Milestone 1: Demand Forecasting and
Walmart was founded in 1962 by Sam Walton in Rogers
Arkansas. Since its humble beginnings it has grown into one of the biggest
retail giants in the world. It currently employs over 2.3 million people around
the world with over 11,000 stores. With recent total revenues of $485.9 billion
it is hard to deny their status. Walmart opened their first store in China in
1996. Since then, it has a total of 416 retail stores. Walmart China has
started out fairly successful in its’s supply chain and transportation
Supply and Demand
Side Walmart China Product flow
the younger state of Walmart China to its counterpart in the United States,
their supply chain has gone through a few transformations recently. They have
gone from a high-volume distribution mechanism to a more customer-facing
operation. Walmart China would ship 15,000 to 20,000 stock keeping units to
its’ stores and many times the products would vary. Shipping products directly
to stores is inefficient and impractical for Walmart China. With this type of system,
they were shipping full truckloads to their stores to supply their product,
which is not an effective way to do it for perishable goods. Seeing the money
they were wasting and the uneconomical way their distribution methods were,
they introduced two new methods in 2015. These two new methods are a perishable
distribution system and a dry distribution system. This type of distribution
system made it so there were new distribution centers made that of perishable
and dry distribution cents.
needs of the customers for Walmart China are simple, convenient locations,
cheap products, and quality cost and services. The way that Walmart China
started to accomplish this was to start expanding to new locations in China.
More locations of Walmart China helped improve customer satisfaction and keep
products cheap and high quality.
are other expectations that customers include for Walmart China. These
expectations are, an operating cycle of seven days a week on two shifts,
capacity of 150,000 products per day, $24.5 average value per case, and peak
demand of 90,000 per day. Having a product mix of 3,500 SKU consisting of a
wide range of products from durable to the perishable goods. Expectations for
the distribution center is to be seventy percent of peak demand.
through its’ 416 physical locations and its “hyper market” online website,
Walmart China has a lot of demand for their suppliers. Almost all of these
stores use close to the same procedures in inventory management, information
technology, material handling, staffing, merchandise display, customer
relations, and product design and control. This is all controlled and
facilitated by corporate management teams that are in various stores of the
At the current time, Walmart
China has incorporated a supplier strategy that will help to make a reduction
in cost to their transportation. Creating more centralized distribution centers
helped in lowering costs to transportation. Using fuller trucks and the railway
system is also a way Walmart China helped to lower transportation costs. They
also implemented a way for stores that are near each other to transfer needed
stock between each store. Using an integrated information technology system, it
helps the stores not over forecast to their suppliers and keep inventory levels
Inventory turnover rate was
beginning to trend don for many of Walmart China’s stores due to shipping
products directly to customers and online shopping. Walmart China needed to fix
this low inventory turnover rate to help keep storage costs down. Walmart China
began to keep a smaller number of inventory with a wider selection of goods.
Concentrating on the ecommerce market and being able to ship to customers from
any store began to save Walmart China money.
Evaluation of Walmart China Network
network of Walmart China is spread between 29 autonomous buying offices across
China. This network was not working very efficiently for Walmart China and was
costing them tons of money for its’ inefficiency. The five dry distribution
centers were not keeping up with the stores very effectively. Walmart China
uses third-party logistics to run their distribution centers, which cost them
lots of money. In correlation with the fees the third-party logistics team was
charging Walmart China, they would use large trucks to bring the products to
the stores., which cost them even more money.
China needed to change the way their distribution centers were being ran. Their
network sourcing system began to see some major transformations in 2015. They
are currently running 20 different distribution centers throughout China. These
distribution centers are split up between 11 perishables and 9 dry centers.
With supplier fill rates on the rise and in stock performance improving,
Walmart China is benefiting from a better distribution network system. Walmart
China runs a similar system to that of Walmart in the U.S.A. with it’s ambient
DC model. This ambient DC model gives a better cross dock and enhances its’ overall
for Walmart China distribute their products directly to the suppliers of
Walmart China. They operate 20 distribution centers throughout the country of
China. All of these distribution centers help with getting products from the
manufactures to the stores in a more efficient matter.
The way Walmart China operates
with its third-party logistics team should be dealt with. They need to revamp
their logistics teams, so they have a more efficient and less costly logistics
program. There should be better supervision of their inventory levels to avoid overstocking
and understocking products. Customer demand forecast should be addressed better
through the company network systems. Shipping and transportation of products should
be made far more efficient than they currently are.