MO0256_MO9521 Transport & Inventory Management Report: Walmart

This report provides a comprehensive analysis of Walmart's transport and inventory management strategies. It begins by examining Walmart's adoption of intermodal and multimodal transportation, detailing its choices and how it can further increase its use of these methods, including advantages, disadvantages, and the impact of digitization and industry cooperation. The report then delves into Walmart's warehouse management practices, including an examination of its distribution centers and order picking principles, and how these strategies have evolved in response to increased competition from e-commerce providers. The report further discusses the company's strategic and operational factors, such as location, cost, space and capacity, service level, communications, culture, stock movement, and technology. The analysis includes diagrams, flowcharts, and references to relevant literature to support the findings. Overall, the report provides a thorough overview of Walmart's supply chain operations and how they contribute to its success.

Running head: TRANSPORT AND INVENTORY MANAGEMENT 1
Transport and Inventory Management
Name
Institution

TRANSPORT AND INVENTORY MANAGEMENT 2
Table of Contents
Executive Summary...............................................................................................................................3
Transport and Inventory Management...............................................................................................4
Topic 1...........................................................................................................................................4
Topic 2...........................................................................................................................................9
References...........................................................................................................................................14

TRANSPORT AND INVENTORY MANAGEMENT 3
Executive Summary
Intermodality/multimodality are concepts in transport and logistics that most, if not all
companies are trying to adopt. This is in response to the global changes in the transport and
logistics industry, including increased demands for safety and efficiency. This means that
companies are not only looking for faster and cost-effective ways of transporting freight, but
are also considering the environmental impact of the same (Banker, 2013). This report looks
at how Walmart has adopted multimodality and the advantages and challenges associated
with this move. It is evident from the findings, that Walmart has had more to gain from
enhancing intermodality/multimodality in comparison to the disadvantages it has
experienced. Warehouse management is also important in the supply chain as it includes
inventory handling. This report looks at the ways in which Walmart manages its distribution
centres, including an examination of their order picking principles. There is evidence of how
its warehouse management strategies act in response to the increased competition from e-
commerce providers such as Amazon (Bose, 2016). Evidently, Walmart’s operations in
recent years have been centred on enhancing their e-commerce platform, while ensuring that
its existing mode of business remains effective. Operations at their distribution centres have a
lot to contribute to this growth, as this report goes to show.
Topic 1
Identify and explain its intermodal/multimodal transportation choices
Walmart is the leading retailer in the United States. Walmart has an excellent distribution
and logistics system. Worldwide, Walmart has over 158 distribution centres. The distribution
centres for Walmart are only 200 miles apart. In global business expansion, Walmart
considers the strategic location to ensure that between 90 and 100 stores can be built around
for purposes of smooth distribution of materials in the stores. Today, Walmart distributes its
products using over 55,000 trailers, 7,000 drivers, and 6,500 tractors. The use of trailers and
tractors is mainly used when transporting products within the same country. However,
Walmart has been relying on train, ocean, and air transport will transporting cargo from one
country to another.
Multimodal transport involves the use of a combination (two or more) of transportation
modes to deliver freight to a final destination. Despite the use of various carriers, multimodal
transport involves a single bill of lading. This mode of transportation often makes use of a
single carrier, a multimodal transport operator, who is responsible and legally liable for the
whole process (Alain Martel, 2016). The benefits of multimodal transport include increased
efficiency, fewer documentation for the consignor, reduced costs and limited risks (Jesus
Cambra‐Fierro, 2009). Other than simplifying the transportation process, multimodal
transport also ensures easy communication, as the consignor only deals with a single service
provider. Walmart uses multimodal transport to guarantee faster transit of freight.

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Figure 1: An example of flow of goods in multimodal transport between two countries
Intermodal transport just like multimodal, involves a combination of two or more modes
of transport. However, in intermodal transport the freight is placed in a container or vehicle
across all modes without having to handle the freight when changing the mode (Alain Martel,
2016). Also, different bills of lading are used in intermodal transport for each carrier.
Walmart uses intermodal means to transport products of high value. For example, the use of
air transport to move vegetables and other grocery products from one country to another and
have a lorry standby in the airport to transport these products to their deserved destination
without any delay. Using this approach is cost effective to Walmart and increases the
efficiency of business operations across all worldwide centres.
Figure 2: A simple illustration of the processes involved in intermodal transport
Examine how this company can increase the intermodality/multimodality in its supply chains,
for some or all of its product categories
Intermodal/multimodal transport has gained tract over the last few years as more and more
companies embrace it as their preferred mode of transport (Jesus Cambra‐Fierro, 2009). This
Loading of
cargo
Selection of
appropriate
mode of
transport
Final
destination
and
unloading of
cargo
Loading point at
distribution centre (Country
A)
Offloading point at final
destination (Country B)
Land transport
(rail, road) Sea, air transport Land transport
(rail, road)

