NAME –PRAVEEN TARKAR

ROLL NO.-2003659
PROGRAM –BBA LOGISTICS
COURSE –BBL 603

TOPIC – WALMART ‘S INVENTORY

MANAGEMENT SYSTEM
REPORT - 2
WALMART
• Wal-Mart Stores, Inc. branded as Walmart, is an American multinational
retailer corporation.
• The company is the world's third largest public corporation, according to the
Fortune Global 500 list in 2012.
• It is also the biggest private employer in the world with over two million
employees,.
• Walmart remains a family-owned business. It is also one of the world's most
valuable companies.
• The company was founded by Sam Walton in 1962, incorporated on October
31, 1969. It publicly traded on the New York Stock Exchange in 1972.
• KEY COMPONENTS
• 1. Introduction
• 2. Vedors managed inventory
• 3. Type of Inventory
• 4. Just in time cross docking
• 5.Bullwhip Effect
 WALMART’S INVENTORY MANAGEMENT

WALMART INC.’S INVENTORY MANAGEMENT IS ONE OF THE BIGGEST CONTRIBUTORS TO THE SUCCESS
OF THE MULTINATIONAL RETAIL BUSINESS. CONSIDERING THE MAMMOTH SIZE OF THE COMPANY,
EFFECTIVE AND EFFICIENT INVENTORY MANAGEMENT IS OF CRITICAL IMPORTANCE IN OPERATIONAL
EFFECTIVENESS. WALMART IS KNOWN FOR CUTTING-EDGE TECHNOLOGICAL APPLICATIONS FOR ITS
INVENTORY MANAGEMENT ASPECT OF OPERATIONS.
WALMART’S INVENTORY MANAGEMENT IS A KEY SUCCESS FACTOR IN THE FIRM’S ABILITY TO GROW TO
ITS CURRENT INDUSTRY POSITION AS THE LEADING RETAILER IN THE WORLD. THE COMPANY’S
STRATEGIES FOR VARIOUS BUSINESS AREAS ARE LINKED TO INVENTORY MANAGEMENT IN TERMS OF
HOW STRATEGIC APPROACHES SUPPORT OR EXPLOIT BENEFITS BROUGHT THROUGH INNOVATIONS IN
INVENTORY ACTIVITIES. IN THIS REGARD, SUCH STRATEGIES APPLIED IN INVENTORY MANAGEMENT
DIRECTLY RELATE TO WALMART’S OPERATIONS MANAGEMENT AND PRODUCTIVITY STRATEGIES.
WALMART’S VENDOR-MANAGED INVENTORY
MODEL
• Walmart’s success in managing its inventory is partly due to the effective implementation of the vendor-
managed inventory model. In this model, suppliers access data from the company’s information
systems, such as data on current inventory levels and the rate at which certain goods are sold. Suppliers
decide when to send additional goods to Walmart, while the company monitors and controls the actual
transit of goods from warehouses to the stores. This strategy shifts some of the inventory control
activities onto the side of the suppliers.
• Walmart’s vendor-managed inventory has the benefit of minimizing delays in the movement of
inventory across the supply chain. This benefit is achieved because suppliers can directly access current
data about the inventory of their goods at Walmart stores. Another beneficial effect of using the
vendor-managed inventory model is the minimization of costs in inventory management activity. The
company does not need to spend for extra personnel to manage each supplier’s goods. Instead, this
financial and human resource expense is directly passed on to Walmart’s suppliers
TYPES AND ROLES OF INVENTORY AT
WALMART INC.

Walmart uses many types of inventory, each with a corresponding set of management approaches,
strategies, and tactics. Each type fulfills a certain role in the retail company’s inventory and supply chain.
The following types of inventory are some of the most notable in Walmart’s practices:
Finished Goods Inventory
Transit Inventory
Buffer Inventory
• Anticipation Inventory
• Finished goods inventory. The finished goods inventory type is the most significant in Walmart’s business.
Finished goods arrive at the company’s stores. These goods are stored and the inventory is replenished
regularly. Thus, the role of this type of inventory is to support Walmart store operations, where the
finished goods are moved from the company’s merchandise distribution centers to be sold to the retail
buyers at the stores.
• Transit inventory. Walmart uses the transit inventory type as the second most significant in supporting its
retail operations. This type of inventory refers to the goods that are held while in transit. The global extent
of Walmart’s supply chain means that some goods are in transit for days or weeks. The role of this
inventory type is to support the replenishment of the finished goods inventory in the merchandise
distribution centers and Walmart stores.
• Buffer inventory. Walmart uses the buffer inventory type in its stores by keeping a small margin of extra
goods in order to maintain business continuity when demand suddenly fluctuates. For this purpose, there
will always be an extra stock of goods at Walmart stores. The role of this type of inventory is to ensure the
adequate capacity of the company to satisfy sudden increases in demand, considering that current retail
market prediction models may be accurate, but not perfect in modeling such fluctuations.
TYPES OF INVENTORY IN WALMART

