VERSUS

CASE STUDY: SUPPLY CHAIN MANAGEMENT

FROM,
Mohammed Hisham
Pradeep Rao
Sanjana Chander
Advith Ravikumar
Swapnil Phansalkar
Jerry Joseph Emmatty

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 TABLE OF CONTENTS

1. Introduction to Amazon
1.1 Fulfilment Centres
1.2 Whole Foods
2. Introduction to Walmart
2.1 Every Day Low Price
2.2 Development in Walmart’s Supply Chain
2.3 Omnichannel and Walmart.com
3. Challenges that Walmart faces and its implications on Supply
Chain
4. Key Advantages to the Structure of Amazon’s Supply Chain and
Company’s Management of its Supply Chain Operations
5. Differences
6. Conclusion
7. References

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 1. INTRODUCTION TO AMAZON

After Jeff Bezos quitting his position at D.E Shaw as vice president in the year 1994, leaving
from a Wall Street investment management firm moving to Seattle, Washington was a big step
forward for him. He settled in to begin his company Cadabra .Inc which he re-named it as
Amazon.com (AMAZON). Main objective being selling online books at lower prices. Taking
into consideration Online books are cheaper than creating an entire library of physical books.
Going public in May 1997, Nasdaq stock exchange played an important role in funding $54
million, helping Jeff grow his retail online store after the fall of dotcom. Amazon also allowed
third parties to sell their products on amazons website. At this phase, they were in a position to
take over other online booksellers like Bookpages Ltd. in United Kingdom and Telebook Inc.
in Germany, rebranding them under Amazon’s umbrella. Other than this they also looked at
other products for their website that led them to acquire other retailers like Drungstore.com ,
Diapers.com , Audible.com and Zappos.com.
Moving ahead in time, in 2005 Amazon Prime was introduced that included access to Prime
Videos Prime Music, free 2-day delivery and online book access all for under $75.In around
5000 cities, Prime offered customers same day and one day delivery options as well. This
happed to boom Amazons markets as they generated around $9.72 billion in revenues from
subscriber’s services, which included Prime members as well.
Branching out of online retail stores, they began with Amazon Web Services (AWS), a data
service firm that originally provided information on internet traffic patterns in 2006. Providing
more than 100 cloud computing services, including networking, storage, analytics, mobile and
tools for machine learning, Artificial Intelligence and IOT. Out of all these Amazon Elastic
Compute Cloud and Amazon Simple Storage Devices Services stood out to be the most
popular.
The Echo-Device powered by AI has more than 30,000 skills and could convert into a smart
home. They built more brick-and-mortar stores with the acquisition of Whole Foods Market in
2017.Neverthe less to say they began expanding more with Amazon Fresh, Amazon Go
Grocery stores and Amazon Bookstores. Open to transportation via Ocean Fright, Air Cargo
hub, Truck fleet and introduced parcel delivery network. They helped their third party sellers
with fulfillment centers termed as Fulfillment by Amazon (FBA), providing transportation,
warehousing, picking, packing, shipping, customer service and return policies. And these
services were given to any business even if they did not sell products on the Amazon site.
On January 31, 2018, the market capitalization of Amazon.Com.Inc. had hit $702 Billion, the
highest level ever. From starting as Earth Largest Bookstore in 1994, right now Amazon is one
of the most successful and valuable companies in the world making founder Jeff Bezos the
richest person on earth. Amazon with 566,000 employees (also known as Amazonias) had
become more valuable than Walmart Inc.

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 1.1 Fulfilment Centres

Amazon started their Fulfillment centres in Seattle and Delaware in the year 1994 as called as
Distribution centres. The Seattle centres was 8,640sq.ft ,whereas the Delaware fulfillment
centre was larger at 18,766 sq.mt. Furthermore they started their first European market at
Germany(Regensburg and Bad Hersfeld) and one in Marston Gate, United Kingdom. And now
across the globe, Amazon has more than 175 operating fulfilment centres and more than 150
million square feet of space where employees pick, pack, and ship Amazon customer orders to
the tune of millions of items per year.

1.2 Whole Foods

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Amazon entered the grocery business by tossing Whole Foods in its shopping cart. Amazon
spent more than $13 billion to buy this 40-year-old supermarket chain known for its organic
merchandise and, at times, its sky-high prices. They have around 400 plus stores as pickup
locations.11 regional DCs that focused primarily on distributing perishable to stores across UK,
Canada and USA. Also they started a venture called “Global Supply Chain” targeting all
services, including trucking, freight, forwarding and customer delivery. Later with “Dragon
Boat” project they used to increase their fulfilment centres.