TRANSPORT AND INVENTORY MANAGEMENT 5
means that Walmart has to customize its products and services in a manner that increases the
company’s use of intermodal transport. Most customers prefer intermodal transport because
of the guaranteed safety of their cargo and also efficiency. Freight volume is set to increase in
the coming years and so will the volume of freight transport via road (Ralf Elbert, 2016). The
European Union transport policy plans on shifting 30% of road freight volume to other modes
of transport, particularly rail (Ralf Elbert, 2016). This presents an opportunity for Walmart to
increase intermodality/multimodality in its supply chain.
In 2013 alone, the Association of American Railroads recorded 12.8 million in intermodal
volume through containerization, and over 14 million in car loads (Vielhaber, 2014). This is
an increase of more than 549,000 units recorded in 2006 (Vielhaber, 2014). Thus, there is an
opportunity for Walmart to increase its intermodality/multimodality as a result of the
increased coverage of rail transport in North America. This will be ideal in instances where
freight needs to be transported over short distances. The use of a rail network will help boost
sustainability for Walmart especially when transporting heavy cargo over a long distance.
Logistics companies such as Walmart have been trying to improve the efficiency of fuel used
in trucks, but the progress is still slow (Legacy Supply Chain Services, 2019). Walmart will
also be able to increase their domestic freight volume through the use of intermodality/
multimodality. Walmart can expand their use of rail transport and minimize that of
truckloads. There has been a sharp decrease in the number of drivers on the road, especially
due to regulatory changes in the hours they are allowed to be operational (Vielhaber, 2014).
Additionally, trucks have limited capacity which has a negative impact on the volume of
freight that Walmart can transport at any given time. This is not the same for containers,
whose capacity can be easily expanded and also allow for the transportation of a variety of
goods.
Walmart can increase intermodality/multimodality through industry cooperation. There is
an opportunity for increased effectiveness if different retailer and logistics companies could
combine their strengths. Currently, Walmart and its competitors such as Tesco, Woolworths,
and Amazon are working autonomously to advance their individual interests. These interests
include areas such as legislation and funding (University of Denver Transportation Institute,
2019). As a freight logistics company, Walmart utilizes all modes of transport available,
hence the need to increase cooperation among them. Ultimately, there is a lot to be gained
from such cooperative efforts, including cost effectiveness for all parties involved. Ocean
transport carriers have had successful alliances, which have the potential of producing better
results if extended to other modes of transport (University of Denver Transportation Institute,
2019). For instance, there is little integration of rail and air transport (Air Transport Action
Group, 2019).
Also, Walmart can increase its intermodality/multimodality by embracing digitization and
information, communication and technological (ICT) changes, which make logistics and
supply chain distribution easier. Digitization will help ease administrative tasks, monitor
movement of freight in real time, and improve reliability for the company’s clients (Legacy
Supply Chain Services, 2019). Through digitization, Walmart will also increase its

TRANSPORT AND INVENTORY MANAGEMENT 6
responsiveness in the event of any challenge during transportation (Irina Harris, 2015).
Furthermore, digitization will lower labour costs as less personnel will be required at the
company. Jobs are a major cost driver in any system. Communication will also be made
easier with digitization, which is a necessary aspect in any supply chain, including in
increasing sustainability (UNCTAD, 2016). Intermodal/multimodal transport involves the use
of various transport modes and numerous actors. This may give rise to a discontinuity in the
supply chain and discrepancies between various transport modes. Digitization and ICT will
help minimize this by creating cohesion among all actors, by synchronizing information
(Rodrigue, Efficiency and Sustainability in Multimodal Supply Chains, 2018).
Critically evaluate the advantages and disadvantages of the new intermodal/multimodal
transportation choices
There is much to be gained by enhancing intermodality/multimodality that outweighs the
disadvantages of the same. The proposed increase of rail usage is set to increase the volume
of goods and service distributed by Walmart. This is because intermodality primarily uses
containers for transport, which allows for stacking. Depending on the capacity and individual
weight of a given container, Walmart can maximize on stacking to ensure they transport a
high volume of freight at any given time. This, coupled with the mode of transportation used,
could determine the amount of emissions they produce (UNCTAD, 2016). With rail
transport, Walmart will increase sustainability in its operations. The use of containers is also
sustainable because there is limited handling of freight, meaning its contents may be
unknown to its handlers until it arrives at its destination (Serdjo Kos, 2012).
Digitization and implementation of ICT will simplify all business aspects of the company.
With technology, it is easier to keep track of inventories (Tavasszy, 2018). Incidences of theft
will also be minimized, although the containerization aspect of intermodality has certainly
helped with this. This is because of the limited handling of cargo at loading points unlike in
the years before containers came into use. Cooperation between modes of transport will help
increase integration and allow for the improvement of transport and logistics services (Irina
Harris, 2015). Digitization will also aid in the synchronization of data at Walmart, further
providing room for data analytics and optimization (RiccardoGiustia, 2019). Through data
analytics, Walmart would be able to predict aspects such as costs and any trends in the flow
of cargo.
The biggest problem with rail transport is time and as such cannot be used to move freight
that is time-sensitive (Beckwith, 2016). One disadvantage of digitization is the eventual loss
of jobs for personnel employed at Walmart. Some of the tasks handled by personnel will be
integrated into an ICT system to improve efficiency. The use of containers also comes with
its own challenges including larger spaces required for loading/unloading and storage
(Rodrigue, The Geography of Transport Systems , 2017). Ports and rail transport do not have
adequate space to operate terminals and Walmart has to source for external sites.
Empty containers also require storage space, and sometimes have to be transported for
reuse even without freight. These impacts on time and cost are crucial factors which Walmart

