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  Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - July 26, 2012 -  

Timeline of 50 Years of Walmart's Supply Chain

 

From Decision to Embrace Continuous Replenishment with Procter & Gamble to RFID Program Failure, we Detail Key Events and Initiatives from World's Largest Retailer

 
     
     
  by SCDigest Editorial Staff  
     
 

Earlier this week, SCDigest editor Dan Gilmore gave his perspective on the the fiftieth anniversary of the opening of the very first Walmart store in Rogers, Arkansas, which threw open its doors on July 2, 1962. You can find that article here, including some very interesting charts on Walmart's growth and share of the US retail market: 50 Years of Walmart's Supply Chain.

SCDigest Says:
2003: Business Week magazine runs cover story titled "Is Walmart too Powerful?" Story catches major attention, but little really happens from there.

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Walmart's supply chain is legendary, and it has been involved in an incredible number of important supply chain events and innovation.

 

Below, we present a timeline of key events and initiatives in supply chain and logistics from the start of the company until the present.

 

1970: Walmart opens its first distribution center. Before then, stores were stocked by vendor direct shipments and wholesalers.

1975: Wal-Mart leases an IBM 370/135 computer system to maintain inventory control for all merchandise in the warehouse and distribution centers, becoming among the first retailers to really tie store and DC inventories together electronically

1980: Walmart reaches $1 billion in sales, achieving that milestone in just 17 years, fastest in US history.

1985: Amid anxiety about trade deficits and the loss of American manufacturing jobs, Sam Walton launches a "Made in America" campaign that committed Wal-Mart to buying American-made products if suppliers could get within 5 percent of the price of a foreign competitor, major signage in the stores, etc. The campaign stays around for a few years, but never really catches on, and is abandoned, as Walmart becomes by far the largest US importer.

1988: After having first pioneered the concept of continuous replenishment (CR) with Schnuck's Markets in St. Louis, Procter & Gamble takes concept to Kmart – which doesn't act. P&G next heads to Walmart, where Sam Walton says if it will help me sell more soap then Yes, he's in. The rest is history.

1988: Walmart opens its first super center, which carries groceries in addition to general merchandise.

 

1992: Wal-Mart deploys its powerful Retail Link system to better integrate its supply chain. The system provides vendors information on sale trends, inventory levels, and more.

1995: Walmart is involved in the first Collaborative Planning, Forecasting and Replenishment (CPFR) pilot with Warner Lambert, which shows significant benefits from the practice. (It was actually called just Collaborative Forecasting and Replenishment at the time.)

2000: Lee Scott, who started his Walmart career as a dispatcher in the transportation group, is named CEO. Move sends message about importance of logistics to Walmart's success.

2003: BusinessWeek magazine runs cover story titled "Is Walmart too Powerful?" Story catches major attention, but little really happens from there.

2004: Walmart announces first RFID "mandate" for top 100 suppliers to put RFID tags on cases going to three DCs in Texas by Jan. 2005.

2004: Walmart finds inventories are rising at much faster rates (90+%) versus sales growth than historical levels; leads to "Remix" program that is designed to reduce stock outs and lower inventory by improving the flow of fast moving goods from DC to store. Walmart says it also plans to reduce vendors/SKU counts.

2004: Major documentary on Walmart is broadcast by business network CNBC that opens up some previously hidden areas of company operations and certainly leaves an impression Walmart is a unstoppable machine.


(Supply Chain Trends and Issues Article - Continued Below)

 

 
 
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2006: Walmart, led by CEO Lee Scott, really starts to push sustainability message and initiatives. Scott goes on big media tour with the message.

2007: With stock price stuck in concrete, Walmart said to be developing super-secret plan under incredible security that might involve spin out of Sam's Club unit and other moves, but nothing ever happens.

2009: Walmart's RFID case tagging initiative is for all intents and purposes dead. Company does later move ahead with (better) plan for item-level tagging of apparel.

2009: Amid deep recession, Walmart starts taking thousands of marginal SKUs off its shelves in in an attempt to reduce store clutter, focus on faster-growing product categories, and improve supply chain efficiencies.

2009: Walmart announces plans for a supplier sustainability index, basically a "green" vendor scorecard, that will be rolled out in three phases. The program is still evolving today.
.

2010: Walmart announces major plan to take greater control of inbound freight from vendors, but program grows slowly from there amidst much pushback from suppliers.

2010: WalMart announces an ambitious plan to dramatically increase the amount of "local" produce it sources and sells in the US and around the world, says it will invest $1 billion in related logistics improvements for produce/fruit.

2010: Walmart announces a sweeping plan to consolidate its global procurement functions and reduce the use of intermediaries in its global sourcing processes, leading to savings of billions of dollars per year.

2011: Walmart reverses course, says it is bringing 8500 SKUs back to store shelves, as removal blamed in part for slumping same store sales numbers.

2012: Walmart appears caught in scandal of sorts involving alleged bribes in Mexico years before and more importantly alleged cover-ups by top execs, but issue seems to have faded from view.

2012: Walmart stock price reaches all-time high in mid-summer, surging in 2012 after years of flat performance.

 

How important has Walmart been to the development of supply chain practice? What do you think its most important contributions were? Anything major we missed in our timeline?  Let us know your thoughts at the Feedback section below.


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Recent Feedback

Great overview, although I'm a little suprised to see no mention of their planning center, which is one of the major reasons they can react to natural disasters like Katrina faster than our own government.


William McNeill
Senior research analyst
Gartner
Jul, 27 2012

I would like to know why Walmart's RFID case tagging initiative was, for all intents and purposes, dead and too fast, although it was just used for 4 years or less. They didn't try to introduce it again in their supply chain. Maybe test it with a different type of products?


Elizabeth
Mrs.
Colombia
Jul, 27 2012

Informative article.  As a consumer, I also noticed that Walmart redesigned their layout to create 'walk through traffic'.  I wonder if the new merchandizing layout increased sales on product that had low traffic.


Cecile Strait
Program Manager
CACI International, Inc
Jul, 27 2012

While most retailers put merchandising at the core of their strategy, Wal-Mart seemed to focus more on supply chain at a fairly early stage. Thus started the virtuous cycle:

Supply chain efficiencies lead to lower costs...
Lower costs lead to lower prices...
Lower prices lead to higher sales volume...
Higher sales volume leads to greater opportunities for supply chain efficiencies...
Rinse and repeat.

As someone who grew up in the 1970s and 1980s, Kmart was the undisputed heavyweight champ of mass merchandise retailing. I think 1990 was a major milestone for Walmart, having for the first time surpassed Kmart (who I believe also set up shop in 1962) in sales.


Jeff Harrop
Partner
Demand Clarity Inc.
Aug, 01 2012

 In reference to their Supply Chain and Logistics in e-commerce, I would like to know what goals they may have for their "Site-to-Store" and direct-to-consumer operations.


Derek Dixon
Southeast Regional Sales Manager
Fromm Packaging Systems
Aug, 09 2012
 


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