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 2. INTRODUCTION TO WALMART

Company’s Growth
Walmart was started as a single retail store in 1962 in state of Arkansas in United States. The
company was incorporated and was officially on New York Stock Exchange in 1970s. In
1980s, Walmart had grown to 250+ stores and the company was employing over 20,000 people.
In 1990, Walmart became the largest retailer in United States. The retailer saw and incredible
milestone of $1 Billion in sales in one week in year 1993. By adding a store in the state of
Vermont, Walmart grew its presence into all 50 states in the United States in 1995. Walmart
registered a staggering achievement of $ 100 Billion in annual sales in 1997. This year also
saw Walmart honored as largest private employer in United States. With 1.1 million
employees, the company became largest private employer in the world in 1999. A 1000th
Walmart store was opened in 2001 and the retailer reached number 1 spot on list of Fortune
500 companies in year 2002. By 2015, Walmart had 10,000+ stores, employed 2.2 million
people and did $ 473 Billion in sales. In year 2021, Walmart operates 11,500 stores in 28
countries. Number of customers is estimated at 250 million per week.

International Markets
Walmart has retail presence in 28 countries. The company strategy is to provide a customized
approach to each market it operates in. Walmart’s presence in Africa is through Massmart, a
retail group that Walmart holds majority stakes in. Established in 1994, Walmart Canada is
company’s division in Canada that runs discount stores through tight knit network of 2000+
suppliers. Walmart de Mexico y Centroamerica was established in 2010 to run operations in
Mexico and other countries in Central America. Walmart has huge presence in China where
the company runs 400+ discount stores in over 150 cities. The company offers innovative
services such as one-hour delivery in some places and next day delivery in most places due to
its strong distribution network of 20 centers. Walmart’s business expansion in India is through
the Flipkart group, a leader in India’s eCommerce sector. Walmart has an omnichannel retail
presence in Japan where it holds investment stake in Seiyu retail group.

Walmart Supercentres vs Walmart Discount Stores vs Neighbourhood markets:

Walmart has 3 different formats of stores in the United States.

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 Discount
Store

Super
center

Neighborhood
market

Walmart Supercenters are almost twice in size as compared to Walmart discount stores.
Supercenters average 175,000 square feet in physical area while discount stores average 95,000
square feet in physical store area. Supercenters are mainly located in densely populated areas
while discount stores are primarily located in smaller towns with lower foot traffic.
Supercenters tend to have lot more variety of items along with more stock due to much larger
shelf space. Supercenters offer wider range of services such as restaurants, pharmacies and
delis. They are truly a one stop shop when it comes to services they provide. Neighborhood
markets are about half the size of discount stores (average 40,000 square feet) and focus on
selling groceries and produce. In 2021, there are roughly 3500 supercenters, 300 discount stores
and 700 neighborhood markets in the United States.

2.1 Every Day Low Price (EDLP)

Walmart boasts an “Every Day Low Price” strategy on their huge selection of products. One
of the biggest reasons behind Walmart being able to maintain low prices is their ever-reliable
customer base. Several studies show that vast majority of U.S. population lives within average
15 miles from a Walmart store. This proximity ensures a reliable foot traffic that allows
Walmart to maintain its low prices. Being the world’s largest retailer, Walmart is always in a
position to negotiate with its suppliers to demand lower rates. Majority of the supplier network
depends on Walmart to stay in business and cannot afford to lose Walmart as their customer.
Also, sheer volume of sales allows Walmart to maintain lower prices than any other retailer
even if Walmart has lower profit margin. Finally, Walmart stresses on buying directly from the
product manufacturer and avoids involvement of other parties wherever possible.

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 2.2 Development in Walmart’s Supply Chain

Walmart pioneered several technologies over the years to maintain steady advancement in its
Supply Chain. In 1975, Walmart introduced electronic cash registers and started recording
point-of-sales (POS) data to ensure accurate inventory. Two years later, the company
developed a company wide computer network as a system for ordering products from suppliers.
This network was vital in maintaining Walmart’s EDLP strategy. Walmart moved towards
implementation of Universal Product Code (UPC) i.e. barcodes and replaced 100% of old cash
registers with computerized POS system. This allowed customers to check out much quicker.
Walmart has always focused locating its stores within a day’s driving distance from the
distribution centers. The company is now setting increasingly steep targets for its suppliers to
deliver on time to reduce lost business due to stock outs. Walmart’s buyers proactively meet
supplier network every quarter to discuss and develop procurement, capacity management
strategies. The company is able to dictate low price points as a result of high volume of sales.
Company was successful in doing $ 520 Billion in revenues in fiscal year 2020.

