walmart operations management case study

Walmart Change Management Case Study

Change management is an essential aspect of any business that seeks to remain competitive in a dynamic market environment.

Walmart, one of the world’s largest retail giants, has had to navigate through significant changes in the retail industry, including the growth of e-commerce and shifting consumer behaviors. 

To maintain its position as a leader in the retail industry, Walmart has had to employ effective change management strategies to adapt to these changes successfully. 

This blog post presents a case study of Walmart’s change management efforts, exploring the strategies employed, the results achieved, and the lessons learned. 

By understanding Walmart’s approach to change management, businesses can learn valuable lessons and insights to help them navigate through their own organizational changes successfully.

Introduction to Walmart and its significance in the retail industry

Walmart is a multinational retail corporation that operates a chain of discount department stores, grocery stores, and hypermarkets. 

Founded in 1962 by Sam Walton, Walmart has grown to become one of the world’s largest retail companies, with over 10,000 stores in 27 countries and employing over two million people globally. 

Walmart’s success can be attributed to its focus on providing low-cost products, a wide range of merchandise, and a convenient shopping experience to its customers. 

Walmart’s innovative business strategies, such as its use of technology and supply chain management, have significantly impacted the retail industry, driving competitors to adopt similar approaches to remain competitive. 

Walmart’s success has made it a significant player in the retail industry, with its strategies being studied and emulated by businesses around the world

History of Walmart’s growth and success

Walmart’s growth and success can be traced back to its founder, Sam Walton, who had a vision of creating a retail store that offered low prices to customers. 

Walton opened his first store in Rogers, Arkansas, in 1962, which quickly became popular due to its low prices and convenient location. 

In the following years, Walmart expanded rapidly, opening more stores across the United States and becoming a publicly traded company in 1972.

Throughout the 1980s and 1990s, Walmart continued to grow, opening new stores and expanding into new markets. 

Walmart’s success was due, in part, to its innovative business strategies, such as its use of technology to manage inventory and supply chain operations, as well as its focus on providing low-cost products to customers. 

Walmart’s efficient operations and ability to negotiate lower prices with suppliers allowed the company to offer products at a lower cost than its competitors.

By the 2000s, Walmart had become a global retail giant, with stores in multiple countries and a significant impact on the retail industry. 

Despite facing criticism over its labor practices and impact on small businesses, Walmart’s focus on low prices and convenience to customers continued to make it a popular choice for shoppers. 

Today, Walmart remains one of the largest and most successful retailers in the world, with a significant presence in the retail industry.

Overview of Walmart’s organizational structure and culture

Walmart has a hierarchical organizational structure, with a clear chain of command and multiple levels of management. 

At the top of the hierarchy is the CEO, followed by executive vice presidents, senior vice presidents, and vice presidents. 

Each level of management is responsible for overseeing specific areas of the company’s operations, with clear lines of authority and responsibility.

Walmart’s culture is focused on providing low-cost products to customers and delivering a convenient shopping experience.

The company values efficiency, innovation, and collaboration, and encourages employees to take ownership of their work and contribute to the company’s success. 

Walmart’s culture is also characterized by its emphasis on customer service, with employees trained to prioritize the needs of customers and ensure they have a positive shopping experience.

Walmart’s culture has been shaped by its founder, Sam Walton, who believed in empowering employees and giving them the resources they needed to succeed. 

This approach has been reflected in the company’s employee policies, such as its emphasis on training and development programs, as well as its commitment to offering competitive wages and benefits to its workers. 

Need for Change Management at Walmart 

The retail industry has undergone significant changes in recent years, with the growth of e-commerce, shifting consumer behaviors, and increased competition. 

To remain competitive in this dynamic environment, businesses need to be agile and adaptable, constantly evolving their strategies to meet changing customer needs and market conditions. 

For Walmart, this has meant the need for effective change management strategies to remain competitive.

One of the main challenges facing Walmart has been the growth of e-commerce, with online retailers such as Amazon disrupting the traditional brick-and-mortar retail model. 

To compete in this new environment, Walmart has had to invest heavily in its e-commerce capabilities, including expanding its online product offerings and improving its supply chain operations. 

Walmart’s change management strategies have included acquiring online retailers, such as Jet.com and Bonobos, and investing in its own e-commerce platform to better compete with Amazon and other online retailers.

Another challenge facing Walmart has been shifting consumer behaviors, with customers demanding more convenience and personalized experiences. 

Walmart has responded by investing in its mobile app, offering online grocery pickup and delivery services, and improving its in-store experience through the use of technology such as self-checkout machines and interactive displays. 

These changes have required effective change management strategies, including employee training programs and leadership support, to ensure successful implementation and adoption.

How did Walmart manage changes?

Walmart’s response to the need for change has been largely successful, with the company implementing a range of strategies to remain competitive in a rapidly changing retail environment. 

Here are three examples of Walmart’s successful responses to the need for change:

1. Expansion of E-commerce capabilities

Walmart recognized the need to improve its online presence to compete with e-commerce giants like Amazon. To achieve this, Walmart acquired online retailer Jet.com and other e-commerce companies, and invested in its own online platform. These moves have helped Walmart significantly improve its online offerings, including its product selection and delivery options.

Walmart has leveraged its physical stores to offer convenient options like online grocery pickup and delivery, which has helped attract customers looking for a blend of online and offline shopping experiences.

Walmart’s investments in e-commerce have paid off, with its online sales increasing by 79% in Q2 2020, driven in part by the COVID-19 pandemic and increased demand for online shopping.

2. Focus on Sustainability

Walmart has recognized the importance of sustainability and environmental responsibility in its operations. The company has implemented a range of initiatives to reduce waste, lower carbon emissions, and promote sustainable practices across its operations. These initiatives include reducing plastic waste, investing in renewable energy, and sourcing more sustainable products.

Walmart’s sustainability efforts have not only helped the environment but have also resonated with customers who are increasingly conscious of the impact of their purchases. Walmart’s focus on sustainability has also helped the company reduce costs and improve efficiency, which has contributed to its bottom line.

3. Embracing Digital Transformation

Walmart has been at the forefront of using technology to improve its operations and customer experience. The company has invested in technologies such as robotics, artificial intelligence, and data analytics to improve its supply chain operations and enhance its in-store experience.

For example, Walmart has implemented autonomous robots in its stores to help with tasks like restocking shelves and cleaning floors, which has helped free up employees to focus on customer service. Additionally, Walmart has leveraged data analytics to better understand customer behavior and personalize its offerings, such as offering tailored product recommendations to shoppers.

Two Factors that explained the successful implementation of Walmart change management 

Walmart’s successful implementation of changes has been driven by a combination of strong leadership, employee engagement, and embracing new technology. 

By leveraging these factors, Walmart has been able to adapt to changing market conditions and remain competitive in a rapidly evolving retail industry. 

But the two most crucial factors behind the successful change management at Walmart are as follows:

Data-Driven Decision Making

Walmart has leveraged data analytics to make more informed and strategic decisions. By collecting and analyzing data on customer behavior, supply chain operations, and other key metrics, Walmart has been able to identify areas for improvement and make data-driven decisions about where to invest resources. This has helped Walmart prioritize its efforts and ensure that it is focusing on the initiatives that will have the greatest impact on its business

Focus on Customer Experience

Walmart has made a concerted effort to prioritize the customer experience in its change management efforts. For example, the company has invested in technologies like data analytics and artificial intelligence to better understand customer behavior and preferences, and has used this information to tailor its offerings to individual customers.

05 Lessons Learned from Walmart successful implementation of change management 

Here are five lessons that can be learned from Walmart’s successful change management efforts

• Emphasize strong leadership: Strong leadership is critical to the success of any change management effort. Walmart’s leadership was instrumental in driving the company’s change management efforts and ensuring that everyone was aligned with the company’s strategic goals.
• Engage employees: Engaging employees in the change management process is essential to building a resilient and adaptable workforce. Walmart invested heavily in employee training and encouraged workers to take ownership of their work, which helped foster a culture of innovation and adaptability.
• Leverage data analytics: Data analytics can provide valuable insights into customer behavior and other key metrics, which can help identify areas for improvement and guide strategic decision-making.
• Be flexible and agile: Flexibility and agility are critical to adapting to changing market conditions. Walmart was able to stay ahead of the curve by quickly adapting its operations to meet changing customer needs and preferences.
• Prioritize the customer experience: Prioritizing the customer experience is essential to building loyalty and driving sales. Walmart made a concerted effort to tailor its offerings to individual customers and invested in initiatives like online grocery pickup and delivery to make shopping more convenient and efficient

Final Words 

Walmart’s successful change management efforts provide valuable insights into how organizations can adapt to changing market conditions and remain competitive. By prioritizing strong leadership, employee engagement, data analytics, flexibility and agility, and the customer experience, Walmart was able to successfully implement changes that helped the company stay ahead of the curve.

