Holding $32 billion in inventory, Walmart’s supply chain is often touted as one of the most effective in the world and a major contributor to the organization’s operational success. Though it often is head-to-head with Amazon in terms of the world’s largest company, it beats the former in revenue. Walmart also remains a significant challenger when it comes to supply chain strategy, which was particularly prevalent during the COVID-19 pandemic. 

Much of Walmart’s supply chain success comes from seeking out more efficient ways of watching inventory levels and keeping stock levels consistent with demand as well as streamlining warehouses, manufacturing, and employee processes. The company is also focused on adopting different technologies quickly and efficiently through multiple channels to keep their chain swift and effective. 

We took a look at what Walmart stores and the company as a whole does to build an efficient supply chain and how it compares to retailers worldwide. 

A Brief History of the Walmart Supply Chain

Founded by the late Sam Walton and opening its doors in 1962, the mission of Walmart stores was to bring more affordable goods to shoppers without losing out on great service. Eight years later, Walmart went public and began to rapidly expand with the help of a loyal customer base, a unique employee strategy, and interesting technological advances and store formats Sam’s aspirations. In addition to bringing new approaches and technologies to retail, he also experimented with new store formats such as Walmart Supercenters and Sam’s Club locations.

Walmart operates with similar messaging today and has now grown into a global retail behemoth, so much so that it is the world’s largest retailer in terms of revenue. Walmart continues to make changes and innovations that make its supply chain even more efficient. So how does Walmart’s supply chain strategy look nowadays and why does it stand out from other supermarkets? 

Data Sharing Throughout the Walmart Supply Chain

Image credit: Shutterstock/JRomero04

Walmart shares inventory data with suppliers to maintain better stock levels. Suppliers use this data to form more accurate forecasts and prepare more effectively to meet the retail giant’s needs. Only in the last several years has this become a part of the supply chain strategy. Part of this involved sharing On Shelf Customer Availability (OSCA) data on its Supplier Growth Forum, which gives the suppliers it works with a better idea for demand forecasting and allows for continuous improvement when it comes to meeting deadlines and fulfillment windows.

There are also proven examples of how this has led to more efficient distribution. The relationship between Walmart and Procter and Gamble (P&G) is a great case study of how the company has been able to leverage data-sharing to create efficiencies. Walmart has set up an automated re-ordering system that uses satellite communication to tell P&G’s portfolio of companies when an item is needed. The item is then delivered to a distribution center or the store in need. 

It Starts with Bargaining Power

Image credit: Shutterstock/Mahmoud Suhail

Walmart deals directly with manufacturers without any need for a supply-chain middleman. As a retail giant, the company wields enormous bargaining power and can demand lower wholesale prices from suppliers.

In turn, these cost savings are then passed onto customers as part of Walmart’s everyday low prices. Walmart makes up for its low prices and smaller margins with its sheer volume of sales, which thus gives it a significant edge in the ecommerce and retail industry. 

The company has strict policies in place to ensure suppliers deliver in full on time (DIFOT) to match customer demand, charging vendors 3% of the cost of goods if deliveries aren’t made as expected.

Warehousing Efficiency and Automation

Image credit: Shutterstock/The Bold Bureau

The scale of Walmart’s inventory is hard to comprehend and it uses numerous processes, software, and devices for inventory control. Although significant investments are required for this level of oversight, it’s clear it’s been worth it for Walmart. 

For starters, Walmart has a cross-docking system whereby most freight that enters its distribution centers goes onto conveyor belts that lead directly to trailers being loaded for individual stores. This reduces warehouse space requirements.

Walmart also uses a consolidation system that allows large shipments of products in one region to be broken down and dispersed throughout the distribution centers across the company. This ensures fuller truckloads to cut down transportation costs.

More recently, robots have been implemented to efficiently manage the entire process for hundreds of warehouses across the U.S., which will delve into further.

Technology within Walmart’s Supply Chain Operations

Image credit: Shutterstock/Joni Hanebutt

Walmart has a long history of leveraging technology to improve operations. As far as Walmart supply chain FAQs go when analyzing the company’s methodologies, one query that typically arises is how its tech differs from other retail stores. 

There is a long list of technological advances Walmart has made in recent years that has helped it with everything from inventory management to cutting down tasks within the supply chain network to meeting customer demands.

