Walmart's Supply Chain

I was reading the book made in america by sam walton and it really amazed me how a small startup like walmart could change the whole funda of retailing. It was the shrewdness and the brilliance of the founder sam walton to come up with a efficient supply-chain model. Back in the 60's He introduced the concept of buying goods directly from the manufactures, cutting out the distributors,wholesalers.Walmart setup its own distribution center and got its own trucks to distribute the goods to their stores. This system cost walmart 3% more than the average but by cutting out the distributors it gained about 5%. So the Walmart gains about 2% which it passes onto the consumer.

SUPPLY CHAIN MODEL
Walmart focussed on two things. Firstly working with the suppliers, sharing the sales information with the suppliers to cut down the costs secondly a higly efficient delivery model to supply goods to the stores.

Walmart have invested heavily in the IT infrastructure, they have put a system whereby all the stores are linked to the central headquarter giving it a real-time inventory data.
As a consumer buys a product and the cashier scans it, the data is sent to the Walmart headquarter and also to the supplier who might be in another country like china. The supplier has real time data on hand and he can plan his production accordingly. This system enables walmart to know about the consumer trends and accordingly it ajusts its inventory.

In the distribution centre a truck from the supplier drops the merchandise boxes on the conveyor belts and the boxes are recognized by the RFID chips (Radio frequency Identification microchips), the antenna transmits the code to the reader. The reader breaks down the code and acquires the complete information about the box like expiry date, contents, temperature to be maintained in case of grocery etc. Accordingly the conveyor belts takes the box to the waiting truck, which will ship the product into the shelves of a particular Walmart store. The truck drivers are equipped with radio sets, that after they dropped off at a store, when needed they could go a to nearby supplier and pickup goods so that the truck wouldn't come back empty.

This nearly perfect supply chain aided by the technology helps Walmart in maintaining prices 3 -5% lower than their competitors.