When it comes to retail success I always look at Walmart for ideas and best practices. If you are a retailer there is always something to learn from this biggest big-box phenomenon. If you are a supplier or B2B2C company, you need to know the ins and outs of this giant to be able to maximize your potential when it comes to selling to Walmart. Even if you are not a Walmart supplier, there is a lot to learn from them and possibly implement in your own processes to become better.
I am always asked about the Walmart ways, how they do what they do so well – like everything else leading to success, it is never one factor only and always a lot of hard work!
One of the factors directly affecting sales growth is in stock levels. It is a given that you can not sell what you don’t show as available in stores and online. Many manufacturers and brand owners lose sales due to inventory gaps, lack of accurate forecast and production mishaps. You may have the best product to sell but if you keep running out of inventory, or having trouble with shipping and don’t have tight logistics, you will eventually fall behind the competition.
So how do you keep up with competition? spoiler alert…it is not only about having the best product at the best price
How Walmart Does it
Walmart is a leading innovator in its supply chain practices. Ever since its inception, Walmart has been able to optimize its supply chain processes by cutting out unnecessary middlemen. By creating a system that focuses on maximizing efficiency, the big-box retailer has been able to provide consumers with lower prices compared to competitors. Walmart understands both traditional operations as well as the need to keep updating its systems with new technologies. That includes the continued development of distribution centers with new technologies such as artificial intelligence robots, updating regulations, and enhancing its sustainability practices. With Amazon dominating every sector of the eCommerce space, Walmart must capitalize on their own abilities. That means continuously maintaining their success in supply chain operations, which they have decade over decade. It is what has given them an edge over the competition and why other businesses want to emulate them. To become a supplier with Walmart it is important to understand their business practices. Otherwise, your product may fall right off the shelves.
It is a lot about staying in stock
Walmart has always been committed to decreasing the costs of the supply chain. This is how they manage to maintain such a high level of in-stock. Ever since its inception, Walmart has stuck to its core values. They developed cost structures that would allow them to offer products at the lowest prices. They focused on designing an advanced supply chain management system that would give them the most control.
They initially began by removing certain components of the chain. They cut out the middle man in order to work directly with manufacturers. Suppliers were given the responsibility of managing inventory in the Walmart warehouses. This became what is known as Vendor Managed Inventory or VMI.
Vendor Managed Inventory is a model that offers suppliers access to company data. Suppliers would know exactly when to send their goods to Walmart. This eventually became Walmart Retail Link which provides suppliers all the data necessary to manage their business. Suppliers can see how well their product is performing as well as track inventory and other important metrics. Walmart expects suppliers to keep up with their inventory to match customer demand.
To maintain the low cost of the supply chain, Walmart implemented cross-docking. This requires suppliers to upload their products to Walmart delivery trailers. These trailers make their way to Walmart warehouses, but they don’t stay there for long. Walmart minimizes inventory costs by immediately repackaging the products and sending them straight to Walmart stores. This optimizes everything from transportation time to storage, as Walmart does not even need to keep these products in the stores themselves.
On-Time In-Full Policy
Walmart further enhanced its supply chain by requiring suppliers to meet an even shorter delivery window. Prior to 2017, Walmart allowed suppliers to deliver their products within three to four days. They were also less strict with packaging mistakes. However, Walmart needed to meet higher customer demand. Consumers expect faster shipping rates due to Amazon’s two and one-day shipping arrangements. This pushed Walmart to become stricter with suppliers in their pursuit of 100% on-time delivery without errors. The retailer wants to avoid low stock as much as possible. Suppliers are penalized by 3% for failing to meet the 87% two-day window delivery time. Suppliers need to take advantage of Walmart’s Retail Link and sales forecasts. Walmart wants to maintain customer satisfaction and meet the high demand that eCommerce has created.
The continued optimization and updating of the supply chain will likely not stop here. Walmart has recently opened a high-tech consolidation center which is only going to continue to maintain high standards.
After all, if Walmart has been a leading innovator all this time, they are not going to slow down in this increasingly fast-paced retail environment.
Lead the pack
To be a successful supplier to Walmart stores and to better serve consumers online, brands need to have an intimate understanding of Walmart’s ways. There is a lot of data available on Retail Link and most brands capture historical data as well. Utilizing this data can help to develop a strategy and tactic to keep in stock and manage supply chain links. Crafting the best product and assortment is important, but no one will buy it unless it’s on shelves. Keeping up with demand is important to retain in-stock.
At Eighteen Knowledge Group, we develop models and workflows specifically designed to each brand’s needs when it comes to motoring and optimizing in stock. While combining forecast, trends, and production capabilities, we are able to flag risks and react fast. We help our clients adhere to Walmart’s and other retailers’ goals and stay compliant when it comes to in-stock levels. We assist companies in identifying the root cause of their lower than desired compliance levels and we bring their score to where it should be.
We make sure our clients never lose sales due to poor operations strategies.
Sharon Shichor is the CEO of Eighteen Knowledge Group LLC, your solution and knowledge base for brand building and getting your products in the hands of consumers online and in stores. With over 15 years of wholesale-retail experience, speaking fluent Walmart language.