Walmart is one of the most important retailer, mainly in US. Here we have 4 strategies that make it successful:
1- Few intermediaries in their supply chain: Since 1980 Walmart began working directly with manufacturers to lower costs and better manage the supply chain. Manufacturers were responsible for managing their products in Walmart stores. As a result, Walmart was able to expect about 100% of the re-supply of all merchandise.
In 1989, Walmart was named the retailer of the decade, with an unparalleled distribution cost estimated at 1.7% of its cost of sale – far superior to its competitors like Sears (5%) and Kmart (3.5%). Since then, the company’s supply chain has done nothing more than improve.
2- A strategic and efficient partnership: Walmart establishes strategic alliances with most of its suppliers, offering them the possibility of large and long-term purchases in exchange for the lowest possible prices. In addition, Walmart improved its supply chain by building communication networks with its suppliers to improvise the flow of materials with low inventories.
All the intermediaries in the chain are connected through technological tools, which include a central database, point-of-sale systems at the store level and a network of satellites. In recent years, Walmart has used radio frequency identification (RFID) tags, numerical codes that are scanned from a distance to track the movement of goods along the supply chain.
3- Cross Docking as a method for inventory tracking: Cross-docking is a logistics practice that is a key part of Walmart’s strategy to replenish inventory efficiently. It refers to the direct transfer of products from one truck to another output, without using extra storage.
The suppliers deliver their products to Walmart distribution centers, where they are transferred to another truck, which will be responsible for delivering them to stores. Cross-docking maintains reduced inventory and transportation costs, reducing transit times and eliminating inefficiencies.
Using cross-docking allows you to avoid keeping your inventory stationary for long periods of time; since, the products are shipped by the suppliers to the Walmart stores, and then, automatically, they are re-shipped to the stores. This process is usually done in 24 hours or less.
4- Technology: Walmart has the longest technological infrastructure that any private company in the world. Its state-of-the-art technology and network design enable Walmart to accurately predict demand, control and predict inventory levels, create high-efficiency transportation routes, and manage logistics for customer relationship and service.