7 ms·

What's Walmart's supply chain like?

by hswolff 15y ago

jacques_chester 15y ago
They've often been considered one of the best supply chain operations in the world, and aggressively drive their suppliers to lower prices and increase volume. One classic anecdote is that leading up to a hurricane, Walmart did some data mining and found that poptarts sold like crazy when hurricane watches were declared. Within hours they had dozens of trucks heading to the Florida coast filled with poptarts and they made a lot of money that way. Unless you have a fast, flexible logistics system and the analytical smarts to back it up, you can't exploit changing circumstances like that. Edit. Source of Walmart anecdote is here: http://www.nytimes.com/2004/11/14/business/yourmoney/14wal.html http://www.nytimes.com/2004/11/14/business/yourmoney/14wal.h...
- DiabloD3 15y ago
  I agree that exploit is the right word here, but probably not for the reason you chose it.
  - mc32 15y ago
    Either opportunistic or exploitive are appropriate -those words are not always negative, to me they also have a descriptive meaning. If they saw a trend and they took steps to fulfill the foreseen demand, it's all good. I'm sure people were happy WalMart had that in stock, rather than think 'this WalMart, they're using this hurricane in an underhanded way to sell me more poptarts'.
  - nknight 15y ago
    There's plenty to dislike about Wal-Mart, but there is absolutely nothing wrong with predicting a sudden shortage of a product in a particular area, and trucking in a bunch. If they'd doubled the price, that would be another matter, but that's not what they did.
    - deleted 15y ago
      [deleted]
      - nknight 15y ago
        Pop-Tarts are a cheap, readily-accessible, easily-consumed source of calories with a long shelf life that most people will at least tolerate. They're nutritionally incomplete, but they will help keep you alive and functional in the short term. Most people don't stock up on MREs and survival bars, nor even have a clue where to start. Under such circumstances, it's both expected and reasonable that they reach for a familiar, readily-available energy source.
        absentbird 15y ago
        I remember hearing an anecdote many years ago that when food supplies where being dropped over Afghanistan it was the pop-tarts and peanut-butter that were the most popular. I just looked into it and I the only information on their popularity I could find was that they are often sold on black-markets. Source: http://www.foreignpolicy.com/articles/2011/10/10/stuff_we_dont_want_haiti?page=0,0 http://www.foreignpolicy.com/articles/2011/10/10/stuff_we_do...
- brianbreslin 15y ago
  Funny how quaint the excerpt on data seems now. "Walmart has 460 tb of data, experts suggest Internet has half that."
- teyc 15y ago
  Bottled water always runs out when there is an impending disaster. And after the Brisbane floods, brooms, shovels and gloves were in short supply.
notatoad 15y ago
ruthless. they handle so much more volume than any other retailer that suppliers are willing to sign anything just to be a part of it. all losses are passed back to the suppliers, which enables wal-mart to take huge risks. the sibling comment to mine references a huge volume of pop-tarts being shipped to florida in preparation for a hurricane. if during mid-shipment the weather changed, wal-mart would call up the supplier, cancel the order, and all the trucks would return the pop tarts to their suppliers at no cost to wal-mart. with pop tarts it isn't such a big deal because they don't spoil, but farmers who supply wal-mart will get shipments of spoiled produce returned to them if wal-mart decides they don't need quite as much volume that week. and they just have to deal with it, because they can make more money getting screwed by wal-mart than they can selling to ethical companies.
- antoinehersen 15y ago
  If they make more money this way why are they getting screwed?
  - look_lookatme 15y ago
    I'm not a Walmart hater, but as I understand, the company requires their suppliers to open their books for the inventory they sell to Walmart. If the company "makes more money", Walmart will squeeze them to lower their wholesale cost, but that won't necessarily be passed to the consumer. Essentially, if you get in bed with Walmart, you will make the money you want in the short term, but eventually, if you want to keep that money coming in, you will lose control of your pricing. This doesn't even get into exclusivity requirements for products, etc. See Snapper lawn mowers, for some insight to this process. Make a deal with the devil... and you'll end up at the behest of the devil.
    - danssig 15y ago
      >the company requires their suppliers to open their books for the inventory they sell to Walmart. They do. And they'll start making demands about how you run your business (e.g. "stop buying this local, you need to buy it from China and here are a list of companies we recommend you use"). You will have lots of sales through Walmart but you have to be careful that they don't destroy your business on a whim. See Dill Pickle Co for an example.
kylewpppd 15y ago
This is anecdotal evidence from them coming to speak at my college, but... Walmart controls almost all of it's logistics. Whereas its competitors use other shipping companies, and have inventory sit in 3rd party warehouses, Walmart builds huge distribution centers that service multiple Walmart stores. The distribution centers mean they can purchase huge levels of inventory at discounted terms. Running their own logistics means that they can break up pallets into smaller shipments appropriate for each store. So stores need less space to carry inventory, and they can purchase and store huge amounts at lower cost per sq. ft. The other thing the logistics does is gives them an advantage in transportation cost. Although (I've heard) the margins in ground transport are slim, running your own ground transport saves money, allowing for lower prices to the consumer. Walmart's size also contributes to their "efficiency". They can buy in larger quantities than their competitors and try to exert downward pressure on suppliers' prices. They can also nab exclusives and put them on the shelves for less than competitors.
- NegativeK 15y ago
  To toss some info on the cost-cutting logistics pile, a friend of my dad was a buyer for Wal-Mart for a while. According to him, Wal-Mart's corporate relocation assistance consists of a Wal-Mart truck and some random employees from a local store packing and stuffing your possessions in a semi.
  - brc 15y ago
    Brilliant - I love it. If you're going to compete with a lowest-cost strategy, that's just how far you can take it.
  - tptacek 15y ago
    That's neat, if true. The long-haul truck drive is by far the most expensive part of a cross-country move; movers themselves are very cheap.
- ippisl 15y ago
  Also , by doing logistics for manufacturers and not the other way around, they make logistics for other retailers cost more(because of less scale), which increase the price of the competition.
brianbreslin 15y ago
This article from 2003 is still relevant http://www.fastcompany.com/magazine/77/walmart.html http://www.fastcompany.com/magazine/77/walmart.html
Tangurena 15y ago
Walmart pays faster, but they are just as aggressive at having their hooks into your financials as Apple and pressuring your margins down. If you update or replace your ERP system, your contracts with Walmart require you to integrate the new system with Walmart's. If you weren't paying attention upfront, the required changes can quickly make your ERP implementation explode over-budget.

