12/23/2023 0 Comments Walmart inventory systems summaryAt the end of the day, the margin is king for any type of retail outlet. It’s simple math if you can keep retail prices at the same level and reduce your costs, your margin goes up. Reduced Costs: If you ask any business owner what their number one goal is, I can just about guarantee you their answer will involve finding a way to reduce costs. That example may be a bit extreme as there are some extremely loyal pop drinkers, but I think you get what I’m trying to say.īut, by sending inventory levels to all their suppliers and giving them details on any type of sale or rebate that may be coming up, not only is Walmart able to limit their inventory, but suppliers are also able to have a good feel for a demand spike to make sure the retail outlet still has plenty available to consumers. The Pepsi guy that runs a Walmart out of product on the fourth of July is getting in way more trouble from his boss for lost sales than the Walmart manager is getting yelled at by customers for being out of Pepsi. And while Walmart is going to hold suppliers accountable for keeping their shelves stocked, they know they are missing out on sales because they are such a retail giant. Think about it this way: if Walmart runs out of Kraft Mozzarella cheese, a customer isn’t going to go to another store to get the brand they want, Kraft is just going to miss out on that sale at Walmart. Not only do they cut out a middleman from the pricing perspective, but they have also put the full burden of keeping the shelves stocked on the supplier. If you think about it, that is typically a retail outlet’s biggest expense, keeping plenty in stock.īy cutting out distributors and working directly with the suppliers, Walmart has put itself in the driver’s seat. Lower Inventory Levels: By utilizing VMI, Walmart can significantly reduce its inventory levels at each of its stores. When studying how Walmart utilizes a VMI supply chain, the benefits jump off the charts. Walmart (and others) have completely mastered the VMI system and continue to build an empire off lower purchase prices, and low inventory.īenefits of Vendor Management Inventory for Walmart This type of strategy requires a high amount of technology that is able to feed suppliers, but with reduced costs at the store and inventory level, it is a cost you can quickly hurdle. A VMI system limited the risk of a retail outlet running out of stock unintentionally. This supply chain strategy can often be coupled with a logistics partner to make sure a store can go through seasonality without product runouts. The business owner provides an inventory count to each of their suppliers, and it’s then in their hands to make sure the shelves are stocked with goods. While some retail outlets have entire departments to manage the buying of products in their locations, VMI is a process that puts that inventory control in charge of the supplier. Walmart has become one of the biggest household names around and has become famous for its implementation of vendor management inventory (VMI), a supply chain strategy that provides them the best available pricing, and keeps its shelves stocked for customers. The company did expand again in 1983 when the Sam’s Club brand was created, which is a warehouse club similar to Costco and BJ’s Wholesale. One of the more interesting facts about Walmart is that it saw most of its growth through new construction, and not through acquisitions. The store was known as “Walton’s 5 & 10” and was the first of now over 11,000 Walmart locations in 27 different countries. Walmart was founded in 1950 when Sam Walton purchased his first store in Bentonville, Arkansas. Even with the emergence of the global online giant, Amazon, Walmart is still double in size. It should be no surprise as they are the world’s largest retailer. One company that has completely figured out the game is Walmart. Some companies have fully mastered an integrated supply chain system, while others still struggle and are constantly grinding to keep products in stock. If you are able to keep the most popular products in stock and have the best available product, customers will flock to your store and even be willing to wait in line for a product. Think about it, if you don’t have products available, customers will just stop coming to your store. When you think about any major retail outlet, having a superior supply chain system is what makes the world go round for them. Having a strong supply chain is important for any retail outlet, but the retail giant, Walmart, has mastered the game and hasn’t turned back.
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