party logistics
A company’s logistics outsourcing has become a certain important aspect, which can
affect the final product sell. A 3rd party supply chain management is an act of outsourcing the
company product’s logistics and distribution whereas the 4th party logistics operation is
dependent upon the integrator and accumulators add resources (Presutti, 2012). This service
differs in various terms of logistics management. Warehousing, integrating operations, ensuring
services for transportation, cross docking through shipping, management of inventory
management, freight forwarding and packaging are the some of the major tasks for an
outsourcing logistics companies. There are certain types of services that the 3PL gives to global
companies (Williams, Esper & Ozment, 2014).
 Standard – which are involve in basic activities, like pick and pack, small warehousing
and distribution through channels (Cooper & Ellram, 2015)
 Service developer – these companies gives a valued-added service to the products or
services they distribute among their facilities.

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 Customer adaptor – these companies customises their service to different the developers.
The complete logistics firm take over the certain companies and provide the necessary
service(Cooper & Ellram, 2015).
 Customer developer – these companies integrates all the service and their operation is
dependent on the whole logistics operation needed to be fulfilled (Presutti, 2012)..
A 4PL company’s operation is based on the procurement, storage, distribution and process. It
generally takes over selling and marketing processes of a company(Williams, Esper & Ozment,
2014). A 4PL is an integrator an accumulator of the company and mostly run on logistics. Third
party and fourth party logistics operate on same ways but with different parts. The online and
standard supply chain is based the method of inbound and outbound logistics freight of a
company. Often 4 PL are known as the joint-venture parties that does not affect the main
operation of the parent company. In addition, the company also provides client administration in
some regions. The global logistics companies 3 or 4 PL are different in structure (Disney, Naim
& Potter, 2014).
SECTION 5:
Impact of Traditional and Online Supply-chain
After the emergence of ecommerce companies, the traditional generation of logistics have
grown more and have evolved their primary process. Tracking systems that are manually
operated, order processing systems that are paper oriented, and communication links that are
wired were the initial tools for management available to managers of logistics but it has changed
drastically. The organised retailer is suffering more in terms of facing competition from the
ecommerce companies(Power, 2012). Wal-mart the global retail giant has also expanded its

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visibility in the online market. However, it cannot reach the efficiency level of Amazon supply
chain (Presutti, 2012). Though the supply-chain model of amazon is mostly through procurement
facility, the maintenance of this facility is and centralised among the core operation. In
conventional retail companies the facilities where depend upon the bulk movement of goods and
it did not affect the balance sheet of the organisation (Lancioni, Schau & Smith, 2012). However,
the Amazon business model consists of supplier and client channel relationship mostly. One of
the key activities of Amazon is to source or outsource material or service from a third party
supplier. Retail used to dominate their supplier if the market was more influenced by the retailer
(Disney, Naim & Potter, 2014). Nevertheless, the presence of Amazon has helped lifting the
relationship in logistics business. In order to maintain the consumer confidence the online
ecommerce companies they depends on the companies that channelize their distribution(Presutti,
2012).. There are some benefits and drawbacks of using a e-retailing model. The economic value
addition of a product is a beneficial aspect of e-procurement. The supply chain process also
affects the operational performance of a company. Augmented e-commerce volumes sale and
omni-channel action plans are putting extraordinary demands on the supply chain management
(Power, 2012). The quickly changing demands that the consumer’s presents takes whole
innovative set of challenge to retailers and e-tailors(Lancioni, Schau & Smith, 2012).
Conclusion:
The report concludes by giving an overview about Wamart’s Supply chain in the first
section. The second section in the report deals with supply chain of Amazon. The report has
section 3 deals with summary of both supply chain. Therefore, from the knowledge of 3PL and
4PL it can be concluded that it may differ in terms but the operations are more or less same.
There is only a structural difference in the two logistics variation. In addition, the two different

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models of logistics of Wal-Mart and Amazon, which are traditional supply chain and other based
on e-procurement model of ecommerce, are of different composition.

11LOGISTICS AND SUPPLY CHAIN MANAGEMENT
References
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advantage: The relevance of resource‐based theory. Journal of supply chain management,
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Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
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implications for purchasing and logistics strategy. The international journal of logistics
management, 4(2), 13-24.
Davenport, T. H., Dalle Mule, L., & Lucker, J. (2014). Know what your customers want before
they do.
Dinner, I. M., Van Heerde, H. J., & Neslin, S. A. (2014). Driving online and offline sales: The
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