What's Walmart's supply chain like?

by hswolff 15y ago

What's Walmart's supply chain like?

They've often been considered one of the best supply chain operations in the world, and aggressively drive their suppliers to lower prices and increase volume. One classic anecdote is that leading up to a hurricane, Walmart did some data mining and found that poptarts sold like crazy when hurricane watches were declared. Within hours they had dozens of trucks heading to the Florida coast filled with poptarts and they made a lot of money that way. Unless you have a fast, flexible logistics system and the analytical smarts to back it up, you can't exploit changing circumstances like that. Edit. Source of Walmart anecdote is here: http://www.nytimes.com/2004/11/14/business/yourmoney/14wal.html http://www.nytimes.com/2004/11/14/business/yourmoney/14wal.h...

DiabloD3 15y ago
I agree that exploit is the right word here, but probably not for the reason you chose it.
- mc32 15y ago
  Either opportunistic or exploitive are appropriate -those words are not always negative, to me they also have a descriptive meaning. If they saw a trend and they took steps to fulfill the foreseen demand, it's all good. I'm sure people were happy WalMart had that in stock, rather than think 'this WalMart, they're using this hurricane in an underhanded way to sell me more poptarts'.
- nknight 15y ago
  There's plenty to dislike about Wal-Mart, but there is absolutely nothing wrong with predicting a sudden shortage of a product in a particular area, and trucking in a bunch. If they'd doubled the price, that would be another matter, but that's not what they did.
  - deleted 15y ago
    [deleted]
    - nknight 15y ago
      Pop-Tarts are a cheap, readily-accessible, easily-consumed source of calories with a long shelf life that most people will at least tolerate. They're nutritionally incomplete, but they will help keep you alive and functional in the short term. Most people don't stock up on MREs and survival bars, nor even have a clue where to start. Under such circumstances, it's both expected and reasonable that they reach for a familiar, readily-available energy source.
      - absentbird 15y ago
        I remember hearing an anecdote many years ago that when food supplies where being dropped over Afghanistan it was the pop-tarts and peanut-butter that were the most popular. I just looked into it and I the only information on their popularity I could find was that they are often sold on black-markets. Source: http://www.foreignpolicy.com/articles/2011/10/10/stuff_we_dont_want_haiti?page=0,0 http://www.foreignpolicy.com/articles/2011/10/10/stuff_we_do...
brianbreslin 15y ago
Funny how quaint the excerpt on data seems now. "Walmart has 460 tb of data, experts suggest Internet has half that."
teyc 15y ago
Bottled water always runs out when there is an impending disaster. And after the Brisbane floods, brooms, shovels and gloves were in short supply.

