Supply chain management innovation keeps Walmart on Gartner’s Top 25 list
Seeing Walmart on the Gartner Supply Chain Top 25 list is certainly not unusual (they are #14 on the 2014 list), nor is it surprising to learn the retail giant grossed $476 billion in sales during the fiscal year. But few are aware that Walmart achieves that tally against distribution costs of just 1.7% of those sales.
Walmart’s success in supply chain management is the result of many years of industry-leading innovations in both data management and strategic distribution methodology. While these innovations are numerous, a recent study by the University of San Francisco highlighted several:
Vendor-Managed Inventory. Since the 1980s, inventory in Walmart warehouses has been managed by the suppliers themselves, motivating partners to operate more efficiently on their side and to share their logistics and analytical data.
Demand planning. Walmart’s supply chain operations are explicitly driven by accurate forecasting, derived from complex analytics that integrate history, sales, promotions, and changes in the activity of competitors.
Centralization of performance data. In 1989, Walmart pioneered data centralization, consolidating at the national level its point-of-sale data, nation-wide warehouse inventories, and distribution center activity. Since then, much of that data has been integrated into the logistics and planning of its partners.
Not all of the retailer’s technological innovations have met with success, however. Its initiative to prematurely push its suppliers to adopt RFID technology a decade ago met with considerable resistance, though the adoption of RFID has been, in general, very positive for supply chain technology in general.
Gartner called Walmart “a perennial supply chain powerhouse,” and praised its “mature supplier collaboration process.”