Walmart’s Vendor-Managed Inventory Model

From the case study “Rodillas de Titanio Kapeju” we have recognized the apparent problem of managing the massive inventory that many companies have to face. Therefore I think we all can more or less learn from the example of Walmart, whose one key success lies in their famed Vendor-Managed Inventory model.

By utilizing the advantages of modern communication technology, Walmart shares the data of its information system with the suppliers, who then can monitor the current amount of goods and the rate they are being sold. Based on this information, the suppliers themselves can figure out when Walmart will need to replenish its inventory and send the delivery accordingly.

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The benefits of this practice are clear:

  • Reduce the delay in transporting the goods through the supply chain as the supplier can now even more actively take part in the supply chain, rather than waiting for Walmart to place the order.
  • Decrease the cost of managing the inventory, because with this model Walmart doesn’t have to spend the human and financial resource to monitor and manage each supplier’s good anymore.

It goes without saying, that this model was only made possible with a hefty amount of investment in the IT System as well as many other technologies, for example RFID or bar code scanning, but the reward in the end was indeed enormous.

Sources:
1.
https://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-walmart
2.
http://www.investopedia.com/articles/personal-finance/011815/how-walmart-model-wins-everyday-low-prices.asp

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