Walmart's Supply Chain Management: MGT5PSC Detailed Analysis

This report provides a comprehensive analysis of Walmart's supply chain and procurement processes, examining its strategic goals, mission, and vision, alongside the challenges it faces in supply chain management. It delves into issues related to supply chain operations, information handling, integration, and sustainability, drawing insights from the dynamic alignment model to improve consumer satisfaction and team performance. The report highlights Walmart's historical context as a leading retail company committed to discounted products and services, and analyzes its supply chain and logistics performance, suggesting improvement programs for enhanced market competitiveness. It also covers the existing procurement structure, challenges encountered, and recommendations for improvement, making it a valuable resource for understanding Walmart's supply chain dynamics.

Procurement and supply chain management
A Supply Chain Analysis of Walmart
Source: https://lippincott.com/work/walmart/
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Executive Summary
The report has been crafted post analyzing the supply chain and procurement processes of
Walmart. The document contains detailed information about the company, its background,
strategic goals, mission and vision along with the problems faced in supply chain management,
and the improvements that can be done to achieve the said goals. The report also takes insights
from the dynamic alignment model used in current business initiatives to encourage consumer
satisfaction and to develop high performing teams.
Walmart is the biggest retail sector company with a history of a100 years in serving the world
with discounted products and service offering into a variety of divisions. The founder of the
company, Sam Walton, had put forth the mission of providing discounted products and services
attaining high economies in scale. The mission and vision statement of the company has been
strategically inclined towards the cultural identify set by the founder.
The report analyzes Walmart’s supply chain and logistics performance through various issue
scattered under dimensions of supply chain, company operations, information handling as well as
integration and sustainability issues. It also addresses the suggestive improvement programs that
can be undertaken and developed for attaining market competitiveness.
The complete analysis of the existing structure of procurement and supply chain has been
detailed with the problems faced during its complete work cycle. Therefore, it is a document
having information from its incorporation and the problems faced in supply chain and
procurement in the present scenario.

Table of Contents
Executive Summary.........................................................................................................................1
SUPPLY CHAIN MANAGEMENT AT WALMART...................................................................1
Company Introduction and Service Offering..................................................................................1
Strategic Goals, Mission and Vision...............................................................................................2
Issues with Supply Chain Management...........................................................................................2
Supply Chain Issues.....................................................................................................................2
Operational Issues........................................................................................................................3
Information Issues.......................................................................................................................4
Integration Issues.........................................................................................................................5
Sustainability Issues.....................................................................................................................7
Analysis of Existing Structure of Procurement and Supply Chain..................................................9
The Dynamic Alignment Model..................................................................................................9
Improvement Programs and Recommendations............................................................................11
Gaps based Analysis..................................................................................................................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

SUPPLY CHAIN MANAGEMENT AT WALMART
Company Introduction and Service Offering
Walmart Inc., the globally thriving American international retail corporation manages and
operates 11,300 stores and clubs in over 27 nations, has an expanded business line with 58
different names. Being a world’s largest giant and having a span covering the globe, with over
2.3 million employees and a broad customer base of over 100 million, visiting the stores every
week, it is very essential for the company to manage and maintain the supply chain and
procurement processes as efficiently as possible.
Walmart started as the retail service provider, offering low prices to obtain higher volumes over
a marginal profit expectation. The retail offerings turned and expanded to divisions of all
possible retailing items, pharmacy and financial service, wireless and photo lab services, and
many more. The company introduced technology and innovation in the overall process making
the shopping experience memorable, convenient and comfortable for customers (Mark K., 2012).
As of current scenario, Walmart defines its services divisions into categories of Money Services,
Product services, Health Services, Business Services, Registry Services, Auto Services and Pet
Services. The shopping experience has also reached door-to-door with the E-commerce platform
integration to the store offerings. Driven by consumer market share, Walmart faces strong
competition from Amazon services, but stands strong on the supply chain and leadership front. A
chart is presented below to convey the cut-throat competition between the two facility providers.
Fig 1: Walmart Vs. Amazon
Source: https://revionics.com/amazon-vs-jet-com-vs-walmart-price-leadership-holiday-gift-category/holrpt-amazon-v-
walmart/
Strategic Goals, Mission and Vision
The company’s mission is the one realized and founded by Sam Walton, to provide discounted
products and services attaining high economies in scale. Driven by the founder’s philosophy of
making Customer No. 1 and the unique culture, the company still maintains the originating ideas
as its core operating principles. With time, Walmart has inculcated the idea of bringing together
technology and world class retailing experience for its customers. The company’s slogan of
“Save Money, Live Better” is another strategic business goal that the company focuses in
devising its strategic policies and decisions (David, et al., 2014). The company’s corporate vision
statement, as articulated in year 2017, states “Be THE destination for customers to save money,
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no matter how they want to shop”. Walmart has also started investing in the environment
friendly and sustainable approaches of business practices. Aligning business models and
strategies in accordance to the business objective.