2.3 Omnichannel and Walmart.com

Walmart actively provides its customers with an integrated supply chain experience. Several
services such as “Same day pickup”, “curbside pickup”, “next day delivery” are used by
millions of customers. The company offers 3000+ pickup locations and 1500 delivery
locations. Products are sold in 3 categories: grocery, health and wellness, general
merchandise. Walmart’s online eCommerce revenues tend to go up every quarter as a result
of shift in buying tendencies of the customer base. As opposed to Amazon, Walmart does not
charge fees to list items on Walmart Marketplace.

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 3. CHALLENGES THAT WALMART FACES
AND ITS IMPLICATIONS ON SUPPLY
CHAIN
Walmart experiences supply chain challenges that are quite common for retail and e-commerce
giants. In order to understand how Walmart tackles these challenges, it is important that we
know what these challenges are.
According to Walmart CEO Dough Mcmillon and its supply chain team, the major challenges
that
Walmart’s CEO and its Supply Chain team face are on-shelf availability of fast-moving
products at the retail outlets.Cutting down on the cost of supply chains such as replenishment
cost and Inventory Cost of by finding the best way to replenish different product categories.

Walmart aims to have the right products on the shelves at the right time and price.

Retail and E-commerce industry experts say a high percentage of retailers' costs are linked to
a store replenishment shelves after the arrival of products in stores. A well-refined refilling
process and accurate inventory information in stores and supply prices are essential to ensure
the availability of shelves on the shelf.
Another huge challenge for Walmart is to align in efforts to work with their suppliers. Ensuring
that all suppliers provide the lowest priced products takes a mutual understanding and strategic
alliance between Walmart and their suppliers. Due to the sheer size difference of Walmart and
the sales volume of the product, the level of collaborative efforts varies from individual
relationship. With so many suppliers, products, and retail outlets to maintain, it is important
for Walmart to work with its supply chain partners in the most efficient way to avoid any
uncertainty. Maintaining Transparency and giving suppliers real time information is an act that
Walmart should take to enable the most rational choice of company decision makers.
Given the large supply chain network of that Walmart must maintain, finding the best way to
fill stores with consumer demand is a major challenge. In order to ensure an EDLP business
strategy, distribution costs should be as low as possible. On the other hand, because of its high
competitiveness, the products should be readily available when in demand at the store level.
Achieving affordable high service standards is an important part of Walmart's success.
Frequent changes in Information System The rise of ERP is one example where a company had
to change its entire organizational approach internally. Since Walmart is a large company with
services in many countries, it was expensive and tedious to adopt such a program. Not only
Information system, but also other changes in the IT sector as well, Walmart has been investing
heavily in IT, due to rising costs while setting up programs.
Culture: Its failure in countries such as India, China, Korea, Indonesia, Japan, etc. It has been
shown that flexibility is more important than getting quality products (or part of products)
everywhere. In India, the perception of people in supermarkets that they will find expensive

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items there compared to a small grocery store because in a supermarket costs will be higher.
People tend to buy smaller vegetables and other foods as they think vegetable renewals are
more important than price differences, which is why Walmart has not been able to make its
mark in this particular niche as they intend to sell in bulk at a cheaper price.

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 4. KEY ADVANTAGES TO THE STRUCTURE
OF AMAZON’S SUPPLY CHAIN AND THE
COMPANY’S MANAGEMENT OF IT
SUPPLY CHAIN OPERATIONS

Since its inception in 1994, Amazon has tried to constantly develop its supply chain. With
customer satisfaction as their top priority, they have made strategic business decisions such as
starting their own shipping company, increasing the number of warehouses, acquiring Whole
Foods, as well as daring technological moves such as delivery drones, autonomous vehicles,
and robotic warehouse automation.
Amazon has been a delivery strategy leader since 2005, owing to its services of 2-day shipping,
same-day delivery, and 1-hour delivery for Amazon Prime users.
Strong coordination among sellers, retailers, e-commerce, and order fulfilment by supporting
speedier shipment through the outsourcing of inventory management and insourcing of
logistics. Third-party sellers account for 51% of Amazon's sales, for which they currently
provide delivery services.
With over 573 million product possibilities and the use of a push/pull technique for warehouse
management, Amazon has risen to the top of the e-commerce market. They streamlined the
whole supply chain, from purchase through shipment to the distribution centre and final client
delivery.
Amazon, as a fundamentally innovative company, has accelerated the production network and
encouraged accuracy by utilizing computerization in fulfilment centres and AWS to attempt
information combination and investigation. Amazon is also experimenting with delivery robots
and Prime Air logistics to strengthen the retail network.