Centralized Databases

A centralized database that houses all inventory information of Walmart discount stores across the world, noting levels of every product. There is also a Retail Link database that improves communication with suppliers and forecasting.

RFID Tracking and Smart Tags

Image credit: Shutterstock/Talkin’ Things

Walmart uses RFID technology and other smart tags that allow store employees to better track inventory. This plays a critical role in managing where products are and reducing loss. In fact, in 2024 it cemented in a mandate for a wide range of suppliers, enforcing them to have RFIDs within their products. Walmart isn’t the only company pushing for this kind of technology, as the RFID sector is worth billions now. 

Transportation Logistics

Image credit: Shutterstock/Felipe Sanchez

Walmart operates a private fleet of transportation trucks, which actually makes it the largest private motor carrier in North America. In owning this form of transportation, Walmart gets much better control over logistics and timeframes and only has to focus on getting its own products from point A to B. 

As part of its sustainability initiatives, Walmart is aiming to switch to electric vehicles and cut out emissions from its transport fleet by 2024 in the U.S. and Canada. It released a concept for a new semi-truck that has a hybrid powertrain and a centered seat for the driver, among other updated features. 

Patented Smart Devices and Products

Outside of great inventory management and sleek external and internal systems, Walmart’s supply chain strategy involves Innovative patent filings. These include smart shopping carts, electronic imaging devices that sense when inventory levels are dropping, and in-store customer assistance drones.

In-House Software 

Walmart has a My Productivity App for store managers to minimize backroom tasks and because it has a vendor-managed inventory system, it puts more responsibility on suppliers to stay on track. 

The Future of Walmart Supply Chain Management

Image credit: Shutterstock/Feng Cheng

There are many ways in which Walmart continues to shift its practices and adopt new technologies to boost its supply chain. Here are a handful of recent moves the company has made.

Robot and Drone Expansion

Another few futuristic endeavors that are bolstering the Walmart supply chain are drones and robots. As of 2024, Walmart is testing the waters with drone delivery in parts of Texas. Not only are these UAVs capable of delivering numerous products, but they cut delivery times from the usual expedited day or two down to 30 minutes or less. 

Prior to drones, Walmart has also introduced autonomous mobile robots into its warehouses over the last couple of years to help out with orders and moving stock. With AI developments happening faster than ever across multiple sectors, it wouldn’t be a surprise to see Walmart implementing other cutting-edge technologies with AI at the forefront soon, too. 

e-Commerce Boom and Ship-from-store

Walmart stores have set such a precedent for e-commerce fulfillment that it’s now offering third-party retailers the chance to work with its supply chain. This gives it yet another step up when it comes to competing with Amazon. Walmart has a notably rigorous application process, lower fees, and fewer suppliers on its platform, which can make it more enticing to other brands. 

In the past, Walmart increased its ship-from-store capacity and expanded its ecommerce space to handle the boom. Walmart’s online sales also jumped 25% year-on-year during the COVID-19 pandemic.    

“Ship from store” means using stores themselves as warehouses for online sales. Walmart has a clear advantage over Amazon with nearly 5,000 stores in 49 states. Shipping costs are low because 90% of Americans live within 10 miles of a Walmart store. 

Improved Sustainability 

Image credit: Shutterstock/Steve Heap

There are several ways in which the Walmart supply chain aims to reduce its carbon footprint. Walmart’s Sustainability Hub has not only committed to reducing direct greenhouse emissions but also to slash the emissions created by the company’s supply chain.

One of its sustainability initiatives is Project Gigaton, which aims to reduce its environmental impact by preventing one billion metric tons of greenhouse gasses from Walmart’s global supply chain from entering the atmosphere by 2030. 

Walmart is currently on track to reach that goal. We can expect to see increased use of renewable energy sources and recycling programs to reduce waste. It is also utilizing solar and wind power to lessen its footprint and help the company become fully renewable energy-powered by 2035. 

Tech Savvy Warehouses

Walmart is already in the process of building futuristic warehouses and consolidation centers that can move more volume with fewer workers. Technology includes automated item identification and self-driving delivery vehicles. It is likely that Walmart will also upgrade existing facilities with these technological improvements.

When looking at revenue and processes, it’s clear that Walmart’s supply chain is one of the most efficient in the industry and there are an immense number of ways in which the company has made this possible.