Data-Driven Dynamics: A Case Study on Enhancing Walmart's Supply Chain

Efficiency through Prescriptive Analytics and Network Redesign

THE CASE

Walmart Inc., a prominent American multinational retail corporation, operates a

vast network of hypermarkets, discount department stores, and grocery outlets across
the United States. Over the years, Walmart has experienced continuous growth and
expansion, venturing into new domestic and international markets. With diverse retail
formats and a strong online presence, Walmart operates 10,566 stores and clubs in 24
countries, making it the world's largest retailer by revenue. The company boasts a
workforce of over 2.3 million employees and serves more than 230 million customers
weekly.

Despite its global reach and extensive product offerings, Walmart faces
challenges within its supply chain management. The company's supply chain involves
complex networks of suppliers, manufacturers, warehouses, and retail outlets. However,
these networks lack synchronization and streamlined processes, resulting in several
issues. According to Felsted (2022), “Walmart's supply chain is a mess. The company's
stores are often out of stock of popular items, and its distribution centers are overflowing
with merchandise. Walmart's supply chain problems are costing the company billions of
dollars in lost sales and profits”.

The primary challenge revolves around achieving seamless integration and

communication across Walmart's sprawling supply chain network. Suppliers struggle
with accurate demand forecasting, leading to imbalances in inventory levels. This
discrepancy between supply and demand causes overstocking of certain products and
stockouts of high-demand items, resulting in increased holding costs and missed sales
opportunities.

Additionally, Walmart's distribution centers encounter inefficiencies due to

suboptimal inventory management, transportation delays, and unreliable logistics
partners. Consequently, the company faces extended lead times, higher transportation
costs, and diminished customer satisfaction due to delayed deliveries and inconsistent
product availability.

The objective of this case study is to analyze Walmart's supply chain

management challenges and devise strategic solutions to streamline the supply chain
processes. Consequently, this study aims to make use of network modeling and
prescriptive analytics in the suggested course of action. Addressing these challenges
and proposing an optimal solution is crucial for Walmart to enhance operational
efficiency, reduce holding costs, ensure consistent product availability, and elevate
overall customer satisfaction levels.

I. STATEMENT OF THE PROBLEM

This study aims to provide to develop strategic solutions to streamline the supply
chain processes of Walmart using network modeling and prescriptive analytics. In line
with this, this study aims to answer the following questions:

Major

1. What are the key bottlenecks and inefficiencies in Walmart’s current supply chain
processes?
2. How can network modeling help optimize Walmart’s supply chain processes?
3. What prescriptive analytics approaches can Walmart implement to improve
decision-making and efficiency?

Minor
1. What data sources and metrics are critical for effective supply chain optimization
using network modeling and prescriptive analytics?
2. What are the potential challenges and risks associated with implementing
network modeling and prescriptive analytics solutions in Walmart’s supply chain?
3. How can stakeholder collaboration and change management strategies facilitate
the successful implementation of optimized supply chain solutions?
II. STATEMENT OF OBJECTIVES

In line with the problem, the objectives of the study are divided into two (2) parts:

Musts

1. To understand the existing issues in Walmart's supply chain.

2. To familiarize with various network modeling techniques, such as supply chain
mapping, and understand how to apply these techniques to Walmart’s situation
for effective analysis.
3. To integrate prescriptive analytics methods in generating actionable insights and
optimal solutions towards Walmart’s supply chain issues.

Wants

1. To understand which metrics are available and relevant in allowing a more

accurate and tailored application of network modeling and prescriptive analytics
techniques toward Walmart’s supply chain infrastructure.
2. To explore the integration challenges related to existing systems and
technologies within Walmart's supply chain infrastructure.
3. To identify potential problems and develop strategies to address them for
successful implementation.

III. Areas of Consideration

The following areas must be considered in solving the Supply Chain Issues of
Walmart:

1. Demand Forecasting and Inventory Optimization. Understanding demand

patterns can help Walmart optimize inventory levels, reduce excess stock,
minimize stockouts, and enhance overall operational efficiency.
 2. Network Design and Distribution Optimization. Identifying the most cost-
effective and streamlined distribution routes aids Walmart in reducing operational
costs, improving delivery speed, and enhancing customer satisfaction.

3. Supplier Collaboration and Performance Enhancement. Analyzing supplier

data can help Walmart enhance collaboration, negotiate better terms, and
optimize procurement processes.