• Anticipation inventory. Walmart uses the anticipation inventory type to ensure optimal capacity to
satisfy consumer demand. This type is similar to the buffer inventory because the company maintains
extra stocks of goods to address an increase in demand. However, the anticipation inventory type is
based on seasonal changes and corresponding empirical data on seasonal changes in the market. For
example, Walmart dramatically increases its inventory size right before and during Black Friday to
satisfy the massive increase in demand during this special shopping day. The company also uses
anticipation inventory for the Christmas season and some long holiday weekends. Walmart does not use
the anticipation inventory type during regular shopping days, which are basically the rest of the year. The
role of this inventory type is to enable the company to satisfy expected seasonal increases in demand.
WALMART’S MEASURES OF INVENTORY
PERFORMANCE

Considering the size of its business and the variety of products it offers, Walmart uses numerous
variables as measures of inventory performance. The following measures are some of the most
significant:
• Inventory turnover
• Stock-out rate
• Inventory size
Inventory turnover is the rate at which Walmart’s inventory is sold out and replenished. It is a
measure of the cost of keeping each item in stock. A higher inventory turnover rate is less costly
and more desirable for the company.
The stock-out rate is the frequency at which Walmart’s inventory becomes inadequate in
satisfying demand. A lower stock-out rate is desirable. In addition, the company uses inventory
size as a gauge of cost. As noted, the corporation spends less for a smaller inventory. These
measures reflect the cost minimization objectives linked to
Walmart’s cost leadership generic competitive strategy, which requires low costs to maintain
 JUST-IN-TIME CROSS-DOCKING
• Walmart uses different methods to manage its inventory. Just-in-time inventory is the application of the just-
in-time (JIT) method to inventory management. This method involves measures and activities for the
operational objective of minimizing storage and related costs. At Walmart, the just-in-time inventory method
is applied in the form of cross-docking. In cross-docking, suppliers’ trucks and the company’s trucks meet at
the company’s warehouses or merchandise distribution centers. Goods are transferred from the suppliers’
trucks directly to Walmart’s trucks, which deliver the goods to the stores.
• The main benefit of cross-docking at Walmart’s warehouses is the minimization of inventory size. Fewer
goods are stored at the warehouses. A smaller inventory is less costly to maintain. Also, cross-docking enables
Walmart to quickly deliver goods to the stores. This condition enables the firm to rapidly respond to
fluctuations in demand and related changes in the market. Thus, this method of inventory management
supports Walmart’s operational efficiency and business resilience
 MANAGING INVENTORY ACROSS WALMART’S
SUPPLY CHAIN
• ABC Analysis. The Category A items in Walmart’s inventory include the finished goods sold at its stores and operations
equipment, such as information systems for supply chain management and inventory management. Items in this
category are regularly monitored and recorded. The Category B items in Walmart’s inventory are the other supplies or
materials used for operations, such as maintenance equipment and office furniture. These items are moderately
monitored and have moderate recording accuracy. Category C involves the least monitored and recorded inventory
items, such as janitorial supplies and office supplies like paper. This category has the least impact on the company’s
daily retail operations.
• Bullwhip Effect in Walmart’s Supply Chain. The bullwhip effect is the propagation of error in the form of inadequacy or
excesses in the supply chain. A small error in one part of Walmart’s supply chain could lead to bigger errors and higher
costs across the supply chain. The company minimizes the bullwhip effect in its supply chain through the vendor-
managed inventory model. Vendor-managed inventory allows suppliers to directly access Walmart’s inventory data. In
this way, the company’s personnel have minimal contribution to possible errors in managing the movement of goods
from the suppliers to the company’s stores.