final report global supply chain management of walmart

VIETNAM NATIONAL UNIVERSITY, HA NOI INTERNATIONAL SCHOOL

Dinh Trung Hieu Tran Van Khanh Nguyen Thuc Khanh

Hanoi, 17" June, 2022

CONTRIBUTION TABLE

Full name Date of Student Class Participation birth ID

Do Lan Huong 05/04/2001 | 19071385 | IB2019B 100%

Nguyen Thuc Khanh | 02/10/2001 | 19071387 | IB2019E 1 100% Tran Van Khanh 30/04/2001 | 19071389 | IB2019C 2 100%

Dinh Trung Hieu 28/11/2001 | 19071365 | IB2019B 100%

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TABLE CONTENT

EXECUTIVE SUMMARY 4343 5 PART 1: OVERVIEW OF WALMART SUPPLY CHAIN 00 cc ccccceceseeeceeeeees 6 I Overview about Walmarf - Ặ SÁ HH HH HH HH HH HH HƯU 6

II Introduction to the supply chain stratesy of Walmart 6

PART 2 THE EFFICIENCY OF WALMART SUPPLY CHAIN 7

I Lean manufacturing principlÌes - - Án HH HH HH HH 7 1 Jusf-in-fime producfion - Ăn HH HH HH HH HH kh 7

P AC nm 7

E AI 0 didặỳỪD 7 4 Respect human elemenS - - Ăn HH HH HH ng HH HH, 8 H — Network design SÁT HH HH HH HH HH HH HH In 8

2 Information technology (ÍÏT) - Ă SĂ HH HH HH HH HH HH 9 EM 9 HI Supply Chain Management at Walmart Ặ ẶĂ SH 10

1 Procurement and Distributfion - HH HH HH HH Ha 10

PP NMI, 0 nên .eố 11 2.2 Wareh0iUs© SVSÍCHH Ăn HH TH HH HH HH HH Hy 11 3 Invenfory ManagemenÍ{ - -Ă SÁCH SH HH HH HH HH HH kh 11 = ae 13 hố 14 6 Operafion managem€nÍ : - - Án TH HH HH HH HH HH 14

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6.3 Process and Capdbility Desig1 cà He 15 6.4 Design Layout qHd STGÍCBV LH nHHnH«nHH HH HH Hà, 15 PART 3 SUPPLIER RELA TIONSHIP MANAGEMENNT ceceeieằ 16 PART 4 ISSUES AND SOLUUTIONS HH HH HH 17

1 Invenfory manageImenÍf - Ác HH HH HH HH HH HH 17

2 The battle against the big data skills crisis - - Ă Ăn He 17

3 Failure of suppliers to deliver products on tỉme 5-7555 c<<<<<<<52 17 4 Relying too much on outsourcing in Chima cece eeceeceeeeeeeeenees 17

PART 5: WALMART"S GREEN SUPPLY CHATN MANAGEMENT 18

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This report is divided into six parts In the first part, we provide an overview of the Walmart supply chain In the second part, we describe the efficiency of Walmart's supply chain and focus on three key points: Lean manufacturing principles; Network design and Supply Chain Management at Walmart In the third part, we will analyze Supplier Relationship Management with the example of the relationship between Walmart and P&G In the fourth part, we identify some Issues and Solution for Walmart supply chain and the fifth part is Walmart's green supply chain management which is a managerial recommendation for supply chain management improvement based on what we analyzed above Finally, we conclude this report with the highlights in the Walmart

system

PART 1: OVERVIEW OF WALMART SUPPLY CHAIN I Overview about Walmart

Walmart is a retailer that operates grocery stores, supermarkets, hypermarkets, department and discount stores, and neighborhood markets It has grown to be the largest and probably most powerful retailer in the world, with sales, inventory turnover, and operating profit exceeding those of any other retailer in recent decades To understand the performance of Walmart and its impact on the retail sector, look at its historical stock figures Corporate success involves successful supply chain management as it transitions from a localized store to a worldwide retail organization According to Supply Chain Digest, Walmart runs over 11,700 shops under 59 brand names, employs 2.3 million people in 28 countries, and manages a $32 billion inventory on average