Issues with Supply Chain Management
Supply Chain Issues
Supply Chain issues are the concerns linked with the heavy demand and supply
mechanism of Walmart. Offering a wide variety of services and products, with huge market
demand, it is always a necessity of highly cost effective and performing logistics provider. As
Walmart operates and owns many of its own Supply chain modes, thereby taking the complete
end to end responsibility of delivering goods to its stores, it becomes important to settle and
manage the challenges faced in the process (Natto H., 2014). Handling the SCM process, the
company faced challenges with inventory management. The company modified its strategic
approach towards the same and innovated with its process implementing the Vendor
Management Inventory system, reaching directly to manufacturers cutting intermediary costs and
reducing the lag time of deliveries, by allowing vendors to manage their own products in its own
warehouse.
Due to a very high consumer demands and expectations, the procurement department holds the
control of all the retailing products offered under the flagship. The customer expectations are met
by the high performing suppliers based out of different countries across the globe (Gilling &
Ulmer, 2016). The major supplying parties that manages the consistent load for deliveries come
from 4 companies operating from U.S. and one based out of Japan. They are Plug Power for
energy and power management, Funai Electric Co. for electronic equipment, CCA Industries for
health and beauty products, Green Dot Corporation for banking and finance service management,
and Primo Water Corporation providing home improvement and depot products.
Considering the heavy flow of products and services, the company has inculcated the process of
purchase as an integral part of the supply chain procurement method. In order to beat the
competition from strong and competitive contender, like Amazon, Walmart has successfully
implemented the principles as indicated by Kraljic (1983).
Operational Issues
Rise and fall in demand led to the enhancement of operational strategies and approaches towards
inventory control. The modified Vendor Managed Inventory mechanism also started falling out
due to lack of technological support (S. & Tucci J. .E., 2015). To develop a cost-effective
process, the company decided to invest into innovation at the same. The company invested over
$10.5 billion in technology, eyeing the rise of E-Commerce platform capabilities and information
technology interference in retailing process.
The operational process suffered setbacks from various manual and transportation delays, but the
overall management, leadership and continuous improvement programs have enabled Walmart to
manage the on-demand supply requisites and stay competitive. Majority of the customers of
Walmart are now taking the road of e-commerce and therefore the role of logistics supplier has
become more prominent. The operations of e-commerce are booming, and the observed trend is
of a steep increase. Below is a graph depicting global company site visits on both
laptops/desktops and mobile, for the month of July 2019.
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Fig 2: Total global visits to Walmart, July 2019
Source: https://www.statista.com/statistics/714568/web-visits-to-walmartcom/
Due to the rising demand of e-commerce facilities, the company’s consumer base has been
geographically discrete and distributed (Himanshu & Sharma, 2015). In order to fulfil the rising
demands and to effectively manage the supply chain, Walmart has invented the principle of
Vendor Managed Inventory where manufacturers are responsible for managing products in the
warehouse. The initiative has been very successful as the demand of consumers in the
merchandising segment has been met by Walmart as a 100% order fulfilling success score.
Walmart has been using the same mechanism for most of the products in the inventory. Majority
of the inventory management challenges have now been dealt with.
Information Issues
The information is an integral part of supply chain, which is sent, collected, manipulated and
managed at all levels to effectively organize sales process. Any distortion in the actual
information exchange can lead to huge variance and discrepancies in orders and supplies, which
can harm the brand image by upsetting consumer demand analysis. The Bullwhip effect
(Padmanabhan et al., 2009) is a variance that occurs in the supply chain due to communication
and information exchange errors. The discrepancy in the information process was overcome by
utilizing the technological equipment and enhancing the communication mode (Burke & Litwin,
1992).
Walmart has the data storage and management capacity of around 570 TB, which gives it the
maximum data management and manipulation potential but also leaves the error window to
exponential failure rates if miscommunication in sales demand takes place (Traub T., 2012).
Most of the reported errors occurring due to Bullwhip effect is due to promotional sales offerings
from the provider, Walmart bypasses these problems by allowing everyday-low-pricing strategy,
maintaining its mission. Walmart has invested in upscaling technology to manage losses and
overcome supply chain challenges over the course of time. IT started suing satellite
communication to integrate its stores, created Point-Of-Sales systems for effective serviceability,
radio frequency network to track stocks in inventory, Voice based order fulfilling systems retail
link systems, and collaborative planning, forecasting and replenishment systems also known as
CPFR.
