Strategic Analysis of Walmart's Supply Chain: A Comprehensive Report

This report provides a detailed analysis of Walmart's supply chain network, examining its operations from finished goods procurement and manufacturing to distribution and logistics management. The study utilizes Steven A. Melnyk’s Outcome-Driven Supply Chain Model to assess Walmart’s strategic approach, evaluating elements such as cost, responsiveness, security, sustainability, resilience, and innovation. The report explores Walmart's strengths, including its efficient management of a vast supply network and continuous efforts to improve, alongside identified weaknesses. The analysis covers both direct and indirect procurement methods, distribution channels, inventory management techniques, and the integration of technology. The conclusion highlights the complexity of Walmart's supply chain and the importance of its effective management for maintaining its competitive advantage. The report underscores the critical role of supply chain management in supporting Walmart's ability to deliver products to consumers at low costs.

Running Head: Supply Chain Analysis
Supply Chain Analysis: With Special Reference to Walmart
Student Details
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Supply Chain Analysis
Executive Summary
Supply chain is the interconnection of various methods, channels, business, and networks.
This interconnection helps in supply of raw material and finished goods and services from their
point of origin to the point of consumption. Walmart is world’s largest and biggest retail store and
delivering products to millions of customers at a low cost from the market. As it is very large, hence
it requires a very effective and efficient supply chain network. For this report, the supply chain
network of Walmart has analyzed thoroughly, in order to find out the mesmerizing network of flow
of finished goods from manufacturer to end consumers by going through different channels of
supply chain.
This analysis has done by using Steven A. Melnyk’s Outcome-Driven Supply Chain Model.
It was just the descriptive study, so it analyzed the secondary data only and according to proper
analysis of the model, it has concluded that the supply chain of Wal-Mart is very complicated and
its proper management is very important. The company is managing every aspects of its supply
chain from procurement of goods to its delivery to end consumer. The study by using Melnyk’s
model concluded that company’s supply chain network is quite effective. It is efficiently managing
the supply of large number of goods from their respective producers to retail stores of Wal-Mart
and ultimately to end consumers. Company is continuously working on overcoming its weakness.
Wal-mart is outcome focused and has proper check on each step of its supply chain.
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Supply Chain Analysis
Table of Content
Contents
Executive Summary.............................................................................................................................2
Table of Content...................................................................................................................................3
Introduction..........................................................................................................................................5
Walmart Profile....................................................................................................................................5
Supply Chain Management Theory /Model.........................................................................................6
Outcome Driven Supply Chain Model.............................................................................................6
Cost...............................................................................................................................................7
Responsiveness.............................................................................................................................7
Security.........................................................................................................................................7
Sustainability................................................................................................................................7
Resilience.....................................................................................................................................7
Innovation.....................................................................................................................................8
Walmart Supply Chain Network..........................................................................................................8
Finished Goods Procurement.......................................................................................................9
Manufacturing of Goods..............................................................................................................9
Distributing Goods.......................................................................................................................9
Management of Logistics...........................................................................................................10
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Supply Chain Analysis
Managing the Inventory.............................................................................................................10
Walmart’s Supply Chain Strategic Analysis by using Melnyk’s Model...........................................10
Cost.............................................................................................................................................11
Responsiveness...........................................................................................................................11
Security.......................................................................................................................................11
Sustainability..............................................................................................................................11
Resilience...................................................................................................................................11
Innovation...................................................................................................................................12
Combined Outcome of Supply Chain and Model..............................................................................12
Strengths of Walmart’s Supply Chain Network.............................................................................12
Weaknesses of Walmart’s Supply Chain Network........................................................................13
Conclusion..........................................................................................................................................13
Bibliography.......................................................................................................................................15
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Supply Chain Analysis
Introduction
Supply chain management is the movement of goods and services from their point of origin
to their point of consumption. With the flow of manufactured goods and services, supply chain
management also includes the flow of raw materials required for manufacturing the products.
Supply chain management is the combination of some steps, which one have to follow in order to
create an effective supply chain for their business products or services. These steps have not fixed
for every business. They vary business to business according to their requirements. However, on
general level supply chain management steps include planning what produce has to be produced
and how to produce it. Then organize the ways of its production. It has done by distributing the
channels of production for the concerned product. Then identify the channels of distribution for the
manufactured product to its end consumer (Mentzer, DeWitt, & Keebler, 2011).
When considered in general all streams of supply chain management are important.
However nowadays lots of attention is paid on marketing channels of supply chain and on the other
hand maintaining customer relations (Christopher, 2016). Current study is all about the supply
chain of a leading company named Walmart. With this study, an attempt has made to analyze the
supply chain network of this company. In upcoming text, detailed explanation of company and its
supply chain are given.
Walmart Profile
Walmart is an American retail store that has its chain internationally spread out. It has
founded by Sam Walton and has incorporated on 31 October 1969. Headquarter of the company is
in Bentonville, Arkansas, USA. It has many branches as the chain of discount departmental stores,
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Supply Chain Analysis
grocery stores and hypermarkets in all over the world. Apart from them, it also includes and
operates Sam’s club retail warehouses. In USA, it has almost 4672 stores and in all over world it
has more than 11 thousand stores and clubs in almost 27 countries with different names. Walmart is
not present in Australia right now, but research says that it could be coming soon (Jambil, 2017)
(Walmart, About Us, 2019).