TRANSPORT AND INVENTORY MANAGEMENT 7
has to consider when enhancing their intermodality/multimodality. Containers are also costly,
including the infrastructure required to operate them (Rodrigue, The Geography of Transport
Systems , 2017). To increase intermodality/multimodality, Walmart will have to invest more
money to acquire containers, terminals and infrastructure such as yard equipment and cranes.
Regardless of the measures taken to reduce theft, there are still cases where containers are
intercepted while on transit such as in the sea (Rodrigue, The Geography of Transport
Systems , 2017). These cases, however, remain minimal.
Topic 2
Examine how this company manages its warehouses
Retail giant Walmart has continued to excel in part because of its efficient supply
chain management (Nguyen, 2017). Since the inception and subsequent growth of online
shopping, customer demands have increased and so have the supply needs of the company.
This means that Walmart has had to develop new innovations that would assist in meeting the
increasing demands of their customers. This demand has created a necessity for larger or
more warehouses to store goods on transit to customers (Bose, 2016). Given the number of
goods stored in these warehouses, there is an obvious need for efficiency if customer
fulfilment is to be achieved. Demand and competition have affected delivery time of goods in
that now customers expect to have their products delivered in the shortest time possible.
Walmart has over 150 distribution centres, including 12 fulfilment centres designated
for e-commerce products, and 6 centres for distribution during disaster emergencies (Walmart
U.S., 2019). These distribution centres are categorized according to the type of products
stored in them, including general merchandise, fashion, specialty (optical labs,
pharmaceutical among others), import/redistribution, centre point, Sam’s Club, and grocery
distribution centres (Wulfraat, 2019). The distribution centres act as warehouses where
products are stored awaiting distribution to Walmart’s retail stores or directly to customers.
General merchandise and grocery distribution centres account for the bulk of the
company’s overall number of warehouses, although they also have specialty centres
(DeShields, 2016). These warehouses make use of conveyors to sort and move goods from
one point to another (DeShields, 2016). Given that a single distribution centre may serve up
to 100 retail stores at a time, Walmart’s warehouses engage different order picking strategy
for purposes of efficiency. Walmart’s distribution centres are massive, covering over 1
million square feet of space, with over 600 personnel (Walmart U.S., 2019).
The most common feature in Walmart’s distribution centres is a vendor-managed
inventory. Walmart has integrated information’s system that allows for data sharing with its
suppliers (Greenspan, 2019). With access to inventory information, suppliers can then decide
when to send additional products to Walmart. This helps to minimize any delays in inventory
movement and predict inventory shortfalls. Additionally, Walmart reduces operational costs
by placing the burden of inventory management on its suppliers (Rubin, 2018). Operational
costs are also reduced by eliminating the need for storage, something that Walmart has
achieved with the use of cross-docking (Jon Dages, 2016). This refers to the direct transfer of

