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Walmart is one of the largest retailers in the world, managing an extensive network of suppliers, warehouses, and stores.
They are known for offering a wide range of high-quality products and are renowned for their efficient inventory management system.
With years of experience and a sophisticated inventory management network, Walmart has mastered the art of handling inventory to meet customer demands while optimizing costs.
Whether you’re a supplier, a third-party seller on Walmart Marketplace, or a business looking to learn from Walmart’s strategies, this guide will help you understand Walmart's inventory management system and how you can optimize your own processes.
The Walmart inventory management system is a sophisticated and highly efficient operation that combines advanced technology, strategic partnerships, and data-driven decision-making. Here's an overview of how the Walmart inventory management system works:
Walmart follows a just-in-time inventory system, where the focus is on minimizing inventory levels to reduce holding costs. This system requires accurate demand forecasting and reliable suppliers to ensure timely deliveries. In other words, it ensures that products are restocked just in time to meet customer demand without accumulating excess inventory.
Walmart leverages cutting-edge technologies, such as Radio Frequency Identification (RFID). RFID tags are attached to products, allowing for real-time tracking throughout the supply chain. This technology provides accurate and up-to-date information on inventory levels, reducing errors and optimizing stock management.
Walmart employs a cross-docking strategy, which involves receiving goods from suppliers and shipping them directly to stores with minimal handling and storage in between. This reduces the need for large warehouses and accelerates the replenishment of store shelves.
Walmart uses data analytics to analyze consumer trends, identify seasonal variations, and forecast demand for different products. This data-driven approach helps in making informed decisions about inventory levels, ensuring that the right products are stocked at the right time.
Through a Vendor-Managed Inventory system, Walmart collaborates closely with its suppliers. Suppliers play an active role in monitoring and replenishing inventory at Walmart stores, sharing real-time data on sales, stock levels, and product performance. This reduces stockouts and improves overall efficiency.
Walmart has strategically positioned distribution centers and fulfillment hubs worldwide. This efficient supply chain network ensures that products can be transported swiftly and cost-effectively to stores, contributing to quick restocking and high product availability.
Inventory management is the backbone of any successful retail operation. Here’s why Walmart inventory management is important:
Effective inventory management helps Walmart keep costs low, a key factor in maintaining its "Everyday Low Prices" strategy. By optimizing inventory turnover rates and reducing carrying costs, Walmart ensures that capital is not tied up in excess stock. The just-in-time inventory system used by Walmart minimizes excess inventory, allowing the company to operate with leaner inventories, optimizing working capital and improving overall cost-effectiveness.
Walmart's inventory management ensures that products are consistently available to meet customer demand. With enough products available to meet demand, shoppers can find the items they need when they visit Walmart stores or shop online. This improves customer satisfaction, encouraging repeat purchases.
Walmart's use of advanced technologies and data analytics for demand forecasting empowers the company to make informed decisions. This data-driven approach helps optimize inventory levels, preventing overstocking or stockouts and ensuring that the right products are available at the right time.
The cross-docking strategy and efficient supply chain network enable Walmart to restock shelves quickly. High inventory turnover ratios indicate that products move swiftly through the supply chain, minimizing the risk of obsolete or expired stock.
With the rise of ecommerce, Walmart has seamlessly integrated its inventory management across physical stores and online platforms. This unified inventory system allows customers to check product availability in real-time, choose between in-store pickup and home delivery, and receive timely updates on restocking. This integration enhances customer convenience and drives more sales.
Walmart manages different types of inventory to ensure smooth operations and meet customer demands efficiently. Here are some key types of inventory at Walmart and their respective functions:
Finished goods inventory comprises the products that are ready for sale and available on store shelves. This is the most critical type of inventory for Walmart as it directly corresponds to the products available for purchase by customers.
Buffer inventory, also known as safety stock, is held to mitigate the impact of uncertainties in demand or supply. It acts as a cushion to prevent stockouts in case of unexpected surges in demand or disruptions in the supply chain. Walmart strategically maintains buffer inventory to ensure product availability during fluctuations.
Anticipation inventory is stocked in anticipation of predictable events, such as seasonal demand or promotions. Walmart carefully plans and manages anticipation inventory to align with peak shopping seasons, holidays, and promotional events, ensuring that it can meet heightened demand during these periods.
Work-in-progress inventory includes partially completed goods that are in the process of being manufactured or assembled. While Walmart doesn't manufacture its products, this type of inventory is more relevant to companies involved in production. For Walmart, it might include goods in the process of being packaged or labeled.
There are various key performance indicators (KPIs) and metrics to measure the performance of Walmart’s inventory management. These metrics measure the efficiency of its supply chain, the effectiveness of inventory turnover, and the overall health of its inventory.
Here are some metrics used to measure Walmart inventory performance:
Inventory turnover is a critical metric that measures how many times Walmart's inventory is sold and replaced over a specific period. A high inventory turnover ratio indicates efficient inventory management, quick product movement, and minimized holding costs.
Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory
The stockout rate measures the frequency with which Walmart experiences situations where products are not available to meet customer demand. A lower stockout rate indicates better inventory management and improved customer satisfaction.
Stockout Rate = (Number of Stockouts / Total Number of Sales) x 100
This metric calculates the average number of days it takes for Walmart to sell its entire inventory. A lower number of days implies faster inventory turnover and is generally considered a positive indicator.
Days of Inventory on Hand = 365 days / Inventory Turnover Ratio
Order fill rate measures the percentage of customer orders that are completely fulfilled from available stock. A high order fill rate indicates Walmart's ability to meet customer demand promptly and accurately.
Order Fill Rate = (Number of Complete Orders / Total Number of Orders) x 100
Effectively managing inventory on the Walmart Marketplace requires careful planning, strategic execution, and adherence to Walmart's guidelines.
Whether you are a third-party seller or a direct supplier, here are essential steps and tips for managing inventory effectively on the Walmart Marketplace:
Familiarize yourself with Walmart's specific guidelines and requirements for inventory management. This includes product listing standards, shipping policies, and any specific regulations for your category.
Set up an account on the Walmart Seller Center, the platform where you manage your inventory, product listings, and orders. The Seller Center provides tools and resources to help you efficiently manage your business on the Walmart Marketplace.
Ensure that all product information, including titles, descriptions, and images, is accurate and complies with Walmart's requirements. Clear and detailed product information can reduce customer inquiries and improve the overall shopping experience.
Optimize your product listings for search by including relevant keywords and attributes. This helps your products appear in relevant search results and increases their visibility to potential customers.
Set up an efficient order fulfillment process to ensure timely shipping. Walmart places a high emphasis on fast shipping, so meeting or exceeding delivery expectations is crucial for maintaining a positive seller rating. You can take advantage of Walmart Fulfillment Services and have Walmart handle your order and inventory management, shipping, and customer service.
See also: Walmart Fulfillment Services: What Sellers Need To Know.
Regularly monitor your inventory levels to prevent stockouts. Walmart encourages sellers to maintain high in-stock rates to provide a consistent shopping experience for customers. You can integrate your Walmart Marketplace account with inventory management software to keep stock levels updated in real-time. This reduces the risk of overselling or stockouts.
Consider participating in Walmart's 2-Day Shipping program, which offers fast and free shipping to customers. This can enhance the visibility of your products and improve the likelihood of sales.
Take advantage of Walmart's analytics tools to gain insights into your sales performance, customer behavior, and inventory turnover. Use Walmart's Performance Dashboards to track these metrics. You can use this data to make informed decisions about your inventory management strategy.
Familiarize yourself with Walmart's returns policy and provide excellent customer service in handling returns. Clear return policies can positively impact customer satisfaction and repeat business.
Stay updated on any changes or updates to Walmart's policies, procedures, and features. This ensures that you can adapt your inventory management strategy to align with the latest requirements.
Effective inventory management is a non-negotiable factor for ecommerce success.
Thanks to Walmart’s sophisticated inventory management system, you can fulfill your orders faster, increase customer satisfaction levels, increase sales, and become a successful Walmart seller.
Walmart uses a sophisticated inventory management system that combines technologies, automation, and data analytics. Some key aspects of the Walmart Inventory management system include Just-in-Time (JIT) Inventory System, Radio Frequency Identification (RFID), Cross-docking strategy, Vendor-Managed Inventory (VMI), etc.
The specific amount Walmart spends on inventory management is not publicly disclosed in exact terms, as it’s part of their overall supply chain and operational costs. However, factors like technology, labor, supply chain network, warehouse and distribution costs, and so on contribute to the overall costs of Walmart’s inventory management.
Walmart uses the First-In, First-Out (FIFO) inventory costing method for its operations. This method assumes that the oldest inventory (the first items purchased) is sold first while the newer inventory remains in stock. FIFO helps match the costs of older inventory with the revenue generated from sales, making financial reporting more accurate. It also helps Walmart manage perishable goods and products with a shelf-life, ensuring that older stock moves out first to avoid waste and spoilage.
A Walmart inventory specialist plays a key role in managing and maintaining the store's inventory, ensuring that the products are properly stocked and that the inventory is accurate. Some key responsibilities of a Walmart inventory specialist include tracking inventory, replenishing inventory, reviewing inventory reports, forecasting demand, maintaining quality, etc.
Becoming an inventory specialist at Walmart, or in general, involves a combination of skills, experience, and sometimes education. Here’s a brief overview of what you need to become an inventory specialist:
As you gain experience, continue to improve your skills, stay updated on industry trends, and consider pursuing additional certifications or education that can help you advance in the field.
Overnight stockers at Walmart typically work full-time shifts that range from 8 to 10 hours per shift, depending on the store's needs and schedule. These shifts usually start in the evening and end early the next morning, often between 10:00 PM and 7:00 AM.
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now