4. Operational Process Optimization and Efficiency. Optimizing operational

processes will lead to reduced lead times, minimized manual errors, and
enhanced overall productivity. Through data-driven insights, Walmart can identify
inefficiencies, automate routine tasks, and improve resource allocation.

IV. Alternative Courses of Action

1. Enhance Walmart’s supply chain efficiency by improving demand

forecasting accuracy and optimizing inventory levels, ensuring consistent
product availability while minimizing holding costs.

Advantages:

Enhancing demand forecasting accuracy and optimizing inventory levels

result in a streamlined supply chain where products are consistently available to
meet customer demands. This leads to reduced holding costs and ensures
optimal inventory management, minimizing excess stock and stockouts.

Disadvantages:

Implementing advanced demand forecasting and inventory optimization

systems may incur substantial initial costs, requiring significant investment in
technology and training. The accuracy of these solutions heavily depends on the
quality and reliability of historical data, making it vulnerable to errors if data
quality is compromised. Additionally, employees may resist changes in inventory
management processes, necessitating effective change management strategies
to ensure smooth implementation.
2. Optimize Walmart’s distribution routes and reduce costs by redesigning
the network, using network modeling techniques to create an agile and
cost-effective distribution system.

Advantages:

Optimizing distribution routes and redesigning the network will lead to

significant cost savings and improved operational efficiency. By minimizing
transportation costs and lead times, the supply chain becomes more cost-
effective, and the organization achieves higher overall efficiency. Furthermore, a
well-designed network ensures scalability, allowing for future growth and
adaptation to changing market demands.

Disadvantages:

Redesigning distribution networks can be complex and may cause

disruptions in the supply chain operation, requiring careful planning and
coordination to minimize negative impacts. Stakeholders such as suppliers,
transportation partners, and employees might resist changes in established
distribution networks, necessitating extensive collaboration and negotiation
efforts. Additionally, external factors like geopolitical events or natural disasters
can impact the effectiveness of optimized distribution networks, requiring
continuous adjustments to maintain efficiency.

3. Strengthen supplier partnerships and mitigate risks by utilizing

prescriptive analytics to assess supplier performance, enabling strategic
procurement decisions and timely, cost-effective deliveries.

Advantages:

Strengthening supplier relationships through prescriptive analytics

enhances collaboration and negotiation efforts, fostering long-term partnerships.
By making strategic procurement decisions based on supplier performance
 analysis, the organization achieves cost savings and ensures timely deliveries,
reducing supply chain risks and enhancing reliability.

Disadvantages:

Integrating diverse supplier data sources might pose challenges,

potentially leading to data inconsistencies and errors that could impact decision-
making processes. Suppliers may resist sharing detailed performance data,
hindering the depth of analysis and potential improvements. Additionally,
implementing supplier performance enhancement strategies may require
significant time and effort to establish trust and collaboration, impacting resource
allocation within the organization.

V. Recommendation

In assessing the advantages and disadvantages of each suggested course of

action, the top solution for Walmart’s streamlined supply chain infrastructure is the
second one, which focuses on optimizing distribution routes and redesigning
Walmart's network. This choice is driven by the potential for significant cost savings
and improved efficiency. This alternative aligns well with Walmart's goal of creating a
more cost-effective operation by minimizing transportation costs and streamlining the
supply chain. Additionally, the scalability of a well-designed network is essential for
accommodating future growth and adapting to changing market demands. While all
options have their merits, prioritizing network optimization offers a lasting impact on
efficiency, contributing to Walmart's long-term success. However, the final decision
should consider Walmart's specific challenges, resources, and readiness for change,
potentially adopting a phased implementation approach for smoother integration.

VI. Plan of Actions

To fulfill the chosen course of action, it is important to implement the following

strategies:
1. Perform a thorough analysis of the existing distribution network using network
modeling tools to identify inefficiencies and optimization opportunities.
 2. Utilize advanced algorithms to determine the most efficient transportation routes,
considering factors such as costs, lead times, and fuel efficiency.
3. Evaluate existing warehouse layouts for improved space utilization, and consider
implementing automation technologies to enhance efficiency.
4. Introduce cross-docking facilities to facilitate direct product transfers between
inbound and outbound transportation, reducing storage needs and handling
times.
5. Strengthen partnerships with transportation providers, negotiating favorable
terms, and leveraging technologies for enhanced route planning and visibility.
6. Implement advanced analytics tools for real-time monitoring and analysis of
network performance, enabling data-driven decision-making.
7. Evaluate the regionalization of distribution centers to reduce transportation
distances and consider decentralization for improved responsiveness to local
demand.
8. Anticipate potential disruptions and develop contingency plans to ensure the
resilience of the optimized distribution network.
9. Provide employee training for adapting to new technologies and processes, and
implementing change management strategies to address potential resistance.
10. Establish a system for continuous improvement, regularly reassessing the
distribution network's performance, monitoring key indicators, and gathering
stakeholder feedback for refinement.

