Reference no: EM133360703

The Case Study: Walmart is a well-known leader in applying network technology to coordinate its supply chain. Walmart's supply chain is the secret sauce behind its claim of offering the lowest prices every day. It's able to make this promise because it has possibly the most efficient B2B supply chain in the world. It doesn't hurt to also be the largest purchaser of consumer goods in the world. With sales of more than $495.76 billion for the fiscal year ending January 31, 2018, Walmart has used information technology to achieve a decisive cost advantage over competitors. As you might imagine, the world's largest retailer has the world's largest supply chain, with over 60,000 suppliers worldwide.
In the next few years, the company plans to expand from around 5,000 retail stores in the United States to over 5,500 and increase its selection of goods. Internationally, Walmart has over 5000 additional stores in 26 countries outside the United States, giving it over 10,000 retail units. The rapid expansion of Walmart's international operations will require an even more capable private industrial network than what is now in place.

In the late 1980s, Walmart developed the beginnings of collaborative commerce using an Electronic Data Interchange (EDI)-based supply chain management system that required its large suppliers to use Walmart's proprietary EDI network to respond to orders from Walmart purchasing managers. In 1991, Walmart expanded the capabilities of its EDI-based network by introducing Retail Link. This system connected Walmart's largest suppliers to Walmart's own inventory management system, and it required large suppliers to track actual sales by stores and to replenish supplies as dictated by demand and following rules imposed by Walmart. Walmart also introduced financial payment systems that ensure that Walmart does not own the goods until they arrive and are shelved.

In 1997, Walmart moved Retail LinkTM to an Extranet that allowed suppliers to directly link over the Internet into Walmart's inventory management system. In 2000, Walmart hired an outside firm to upgrade Retail Link from being a supply chain management tool to a more collaborative forecasting, planning, and replenishment system. Using demand aggregation software provided by Atlas Metaprise Software, Walmart purchasing agents can aggregate demand from more than Walmart's 5,000 stores in the United States into a single RfQ (request for quotation) from suppliers. This gives Walmart tremendous clout with even the largest suppliers.

In addition, suppliers can now immediately access information on inventories, purchase orders, invoice status, and sales forecasts based on 104 weeks of online, real-time, item-level data. The system does not require smaller supplier firms to adopt expensive EDI software solutions. Instead, they can use standard browsers and PCs loaded with free software from Walmart. Over 20,000 small and large suppliers are participating in Walmart's Retail Link network. By 2012, Walmart's B2B supply chain management system had mastered on a global
scale the following capabilities: cross docking, demand planning, forecasting, inventory management, strategic sourcing, and distribution management. The future of Walmart's SCM (Supply Chain Management) lies in business analytics-working smarter-rather than simply making the movement and tracking of goods more efficient. For instance, in 2012, Walmart purchased Quintiq Inc., a supply chain management tool for improving load assignment and dispatch of trucks for large retailers. Quintiq's software will enable Walmart's managers to optimize the loading of its trucks and reduce the time required to supply its retail stores.

Despite the economic slowdown in 2011-2012, Walmart's sales grew. In 2011, Walmart's net sales of $418.5 billion were around 4 percent from 2010, and its net income was $15.77 billion, up from $15.36 billion. In 2012, net sales continued to grow by over 5 percent.

Questions:

What is the purpose of Walmart's Retail Link system?

Question #2 - How does Retail Link connect to Walmart's purchasing and vendor supply systems?

Question #3 - What is the significance of Retail Link in Walmart's corporate strategy to become the dominant low-cost provider of retail goods?