All Those Numbers: Logistics, Territory andWalmart
Sam Walton’s ledger,Walmart Visitors' Center, Bentonville, Arkansas. [Images courtesy of the author except where noted.] Walmart Stores, Inc. is a discount retailer based in Bentonville, Arkansas.In 2008 it earned 400 billion dollars and had a combined floor area larger than the island of Manhattan.If Walmart were a country, it would be the world's 26th largest economy, just behind Austria. Walmartis also the largest private employer in the United States, with a workforce of over 1.4 million, secondonly to the federal government. Charles Fishman, in
The Walmart Effect
, describes the company as"carefully disguised as something ordinary, familiar, even prosaic. But in fact, Walmart is a completelynew kind of institution: modern, advanced, potent in ways we’ve never seen before . . . Walmart hasoutgrown the rules — but no one noticed." [1] Charlie Rose, before introducing Lee Scott, thenWalmart’s CEO, as a guest on his talk show, proclaimed Walmart "the most powerful company ever toexist." [2] It is, in fact, the company’s specialization in logistics — borne out through obsessions withefficiency, information and distribution — that has made it the sophisticated corporation Fishmandescribes. Given that Walmart’s operations are fundamentally concerned with territory, examining themclosely yields insight into some of the mechanisms now at work shaping cities.
Click Image toEnlarge
.Walmart has built its empire by deploying a selection of pre-designed, proprietary building types andadapting these to local requirements. Individually these big boxes, surrounded by acres of parking andsuburban commercial landscaping, have limited impact; but their cumulative effect — multiplied acrossalmost 4,300 U.S. Walmart stores — is considerable indeed. According to a study by Matthew Zook and Mark Graham, geographers at the University of Kentucky, "Fully 60 percent of the entire U.S. population lives within 5 miles of a Wal-Mart location and 96 percent are within 20 miles." [3] What ismore, Walmart has nearly saturated its rural and suburban markets and is now focusing on cities. Yet sofar the retailer has struggled to successfully build in urban areas. [4]Herein lies an opportunity to investigate the design possibilities latent not only in Walmart’s buildingtypes but also in the organizational practices — especially its unparalleled expertise in logistics — thathave made the company ubiquitous in the American commercial landscape. [5] What might the field of architecture learn from Walmart? What new research avenues, urban forms, building types and spatialconditions might emerge? Premiere of Walmart Television at 07:30 on January 11, 1988.
Logistics
Sam Walton (1918–1992) founded Walmart in 1962 in Rogers, Arkansas, based on a low-price/high-volume business model. By selling things cheaper, Walton could sell more of them and generate profitthrough volume rather than through high markup. This approach has proven spectacularly successful — yet it relies on narrow margins that must be vigilantly maintained and constantly improved. As a resultWalmart strives constantly to reduce costs. The company negotiates relentlessly with suppliers and itsleadership puts tremendous pressure on store managers to achieve maximum profitability. Much of thishas been driven by Sam Walton’s obsession with individual stores’ weekly performance data, which hewould review every Saturday morning with his executives and managers in order to root outinefficiencies, either within their own operations or those of suppliers. Through this sort of detailed andobsessive scrutiny, Walmart's leaders concluded that they themselves could handle most externaloperations better, cheaper and faster.It was this early realization that led the company to develop its multilayered distribution system and toidentify logistics — the branch of management concerned with moving supplies from point to point,and which relies upon information to enhance speed, efficiency and control — as its primary expertise.The field of logistics, of course, is rooted in the military; historian James Huston describes logistics as"the application of time and space factors to war.” [6] Unsurprisingly, there is a martial fervor to thecompany’s campaign to achieve total coordination of its worldwide operations.
Diagram illustrating the recommended location of barcodes on various products. [Credit: LawrenceHicks,
The Universal Product Code
(New York: Amacom, 1975)]To bring about such extraordinary coordination, Walmart devotes significant resources to thedevelopment, maintenance, refinement and synchronization of its distribution and data networks. [7]The company keeps track of every item every customer buys for two years and stores this informationin two data centers near its headquarters in Bentonville. Walmart uses this massive amount of information — only the U.S. Department of Defense collects more — to monitor consumer behavior and develop predictive purchasing and distribution models. [8] The transmission of this data is thenenabled by Walmart’s large satellite network and its proprietary intra-net, RetailLink. Walmart was alsoan early proponent of the Universal Product Code, and one of the first retailers to insist on compulsoryadoption by its suppliers, which enabled the company to substantially increase the amount and qualityof the data it tracked. Furthermore, the UPC, or barcode, serves in a sense to abstract the items movingthrough Walmart’s supply circuits: they are registered and tracked as numbers rather than things. This process — the quantification of qualities — is apparent in an illustration from 1975 that advisesmanufacturers on barcode placement: the products themselves are shown as blank forms because, fromthe merchandiser’s viewpoint, the truly relevant information is contained in the string of binary digitsthat make up each UPC. For Walton however, this logistical capacity was largely a means to an end.The founder remained focused only on how logistics affected performance — measured in profit.About the company's extensive data network, he wrote: “What I like about it is the kind of informationwe can pull out of it on a moment’s notice —
all those numbers
.” [9]In recent years Walmart's logistics strength — its expert use of "all those numbers" — has allowed it toexert an increasingly large influence in areas beyond the typical concerns of a discount retailer,especially in environmental regulation and emergency response. In 2005, CEO Lee Scott laid out anambitious plan to reduce the company's energy consumption. The goals were "to be supplied 100 percent by renewable energy, to create zero waste, and to sell products that sustain our resources andenvironment." [10] Walmart has approached this challenge with its characteristic rationalism, disciplineand zeal; it has understood that given the sheer size and scale of the enterprise, small improvementswould have big impacts.Schematic diagram of distribution similar to those used by Walmart.
Click Image to Enlarge
. [Credit:“Supply Chain Management, Inc. System Overview,” Brochure, Dematic Corporation, 2008]The company calculated, for example, that an increase in fuel efficiency of just one mile per gallonwould save more than $7,000 in fuel costs for a single truck; multiply that by the fleet's 7,200 tractorsand the annual savings is $52 million. Or, for another example, the company has started stocking milk in "case-less" plastic containers that require no crates or racks for shipping. With this minor modification in the packaging of one item, trucks carrying milk can hold nine percent more volume.This means fewer trips, less gas, less packaging and — most important to Walmart — a price reductionof up to $0.20 per jug. Similarly, a few years ago Walmart decided to replace the fluorescent lights inits refrigerated cases with high-efficiency LEDs. When it learned that no existing LEDs had the performance characteristics it sought, the company challenged lighting manufacturers to develop a
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