Monday, February 24, 2014

Walmart’s Distribution and Logistics System

Walmart has been the world’s largest retailer with net sales standing at $466.1 billion for the fiscal year of 2012. One of the factors contributing to the success of the company is its “best-in-class” supply chain management practice, especially the distribution and logistics system.

The company has 158 distribution centres worldwide. These “hubs” are highly automated and run 24/7. Each centre is over 1 million square feet large. The total length of the conveyor belts inside every centre is estimated to be 5 miles. There are a total of 55,000 trailers, 6,500 tractors, and 7,000 drivers. Each distribution centre supports about 90 to 100 stores, within the distance of 200 miles.

When considering an expansion of business to a new region, Walmart has to choose a location for a distribution centre. This location must be where 90 to 100 stores can be built around.

No inventory is stored at the distribution centres since Walmart uses the “hub-and-spoke” distribution network. Goods are picked up directly from the manufacturers by a fleet of 6,500 trucks. They are then categorised at the centres and distributed to stores within 24 to 48 hours. With certain goods or for special orders, the company also take advantage of the manufacturers’ distribution system to deliver the goods directly from the warehouses to the stores.

Recruiting, training, assigning and supervising truck drivers are also critical steps or to make sure that the transportation system is safe, fast and responsive. Experienced drivers are hired and building up their loyalty is considered an important part of Walmart’s human resource management strategy.

Drivers are given handbooks with instructions, rules and schedules. They are closely monitored by supervisors. Breaches of the rules are dealt with according to the handbooks. Having systematic operational procedures and treating drivers fairly both contribute for the success of the distribution and logistics system.


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