Walmart's Value Chain Model
In this paper, different processes carried out at Walmart are described in lieu of this model. Walmart is an American corporation retail organization of hypermarkets, discount department stores, and grocery stores. Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. As of September 30, 2016, Walmart has 11,573 stores and clubs in 28 countries, under a total of 63 banners. Walmart is the world 's largest company by revenue, according to the Fortune Global 500 list in 2016, as well as the largest private employer in the world with 2.2 million employees
Inbound Logistics: Each company needs to have raw materials and the importing of raw material is known as Inbound logistics. In the process of inbound logistics, your relations with your suppliers play a crucial role towards adding value to your end product. If your relations are good with your suppliers, you are likely to get the raw material in a timely manner and at optimal cost. Also, the rate at which you are able to get the raw material from your supplier to your company also adds value to the process. Thus, your material is available for further …show more content…
Generally, Walmart inbound logistic practices are based on the following three principles:
1. Using the minimum amount of links in the supply chain. Starting from the 1980s, Walmart began to ruthlessly eliminate traders in its supply chain opting to work with manufacturers directly. Such a strategic decision proved to have a positive impact on the bottom line after a few years. Specifically, “in 1989, Wal-Mart was named Retailer of the Decade, with distribution costs estimated at a mere 1.7% of its cost of sales – far superior to competitors like Kmart (3.5%) and Sears (5%)”. The efficiency of Walmart supply chain practices has further improved since in a consistent manner.
2. Forming strategic partnerships with vendors. Walmart imposes strict conditions on various aspects of the business when negotiating with potential suppliers. The company also attempts to purchase for the lowest prices applying its huge bargaining power in order to be able to maintain the cost leadership competitive advantage. However, once a potential vendor is contracted as a supplier, Walmart offers a strategic partnership for the long-term perspective and engages in high volume purchases, although for lower