Il Introduction to the supply chain strategy of Walmart

Walmart's supply chain management strategy has given the corporation various long-term competitive benefits, such as lower product prices, lower inventory carrying costs, more in-store diversity and selection, and extremely competitive customer pricing Walmart's ability to sell items at a lower price than competitors is dependent on reducing the number of intermediaries They always try to buy directly from the manufacturer With its massive purchasing power, Walmart uses this data collection to affect the behavior of its suppliers, lowering prices dramatically

Walmart also uses discount programs on a regular basis to encourage effective consumption, ensuring that there is no inventory at the end of the year This is corroborated by Walmart's sale seasons with almost guaranteed success

Three reasons helped Wal-Mart establish its supply chain successfully: 1 Distribution Operation Process

2 How to operate fleet and technology 3 Inventory management and product forecasting

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PART 2 THE EFFICIENCY OF WALMART SUPPLY CHAIN

I Lean manufacturing principles

Walmart has used lean systems to reduce big changes in consumer demand for items that cannot be met by its capacity to provide Various lean manufacturing methods, including Just-in-time, Kaizen, One-piece flow, and Respect your human elements, were chosen and implemented in analyzing Walmart's operating strategy Using a lean approach helps Walmart to maintain a consistent inventory of products and things that it can handle while incurring little storage costs Perhaps this explains the company's preference for cross-docking, in which items obtained from manufacturers or suppliers are supplied straight to retail chains or consumers who purchase them with limited storage time

1 Just-in-time production

Walmart manages its inventories in a range of methods The application of the Just-in-time (JIT) approach to inventory management is referred to as just-in-time inventory This strategy entails actions and activities with the operational goal of reducing storage and related expenses The just-in-time inventory strategy is used at Walmart in the form of cross-docking We will discuss this in detail in part inventory management

2 Kaizen

Walmart orders directly from its vendors and ensures that once the items arrive at their locations, they are unloaded immediately onto distribution trucks This saves the organization money on inventory management and storage expenditures that would otherwise be squandered Kaizen - a method for enhancing a company’s best practices and procedures through waste elimination - is another effective concept within the lean management regime

It is a successful method for improving performance by motivating employees and boosting collaboration In the instance of Walmart, with its numerous locations and big workforce, an overall Kaizen approach with local features in each store should be applied to provide the best possible team culture and employee productivity It would also improve the level of service, thus the level of satisfying the customers’ needs, because the workers of every process will carry out their functions to the best of their abilities

3 One-piece flow

One-piece flow is another effective principle in a lean management regime Sticking to this principle does not imply that a corporation must only make one item at a

time; rather, the emphasis should be on carrying out one activity at a time When discussing huge quantities of the same product, it involves producing one batch at a time It can also refer to a single individual doing a certain function

The one-piece flow principle is one of Walmart's key principles in supply chain management It allows consumers to focus on only one process at a time, allowing it to be done with the greatest quality possible Incorporating it may also be a valuable technique for further optimizing the working process For example, having one person responsible for completing orders could improve quality and boost employees’ degrees of responsibility

4 Respect human elements

Walmart has long used strategic sourcing to source items at the greatest price from vendors who can assure demand is met The company then creates strategic agreements with the bulk of its vendors, offering them long-term and high-volume purchases in exchange for the lowest possible cost

Furthermore, Walmart optimized supply chain management by establishing communication and connection networks with suppliers in order to increase material flow and reduce stockpiles The network of worldwide suppliers, warehouses, and retail locations has been described as acting nearly like a single company

Il Network design

Walmart Vacations Neighborhood Market

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Walmart's Used Fixture Auctions Internationalwalmart.com

Walmart Alaska Bush Shopper

2 Information technology (IT)

Walmart was completely successful in negotiating with its suppliers for the use of information technology like barcodes or, more recently, RFID tags and Vendor Managed Inventories (VMI) These technologies enabled employees and suppliers to access the information about products’ situations and helped improve the service level of suppliers as well as track and control the inventory level

