Walmart Supply Chain and Delivery Time Cycle Analysis

Introduction

Walmart's delivery time cycle performance is central to its dominance in the retail sector. There are other large retailers that closely or loosely match what Walmart sells, including Kroger, Kmart/Sears, and Target. However, in its half-century or so of existence, Walmart has become the juggernaut of the world retail sector, and there is little chance of that changing anytime soon, barring a cataclysmic event in the retail or broader business world. While Walmart has taken its share of criticism for wages, benefits, and the volume of goods it sources from China, its position as the retail cost leader — and the degree to which its supply chain management and delivery time cycle contribute to that position — cannot be denied or ignored.

Automated Replenishment and Distribution Center Operations

Walmart is the global leader in retailing and clearly dominates the United States market. Other players are not irrelevant — Kroger and Target are making meaningful inroads — but no single retailer rivals Walmart's combination of hard goods and grocery. One of the primary reasons for this is Walmart's supply chain. The genius of Walmart's system is that the vast majority of goods replenishment is triggered automatically as items are sold at the register. Each item is assigned a "max shelf" figure, which defines how much can fit on the sales floor at any given time. When the quantity on hand falls to a certain threshold relative to that figure, an order is automatically generated.

Complementing this system, Walmart operates distribution centers across the United States and around the world, ensuring that the vast majority of its goods are within a few days' reach of any store at most. These facilities use separate receiving bays for grocery and hard goods, since the handling requirements for each category are quite different. Walmart also makes use of what are known as "break packs" — reusable boxes of varying sizes used to ship goods that are not sold or distributed by the full case. When these boxes are emptied at the store, they are folded flat and returned to the distribution center for reuse. Damaged boxes are recycled along with other cardboard in the store's baler.

Importantly, Walmart is careful not to be too efficient in terms of delivery volume. The company operates on a just-in-time principle, whereby goods are delivered before the shelf is empty but without excess. Overshipping is particularly problematic when a product is perishable or when storage space in a store is limited (Walmart, 2014).

References

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