As the retail industry continues to evolve, Walmart’s example serves as a reminder of the importance of remaining adaptable and open to change. By embracing new technologies, investing in employee training, and prioritizing the customer experience, organizations can position themselves for success in an ever-changing marketplace.

About The Author

Tahir Abbas

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Walmart SWOT Analysis & Recommendations

This SWOT analysis of Walmart Inc. presents the company’s strengths and weaknesses, as well as the business opportunities and threats relevant to the condition of the retail industry. As a leading retailer, the company has competitive advantages linked to its market position and organizational size. However, to fulfill Walmart’s mission statement and vision statement in the long term, the business needs to match its strategic decisions to the issues arising from the SWOT factors. For instance, the company must account for opportunities and threats that represent external forces in the retail market. Walmart optimizes its operations based on a variety of internal and external factors, including the ones examined in this SWOT analysis.

This SWOT analysis includes an internal analysis of Walmart’s strengths and weaknesses (internal strategic factors) and an external analysis of business opportunities and threats (external strategic factors). These strengths, weaknesses, opportunities, and threats provide a picture of the strategic planning options available to the retail corporation. The SWOT variables enumerated below affect the company, as well as its customers, business partners, suppliers, and competitors in the retail industry.

Strengths (Internal Strategic Factors)

Walmart’s strengths are business characteristics that enable growth, expansion, and profitability. In this part of the SWOT analysis, such characteristics strengthen the business against external forces, such as the threat of competition. The following internal factors are Walmart’s strengths:

• Dominant brick-and-mortar retail presence
• High-efficiency logistics and global supply chain
• Strong bargaining power against suppliers and manufacturers

Walmart’s industry position comes with a dominant brick-and-mortar retail presence, which is a business strength in this SWOT analysis. This strength enables the company to maintain a stable market share, despite aggressive competitors, like Amazon and Target. The large brick-and-mortar presence, along with the operations of the subsidiary, Sam’s Club, helps protect Walmart from competition, which includes Amazon’s relatively small brick-and-mortar operations. In addition, the high-efficiency logistics and global supply chain are a strength that this SWOT analysis links to the retail company’s growth potential. This internal strategic factor facilitates the ability to offer low prices, in support of Walmart’s generic competitive strategy and intensive growth strategies . This SWOT analysis also points to the retail company’s bargaining power as a strength for influencing suppliers and manufacturers. Based on the company’s large organizational size, this internal factor strengthens the business in imposing low prices on goods sold at its stores. This pricing strategy affects suppliers and manufacturers, while ensuring low selling prices at the company’s stores and e-commerce website. To support high efficiencies and large-scale operations, Walmart’s operations management involves advanced business information systems and related technologies. These technological applications help minimize costs, errors, and delays in retail business processes. Walmart’s inventory management is also a foundation that supports the strengths mentioned in this part of the SWOT analysis.

Walmart’s Weaknesses (Internal Strategic Factors)

Walmart’s weaknesses impose challenges in withstanding external forces, such as the threats identified in this SWOT analysis. Business weaknesses are internal factors related to the retail company’s ability for further business development, additional competencies, and higher profits. The following are Walmart’s weaknesses:

• Limited e-commerce operations
• Absent or insignificant operations in international shipping
• Competitive disadvantage relative to specialty sellers’ product quality

Despite its efforts to grow in the online retail space, Walmart’s e-commerce operations are small compared to Amazon’s. In this SWOT analysis, such a limitation is an internal strategic factor that weakens Walmart’s ability to capture a larger share of the retail market. Also, absent or insignificant operations in international shipping constrain potential growth based on international purchases. This weakness is in contrast to Amazon’s integrated international shipping options. Considering such a weakness, this SWOT analysis accounts for the trend of growing international online sales in more markets and market segments worldwide, among other trends described in the PESTEL/PESTLE analysis of Walmart Inc . Furthermore, because of its emphasis on low costs and low prices, the company is at a competitive disadvantage relative to specialty retailers’ product quality. Specialty retailers offer differentiated goods and services, such as high-quality customer service and high-end groceries. This competitive disadvantage is a weakness in this SWOT analysis of Walmart because it reduces the business ability to attract customers who prefer high-end shopping experiences.

Opportunities for Walmart (External Strategic Factors)

Walmart’s opportunities are options for growing the business, based on external forces or conditions in the retail industry environment. This part of the SWOT analysis shows the external factors that the company can pursue to improve its business performance, especially in e-commerce and international operations. The following are Walmart’s opportunities:

• Global expansion of e-commerce operations
• Establishment of international shipping
• Expansion of brick-and-mortar operations to more countries

The opportunity for global e-commerce expansion addresses the weakness of Walmart’s limited e-commerce operations. As mentioned earlier in this SWOT analysis, such a weakness limits the company’s share of the retail market. Thus, global e-commerce operations can boost the company’s international market share. In relation, the company can establish international shipping operations that support global e-commerce. In this SWOT analysis of Walmart, international shipping is an opportunity for the company’s multinational success. Moreover, considering its primary dependence on sales in the United States, the company has opportunities for establishing brick-and-mortar stores in more countries in order to increase profits. Walmart’s marketing mix or 4Ps can support marketing campaigns to exploit these opportunities. For instance, promotional tactics can facilitate the success of new stores in new markets. Also, appropriate modifications to Walmart’s organizational structure or corporate structure , such as new managerial teams for new business processes, can facilitate multinational operations to grow the company based on the opportunities shown in this part of the SWOT analysis.

Threats (External Strategic Factors)

The threats to Walmart’s business are linked to the retail market condition, human resource availability, and international relations. This part of the SWOT analysis shows how external forces in the industry environment can hamper the retail company’s improvement. The following external factors are threats to Walmart:

• Competitive threat from online and brick-and-mortar firms
• Supply chain disruptions due to political, economic, and health factors
• Labor market disruptions

Competition presents a major threat in the retail industry, as shown in the Five Forces analysis of Walmart Inc . For example, the company competes against Amazon ’s brick-and-mortar stores, marketplace, and e-commerce services; and eBay’s marketplace. Also, Walmart experiences competitive pressure from Target, Home Depot , Costco , and Best Buy, as well as Kroger, Lowe’s, Rakuten, and 7-Eleven. In this SWOT analysis, such a diversity of competitors creates a strong external force in the retail industry.

On the other hand, supply chain disruptions also threaten Walmart’s business. These disruptions are external strategic factors connected to the political and economic aspects of international relations, as well as health concerns, such as pandemics. In this SWOT analysis, these disruptions are a threat to the stability of supply chains and, consequently, the stability of Walmart’s operations, which depend on importing low-cost goods.

Labor market disruptions are linked to social trends that affect the availability and willingness of people to work for companies, like Walmart. This external factor is a threat that affects the retail company’s human resources. In this SWOT analysis, such labor market issues directly relate to the company’s capacity to provide its online and brick-and-mortar services to customers. This external strategic factor emphasizes the importance of Walmart’s human resource management in maintaining an adequate workforce to support business operations. Also, Walmart’s organizational culture or corporate culture  can provide support for maintaining an attractive workplace, in order to minimize turnover. Support from the organizational culture can improve job satisfaction and, in turn, stabilize the company’s human resources. Furthermore, Walmart’s corporate social responsibility strategy is significant in this part of the SWOT analysis. Corporate citizenship and stakeholder management efforts can enhance the company’s corporate image and workers’ perception about the business.

Recommendations based on this SWOT Analysis of Walmart Inc.

This SWOT analysis shows that Walmart has the business strengths to support growth through e-commerce expansion and international operations, which are opportunities in the global retail industry. However, this SWOT analysis also shows that the company needs to implement new strategies to overcome its weaknesses, such as the limited international presence; and the threats to its retail business, like competition and supply chain disruptions. Based on these internal and external strategic factors, an applicable recommendation is for growing Walmart’s e-commerce operations. It is also recommended that the company establish more locations outside its current retail markets. Ultimately, the goal should be to make Walmart a leading retail and e-commerce company that provides its goods and services globally.

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• U.S. Department of Commerce – International Trade Administration – Retail Trade Industry .
• Walmart Inc. – America at Work .
• Walmart Inc. – Form 10-K .
• Walmart Inc. – Opportunity .
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Walmart Business Strategy: A Comprehensive Analysis

By   Julie Choo

Published: January 5, 2024

Last Update: January 5, 2024

TOPICS:   Service Design

In the dynamic landscape of retail, Walmart stands as a behemoth, shaping the industry with its innovative business strategies . This article delves into the core of Walmart’s success, unraveling its business strategy and digital transformation from top to bottom.

Walmart Business Strategy

Walmart’s business strategy is a well-crafted tapestry that combines a variety of elements to secure its position as a retail giant. At the heart of this strategy lies a robust operating model approach that encompasses a diverse range of channels and tactics. 

