As the world’s largest retailer with net sales of almost $419 billion for the fiscal year 2011, Wal-Mart is considered a “best-in-class” company for its supply chain management practices. These practices are a key competitive advantage that have enabled Wal-Mart to achieve leadership in the retail industry through a focus on increasing operational efficiency and on customer needs Wal-Mart’s corporate website calls “logistics” and “distribution” the heart of its operation, one that keeps millions of products moving to customers every day of the year.
Wal-Mart’s highly-automated distribution centres, which operate 24 hours a day and are served by Wal-Mart’s truck fleet, are the foundation of its growth strategy and supply network. In the United States alone, the company has more than 40 regional distribution centres for import flow and more than 140 distribution centres for domestic flow (Logistics, 2011). When entering a new geographic arena, the company first determines if the area will be able to contain enough stores to support a distribution centre. Each distribution centre supports between 75 to 100 retail stores within a 250-mile area. Once a centre is built, stores are gradually built around it to saturate the area and the distribution network is realigned to maximize efficiencies through a process termed “reoptimization” (Troy, 2003). The result is a “trickle-down” effect: trucks do not have to travel as far to retail stores to make deliveries, shorter distances reduce transportation costs and lead time, and shorter lead time means holding less safety inventory. If shortages do occur, replenishment can be made more quickly because stores receive daily deliveries from distribution centres.
The company’s hub-and-spoke distribution network utilizes a system of manufacturer storage with customer pickup. No inventory is stored at Wal-Mart’s distribution centres. Wal-Mart’s fleet of 6,500 dedicated trucks and over 50,000 trailers (SC