Another important technological advancement adopted by Walmart of the RFID, which is Radio
Frequency Identification, where the scanning of barcode is no longer required during the billing
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phase (Traub, 2014). This has enabled the company to save labor costs and time and has enabled
company to enhance the power of Just-In-time processing at inventory and deliveries
management.
Integration Issues
Walmart has its well-established logistics and procurement supply chain. Over the course of time
Walmart has realized strong need of technological upscaling and innovation. The company has
integrated its business operations with inventory management advanced modelling structures and
have also developed high speed communication channels for better performance (Ellinger, et al.,
2015).
Based on analysis done with the supply chain and operational issues, and also inculcating the
information and technological findings, below is a comprehensive map of the entire supply chain
process, as observed through Walmart itself.
Fig 3: Comprehensive Map of Walmart’s Supply Chain
Source: https://asia.floorwage.org/workersvoices/reports/precarious-work-in-the-walmart-global-value-chain
The strategic key process objectives of the company have remained in line with the company’s
mission and vision. The company has identified its integration issues in parallel to the
distribution mechanism enhancement (Walmart, 2012). The company identified the possible set
of intermediary related conflicts and have developed its own supply chain network building
strong relationship bonds with suppliers and material providers. The company saves intermediary
costs and instead invests in maintaining supplier relationship with interactions, visits, audit
procedures, inventory management programs etc.
Walmart has adopted its performance based on the tenets of the Triple A- strategy of Supply
Chain, i.e. agility, adaptability and alignment. (Lee, 2004) The company adopted the agility
modeling framework when the process on inventory management was handed over to the
vendors. What started as an experimental attempt with merchandising segment became a
successful attempt with perfect scores. Adaptability to the changing consumer demands and
meeting the dynamic expectations has also been a part of the strategic goals of the company.
Adapting to the consumer demand, the move towards e-commerce facilitation has brought string
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competitive advantage for Walmart. Also, the third tenet of alignment between high performance
teams, suppliers and logistic performers, with clear and transparent information sharing
mechanism, and an on-time, in-full policy changes to the existing structures for accommodating
innovation has led to the management of integration related issue handling (Lambert and Cooper,
2000).
Sustainability Issues
Walmart has established and rendered the company objectives along with the environmentally
sustainable practices. It aims at developing a zero wastage, 100% renewable energy operated
value chain model (Meeks & Chen, 2011). Walmart has dedicated its Project Gigaton to reduce
the greenhouse gas emission with complete participation of suppliers and logistics wing for
achieving the target of 18% reduction by 2025 against the emission reported in year 2015. The
company also aims to set 50% of its operations on renewable energy by the same year.
Fig 4: Environmental Sustainability at Walmart
Source: https://corporate.walmart.com/global-responsibility/sustainability/sustainability-in-our-operations
Fig 5: Proposed metrices for Project Gigaton by Walmart
Source: https://corporate.walmart.com/esgreport/environmental#climate-change
Walmart has also started the initiative of waste reduction and intends to bring it down to zero.
The target countries for zero waste generation, by 2025, under the first initiative are Canada,
Japan, the U.K. and the U.S. The company is also investing in wastewater management systems,
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by focusing on directed operations in two different directions (Robinson, 2015). One is to reduce
the water wastage and manage the utilization, and second if the treatment of water quality post
usage at the company, for effluence as it returns to the water system.
Fig 6: Waste management – plastic, and water
Source: https://corporate.walmart.com/global-responsibility/sustainability/sustainability-in-our-operations
Analysis of Existing Structure of Procurement and Supply Chain
With the intention of staying competitive and string in the supply chain and market operations,
organizations have turned their interest to the area where the focus is shifted to develop high
performing teams. The dynamic alignment model thus found its existence when the business
leaders identified the need of identifying and diagnosing factors that have an impact on
organization wide effectiveness.
The Dynamic Alignment Model
A new generation model that brings together an enthusiastic workforce with
technologically upscaled systems and processes, the organizations identified these to be the
strategically potential carrying objectives that can help perform at unprecedented levels. The
dynamic alignment model identifies the process of designing and crafting the strategies to suit
the current needs, enabling and developing employee skills for higher performance, unlocking
the human workforce potential with motivate innovation and elevating leadership practices for a
culturally effective and sound performing unit (Bode & Wagner, 2015). This model not only
brings forward the design phase of company’s operations but also focuses on the company’s
objectives, goals and mission.