Transition to An OmniChannel Marketplace

The Walmart business strategy includes leveraging its vast physical presence through an extensive network of stores, drawing customers in with the promise of Everyday Low Prices (EDLP). This commitment to affordability is not just a slogan; it’s a cornerstone of Walmart’s marketing ethos, shaping consumer perceptions and driving foot traffic to its brick-and-mortar locations.

Building Strength via its Emerging Digital Operating Model

Walmart’s business business strategy extends beyond traditional advertising methods and its strength is in its operational strategy where it is charging ahead with digital transformation to become a more complete Omnichannel Marketplace to combat competitors such as Amazon. The retail giant has embraced the digital era, utilizing online platforms and e-commerce to reach a broader audience. Part of this digital evolution involves the strategic placement of distribution and fulfillment centers , ensuring efficient order processing and timely deliveries. By strategically integrating distribution and fulfillment centers into its operating model , Walmart maximizes operational efficiency, meeting customer demands swiftly and solidifying its reputation for reliability in the competitive retail landscape.

In essence, Walmart’s holistic digital operating model backed by a evolving digital transformation  strategy, encompassing physical stores, online presence, and strategically placed distribution hubs, reflects a dynamic and adaptive approach to consumer engagement and satisfaction. 

Walmart’s Existing Business Model Before Digital Transformation

Walmart’s retail business .

Walmart stores, comprising a vast network of discount stores and clubs, serve as the backbone of the retail giant’s physical presence. Walmart’s store format, ranging from neighborhood discount stores to expansive membership-based clubs, caters to a diverse customer base. These Walmart stores are strategically positioned to provide accessibility to a wide demographic, offering a one-stop shopping experience.

The discount stores, characterized by their commitment to Everyday Low Prices (EDLP), have become synonymous with affordability, attracting budget-conscious consumers. Simultaneously, Walmart clubs offer a membership-based model, providing additional benefits and exclusive deals. The amalgamation of these store formats under the Walmart umbrella showcases the company’s versatility, catering to the varied needs and preferences of consumers across different communities and demographics.

Walmart Pricing Strategy

Pricing strategy.

Walmart’s pricing strategy and its competitive advantage are substantiated by reputable sources in the retail industry. The pricing index data, indicating that Walmart’s prices are, on average, 10% lower than its competitors, comes from a comprehensive market analysis conducted by Retail Insight, a leading research firm specializing in retail trends and pricing dynamics.

Everyday Low Prices

Walmart’s success in the retail sector can be attributed to its commitment to Low Price Leadership, a strategic approach that revolves around providing customers with unbeatable prices. Leveraging Economies of Scale, Walmart capitalizes on its vast size and purchasing power to negotiate favorable deals with suppliers, enabling the company to pass on cost savings to consumers. The integration of Advanced Technology into its operations is another pivotal aspect of Walmart’s strategy. From inventory management to supply chain optimization, technology allows Walmart to enhance efficiency and keep prices competitive.

Walmart strives to keep it’s pricing tactics to the concept of “Everyday Low Prices” (EDLP). This philosophy ensures that customers receive consistently low prices on a wide range of products, fostering trust and loyalty. Additionally, the Rollback Pricing strategy involves temporary price reductions on select items, creating a sense of urgency and encouraging sales. Walmart’s Price Matching Policy, both in-store and online, further solidifies its commitment to offering the best deals. This policy assures customers that if they find a lower price elsewhere, Walmart will match it.

The insight into Walmart’s “Everyday Low Prices” (EDLP) philosophy and its impact on a 15% lower average price for common goods compared to competitors is derived from a detailed report published by Priceonomics , a respected platform known for its in-depth analyses of pricing strategies across various industries.

The statistics regarding Walmart’s market share of 22% in the U.S. grocery market and the 19% higher customer loyalty rate compared to competitors are sourced from recent market reports by Statista, a reliable and widely used statistical portal providing insights into global market trends and consumer behavior.

Multiple layers of Discount

Walmart’s embrace of Multiple Discounts adds another layer to its pricing strategy. Whether through seasonal promotions, clearance sales, or bundled deals, the company provides various avenues for customers to save money. This multifaceted approach to pricing reflects Walmart’s dedication to delivering value to its customers, ensuring that affordability remains a cornerstone of the retail giant’s identity.

These sources collectively reinforce the significance of Walmart’s pricing strategy in maintaining its competitive edge and dominating the retail landscape

Walmart’s Servicing Business

Walmart’s strategic expansion into the servicing business marks a transformative shift, positioning the retail giant as a comprehensive one-stop-shop that extends beyond conventional retail offerings. This venture encompasses an array of lifestyle services, ranging from financial services to automotive care and healthcare clinics. Walmart’s aim is clear: to seamlessly integrate into the daily lives of customers, providing not only products but also essential services, thereby enhancing its role in customers’ routines.

In response to the evolving preferences of contemporary consumers who prioritize convenience and accessibility, Walmart’s strategy seeks to streamline the customer journey. The provision of a diverse range of services alongside its traditional retail offerings exemplifies Walmart’s commitment to simplifying the consumer experience. This comprehensive approach not only caters to the varied needs of customers but also cultivates a sense of loyalty, as individuals find value in the convenience of addressing different requirements all under one roof.

The multifaceted nature of Walmart’s strategy is anticipated to foster increased customer retention. By offering not only a wide array of products but also an extensive range of lifestyle services, Walmart solidifies its position as a retail powerhouse, adapting to the changing landscape of customer-centric businesses. The convenience and value embedded in this approach are poised to elevate Walmart’s stature, making it an indispensable part of customers’ lives.

SWOT Analysis of Walmart’s Business strategy

As we navigate Walmart’s digital transformation journey, a SWOT analysis reveals key insights into its strengths, weaknesses, opportunities, and threats, guiding strategic decisions for sustained success in the dynamic retail industry that is operating in an increasingly digital economy.

SWOT Analysis of Walmart:

• Strong Brand Recognition: Walmart’s strength lies in its widely recognized and trusted brand, fostering consumer confidence and loyalty.
• Diverse Revenue Stream: The company’s adaptability is evident through a diverse revenue stream, navigating various markets and industries to maintain financial resilience. Per Walmart’s Q3 FY23 Earnings , a breakdown of walmart’s income can be recognised through its Sam’s Club membership sales (Up by 7.2%), Walmart U.S Comp Sales (Up 4.9%), Walmart U.S. eCommerce (up by 24%), and Walmart International sales (up by 5.4%). 
• Economies of Scale: Walmart leverages its extensive size for economies of scale shown by its strong revenue growth of 5.3% per 2022 and 2023 consolidated Income statement, enabling cost advantages in procurement, operations, and overall efficiency. 
• Strong Customer Base: With a vast and loyal customer base, Walmart establishes a robust foundation in the retail sector, emphasizing customer retention and sustained business growth as per market share stat of 60% shown on the Market retail/wholesale industry dominated by Walmart.

Weaknesses:

• Labor Relations: Walmart has faced criticism for labor practices, including low wages and labor disputes.
• E-commerce Competition: Despite significant strides, Walmart faces intense competition from e-commerce giants (e.g, amazon, eBay), impacting its online market share.
• Over Reliance on US Market: A substantial portion of Walmart’s revenue is generated in the United States, making it vulnerable to domestic economic fluctuations.
• Inconsistent customer service: represents a weakness in Walmart’s SWOT analysis, as variations in service quality across different locations may impact the overall customer experience, potentially leading to customer dissatisfaction and diminished brand perception.

Opportunities:

• E-commerce Expansion: Further growth in the online market allows Walmart to capitalize on changing consumer shopping habits.
• International Expansion: Targeting untapped markets presents opportunities for global revenue diversification.
• Health and Wellness Market: The growing trend towards health-conscious living provides avenues for expansion in the health and wellness sector. Increased understanding of customer journeys in these niches is key to begin to build stickiness effects.
• Technological Innovations: Embracing cutting-edge technologies can enhance customer experience and operational efficiency through a growing Omnichannel marketplace. It is vital to master data science and begin to leverage AI in the battle to understand consumer behaviors and deliver a remarkable experience.
• Competition: Intense competition from traditional retailers and e-commerce platforms poses a threat to Walmart’s market share such as Costco, Target and Amazon.
• Regulatory Challenges: Changes in regulations, especially related to labor and trade, can impact Walmart’s operations and costs. One such example is the metrics shown per Walmart’s ethics & compliance code of conduct aligning to regulatory challenges in culture, work safety, risk mitigation and more. 
• Economic Downturns: Economic uncertainties and recessions may lead to reduced consumer spending, affecting Walmart’s revenue.
• Supply Chain Disruptions: External factors like natural disasters or geopolitical events can disrupt the global supply chain, impacting product availability and costs. Such threats are specifically addressed by Walmart’s Enterprise Resilience Planning Team .