notatoad 15y ago

ruthless. they handle so much more volume than any other retailer that suppliers are willing to sign anything just to be a part of it. all losses are passed back to the suppliers, which enables wal-mart to take huge risks. the sibling comment to mine references a huge volume of pop-tarts being shipped to florida in preparation for a hurricane. if during mid-shipment the weather changed, wal-mart would call up the supplier, cancel the order, and all the trucks would return the pop tarts to their suppliers at no cost to wal-mart. with pop tarts it isn't such a big deal because they don't spoil, but farmers who supply wal-mart will get shipments of spoiled produce returned to them if wal-mart decides they don't need quite as much volume that week. and they just have to deal with it, because they can make more money getting screwed by wal-mart than they can selling to ethical companies.

antoinehersen 15y ago
If they make more money this way why are they getting screwed?
- look_lookatme 15y ago
  I'm not a Walmart hater, but as I understand, the company requires their suppliers to open their books for the inventory they sell to Walmart. If the company "makes more money", Walmart will squeeze them to lower their wholesale cost, but that won't necessarily be passed to the consumer. Essentially, if you get in bed with Walmart, you will make the money you want in the short term, but eventually, if you want to keep that money coming in, you will lose control of your pricing. This doesn't even get into exclusivity requirements for products, etc. See Snapper lawn mowers, for some insight to this process. Make a deal with the devil... and you'll end up at the behest of the devil.
  - danssig 15y ago
    >the company requires their suppliers to open their books for the inventory they sell to Walmart. They do. And they'll start making demands about how you run your business (e.g. "stop buying this local, you need to buy it from China and here are a list of companies we recommend you use"). You will have lots of sales through Walmart but you have to be careful that they don't destroy your business on a whim. See Dill Pickle Co for an example.

kylewpppd 15y ago

This is anecdotal evidence from them coming to speak at my college, but... Walmart controls almost all of it's logistics. Whereas its competitors use other shipping companies, and have inventory sit in 3rd party warehouses, Walmart builds huge distribution centers that service multiple Walmart stores. The distribution centers mean they can purchase huge levels of inventory at discounted terms. Running their own logistics means that they can break up pallets into smaller shipments appropriate for each store. So stores need less space to carry inventory, and they can purchase and store huge amounts at lower cost per sq. ft. The other thing the logistics does is gives them an advantage in transportation cost. Although (I've heard) the margins in ground transport are slim, running your own ground transport saves money, allowing for lower prices to the consumer. Walmart's size also contributes to their "efficiency". They can buy in larger quantities than their competitors and try to exert downward pressure on suppliers' prices. They can also nab exclusives and put them on the shelves for less than competitors.

NegativeK 15y ago
To toss some info on the cost-cutting logistics pile, a friend of my dad was a buyer for Wal-Mart for a while. According to him, Wal-Mart's corporate relocation assistance consists of a Wal-Mart truck and some random employees from a local store packing and stuffing your possessions in a semi.
- brc 15y ago
  Brilliant - I love it. If you're going to compete with a lowest-cost strategy, that's just how far you can take it.
- tptacek 15y ago
  That's neat, if true. The long-haul truck drive is by far the most expensive part of a cross-country move; movers themselves are very cheap.
ippisl 15y ago
Also , by doing logistics for manufacturers and not the other way around, they make logistics for other retailers cost more(because of less scale), which increase the price of the competition.

brianbreslin 15y ago

This article from 2003 is still relevant http://www.fastcompany.com/magazine/77/walmart.html http://www.fastcompany.com/magazine/77/walmart.html

Tangurena 15y ago

Walmart pays faster, but they are just as aggressive at having their hooks into your financials as Apple and pressuring your margins down. If you update or replace your ERP system, your contracts with Walmart require you to integrate the new system with Walmart's. If you weren't paying attention upfront, the required changes can quickly make your ERP implementation explode over-budget.