Walmart: Different Supply Chain Risks and Impact of Covid-19 on Operations (Research Paper Sample)

Final Report-- Walmart
Institution Affiliation
Operations Management
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TABLE OF CONTENTS
TOC \h \u \z EXECUTIVE SUMMARY PAGEREF _z2bwcryeh5bb \h 4INDUSTRY SELECTION AND RELATED INFORMATION PAGEREF _8jjz654b0kr0 \h 4Information About The Industry PAGEREF _6aa4uvg0l5ur \h 4The Current Supply Chain Process For The Company PAGEREF _tl38tsvdtsr2 \h 4OPERATIONAL PERFORMANCE OF WALMART AND ITS COMPETITORS PAGEREF _dxn3qbz2r1la \h 5THE SUPPLY CHAIN RISKS FACED BY GLOBAL COMPANIES IN GENERAL, AND THE RISKS FOR THE COMPANY IN PARTICULAR PAGEREF _dn67e7ryikmg \h 6External Risks Faced by Global Companies PAGEREF _ovbn25502t66 \h 6Internal Risks Faced by Global Companies PAGEREF _li71i8hspfbq \h 7Risks Facing Walmart PAGEREF _ysf0xlm6hx7h \h 8The IMPACT OF THE COVID-19 PANDEMIC ON GLOBAL COMPANIES PAGEREF _kfhbt0lwan58 \h 8THE IMPACT OF COVID-19 PANDEMIC ON WALMART’S SUPPLY CHAIN PAGEREF _fc7cmriefwev \h 10Effects of the COVID-19 on Walmart Inc.’s Operations and Inventory Shortages PAGEREF _jtvpchr57vys \h 10Impacts of Coronavirus on Walmart’s Warehouses, Stores, and Its Production/Service Capacity PAGEREF _g7hi9ed7ptn9 \h 11Did Walmart Shift Production from One Geographic Location to Another PAGEREF _dw549753eck4 \h 12CRITICISM AND SUGGESTIONS ON THE COMPANY’S SUPPLY CHAIN STRUCTURE PAGEREF _8bsuj11jb4s9 \h 13How Walmart’s Supply Chain Network Exposes It to Greater Risks than Other Types of Supply Chain Networks PAGEREF _6w4c5cclp58t \h 13How Walmart can Mitigate Supply Chain Risk in the Future PAGEREF _banvynyfdce3 \h 13How Walmart can make Its Supply Chain More Resilient PAGEREF _hr47r8gn3xrg \h 14THE PROS, CONS, AND LIMITATIONS OF ANALYSIS AND APPROACH TO WRITING THIS RESEARCH PAPER PAGEREF _qdmyke87y5m7 \h 15Pros or Strongest Part of the Research Paper PAGEREF _z0onoq2f9nbd \h 15What Was Not Covered As Deep As We Wanted and Why PAGEREF _fv4jwqyl1dt \h 16Cons, Research Challenges, and Limitations Encountered When Gathering Information PAGEREF _dl3hkkg7ztot \h 16CONCLUSIONS AND FUTURE WORK PAGEREF _ob6zhf60c55e \h 17APPENDIX PAGEREF _pepdatw31m2l \h 18REFERENCES PAGEREF _2eslsdtarhik \h 19
EXECUTIVE SUMMARY
This report examines the different supply chain risks faced by Walmart, and analysis on how the COVID-19 pandemic impacted Walmart’s operations and its supply chain process. Findings for the supply chain and its operations before and after the outbreak of the COVID-19 virus are investigated and analyzed, and we recommend that Walmart needs to have constant monitoring of their supply chain, especially in their inventory management to avoid any supply chain disruptions happening. Overall, Walmart's supply chain improvements will help it maintain its position as an industry leader in the future, but we do recommend that Walmart should establish a Triple-A supply chain network.
INDUSTRY SELECTION AND RELATED INFORMATION
Information About The Industry
The retail industry is a sector of the economy, mainly engaged in the sale of finished products to companies or consumers. There are many chain retail stores in the United States and these retail stores account for a high share of the US GDP. There are so many large retailers in the world like Walmart, Amazon, Costco, Target, CVS Pharmacy, etc. Walmart is one of the largest retailers in the United States and the largest retail companies in the world. Walmart has stores almost all over the world and has a great influence in the world's retail industry. In the retail industry, not only offline sales, but also online sales models are mainly based on websites. At the same time, the retail industry has also contributed a lot to the employment of American workers.