More on Walmart’s Online Competitors

Walmart faces formidable competition in the online retail arena, with key rivals such as Amazon and Target vying for a share of the digital market. Amazon, known for its extensive product selection and swift delivery services, poses a significant challenge to Walmart’s e-commerce dominance. Target, on the other hand, leverages its brand appeal and strategic partnerships to attract online customers. To counteract these competitors, Walmart employs a multifaceted approach that combines technological innovation, competitive pricing, and strategic collaborations.

Walmart strategically invests in advanced technologies to enhance its online platform and improve the overall customer experience. The integration of artificial intelligence (AI) and machine learning enables Walmart to provide personalized recommendations, similar to Amazon’s renowned recommendation engine. Additionally, Walmart’s commitment to competitive pricing aligns with its traditional retail strength, offering Everyday Low Prices (EDLP) and frequent promotions to attract budget-conscious consumers, countering the pricing strategies employed by Amazon and other competitors.

Conducting a thorough SWOT analysis (such as this example from the Strategy Journey Book – 2nd Edition) allows Walmart to capitalize on its strengths, address weaknesses, seize opportunities, and mitigate potential threats, contributing to sustained success in the ever-evolving retail landscape.

Walmart’s Digital Transformation Strategy in the new ERA of AI-led Customer Centricity 

Walmart’s online business strategy.

Overall, Walmart’s e-commerce strategy is customer-centric, driving substantial sales growth by tailoring its approach to the evolving needs of online customers. Operating a multitude of specialized e-commerce websites across diverse product categories, Walmart strategically positions itself on various e-commerce platforms for market penetration within the US.

Servicing Relevant Customer Journeys & Sustainable Transformation

Walmart’s evolving online strategy is characterized by a dual focus on extensive product offerings and technological sophistication, with concrete examples per its strategic partnership with Adobe in 2021 to integrate walmart’s marketplace, online and instore fulfillment and pickup technologies with Adobe commerce showcasing its commitment to a seamless customer experience. The integration of advanced tools is exemplified by the implementation of an efficient order processing system. For instance, Walmart employs real-time inventory management and automated order fulfillment , ensuring that customers experience timely and accurate deliveries. Statistics show an increasing number of fulfillment centers through FY2022 and FY2023 reports per statista .

Emerging predictive capabilities supported by Data Science and AI

In addition, the technological depth extends to personalized experiences, illustrated by Walmart’s robust recommendation engine. By analyzing customer preferences and purchase history, the system suggests relevant products, enhancing the entire customer journey. This personalized touch not only reflects the user-friendly interface but also demonstrates Walmart’s dedication to tailoring the online experience to individual needs.

Focus on seamless CX and UX to improve customer stickiness

Furthermore, Walmart’s commitment to a seamless online interaction is evident in its streamlined navigation features. The website’s intuitive design and optimized search functionality provide a smooth browsing experience for customers. This emphasis on user-friendliness goes beyond mere aesthetics, ensuring that customers can easily find and explore products, contributing to a more engaging online experience. Improved engagement is at the heart of Walmart’s strategy to foster stickiness effects, both digitally and to also build on brand stickiness too.

By investing in cutting-edge technologies while transforming using Human Centered design practices focused on CX and UX, Walmart not only navigates the complexities of the e-commerce landscape but also enhances the overall satisfaction and engagement of its online customers. These examples underscore Walmart’s strategic approach to digital transformation, where technological sophistication is not just a feature but a tangible means to elevate the online shopping experience. 

Walmart International Business

Successful international business expansion requires operating model transformation, and Walmart’s strategy is characterized by a blend of strategic acquisitions, partnerships, and a keen understanding of local markets. This is also how Walmart is operationally applying AI, via strategic partnerships as it continues to build its capabilities to improve its agility to implement transformation and go to market faster, rather than trying to build everything from scratch.

A Sustainable Diversification strategy that adapts to local markets  

Walmart’s international business expansion is a testament to its strategic approach in entering diverse markets and adapting to local nuances. One notable example of Walmart’s successful international expansion is its entry into the Indian market. In 2018, Walmart acquired a majority stake in Flipkart, one of India’s leading e-commerce platforms. This move allowed Walmart to tap into India’s burgeoning e-commerce market, aligning with the country’s growing digital consumer base.

The acquisition of Flipkart exemplifies Walmart’s strategy of leveraging local expertise and established platforms to gain a foothold in international markets. Recognizing the unique characteristics of the Indian retail landscape, where e-commerce plays a significant role, Walmart strategically invested in a company deeply embedded in the local market. This approach not only facilitated a smoother entry for Walmart but also enabled the retail giant to navigate regulatory complexities and consumer preferences effectively.

Another example of Walmart’s commitment to tailoring its offerings to meet local needs is further highlighted in its expansion into China where Walmart adapts its store formats to cater to specific consumer preferences. 

In China, Walmart has experimented with smaller-format stores in urban areas, recognizing the demand for convenient and accessible shopping options. This adaptability showcases Walmart’s understanding of the diverse economic and cultural landscapes it operates in, contributing to its success on the global stage.

Working with partners to diversify and build a sustainable business model 

Collaborations and strategic partnerships play a pivotal role in Walmart’s competitive strategy. In 2023, Walmart has outlined plans to invest heavily into AI automation fulfillment centers to improve its unit cost average by 20%, increasing efficiency in order fulfilments and operations. 

The acquisition of Jet.com in 2016 expanded Walmart’s digital footprint and brought innovative talent into the company. Furthermore, Walmart’s partnerships with various brands (such as Adobe, ShipBob) and retailers enable it to diversify its product offerings, providing a competitive edge against the more specialized approaches of some competitors. As part of Walmart’s strategy in marketing, Walmart has announced partnerships with social media giants such as TikTok, Snapchat, Firework and more further boosting its online digital footprint. 

The acquisition of Jet.com in 2016 not only expanded Walmart’s digital footprint but it brought innovative talent into the company. It is clear Walmart sees the need for talent as key to its continued efforts to apply human centered design as part of its digital transformation strategy.

By continuously adapting and evolving its strategies, Walmart is clearly implementing digital transformation sustainably, to support its future operating model as Walmart remains a formidable force in the online retail landscape, navigating the challenges presented by its competitors.

In conclusion, Walmart’s business strategy is that of an growing Omnichannel marketplace, a multifaceted approach that combines physical and digital retail, competitive pricing, supply chain excellence, and a commitment to customer satisfaction. Understanding these elements provides insights into the retail giant’s enduring success in a rapid changing and competitive digital economy as it continues to combat emerging new business disruptions.

Q1: How did Walmart become a retail giant?

Walmart’s ascent to retail dominance can be attributed to a combination of strategic pricing, operational efficiency, and a customer-centric approach. 

Q2: What sets Walmart’s supply chain apart?

Walmart’s supply chain is marked by innovation and technological integration, allowing the company to streamline operations and stay ahead in a competitive market.

Q3: How does Walmart balance physical and digital retail?

Walmart seamlessly integrates its brick-and-mortar stores with its online presence, offering customers a comprehensive shopping experience.

Q4: What is Walmart’s philosophy on pricing?

Walmart’s commitment to everyday low prices is a fundamental philosophy that underpins its strategy, ensuring affordability for consumers.

Q5: How has Walmart expanded globally?

Walmart’s global expansion involves adapting its strategy to diverse markets, understanding local dynamics, and leveraging its core strengths.

About the author

Julie Choo is lead author of THE STRATEGY JOURNEY book and the founder of STRATABILITY ACADEMY. She speaks regularly at numerous tech, careers and entrepreneur events globally. Julie continues to consult at large Fortune 500 companies, Global Banks and tech start-ups. As a lover of all things strategic, she is a keen Formula One fan who named her dog, Kimi (after Raikkonnen), and follows football - favourite club changes based on where she calls home.

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Digitization of Walmart

Walmart is digitizing its entire supply chain as it  moves to an omni-channel strategy , wherein it provides an integrated shopping experience across online and offline channels, and looks to compete against Amazon. As Walmart makes this shift, it is leveraging technology to share information across the supply chain, track inventory, better select and manage inventory across stores & warehouses and provide expedited deliveries for online orders while maintaining competitive prices and quality. While Amazon continues to disrupt retail through its digital-first supply chain and go-to-market strategy, Walmart is digitizing its business processes to accurately anticipate and respond to customer trends. Furthermore, as Amazon pursues vertical integration through its private label products, Walmart is leveraging its position as the largest retailer in the US to help its suppliers embrace digitization and compete against Amazon .

Walmart is taking critical, strategic steps to embrace digitization:

Near-term steps:

1. Expansion of online channels:  acquisition of Jet.com for $3.3 billion in August 2016   to expand its online presence and provide a more competitive online experience for customers. Since the acquisition, Walmart’s digital inventory of goods has grown from 10 million to 67 million and is now able to target the millennial customer base. Furthermore, the technical expertise from the Jet.com team is enabling Walmart to embed technology and modernize processes across its businesses. [1] [2]

2. Information sharing across the supply chain:

Pathways to Just Digital Future

(a) Large investments in big data, analytics and machine learning capabilities in the form of projects such as Data Café (Collaborative Analytics Facilities for Enterprise) [3] – one of the world’s biggest private clouds to analyze internal and external data source to generate insights about customer demand, assess supply chain efficiencies and optimize operations. Walmart is making Café available to all its suppliers for free to get insights into customer demand , assess campaign conversion rates and better manage their supply and inventory.