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 5. DIFFERENCES

Essentially, Amazon has a higher shipping cost because "The Last Mile Delivery" is the most
expensive in any supply chain. Amazon attempts to offset these expenses through product
aggregation, warehousing, and free shipping minimums. Nonetheless, they pay for the last
mile, basically delivering directly to the consumer.
Customers come to Walmart and pick up the things they desire, thus Walmart does not pay for
"the last mile." Walmart will have higher property and staff expenditures, but they have
multiple locations and distribution hubs where they can use aggressive pricing to further lower
costs.

GENERAL COMPARISON BETWEEEN WALMART AND AMAZON

NATURE OF STORE
Walmart began as physical stores and has recently added an online store; Amazon is a massive
ecommerce company with few physical locations.

NUMBER OF PRODUCTS
In-store, Walmart provides customers with over 4 million products across a wide range of
product categories. Amazon has over 250 million things available online and adds over 50,000
new products every day.

DELIVERY
Walmart delivers items purchased online for free if the truck totals more than $35; Amazon
Prime members get free same-day, next-day, and two-day delivery.

LOCATION
Walmart has almost 11 000 stores spread across 27 countries. Amazon has few physical stores
in the United States, but people from more than 180 countries can purchase from the online
marketplace (Jooste, 2017).

PRICING
Except for "Foods and Beverages," Walmart is less expensive in all product categories.
Amazon is much less expensive in the "Foods and Beverages" category but significantly more
expensive in the other categories.

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EARNINGS
Except for "Foods and Beverages," Walmart is the cheapest in all product categories.
Amazon is much less expensive in the "Foods and Beverages" category but significantly
more expensive in other categories.

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 6. CONCLUSION

Walmart is the world’s largest brick-and-mortar retailer with over 5,362 stores worldwide
while Amazon is the world’s largest online retailer. Amazon’s supply chain is based on online
retailing. Walmart’s supply chain is based on store retailing. Amazon’s strategy was to control
the shipment of goods across the entire supply chain. Amazon’s buyers purchased and priced
goods for sale in Amazon site, placing orders to replenish inventory. Branching out of online
retail stores, they began with Amazon Web Services (AWS), a data service firm that originally
provided information on internet traffic patterns in 2006. In January 2018, the market
capitalization of Amazon.Com.Inc. had hit $702 Billion, the highest level ever. From starting
as Earth Largest Bookstore in 1994, right now Amazon is one of the most successful and
valuable companies in the world making founder Jeff Bezos the richest person on earth.
Amazon with 566,000 employees (also known as Amazonias) had become more valuable than
Walmart Inc. Walmart has retail presence in 28 countries. The company strategy is to provide
a customized approach to each market it operates in. Walmart’s presence in Africa is through
Massmart, a retail group that Walmart holds majority stakes in. In 1975, Walmart introduced
electronic cash registers and started recording point-of-sales (POS) data to ensure accurate
inventory. The company is able to dictate low price points as a result of high volume of sales.
Company was successful in doing $ 520 Billion in revenues in fiscal year 2020.

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 7. REFERENCES

Chart 21 Million square meters of Logistics Space World Wide Statista

All AWS Products and Use of each products.
Johnson, P. Fraser and Ken Mark: “Walmart: Supply Chain Management”. Ivey Business
School Foundation, 9th September 2019.
The Walmart Digital museum: www.walmartmuseum.com. Accessed on 15th October, 2021.
John, Steven: “How Walmart keeps its prices so low”. www.businessinsider.com. Accessed on
16th October, 2021.
Walmart Inc – 2020 annual report. www.corporate.walmart.com. Accessed on 16th October,
2021.
Our Business: Walmart U.S. https://corporate.walmart.com/our-story/our-business. Accessed
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P Fraser, Johnson, Ken Mark. “Walmart: Supply Chain Management.“ July 9 2019.
https://hbsp.harvard.edu/product/W19317-PDF-ENG
Forbes, The world’s largest retailers 2020: Walmart, Amazon Increase Their Lead Ahead Of
The Pack https://www.forbes.com/sites/laurendebter/2020/05/13/the-worlds-largest-retailers-
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Supply Chain Dive, Matt Leonard, “Walmart boosts inventory, extends lead times to account
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Jooste, Ivannih. "Difference Between Walmart and Amazon." Difference Between Similar
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Mark, Ken. “Amazon.Com: Supply Chain Management.” Ivey Publishing, 2018.

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