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Fig 7: Exemplary dynamic alignment model
Source: https://www.sirota.com/the-dynamic-alignment-model/
Walmart’s dynamic alignment model has the new idea of e-commerce enhancement at the
central focus with the new strategic models and processes. The team is expanding and managing
the source of operations and planning to go global with the process, which is now limited to 10
countries alone. The dynamic model that observes the transformational phase, has been portrayed
by Jake Barr of Procter and Gamble. The observation on the transformational phase, which is
also managed and followed by Walmart reflects performing a market segmentation analysis,
while driving decisions of logistics strategies (Lu, 2014). Also, a similar analysis on suppliers
with least cost analysis is done to transform the business performance. A reflection from
previous Back to shelf mode to On-demand transformation is depicted on the chart below.
Fig 8: Supply Chain Leadership and Dynamic Alignment
Source: https://blog.kinaxis.com/2012/06/dynamic-supply-chain-alignment-a-theory-ready-for-practical-application/
Thus, the dynamic alignment model of the supply chain of Walmart creates a flexibility and
responsiveness in addressing the opportunities and the threats while creating and sustaining
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multiple chains of supply with the chain partners, suppliers, and customers, through direct
interactions and high performing teams.
Improvement Programs and Recommendations
Although Walmart has an extensive supply chain that has been functional over a century, most of
the innovations is brought up by it and excellence in the processes has already been achieved.
The 24 hours dock cross delivery system of Walmart is a strong contender to the standard set of
logistics supply by Amazon which has introduced the 2-day free delivery system. This new
delivery system has increased the revenue and the brand value of Amazon giving it a strong
competitive advantage (Forbes, 2016). Also, this method of branding places a good stress on
Walmart.
Yet, there are certain supply chain measures of Amazon that can be adopted by Walmart.
Amazon has a well-built chain of logistics from the warehousing, technology, delivery to
manufacturing, that offers delivery at the hub points where customers can pick-up their purchase.
This mechanism suits best for people working or travelling or moving away and the delivery
does not remain bound to the premise (Mangan, et al., 2016). Thus, the company has an
opportunity to increase its revenue flow by introducing more liberal methods of delivery and
reaching out to its customers through pickup facilities and operational hubs. This practice is
already in place with Walmart, but the extension of these services can be utilized as it seems to
have potential in performance improvement and competitive advantage.
Recently Walmart has been in news against the labor policies and compensation. Over an
extended course of time, this issue has remained hot with the firm. As an improvement scope,
measure for better and enhanced labor policies can be brought in place to prevent any leaks or
fallouts from the employability perspectives (Sehgal, 2014).
The mission to provide discounted products and services to the people has been the primary
moto of operations of Walmart. But to give it a new look and life, Walmart can implement the
different improvement programs in its supply chains and logistics, glorifying the strategic goals,
mission and vision of the company. The improvement program intended for growth of logistics
delivery through enhanced pick-up hub, can help save time and cost in deliveries (Zentes, et al.,
2007). This would lead to an additional effort towards reducing the greenhouse gas emissions
and would also help with wastage control. An additional impact of upgraded and balanced labor
policies would help magnify the performance of the brand. The opportunities realized through
the fulfillment of these gaps can be considered as the mode of maintaining competitive
advantage.
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Fig 9: SWOT analysis – Walmart
Source: https://bstrategyhub.com/swot-analysis-of-walmart-2019-walmart-swot-analysis/
Gaps based Analysis
Walmart had the mission of providing low-cost or discounted products to its customers and it has
achieved it over the years without any failure. But with the increased competition in the market
for dominance and the other companies striving hard for customer satisfaction, Walmart has to
take significant steps to maintain its position. Since its incorporation, the company expanded its
wings for multinational trade and currently the rising economies offer a great potential in growth.
The South Asian countries like India, Sri Lanka, Bangladesh offer a variety of growth
opportunities (Matusitz & Reyers, 2010). This would help to meet the strategic goals and the
gaps in policies can be covered.
Also, the environmental sustainability in these countries and managing business with renewable
and environment friendly operational strategies is challenging. Implementing innovation to meet
the desired outcome and remain directional with the goals of sustainability in business, Walmart
has a large scope of building strong foothold.
Conclusion
The world's largest revenue generating, and the oldest company Walmart is an extensive supply
chian operating retail business, where the role of logistics is very crucial. In order to continue the
competitive advantage in the string competition, the company, on time-to-time basis have
attended to various issues relating to supply chain, operations, information, integration and
sustainability. The role of technology and innovation has been centric in a successful
development of the existing proficient processes for Walmart. The report analyses the issues in
depth, understands the dynamic alignment model and connects the opportunities through gap
analysis. The recommendations for process improvement are also suggested, to ensure that the
areas can be further enhanced and challenges can be managed, making Walmart the complete
business leader.
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