Walmart is known for having one of the most efficient supplychain’s in the world stocking products in 70 countries while operating overthan 11,000 stores and managing about ~32 billion in inventory (Tradegecko 1). Theirsourcing decisions helps to reduce their inventory holding costs, manage theirinventory levels and help raise profits.
Knowing who your suppliers are andmanaging them effectively along with coordination, communication, and trustwith their sourcing decisions leads to increased revenues and greater profitsfor the firm. Economies of scale can be optimized if sourcing decisions aremade properly and planned accordingly to increase sales and reduce holdingcosts. The collaboration between member firms can lead to a reduction in flowtime of inventory and help the inventory get out of the door in the quickestpossible way without stocking out.
Walmart’sVendor Management Inventory (VMI) puts the management process on themanufacturer’s themselves to control their inventory for Walmart stores. Sourcingdecisions can help increase profitability, communications and cooperationpromoting an environment where manufacturers want to provide their goods tofirms such as Walmart. Their sourcing decisions help track inventory, managecosts, and share information accurately and quickly engages Walmart and theirconstituents in a health relationship pushing responsiveness amongst theorganization. Walmartalso instilled a Responsible Sourcing initiative that focuses on the suppliersthey use, accessing their risks and third-party risks, while ensuring theirdevotion to keep their manufacturing and distribution facilities up-to-date,clean, and friendly through external audits and investigations. They make sureall their sourcing decisions are based on the desire for excellence, actingwith integrity, and providing the best overall service to their customers.Walmart has well defined policies and facility expectations outlining theirwants and desires for sourcing decisions.
They keep their sources accountablefor their decisions via the Responsible Sourcing initiative also help intraining initiatives and showing their own responsibility efforts to theirmanufacturers. Maintaining positive and beneficial relationships with theirmanufacturers helps them succeed throughout their supply chain initiatives aswhole taking a unique approach that other companies and firms do not capitalizeon. Managing supply chain inefficiencies are crucial to the success frompositive sourcing decisions; Walmart is an example of a company whose policiesand contingencies ensure overall success.