Walmart generally considered as world’s top retail store for delivering commodity goods to
its customers. However, very few know the links of different channels behind the offering and
delivering of goods to customer on such a very large scale and at a low cost. In order to identify the
biggest retail chain of the world this report has been made. The report contains detailed analysis of
supply chain of Wal- Mart and its strengths and weaknesses for the company. It also focuses on
identifying different supply chain theories and tries to relate one of them to supply chain network of
Walmart (Walmart, Our Company, 2019).
Supply Chain Management Model
Supply chain management is the process where many businesses come together to facilitate
the flow of raw materials from suppliers to manufactures and then complete goods and services
from manufacturers to end consumers. These businesses have linked to one another in order to
provide smooth flow of goods from one end to another. Here some supply chain models have
discussed in detail to clear the flow of goods and services from manufacturers to end consumers
(Carteri, Rogers, & Cho, 2015) (Fayezi & Zomorrodi, 2015).
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Supply Chain Analysis
Outcome Driven Supply Chain Model
This model has suggested by Steven A Melnyk and talks about the outcome focused factors
of a supply chain. These factors have discussed in the following lines (Melnyk, Sandor, Davis, &
Spekm, 2010).
Cost
Cost is the total amount gets involved in the production of the good and its delivery from
producer to the end consumer. According to some experts, cost has considered as the winner of the
orders while delivery and the quality are just considered as the qualifiers of the race.
Responsiveness
It is the ability to change according to circumstances promptly. The can be related to
product diversification, new product launch or increase in market segmentation. When the company
is responsive enough, it can change higher prices also.
Security
It is something that has grabbed attention recently. Security is concerned with the fake use
of materials breach of any code in between the supply chain network of the company. The product
should not be contaminated or damaged, so its security is necessary.
Sustainability
Many people confuse sustainability with security. Sustainability deals with security but in a
different way. It makes sure that the product that is chosen for production is economically and
socially friendly. It should not harm the nature and the people of the society. Its production should
be sustainable in nature (Barney, 2012).
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Supply Chain Analysis
Resilience
Resilience is something, which is dealing with the disruptions in the supply chain, which has
caused by some natural disaster, economical issues, national issues, etc. quickly and effectively.
Innovation
It has always said that, Innovation is the key to success. Every business should focus on
time-to-time innovations in their supply chain of products and services. They need to do this with
the need of being successful in the market.
Walmart Supply Chain Network
The supply chain network of Walmart includes a series of steps, which starts from
procurement of products from manufactures and then selling them to end consumers through their
retail stores. These steps include both traditional and modern ways of supply chain network
(Walmart, About Us, 2019).
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Supply Chain Analysis
Source: Walmart’s Supply Chain Model (Jambil, 2017)
Finished Goods Procurement
Walmart is a retail store it usually not manufacture the products. It attains finished goods
from different manufacturers and sells them to end consumers under one roof (Grean & Shaw,
2019). The procurement of finished goods by Walmart has done by two ways that are explained
below.
a. Direct
In this method of procurement, Walmart stays in direct contact with manufactures by
purchasing their products in bulk. Bulk purchases help in reduction of cost for Walmart and its
customers.
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Supply Chain Analysis
b. Indirect
In this type of procurement method, company does not buy the products of manufactures,
infect they do strategic partnership with them. In this partnership, Walmart tells manufacturer that
they will get a fix percent of profit when their products have sold.
Manufacturing of Goods
Apart from procuring finished products from the manufacturers, Walmart from sometime
started on appointing some manufacturers to get their products like apparels, foods, home products,
etc. manufactured in bulk. It makes those manufacturers strategic partners, who can produce their
products at lower costs.
Distributing Goods
Walmart has a very big chain of distribution of its procured and manufactured products.
They have approximately 4700 stores in USA and more than 11000 stores in all over the world like
USA, Europe, Africa and some parts of Asia. Different products have forwarded to retail stores
from the warehouses of Walmart to its retail stores (Walmart, Logistics, 2019).
Management of Logistics
It is a massive process of planning, scheduling, obtaining and managing truck drivers and
monitoring the whole process. They move products for delivering to 200 million customers from
11000 stores. They are offering products for sell through digital networks also. In order to make
sure that their distribution network is functioning properly that on an average use 6500 tractors,
55000 trailers and more than 7000 drivers. They use super cube and advance level tractors to
deliver (Walmart, Logistics, 2019).
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Supply Chain Analysis
Managing the Inventory
Walmart massively invest in information technology and communication in order to manage
a large amount of inventory. It also had installed its own satellite system in 1983 to remove
interruptions in communication from their network. It also started using POS in 1980s, to monitor
the stock levels. In 1991, it has developed a 570 Tb database named Retail Link so that many
suppliers can tack their order on regular basis. It also has introduced RFID technology in 2004
(Shin & Eksioglu, 2015).
