Answers to Video Cases 1 2
1. Where does Walmart’s supply chain start? What triggers Walmart’s Retail Link system to ship goods to local Walmart Stores?
Walmart’s Retail Link is triggered by consumer purchases in local stores by point-of-purchase cash register data. This is in contrast to more traditional supply chains which often start with a manufacturer or distributor shipping goods to local stores based on forecast sales or the hope of making more sales by flooding isles with products (“push” driven supply chains). In the case of Walmart, the supply chain is driven by consumer behavior which “pulls” replacement stock from inventory.
2. Why is a detailed knowledge of consumer purchases at each store important to Walmart’s success?
There are regional and local differences among all of Walmart’s stores in the United States.
These differences may involve weather patterns, ethnic composition of customers, local economic conditions, and regional cultures as well. Therefore, each store is in reality a unique entity with its own patterns of consumption. By adjusting inventory to each store, Walmart is able to meet different customer needs, and optimize sales revenue.
3. Why can’t other large retailers easily duplicate Walmart’s Retail Link?
Retail Link has been built over several decades, and the experience and knowledge that
Walmart has developed cannot be easily transferred to other firms. Moreover, the financial investment is substantial. Nevertheless, other large retailers like Target and Costco have developed powerful and competitive systems to compete with Walmart. Because the technology has fallen in cost over the last decades, new comers have an advantage over legacy systems like Retail Link.
4. Why does Walmart encourage its vendors to learn how to use Retail Link?
Walmart is able to offload some of the cost of keeping its shelves full to vendors. Vendors monitor the stock of their goods in all Walmart stores and are incentivized to keep