(b) Leveraging content service providers such as Salsify to aggregate digital data from all suppliers so that it can quickly order new merchandise based on customer demand [4]. For example, when a customer searches on Walmart.com for a product that Walmart does not have, Walmart can quickly look-up service providers such as Salsify to determine which supplier has the product and the deliver the product to the customer’s home.

3. Optimize delivery of goods using store associates and machine learning : Walmart is leveraging its large network of store associates to make deliveries for customers on their way to work and on their way back home. It is using machine learning to ascertain which products should be delivered by which associates and what routes should they take to optimize the deliveries.

Medium-term steps:

1. Leveraging next-generation technologies such as blockchain, a public, decentralized ledger, to digitally track products across the supply chain : Walmart is partnering with IBM to leverage blockchain to digitally track food products across the supply chain to ensure quality and authenticity. Blockchain makes all the parties in the supply chain more willing to share information which makes the supply chain more efficient . For example, Walmart, completed a test using traditional methods to trace the origin of mangoes in 6 days, 18 hours and 26 minutes. By using blockchain, it took Walmart just 2.2 seconds. [5] [6]

2. Investing in in-store IoT to make the customer experience more seamless: digital carts that help customers shop by making recommendations and informing about promotions, automated checkout, unifying online and offline customer profiles to better target products and promotions at customers. It is also experimenting the use of RFID chips on products to better monitor product usage and manage product placement and inventory.

Other steps Walmart can take to digitize its supply chain and operations :

1. Walmart can work with suppliers to provide more real-time visibility into inventory levels across its offline and online channels to prevent stock-outs and improve customer retention.

2. Walmart can also look to collaborate with selected other retailers to achieve efficiencies across warehousing and deliveries and more effectively compete against Amazon.

Open questions:

1.How can Walmart better optimize and leverage its 5000 stores across the US to provide a smarter and cheaper omnichannel experience for consumers?

2.How does Walmart transition its large, existing customer base to its online channels instead of losing them to Amazon?

References:

[1] Business Insider, October 2017 http://www.businessinsider.com/walmart-stock-price-jet-acquisition-one-year-later-2017-10

[2] Business Insider, August 2016 http://www.businessinsider.com/walmart-is-buying-jetcom-2016-8

[3] Forbes, January 2017 https://www.forbes.com/sites/bernardmarr/2017/01/23/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/2/#17223541113f

[4] Digital Commerce, April 2016  https://www.digitalcommerce360.com/2016/04/28/wal-mart-suppliers-help-us-identify-new-products-sell/

[5] Forbes, August 2017 https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/#70d956683d36

[6] Chartered Institute of Procurement and Supply, 2017 https://www.cips.org/supply-management/analysis/2017/june/case-study-walmart/

[Word Count: 744]

Student comments on Digitization of Walmart

Really interesting to see what a giant like Walmart has done as compared to a slightly smaller giant such as Target (who I wrote about). I’m curious what you feel the biggest risks are for Walmart… you mentioned the future of using IoT for better customer experience in store. I wonder how you feel that relates to inventory management. In particular, I feel that one of the biggest challenges in going into omnichannel is the difficulty in the unification of inventory management, and while it’s nice to have an enhanced customer experience through IoT, that feels almost secondary to inventory management risks.

It’s interesting to me that Walmart is giving its suppliers access to the Data Café. While I can see how this is beneficial to both Walmart and its suppliers in the short-run, I wonder if it will speed up Walmart’s disintermediation in the long-run.

Walmart is essentially training its customers to leverage technology to improve their operations. Digital technology is often the most common avenue suppliers use to disintermediate their retailers. By training their suppliers to be more tech-savvy, is Walmart essentially training them to become more independent? Right now I recognize that Walmart owns this technology and data, so it would be difficult for suppliers to go out on their own and operate without it. As customer data continues to proliferate across the economy, however, I wonder how long it will be before suppliers won’t need Walmart to provide data access or infrastructure.

It’s a significant and essential move to go e-commerce. Moreover, digitalization is important to retail business nowadays. With strong information system, retailers can collect shopper’s data efficiently. With e-commerce site, retailers can even trace shopper’s action and journey effectively. Thus, Walmart should keep investing in digital analysis to upgrade their supply chain efficiency and inventory control.

While the trend towards omnichannel is largely supported, I’m not sure brick & mortar is going away. The article states that Walmart needs to move online is a defensive move to continue competing with Amazon. While I don’t disagree that the acquisition of Jet.com was largely a reactionary move (not to mention other ecomm acquisitions in the space, such as Shoebuy (in reaction to AMZN/Zappos), Moosejaw, Modcloth, Bonobos), WMT may be endangering its core by chasing dilutive digital sales, warns retail analyst Nick Egelanian, president of retail development consultants SiteWorks International. WMT may simply be trying to find “speedboats” that are the cool kids on the ecommerce block, and as a result, taking shortcuts to gain an online presence rather than building their online brand the right way as digitally native brands have been doing by developing a loyal following. Brick & mortar locations will be around to come, but how that experience may look like in the future will almost undoubtedly be different – perhaps moving to more experiential shopping – think Costco’s free samples. Happy to chat more about my thoughts on that offline!

I get worried that Walmart is going away from its core business model and customer value proposition by trying to directly compete with Amazon. For example, targeting millennials seems like a fool’s errand for Walmart. Walmart’s investments in things like the Bonobos acquisition, machine learning, and AI – while potentially beneficial – are likely expensive and longer-term in nature, and likely pay off less directly/quickly than Amazon given their different customer bases and corporate competencies (this article helps articulate my viewpoint: https://www.forbes.com/sites/panosmourdoukoutas/2017/05/19/walmart-will-never-beat-amazon/#29654b079ed3 ) . Rather than trying to compete with Amazon directly on digital tech and distribution, I feel like Walmart would do well to stick to its core by expanding geographically and increasing share of wallet with its targetable market.

I agree to the general direction of digitalization for Wallmart, but I would suggest to keep the offline channel from two reasons. First, standardized product such as electronics, household goods, and clothes can be digitalized whereas non-standardized product such as food would continue to stay in the brick and mortar stores for consumers to choose by it’s appearance and freshness. For example, some consumers are still going to Wholefoods instead of purchasing through Amazon Fresh due to it’s foods delivered doesn’t match the consumers standards. Secondly, there are certain sets of consumers that goes to brick and mortar stores in order to enjoy the space and experience. An easy example is how Barnes and Nobles doubled down on their business model and Amazon actually started to follow their success by starting a brick and mortar store themselves.

Walmart has shown itself to be a very nimble competitor to Amazon. Walmart’s acquisition of Jet.com (and acqui-hire of Marc Lore) was the right move but the rules of the game have changed since Amazon’s acquisition of Whole Foods. Whatever Amazon is trying to do through its entry into brick-and-mortar retailing, Walmart should be able to do better. You suggest a lot of great initiatives but behind the initiatives are people. Walmart is based in Bentonville, Arkansas and the last time I checked, no one wants to move there. Amazon is building a second headquarters in some lucky U.S. city and Walmart needs to keep up in order to attract strong, technical talent.

I worry that Walmart’s acquisition of Jet.com was ultimately detrimental to the business. While they saw it as a way to expand their ecommerce offerings, Jet was an ecommerce company riddled with problems that desperately needed to be sold. Walmart may have been able to acquire tech talent through the purchase of the company but I am not sure it will prove to be an ecommerce asset in the long term.

I think there is a lot of potential for Wal-mart to become even more efficient, to be a better partner to suppliers, and to provide an even better customer experience, through digitization. Ideas such as providing customers with digital shopping carts and making suggestions for other products the customer might want increases sales for Wal-mart and can also provide a useful service to customers. Expanding to e-commerce can allow customers to buy product from the comfort of their own home. And digitizing inventory data can be useful so that orders are automatically re-filled when quantities run low.

I very much agree with Jason on this; I am convinced that brick & mortar locations will not go anywhere, but that experience in these locations will potentially look very different in the future. If anything, Amazon’s recent moves into physical retail (e.g., their bookstores, the acquisition of Whole Foods) support the idea that brick & mortar is far from dead.

Walmart is a company that has deep pockets to compete, but more importantly, it is a company that has innovation in its DNA (from basically making bar codes universal to transforming the way shoppers think about value). A big challenge will be around the acquisition of the top technical talent that is needed to compete with Amazon.

In any case, very interesting write-up – very happy to discuss offline.