The Current Supply Chain Process For The Company
Walmart is one of the largest retailers in the world, it has a lot of stores worldwide. In 2019, the sales of Walmart were “510.33 billion dollars while it was 519.93 billion dollars” in 2020 “According to Supply Chain Digest, the retail giant Walmart runs more than 11,700 stores under the name of 59 companies1”. Because of these huge numbers, an efficient supply chain management strategy and system must exist to maintain the steady growth of numbers. Walmart's goal is to provide customers with the lowest prices of goods. Then Walmart is focused on developing structural costs to ensure lower costs. Walmart's supply chain management strategies have succeeded in making a huge contribution to those large numbers. Later, Walmart worked directly with manufacturers to reduce costs. Walmart’s innovation lies in long-term strategic purchases to ensure that the products they find are at the lowest price. And their long-term cooperation greatly increases their long-term purchasing potential. In addition, Walmart simplifies supply chain management by establishing good communication and relationship networks with suppliers, thereby improving material flow with lower inventory levels. “The main reason for Walmart’s success is cross-distribution, it is a kind of logistics inventory model1”. This means they ship the items directly to trucks or trams to avoid additional storage costs. This approach reduces inventory costs, transportation costs, and transportation time. These supply chain operations are the key to Walmart's success.[Statista Research Department. (2021), “Walmart's net sales worldwide from fiscal year 2006 to 2021,” Statista.]
OPERATIONAL PERFORMANCE OF WALMART AND ITS COMPETITORS
Walmart’s total sales are 559,151 million in 2020, Its sales are three times that of its competitor Costco and six times that of Target. Walmart's sales grew by 7.72 percent, three times the growth rate compared to the past. But that's below competitors Target (19.8 %) and Costco (9.21 %) (Bloomberg).（Appendix1）
Walmart's performance improved significantly in 2020, and it is still the No. 1 retailer in the United States. The COVID-19 epidemic has driven some consumers to shop online, resulting in a significant increase in Walmart's online sales. Its online sales grew 97 percent in the second quarter of 2020. Besides, its same-store sales rose 8.6% in the fourth quarter, and the sales rose 7.3% compared with the same period last year. Also, Walmart's customer spending per purchase increased by 22 percent. Furthermore, Sam's Club is a member store of Wal-Mart. Its membership grew by 60% in the third quarter. Its e-commerce sales in 2020 are up 41 percent from 2019.[Kohan, S. E. (2021), “Walmart Revenue Hits $559 Billion For Fiscal Year 2020,” Forbes.] [Sozzi, B. (2020), “America's biggest warehouse clubs are booming as COVID-19 rages on,” Yahoo Finance]
In 2020, Walmart improved its digital operations and used automation in its supply chain to make the customer experience more efficient. Currently, Walmart's inventory turnover is 8.81, Costco's is 11.93, and Target is 6.48. Walmart's average inventory processing period is 42 days, Costco's 31 days, and Target's 56 days (CSIMarket). The inventory turnover rate of Walmart has a good performance in the industry. Its inventory liquidity is good, which means that the enterprise has strong liquidity.
THE SUPPLY CHAIN RISKS FACED BY GLOBAL COMPANIES IN GENERAL, AND THE RISKS FOR THE COMPANY IN PARTICULAR
There are a number of supply chain risks faced by global companies in general, and they are usually categorized as two main types of risks, which are external and internal risks. External risks are the ones that are not in the company’s control, but internal risks are the ones that are within the company’s control and can be prevented.
External Risks Faced by Global Companies
The external risks include demand risks, supply risks, environmental risks, business risks, and physical plant risks. The demand risks can be influenced by unpredictable consuming trends, as well seasonal demands that businesses fail to estimate or predict. This risk happens when there is a gap between the forecasted and the actual demand. The supply risks, it is interruptions or disruptions in the flow of products within the supply chain of the company. The supply of the company can be disrupted through physical damage of products, inventory problems, incorrect forecasts, and delays. The supply risks can happen due to human behavioral risks of strikes and labor disputes, as well as theft. For the environmental risks, it happens outside of the supply chain and it has nothing to do with the company. These outside risks