Walmart’s Supply Chain Strategic Analysis by using Melnyk’s Model
Melnyk’s model has six elements through which efficiency and effectiveness of supply
chain of organizations have analyzed. The steps in supply chain network of Wal-Mart have
analyzed in following paragraphs by using the model (Walmart, Logistics, 2019) (Melnyk, Sandor,
Davis, & Spekm, 2010).
Cost
According to some experts, cost has considered as the winner of the orders while delivery
and the quality have just considered as the qualifiers of the race. Cost involved in Walmart’s supply
chain was not that high earlier but after innovations in its supply chain by introducing its own
satellite and becoming an online business, it is now gaining its pace.
Responsiveness
It is the ability to change according to circumstances promptly. The Wal-Mart is responsive in
nature as it has the ability to diversify its supply chain. It uses many new and innovative ways of
supplying goods from one place to another, still then charges less for its products. It made an online
portal named Walmart Grocery, for providing products to its customers through internet.
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Supply Chain Analysis
Security
Security is concerned with the fake use of materials breach of any code in between the
supply chain network of the company. Supply chain of Wal-Mart is completely secured as the flow
of its products is being tracked through its own satellite 24/7.
Sustainability
It makes sure that the product that has chosen for production is economically and socially
friendly. The supply chain of Wal-Mart is also sustainable in nature as it tries to offer products at
very low cost as compared to others to its customers (Alex, 2012).
Resilience
The resilience of Wal-Mart’s supply chain is very prompt. It has many alternatives to use
instead of originals in case of any natural disaster, economical issues, national issues, etc. quickly
and effectively. In case of shortage, it has many warehouses in that it stores the products from
before only to get then delivered in case of any emergency.
Innovation
In order to be profitable in the market the supply chain of Wal-Mart has always be updated.
New technologies are coming and people are switching online for buying products, so as Wal-Mart.
Combined Outcome of Supply Chain and Model
Management of supply chain is not just the work of single stream. It includes streams like
Product and System Engineering, Operations Management, Information Technology, Logistics
management, Marketing Management and Customer Relationship Management (Kotler, 1993)
(McDonald & Woodburn, 2011). As supply chain management is the combination of all these
streams, it needs experts to handle functions at each step perfectly. With the help of this model,
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Supply Chain Analysis
Walmart can identify the efficiency and effectiveness of their supply chain. If they find inefficient
network they can fix it as soon as possible. Here some Strengths and Weaknesses of Supply Chain
of Wal-Mart are discussed:
Strengths of Walmart’s Supply Chain Network
 It has already mentioned above that the Walmart is world’s largest retail store offering
goods to a large number of customers. This becomes possible by having a set network of
systematic supply chain (Mehrjerdi, 2009).
 The entire organization focuses on reducing cost of goods for their customers and so as for
themselves also. In order to fulfill this they designed their supply chain in a way that draws
out money from supply chain, keep products’ prices low, and keep chain eco-friendly
(Ghosh & Shah, 2012) (Tate, Kirchoff, & Ellram, 2009).
 Walmart works directly with the manufacturers without involving any intermediary, which
cuts the cost and allow them to be profitable in nature. They also have their own satellite to
tack order deliveries from manufacturers to end consumers (Tajima, 2019).
 Walmart is a very big organization so as its functions also. In order to provide variety of
products to a large number of customers, it has largest number of warehouses and retail
stores as compared to other companies.
Weaknesses of Walmart’s Supply Chain Network
 Walmart is a big brand name but still it has some weaknesses. It delivers its products
through online portal only within the territories of USA, but not outside it. It needs to
expand its region.
 Walmart’s supply chain model was a unique one but not that complex. This makes the
model direct target to get copied by other competitors in the market.
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Supply Chain Analysis
 By providing products at low cost to its customers and making its supply chain as simple as
possible by cutting costs, Walmart’s profit margins are becoming low. In order to overcome
this it is now also shifting to online business.
Conclusion
On Walmart, stores customers can look for their products from among approximately one
million products. There are many stores of the company available for customers near to their places.
Walmart also delivers the products to customers on demand but within some territories only, not
outside that. In earlier times, the experts believed that supply chain just offers reduced cost, fast
deliveries, and quality improvements. However, in today’s world these parameters have not
considered satisfactory enough (Oswald, 2012). Different models and theories have designed to pay
proper check on supply chain network of different companies. For this purpose, the supply chain
network of Wal-Mart is analyzed by using Steven A. Melnyk’s model. Supply chain management is
a complicated process. It deals with different fields with different point of views of people. The
study by using Melnyk’s model concluded that company’s supply chain network is quite effective.
It is efficiently managing the supply of large number of goods from their respective producers to
retail stores of Wal-Mart and ultimately to end consumers. It has also identified that the Wal-Mart’s
supply chain has some strengths and weaknesses. Its biggest competitor is Amazon, as it has similar
business concept with little variations (Shin & Eksioglu, 2015). Company is continuously working
on overcoming its weakness. They are now outcome focused and have proper check on each step of
their business. They are trying to expand their business in countries of world where there is big
economy and good scope for expansion.
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