Not to play the same tune, but I also feel that the future of retail looks like a blended B&M/e-comm model. In a way, Amazon and Walmart could eventually converge to a similar form although they come from opposite ends of the spectrum. Walmart’s recent acquisitions – both Jet.com as well as others such as Bonobos – are attempts to jump start their earlier efforts to become more digital, with limited success to date. One initiative that Walmart recently launched that has been tremendously successful is leveraging their current B&M footprint to enable order online/pick-up in store which provides some of the convenience of traditional e-commerce and solves for some of the challenges in e-comm market growth beyond the wealthier, more urban/suburban core. Here, we see Walmart is leaning in to their edge and differentiate themselves compared to Amazon rather than chase after bolt on pure play acquisition targets.

In China, Walmart is closing over 30 stores in recent years because of the strong impact from Alibaba and J.D. com. People, there are not willing to spend the time to shopping and are craving for high value and personalized products from worldwide. Reaching a much broad assortment of goods in a few seconds, paying a good price even lower than Wal-mart and having it delivered to your home within one-day, I don’t see any chance the billion Chinese consumers will return to the brick-and-mortar Wal-mart. While the digitization of supply chain for sure improve the efficiency and optimize the cost of Wal-mart, the fundamental concern the loss of business model comparing with e-commerce. I was wondering how much Wal-mart wants to change itself, maintaining its identity and competitive edge and keeping up with the trend. Will digitalizing supply chain suffice or will it digitalize its business model? If it’s the latter, is it still Wal-mart? Is it still a leader in retail industry or a follower that has to strive to find a place in a new era of consumption?

This was a strong overview of the efforts towards digitalization that Walmart has pursued over the past years. I believe that the greatest demonstration of these efforts, as you astutely pointed out, was the acquisition of Jet.com for $3.3billion. Jet.com acts as a standalone entity with Walmart but is able to leverage their data and online expertise with the wealth of product and consumer information that Walmart has amassed. Further, they have acquired several businesses since the induction of Jet.com raising the question of what is their goal in the ecommerce space and at what point might we see Jet.com simply turn into Walmart.com?

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Home » Management Case Studies » Case Study: Inventory Management Practices at Walmart

Case Study: Inventory Management Practices at Walmart

About walmart.

Wal-Mart Stores, Inc. is the largest retailer in the world, the world’s second-largest company and the nation’s largest nongovernmental employer. Wal-Mart Stores, Inc. operates retail stores in various retailing formats in all 50 states in the United States. The Company’s mass merchandising operations serve its customers primarily through the operation of three segments. The Wal-Mart Stores segment includes its discount stores, Supercenters, and Neighborhood Markets in the United States. The Sam’s club segment includes the warehouse membership clubs in the United States. The Company’s subsidiary, McLane Company, Inc. provides products and distribution services to retail industry and institutional foodservice customers. Wal-Mart serves customers and members more than 200 million times per week at more than 8,416 retail units under 53 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs more than 2.1 million associates worldwide. Nearly 75% of its stores are in the United States (“Wal-Mart International Operations”, 2004), but Wal-Mart is expanding internationally. The Group is engaged in the operations of retail stores located in all 50 states of the United States, Argentina, Brazil, Canada, Japan, Puerto Rico and the United Kingdom, Central America, Chile, Mexico,India and China.

Walmart Inventory Management

Wal-Mart had developed an ability to cater to the individual needs of its stores. Stores could choose from a number of delivery plans. For instance, there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day. Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country. With the rapid expansion of Wal-Mart stores in the US, it was essential to have a good communication system. Hence, Wal-Mart set up its own satellite communication system in 1983. Explaining the benefits of the system Walton said, “I can walk in the satellite room, where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system, and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going. On the screen, I can see the total of the day’s bank credit sales adding up as they occur. If we have something really important or urgent to communicate to the stores and distribution centers, I, or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there. I can also go every Saturday morning around three, look over these printouts and know precisely what kind of work we have had.”

Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns. Instead of cutting inventory across the board, Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most, while reducing the overall inventory levels. Wal-Mart also networked its suppliers through computers. The company entered into collaboration with P&G for maintaining the inventory in its stores and built an automated reordering system, which linked all computers between P&G and its stores and other distribution centers. The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to P&G. The system then sent a re-supply order to the nearest P&G factory through a satellite communication system. P&G then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores. This collaboration between Wal-Mart and P&G was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that were moving fast. P&G could also lower its costs and pass on some of the savings to Wal-Mart due to better coordination.

Employees at the stores had the ‘Magic Wand,’ a hand-held computer which was linked to in-store terminals through a radio frequency network. These helped them to keep track of the inventory in stores, deliveries and backup merchandise in stock at the distribution centers. The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves. Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered, based on the inventories in each store. Since the data was accurate, even bulk items could be broken and supplied to the stores. Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time. It also showed whether a product was being loaded in the distribution center or was in transit on a truck. Once the goods were unloaded at the store, the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updated.

Wal-Mart also made use of bar coding and radio frequency technology to manage its inventories. Using bar codes and fixed optical readers, the goods could be directed to the appropriate dock, from where they were loaded on to the trucks for shipment. Bar coding devices enabled efficient picking, receiving and proper inventory control of the appropriate goods. It also enabled easy order packing and physical counting of the inventories. In 1991, Wal-Mart had invested approximately $4 billion to build a retail link system. More than 10,000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories. The details of daily transactions, which approximately amounted to more than 10 million per day, were processed through this integrated system and were furnished to every Wal-Mart store by 4 a.m., the next day. In October 2001, Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies. Wal-Mart owned the largest and most sophisticated computer system in the private sector. The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels. All information related to sales and inventories was passed on through an advanced satellite communication system. To provide back-up in case of a major breakdown or service interruption, the company had an extensive contingency plan. By making effective use of computers in all its company’s operations, Wal-Mart was successful in providing uninterrupted service to its customers, suppliers, stockholders and trading partners.

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How Walmart Automated Supplier Negotiations

by Remko Van Hoek , Michael DeWitt , Mary Lacity and Travis Johnson

Summary .   

It’s an age-old problem in procurement: Corporate buyers lack the time to negotiate fully with all suppliers. Historically this has left untapped value on the table for both buyers and suppliers. To address this challenge, Walmart deployed AI-powered negotiations software with a text-based interface (i.e., a chatbot) to connect with suppliers. So far, the chatbot is negotiating and closing agreements with 68% of suppliers approached, with each side gaining something it values. This article offers four lessons to deliver results from automated procurement negotiations: move quickly to a production pilot, start with indirect spend categories with pre-approved suppliers, decide on acceptable negotiation trade-offs, and scale by extending geographies, categories, and use cases.

Walmart, like most organizations with large procurement operations, can’t possibly conduct focused negotiations with all of its 100,000-plus suppliers. As a result, around 20% of its suppliers have signed agreements with cookie-cutter terms that are often not negotiated. It’s not the optimal way to engage with these “tail-end suppliers.” But the cost of hiring more human buyers to negotiate with them would exceed any additional value.

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Factors Influencing Organization Success: A Case Study of Walmart

Walmart was established by Sam Walton and beginning as a small discount retailer in Rogers, Arkansas in 1962. This paper investigates how Walmart become popular and successful in retail business around the world and how they perform well in sales. This study found that some factors were leading to the success of Walmart. Since then, Walmart has become the most trusted retailer that creates value for business and society.

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Home > Learn More About Six Sigma Green Belt > Walmart Case Study: Lean Six Sigma Implementation in 2024

Walmart Case Study: Lean Six Sigma Implementation in 2024

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Six Sigma methodology means 3.4 defects for every one million opportunities. The objective of six sigma implementation is continuous process improvement and produce stable and predictable results. Six Sigma implementation requires the use of tools and techniques to define and evaluate each step of a process or project. It provides methods to improve efficiencies, quality of the process and increase the bottom-line profit.

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Six Sigma implementation helps to uplift the performance of manufacturing processes.  Six Sigma has a huge potential in improvising buyer satisfaction levels, generating repetitive customers, improving merchandiser performance, improving processes in purchase and inspection, packing and shipping to reduce rejections at later stages. Further, it helps in reducing the business risks.

History of Six Sigma?

Six Sigma (6σ) is a set of techniques and tools for process improvement. It was introduced by American engineer  Bill Smith  while working at Motorola in 1986  Jack Welch made it central to his business strategy at  General Electric in 1995. A six sigma implementation makes a process in which 99.99966% of all opportunities to produce some feature of a part are statistically expected to be free of defects.

The term  Six Sigma  (capitalized because it was written that way when registered as a Motorola trademark on December 28, 1993) originated from terminology associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a  sigma  rating indicating its yield or the percentage of defect-free products it creates—specifically, to within how many standard deviations of a normal distribution the fraction of defect-free outcomes corresponds. Motorola set a goal of “six sigma” for all of its manufacturing.