The CPFR solution is a strategy in which Wal-Mart and suppliers collaborate to estimate customer requirements and optimize supply

Under Walmart’s supply chain initiative — called Vendor Managed Inventory (VMI) — manufacturers become responsible for managing their products in Walmart’s warehouses Therefore, Walmart can expect close to 100 percent goods order fulfillment Using electronic data interchange (EDI) with suppliers provides the company with two substantial benefits: cutting the transaction costs associated with the ordering of products and the payment of invoices, and a high degree of control and coordination in the scheduling and receiving of product deliveries

3 Outsourcing

Walmart has over 6,000 suppliers, with China accounting for 80 percent of them Compared with US manufactured products, Walmart has looked for suppliers in China who can offer lower pricing because of their abundant personnel and great efficiency Wal-Mart intends to boost product imports from Chinese vendors in order to meet its strategic aim of saving customers ‘money

Walmart contacts each supplier directly to place orders to save time and costs so it is accurate and fast to have a response for placing orders China's suppliers, in particular, provide cheaper pricing than domestic manufacturers, contributing to the country’s excellent supply chain management

II Supply Chain Management at Walmart

Manufacturer glam - S| a

Retail Store Distribution center

Figure 1: Walmart supply chain flow chart

1 Procurement and Distribution

Walmart's procurement strategy entails lowering its purchase expenses as much as possible in order to provide the best possible pricing to its consumers The firm buys items directly from producers, cutting out any intermediaries

The distribution hubs guaranteed that items were delivered in a steady & consistent flow The center's management is cost-effective due to the extensive usage of

advanced technologies such as bar codes, RFID, satellite communication system, and

handheld computer systems

Every employee has access to the required information regarding the inventory levels of all the products in the center They make 2 scans: identifying the pallet, and identifying the location from where the stock had to be picked up

Barcodes and RFID are used to label different products, shelves, and bins in the

center The handheld computers guide employees to the location of the specific product The quantity of the product required from the center is entered into the handheld computer, which updates the information on the main central server The computers also enabled the packaging department to get accurate information such as storage, packaging, and shipping, thus saving time on unnecessary paperwork It also enables supervisors to monitor their employees closely in order to guide them and give directions

This enables Walmart to satisfy customer needs quickly and improve the level of efficiency of distribution center management operations

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2 Logistics 2.1 Transport system

Walmart's logistics department has 75,000 employees and 7,800 drivers Dedicated truck fleets enable the corporation to transfer items from distribution facilities to stores in two days Walmart’s fleet transports goods from suppliers’ warehouses to distribution hubs Goods are sent straight to retailers, eliminating the need for additional storage The truck fleet serves as an efficient link between the store and distribution locations Daily, drivers must submit their available working hours to coordination To arrange all deliveries, coordination depends on this information and the projected time it takes for a shipment to travel from a distribution center to a shop

The goal of this manual is to help drivers regulate their conduct Wal-Mart has employed a logistics strategy known as "cross-docking" The system's goal has switched from "supply chain" to "demand chain" Instead of retailers "pushing" things into the system, customers will "pull" products when they require them

2.2 Warehouse System

Walmart operates 114 distribution centers in the United States, each of which is greater than | million square meters Within each center, some chains stretch for more than 5 kilometers and serve over 9,000 distinct product lines The centers are placed systematically, with each supporting operation for 75 to 100 shops within a 250-mile radius Most product categories have a high inventory turnover rate of around once every two weeks

3 Inventory Management

Having too much inventory will result in higher storage expenses, as well as lower business competitiveness and earnings Walmart created the "Suppliers for Inventory Management” program, which works in tandem with the "cross-docking” strategy to maximize efficiency Being able to provide flexible and fast distribution to shops while competing in terms of cost reduction is critical

Supplier Managed Inventory Program (SMIP): Walmart’s VMI requires

suppliers to manage inventory at Walmart distribution facilities By 2006, the program has extended to include a wide range of providers and product categories Walmart can regulate and record sales and inventory levels on shop shelves using the point of sale (POS) system Walmart also employs complex algorithms to forecast the precise amount of each item that must be delivered depending on store inventory levels Then, via the