VII. Potential Problems

The following are proposed contingent plans of action for the potential problems
mentioned:
1. Redesigning the distribution network may lead to operational disruptions,
potentially causing delays and challenges in maintaining regular supply chain
activities.
2. Stakeholders such as suppliers, transportation partners, and employees may
resist changes in established distribution networks, posing a significant challenge
to the smooth implementation of the optimized network.
 3. The upfront costs associated with implementing advanced analytics tools,
automation technologies, and redesigning warehouse layouts may pose financial
challenges for the organization, affecting the feasibility of the optimization
strategy.
4. Integrating diverse data sources for network analysis and optimization may
present challenges, leading to potential data inconsistencies and errors that
could impact decision-making processes.
5. Convincing suppliers to share detailed performance data for collaboration and
improvement may face resistance, impacting the depth of analysis and potential
enhancements to supplier relationships.

VIII. Contingent Plan of Action

The following are proposed contingent plans of action for the potential problems
mentioned:
1. Implement a phased approach to network redesign, carefully planning and
coordinating changes to minimize disruptions. Conduct thorough risk
assessments and develop contingency plans to address potential challenges and
maintain operational continuity.
2. Proactively communicate the benefits of the optimized network to stakeholders,
addressing concerns and obtaining their input. Collaborate closely with
stakeholders throughout the process, providing training and support to ensure a
shared understanding and commitment to the changes.
3. Develop a comprehensive cost-benefit analysis to justify the investment in
network optimization. Consider phased implementation to spread costs over time
and prioritize high-impact, cost-effective solutions. Explore potential partnerships
or funding sources to alleviate financial burdens.
4. Invest in robust data integration technologies and protocols to ensure the
seamless flow of data across systems. Implement data validation processes and
conduct regular audits to maintain data accuracy. Collaborate with IT experts to
address any integration challenges promptly.
 5. Establish transparent and mutually beneficial partnerships with suppliers.
Emphasize the value of collaboration in achieving shared goals such as cost
reduction and timely deliveries. Implement secure data-sharing platforms and
ensure confidentiality to build trust with suppliers, fostering a culture of openness
and collaboration.

GENERALIZATION

The case study on Walmart's supply chain optimization through network

modeling and prescriptive analytics reveals a multifaceted approach to streamline
operations. Recognizing the intricate challenges within Walmart's supply chain, the
chosen strategy focuses on Network Design and Distribution Optimization (Alternative
Course of Action 2). This approach aims to enhance efficiency by analyzing and
redesigning transportation routes, distribution networks, and warehouse layouts.

However, the implementation of this strategy is not without potential challenges.

The study identifies key issues, including the risk of operational disruptions during
network redesign, potential resistance from stakeholders, initial implementation costs,
data integration challenges, and the need to foster collaboration with suppliers. To
address these challenges, recommended solutions include a phased approach to
implementation, proactive stakeholder engagement, rigorous cost-benefit analysis,
robust data integration measures, and transparent supplier collaboration initiatives.

The case study underscores the significance of a carefully orchestrated strategy

that leverages network modeling and prescriptive analytics to optimize Walmart's supply
chain. Through a balanced consideration of advantages, disadvantages, and targeted
solutions, the study aims to provide Walmart with actionable insights to create a more
efficient, resilient, and cost-effective supply chain, ultimately elevating customer
satisfaction and maintaining competitiveness in the retail landscape.

References:

About Walmart. (n.d.). About Walmart. [Link]

Felsted, A. (2022, May 18). Target and Walmart Are Victims of Their Own Supply-Chain
Success. [Link].
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Banker, S. (2022, August 17). Walmart’s Supply Chain Woes. Forbes.

[Link]
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Francis, A. (2020, July 28). Case Study: Supply Chain Management of Walmart - MBA
Knowledge Base. MBA Knowledge Base. [Link]
studies/case-study-supply-chain-management-of-walmart/