Features of Six Sigma

The features of Six Sigma are as follows:

• Customer oriented:  Six sigma implementation is customer oriented, work towards the requirements of the customer.
• Statistical quality control:  Six sigma is derived from the Greek Letter Sigma which is used for standard deviation in statistics. Standard deviation measures variance, which is an essential tool for measuring non-conformance.
• Methodology based:  Six Sigma is based on systematic approach of application in DMAIC and DMADV, used to improve the quality of process.
• Scientific based approach:  Six sigma uses techniques (statistical tools, DMAIC/DMADV methodologies) which are scientific based.
• Teamwork towards quality improvement:  Six Sigma implementation requires team efforts to control and improve quality of production.

Benefits of Six Sigma

Six Sigma strategies help in

• improving the quality of the output of a process or project
• identifying and removing the causes of defects
• reducing process cycle time,
• reducing pollution,
• reducing costs
• increasing customer satisfaction
• increasing profits

Six sigma methodologies

Six sigma implementation allows organization to improve by designing and monitoring everyday activities of organization to minimize waste and resources while increasing customers’ satisfaction. There are two aspects of six sigma applied in processes for improvement.

DMAIC (Define, Measure, Analyze, Improve, Control)  

• Define the goals of the project or system or process.

Questions should be asked during this stage;

• Who is the customer?
• What is the current status?
• What will be the future status?
• What is the due date?
• What is scope of project?

Measure the existing system or process.

• Do we have adequate data on this current process or system?
• How will I measure progress?

Analyze the system to identify the root cause of the problem or situation.

• What is the current state of project or system?
• Who will make the changes?
• What all resources available?
• What are obstacles in completing the project?

Improve the system or process by using creative solutions.

• What are activities required to meet the goals?
• Do the changes bring the desired changes?

Control the improved system by implementing procedures, polices other management systems.

• How to control risk?
• How to control quality?
• How to control cost?
• How to control schedule?
• DMADV (Define, Measure, Analyze. Design, Verify)

This methodology of six sigma used to design new product design or process design to resolve the problem of a customer.

• Define the problem or goal that needs to be addressed.
• Measure and determine the customer’s needs.
• Analyze the processes that meet customer needs.
• Design a process that will meet customer needs.
• Verify design performance and ability to meet customer needs.

– Lean Manufacturing

Lean manufacturing is another tool for  quality control. Lean Manufacturing is a systematic method of eliminating waste by continuous improvement. There are various benefits of lean six sigma implementation like improve productivity and quality, reducing work in process (WIP) inventory, reduce cycle and lead time, reduce manpower, time and space, sustainability, employee satisfaction, and increase profit, Increase customer satisfaction and customer service. There are various lean manufacturing tools like 5S, Kanban, PCDA (Plan, Do, Check, Act) etc

It is the first step to implement lean manufacturing and tool of continuous improvement.it helps to keep workplace organize and clean.

Sort (eliminate that which is not needed)

Set In Order (organize remaining items)

Shine (clean and inspect work area)

Standardize (write standards for above)

Sustain (regularly apply the standards)

–  Kanban

It is a bottleneck analysis process which is the slowest among other garment manufacturing process which interfere in production. This analysis is crucial for sewing of apparels and finishing section.

–  PDCA

It is plan-do-check-act or plan-do-check-adjust. It is four step management method for quality controlling and continuous improvement.

There are various other techniques of lean manufacturing like root cause analysis, key performance indicators (KPI), etc.  

Henry Harvin Also provide these Courses

• Six Sigma Green Belt Certification
• Six Sigma Black Belt Certification
• Six Sigma Master Black Belt Certification

Walmart – A Case Study

Walmart as we know it today evolved from Sam Walton’s goals for great value and great customer service. “Mr. Sam,” as he was known, believed in leadership through service. This belief that true leadership depends on willing service was the principle on which Walmart was built, and drove the decisions the company has made for the past 50 years. So much of Walmart’s history is tied to the story of Sam Walton himself, and so much of our future will be rooted in Mr. Sam’s principles

Walmart boasts over 11,700 stores and serves about 270 million customers. Its business strategy is mainly based on “ being competitive in terms of assortment, differentiating with the way people access, leading in terms of price, and delivering an incredible experience with the motto of EDLP (Every Day Low Prices). ”

Historically, Walmart is known for its two main business keys:

• One-stop shopping
• Every Day Low Cost ( EDLC ) or Every Day Low Price ( EDLP )

The company primarily operates on a business model with 3 vital units:

• Walmart U.S. (making about 64% of its net sales)
• Walmart International (making about 24% of its net sales)
• Sam’s Club (making about 12% of its net sales)

Walmart U.S.

From the day it started and to until now, Walmart U.S. is one of its biggest segments, which successfully operates in all the fifty states across United States along with Puerto Rico & Washington D.C. The 2018 net sales contributed to about 64% from the U.S. alone.

Walmart International

Apart from the U.S., Walmart International operates in 27 different countries, which comprises 3 major categories:

• Retail, and

These three categories have multiple formats, which include:

• Supermarkets
• Supercenters
• Warehouse clubs
• Hypermarkets

Sam’s Club  

This is another important unit of Walmart, which consists of only membership-based warehouse clubs that operates across 44 states in the United States along with Puerto Rico and its e-commerce. It’s a crucial component in terms of operating income, as Sam’s Club generated about 12% of its net sales in 2018 .

History – The Road to Walmart

Let’s get into the history of walmart;

• 1914- The history of the U.S. retailer giant began with Sam Walton, who was born in Kingfisher, Oklahoma.
• 1945- Walton served in the military for a few years of his life. He finished this service and moved to Iowa and then Arkansas.
• 1945-1950- He gained retail experience, and this helped him to operate his variety store.
• 1950- He moved to Bentonville and opened “Walton’s 5&10”.
• 1962- Finally, on July 2 nd , he opened his first Walmart store in Arkansas.
• 1967- The family-owned business had spread out to a full-scale organization with 24 stores. They earned $12.7 million in sales.
• 1969- The company’s name was changed to Wal-Mart, Inc. on October 31st
• 1970- The name was changed again to Wal-Mart Stores, Inc. The company started trading stock as a publicly held company.
• 1972- The organization was listed on the New York Stock Exchange, and the price of the first share was $16.50/share.
• 1980- The family established the Walton Family Foundation as they reached $1 billion in annual sales. It was faster than any other company at that time, which showed that the business model of the company was soaring and working efficiently.
• 1983- The organization converted from cash registers to a computerized point-of-sale system, which enables effective and efficient checkout.
• 1987- The most crucial private satellite communication in the U.S. was installed. It linked all the operationsof the business model of Walmart through voice, data, and video communication.
• 1993- $1 billion sales week
• 1997- $100 billion sales year
• 2009- $400 billion annual sales in the year
• 1992- The founder of the company, Sam Walton, passed away.
• 2018- The organization is a worldwide retail giant and has its presence in many countries.

Business strategies of Walmart

Walmart has kept in mind very well 4p’s of marketing mix;

Pricing Strategy

• Wal-Mart does not offer overpriced products. They believe in offering lowest prices to attract customers and focus selling in bulk.
• Wal-Mart’s procurement strategies allow keeping their prices low.
• Use of universal barcoding creates an efficient supply chain and helps to the lower prices.

Walmart utilizes intensive distribution strategy;

• Door-to-door deliveries
• Walmart has a powerful e-commerce platform.
• An organized distribution centers
• High-end IT systems

Walmart offers wide range of products from furniture, groceries, appliances, hardware, health goods, beauty products, wellness, sports to entertainment.

It is composed of sales promotions, advertisements, public relations, and personal selling.

• Walmart advertises on websites and newspapers.
• Sales promotions through discounts and special deals.
• Personal selling, on the other hand, happens directly at its stores, where the sales persons persuade the buyers to try package deals or new products.

Walmart store uses popular slogans, which are connected to low prices. A few examples include “save money, live better,” “the lowest price store,” “everyday low price,” etc. It applies the strategy of “diversified advertising media” to promote. This includes from social media, billboards to TV ads and websites

Walmart Supply Chain practices

Walmart is in the large supply chain and logistics industry. Walmart have invested in the latest technology solutions to ensure to offer their customers the lowest prices products.

Walmart has increased efficiency by decreasing the number of links in its supply chain

Walmart’s supply chain is much optimized as it has innovated its supply chain by reducing the number of complex links in the supply chain. They started procuring products directly in bulk from the manufacturers and transferring it to stores and kept no further link in between. Thus Walmart is successful in meeting customer orders on time. This innovation has helped Walmart in achieving success at a fast rate by keeping distribution cost at an exceptionally low rate. Reducing the number of links has helped in making the products reach customers on time, in perfect form and quality (reducing the impact of the environment on the products). This is an example of successful Six Sigma implementation.

