Walmart Considers Radically New Supply Chain Optimization Strategies

Meagan Douglas
Mon, Apr 1, 2013

Walmart's new supply chain optimization strategies

 

In an effort to be more competitive against ecommerce retailers such as Amazon.com, Walmart is considering adopting a new inventory management system in which customers ship goods to other customers.

Reuters reported last month that the company is turning to a crowdsourcing model for fulfilling ecommerce orders. Instead of a vehicle owned and operated by Walmart or a contracted third party service delivering an ordered item, a customer is offered a discount to pick up and drop off the purchase.

Another supply chain management system being considered is a locker-based order fulfillment strategy, The New York Times reported. Under this arrangement, goods ordered online are sent to a local store and kept in a designated locker unit. Instead of an item being shipped directly to a business or residence, shoppers would travel to their local Walmart to pick it up.

The purpose of these new initiatives, according to Supply Chain Digital, is so that Walmart can better leverage its existing infrastructure as ecommerce becomes a larger part of the company's retail strategy.

Pros and Cons of Walmart's Proposed Shipping Plan
According to eMarketer, global ecommerce sales rose by more than 21 percent last year to top $1 trillion. In the North American market, ecommerce accounted for more than $364 billion in sales in 2012. While the rise of ecommerce presents significant opportunities for traditional retailers such as Walmart, this new shopping paradigm presents a number of operations and supply chain management issues as well.

One of Walmart's key assets in comparison to online companies is its vast physical storefront infrastructure, Supply Chain Digital reported. However, as ecommerce becomes more popular, that advantage is minimized. Walmart's new strategy aims to capitalize on its physical storefront advantage while also maximizing ecommerce profits.

With these new systems in place, Walmart would be able to make its supply chain more efficient by minimizing the number of shipping end points. More ecommerce operations ship products to centralized warehouses, and then disperse goods to individual customers. This type of arrangement can be a logistical nightmare for some, as trying to manage and oversee so many items being sent to a variety of locations can be fraught with difficulties. What Walmart hopes to do is streamline its shipping process so that goods are sent only to stores. This way, the company would have more oversight and less end points to consider.

However, Supply Chain Digital reported that both plans present challenges. With the crowdsourcing model, Walmart is entrusting its customers to safely and quickly deliver goods to strangers instead of just stealing the item. Under the locker-based arrangement, consumers would have to be willing to sacrifice the convenience of personalized delivery.

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