TRANSPORT AND INVENTORY MANAGEMENT 8
goods from inbound and outbound trucks, without having to offload and store (Rubin, 2018).
This strategy helps minimize time wasted on storage and later transportation of products to
retail stores (Lu, 2018). This can only be achieved in a system where inventory information is
shared openly such as in Walmart (Lu, 2018).
Propose different/better order picking principles to suit the company’s strategic and
operational factors
There is definitely room for improvement in the order picking principles at Walmart’s
distribution centres. The main strategic and operational factors to be considered here are cost
reduction, sustainability and competition. As aforementioned, the core function of
warehouses is to provide customer fulfilment, meaning that new order picking principles
have to uphold the same. Walmart has been facing major competition from Amazon, which
continues to make huge strides in e-commerce (Rey, 2019). Amazon’s fulfilment centres
have been given much press attention for their efficiency, which has significantly contributed
to increased revenue. Walmart, in order to retain its dominance in the retail industry, has had
to increase their investment in online shopping. This implies that improvements in order
picking at Walmart’s distribution centres are related to online shopping.
The integration of e-commerce with physical stores could be a means of improving
Walmart’s order picking principles. So far, Walmart has increased customer interaction with
its online platforms, but have failed to increase their sales volumes in most products (Banker,
2013). This can be attributed to the increased cost of delivering products purchased online to
the customer. The concept of “the last mile” remains an issue for Walmart as it aims to
develop new ways to minimize delivery time while also being cost effective (Ladd, 2018).
The costs associated with “the last mile” include additional logistics required to ensure a
product reaches its final destination. This approach is also labour intensive as pickers are
required to sort items. It would be more cost effective for Walmart to have its customers pick
their products at their physical stores for goods purchased online (Bloomberg, 2017). This
would not only reduce the cost of logistics associated with “the last mile,” but also encourage
customers to purchase additional items at their stores.
Walmart has been focusing on capitalizing on e-commerce, more so since Amazon is
dominating the same (Rey, 2019). This domination by Amazon is to the extent that they are
now stocking groceries whose market was previously dominated by Walmart. This has led to
increased spending on technology to ensure Walmart retains their market share in the sale of
groceries. Recent advances include the use of drones to deliver products to their customers’
actual physical location, with an aim of eliminating costs related to “the last mile
(Bloomberg, 2017).” Instead, Walmart could liaise with the nearest physical store to
consumers shopping online to deliver the products (Ladd, 2018). This implies that order
picking principles would only be applied at the physical stores, thus innovations should be
centred on these stores.
Technology such as automated carts and robots could be enhanced and utilized
together with existing innovations such as radio frequency identification (RFID) tags
(Nguyen, 2017). It is possible to integrate existing systems rather than initiating a fully-

TRANSPORT AND INVENTORY MANAGEMENT 9
fledged venture to satisfy online shoppers. This can be seen in the recent move to automate
online order picking at Walmart’s Salem superstore (Progressive Grocer, 2018). The same
innovation if replicated in its other physical stores would help integrate online and physical
shopping at Walmart. Additionally, Walmart can implement random slotting of products in
its distribution centres, a feature that will help reduce the time taken to pick and pack and
order. This feature has been shown to yield excellent results at Amazon, the implications of
which are reduced delivery time and increased customer fulfilment.
Order picking diagram:

TRANSPORT AND INVENTORY MANAGEMENT 10
In the order picking diagram, Walmart ensures full coordination of the major areas
namely the shipping area, utilizing area, case pick area, order preservation area, and the
receiving area. All the products being transported by Walmart undergo through sorting in the
entire process of delivery.
Critically evaluate how the different/better order picking principles could be influenced by
product inventory types, utilisation of space, stock movement, technology and the location of
picking areas
The most notable types of product inventories at Walmart are transit goods, finished
goods, buffer inventory, and anticipation inventory (Greenspan, 2019). The proposed order
picking principles aim at saving time, reducing cost, and enhancing synchrony between
Walmart’s online and physical stores. Order picking can be influenced by the type of
inventory particularly buffer and anticipation inventories. In both instances Walmart would
have to store extra inventory due to a predicted increase in demand. This means that products
would have to be processed quickly yet efficiently for them to satisfy consumer demands.
Other than the implementation of cross docking, Walmart would have to increase
connectivity between its online and physical stores. Utilization of space and stock movement
will also influence order picking (Johan Oscar Ong, 2014). Walmart has extensive space in its
distribution centres due to the amount of orders they receive. However, they also have to
consider the space at their physical stores if they are to successfully integrate with their e-
commerce portal. This is because the proposed order picking method requires online
shoppers to pick their items from the physical stores nearest to them.
The movement of stock will determine the order picking method to use, because
inventory items vary in the frequency with which they are distributed or moved from the
warehouse. The location of picking areas as proposed in the new order picking principles will
be the physical Walmart stores. The main aim of this is to eliminate extra costs required to
deliver a product to its final destination. Technology is also crucial in determining order
picking principles, more so since inventories vary in size, weight, nature of product (whether
perishable or not), among other differences. Thus, the same technology may not be used to
deliver all types of products (Johan Oscar Ong, 2014). The proposed drone delivery system
has some physical limitations and would be better off stalled until the finer details of the
project are smoothened out.
References

TRANSPORT AND INVENTORY MANAGEMENT 11
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