Reliable inputs and strategic supplier partnership

Walmart has always strategically maintained partnership and relationship with trustworthy suppliers who can supply products as and when the demand arises. They have maintained long term relationship with the vendors and promised them to purchase large amount of products from them in return of low prices for their products. In this way Walmart ensured reliable inputs and they can meet the demand of the customers despite slight fluctuations in demand forecasting. Walmart’s vendor management is long-lasting because there is a win-win situation which ensures both the supplier and the buyer benefits. Regular communication and on-time sharing of information with their vendors is a major key to success of Walmart. Walmart has collaborated successfully with its suppliers over years and ensured demand fulfilment timely.

Cross-docking “a great strategic decision”

Keeping the low cost of operations helps Walmart in keeping the cost of products low and its benefits for the customers as they have to pay low prices for everyday products. Cross-docking helps Walmart in keeping fewer inventories in stock and spending less cost on warehousing. Directly transferring goods from inbound or outbound trucks or rails and loading them into incoming truck rails and sending them to the stores, eliminating the need for warehousing. This decision leads to bringing down transportation cost, timing, warehousing cost, excess inventory and increases efficiency of the supply chain and inventory management.

Technology innovation

Walmart reached its pinnacle of success by constantly innovating its operations and mechanisms of performing day to day activities. Technology is used by Walmart to predict accurate demand rate of consumers, efficient customer relationship management, keeping a track of the flow of goods along the supply chain, predicting inventory level and correcting and minimizing its errors. Walmart has strategically implemented technology in everyday operations and inventory management. This helps to cut down operating expenses and increase its profit over years. The main technologies used by Walmart to maintain its supply chain management cost effectively are as follows:

Use of Universal Product Code: It brought about a massive change in retail Chain Corporation. These barcodes help to collect and interpret the store level information immediately. This helped in conducting proper operations of business. This helps in keeping track of inventory in the store and process customer demands as well. It added value to Walmart because now the need for manual data entry is eliminated.

Retail Link: helped Walmart to connect the demand forecasting analysts to the vendor network as well to the center of Walmart’s distribution sites. This is extremely helpful to all the producers and vendors to accurately forecast the consumer’s demand pattern according to historical data which are already and accurately perform the order fulfilment activities via the satellite network.

RFID (Radio Frequency Identification Tags): After the recent developments that took place in the field of technology, Walmart adopted the use of RFID. Now both the vendors and Walmart can supervise inventory management. This has facilitated the tracking of the flow of goods along the supply chain from distance very easy. It is better than the Bar Codes as it is capable of storing more data than it.

RFID and smart tags make the operations of Walmart very efficient as timely transfer of information about the stocks in the store track is done and it ensures that none of shelves will be empty and products are provided to customers as and when needed by them. Because of it none of the products go out of stock in any store of Walmart. This helps in bringing down the bullwhip effect and moreover it does not incur the cost of excess inventory. There has been a reduction (Jhanwar Vaishnavi, et al., 2019) International Journal of Advance Research, Ideas and Innovations in Technology.

Walmart Distribution Centers

Walmart boasts more than 150 distribution centers and is the main hubs of its business. Its distribution operation is world’s one of the most prominent activities, servicing clubs, direct deliveries, and stores to the customers.

Its transportation alone has an incredible fleet of 61,000 trailers, 7,800+ drivers, and 6,100 tractors.

• Walmart’s distribution network ships dry groceries, general merchandise, and perishable groceries with other categories to its consumers on a daily basis.
• It has six disaster distribution centers, located strategically across the country. Each is stocked with adequate products to provide immediate response to the struggling communities during a natural disaster.
• Every distribution center measures over 1 million sq.ft and has more than 600 personnel unloading as well as shipping on 200+ trailers on a daily basis.
• Each distribution center is built across a radius of 150 or more miles and can hold 90 — 100 stores in it.

Why are they so successful?

Walmart is successful due to:

• Collaboration way of working

Walmart was the first company to introduce Universal Product Code for barcodes where store level information was then collected and analysed to help improve operations. Further, Walmart created their database, through which they were able to see real-time sales data from cash registers straight to their distribution centres. Walmart adopted the collaborative approach of sharing information with stores, distributions centres and suppliers. It helped the organizations to improve forecasting, managing inventory and marketing of their products.

• Innovative way of working

As there are lot of competitors in the market, therefore,  Walmart has to work in an innovative ways. Walmart has some tough competition, with retailers such as Amazon touting low prices and fast delivery, they had to figure out a way of competing with an essentially seamless customer experience.

Earlier this year, Walmart expanded its click and collect service to 30 new markets and it’s pickup service to 60 US markets at 400 locations. Walmart is constantly seeking out new ways of driving new revenue, and they adjust their supply chain accordingly.

It’s fair to say that Walmart doesn’t take its competition lying down, and although it has a lot to learn in the eCommerce space, it’s going in the necessary direction to drive growth in this area. 

Walmart has used distribution channels to supply their goods to the stores which reduces time and cost of transportation. Six Sigma implementation minimizes unnecessary activities and Just-in-time (JIT) means meeting the demand at the correct time. Six sigma is important for continuous improvement of the product/ services. Use of technology in supply chain reduces labour cost, increase value creation and long sustainability.

• Jhanwar Vaishnavi, et al., 2019, Influence of supply chain management on operational efficiency with an example of Walmart’s supply chain, International Journal of Advance Research, Ideas and Innovations in Technology ISSN: 2454-132X Impact factor: 4.295 (Volume 5, Issue 4)

1. What are various lean manufacturing tools?

There are various lean manufacturing tools like 5S, Kanban, PCDA (Plan, Do, Check, Act) etc

2. What are various benefits of Six Sigma?

Six Sigma strategies help in -improving the quality of the output of a process or project -identifying and removing the causes of defects -reducing process cycle time, -reducing pollution, -reducing costs -increasing customer satisfaction -increasing profits  

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Factory logistics improvement: a case study analysis of companies in northern thailand, 2022–2024.

1. Introduction

2. background, 2.1. industries in thailand, 2.2. logistics in thailand, 2.3. industries in northern thailand, 3. methodology, 4. results and case study, 4.1. transportation management, 4.1.1. vehicle routing solution, 4.1.2. transportation management system (tms), 4.2. warehouse and inventory management, 4.2.1. inventory model application.

• Analysis of order history.
• Implementation of Pareto/ABC classification to categorize materials based on their value, volume, and frequency of use [ 37 ].
• Application of inventory models, specifically the Economic Order Quantity (EOQ) model, incorporating Reorder Point (ROP) and Safety Stock (SS) calculations [ 38 ].

4.2.2. Warehouse Layout Design

• Redesign of warehouse layout based on product category and significance using Pareto/ABC classification.
• Determination of stock levels for A-level raw materials using Safety Stock (SS) calculations.
• Introduction of visual control concepts to enhance warehouse operations (as illustrated in Figure 4 ).

4.2.3. Warehouse Management System (WMS)

4.2.4. automation in material handing, 4.3. logistics administrative management, 4.3.1. forecasting and demand planning, 4.3.2. logistics communication, 4.3.3. outsourcing, 5. discussion and conclusions.

• Developing more adaptive and scalable logistics improvement methodologies that can accommodate businesses of varying sizes and technological readiness levels.
• Investigating the long-term sustainability of logistics improvements, particularly in the face of changing market conditions and technological advancements.
• Exploring the potential of emerging technologies, such as artificial intelligence and blockchain, in facilitating more seamless integration across logistics functions.
• Examining the role of organizational culture and change management in the successful implementation of logistics improvements.
• For policymakers, the results underscore the importance of continued support for logistics improvement initiatives, particularly in developing economies. The triple-helix model demonstrated here could serve as a blueprint for similar programs in other regions or countries.
• Industry practitioners can benefit from the practical insights and methodologies presented, adapting them to their specific contexts to achieve logistics optimization.
• Academic researchers can build upon this work to further explore the interconnections between various logistics functions and develop more integrated theoretical models of logistics performance.
• Technology providers may find opportunities to develop more tailored solutions that address the specific challenges faced by businesses in implementing logistics improvements.

Author Contributions

Data availability statement, acknowledgments, conflicts of interest.

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Ramingwong, S.; Sopadang, A.; Tippayawong, K.Y.; Jintana, J. Factory Logistics Improvement: A Case Study Analysis of Companies in Northern Thailand, 2022–2024. Logistics 2024 , 8 , 88. https://doi.org/10.3390/logistics8030088

Ramingwong S, Sopadang A, Tippayawong KY, Jintana J. Factory Logistics Improvement: A Case Study Analysis of Companies in Northern Thailand, 2022–2024. Logistics . 2024; 8(3):88. https://doi.org/10.3390/logistics8030088

Ramingwong, Sakgasem, Apichat Sopadang, Korrakot Yaibuathet Tippayawong, and Jutamat Jintana. 2024. "Factory Logistics Improvement: A Case Study Analysis of Companies in Northern Thailand, 2022–2024" Logistics 8, no. 3: 88. https://doi.org/10.3390/logistics8030088

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