Walmart Supply Chain Analytics Use Case : The Walmart Supply Chain & Its Success Explained

Have you ever wondered how retail giants like Walmart manage to handle billions of dollars worth of goods efficiently? The secret lies in supply chain optimization, a strategic process that ensures smooth operations, timely deliveries, and cost-effective inventory management.

Now,

‍What is Supply Chain Optimization?

Alright, let's break it down. Supply chain optimization is like having a well-choreographed dance between suppliers, manufacturers, logistics, and retailers. It's about finding the most efficient and cost-effective way to get products from the manufacturer to the customer while meeting demand and keeping costs in check.

Why is it Important?

Picture this: Walmart deals with a staggering volume of goods. Without an optimized supply chain, chaos could reign. There might be excess inventory gathering dust or frustrating stock outs that annoy customers. Supply chain optimization ensures that the right products are in the right place at the right time, which is a win-win for both Walmart and its customers.

3 Supply chain analytics courses:

1. Supply Chain Analytics Essentials on Coursera

• ‍Level: Beginner

• ‍Duration: 9 hours approx

• ‍What you’ll learn: Data analysis, Supply chain, Job intelligence

• ‍Description: A beginner friendly course by RUTGERS will teach about fundamentals of supply chain analytics. You can complete this course in about 9 hours without any prerequisites.

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2. Supply chain Analytics Specialization on Coursera

• Level: Beginner

• ‍Duration: 1 month at 10 hours/ week

• ‍What you’ll learn: Identify pain points in supply chain and how to relieve them, data analysis, business intelligence, supply chain, demand and supply planning, Job intelligence

• ‍Description: This specialization is a 5 course series, it’s a beginner level specialization which you can complete in about 1 month considering a 10 hours/ week dedication. The only prerequisites for this course is basic business acumen and some knowledge of supply chain or operation.

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3. Supply chain optimization by UCI on Coursera

• Level: Intermediate

• ‍Duration: 8 hours approx

• ‍What you’ll learn: Identify components of Optimizations, set up optimization problems in Excel and run Monte carlo simulation

• ‍Description: This course by University of California, Irvine will teach you about the components of optimization and how to set up an optimization problem in excel.

How Walmart Masters Supply Chain Optimization to Handle Billion-Dollar Goods

Now let's Dive into the Processes:

So, let's imagine you're a data analyst at Walmart, tasked with making sure everything in this intricate dance of goods runs smoothly.

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Objectives

Your mission is to analyze critical supply chain KPIs (Key Performance Indicators) to optimize inventory levels and cut costs, all through the magic of data-driven analysis.

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Data Collection

First things first, you gather data related to the supply chain. Orders, deliveries, inventory levels, supplier performance, financial data—you name it! If it's got something to do with the supply chain, you're on it.

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Data Cleaning and Processing

Now comes the "clean-up" phase. You roll up your sleeves and dive into cleaning and processing the data to ensure it's accurate and consistent. You’ll make sure that there are no missing values, outliers, and messy formats.

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Exploratory Data Analysis

Now, let's have some fun! You dig into the data using exploratory data analysis. You're asking questions like,

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1. What is the current On-Time Delivery Rate, and how can it be improved to enhance customer satisfaction?

2. What is the Inventory Turnover Ratio, and how can we optimize inventory levels to reduce carrying costs?

You're crunching numbers, using formulas, and getting insights that will guide the next steps.

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Here are two formulas for this use case:

1. On−Time Delivery Rate = [ Number of on−time deliveries / Total number of deliveries]×100%

2. Inventory Turnover Ratio= Cost of Goods Sold / Average Inventory Value

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To assess the health of your supply chain and identify areas for improvement, you may need to calculate 10 more key performance indicators (KPIs) using appropriate formulas. Here's a quick overview of some of the essential KPIs:

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Analyzing Results and Making Recommendations

Once you've calculated these KPIs, it's time to analyze the results. Identify strengths, weaknesses, and areas for improvement in your supply chain. Address critical business questions using the KPIs and propose actionable recommendations.

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For example

1. What is the current On-Time Delivery Rate, and how can it be improved to enhance customer satisfaction?

2. What is the Inventory Turnover Ratio, and how can we optimize inventory levels to reduce carrying costs?

3. How accurate is our demand forecasting, and what strategies can be implemented to improve it?

4. What is the Supplier Performance Score, and which suppliers should we focus on strengthening relationships with?

5. What is the current lead time variability, and how can we reduce it to improve planning?

6. How long does it take, on average, to fulfill an order, and how can we streamline order processing for greater efficiency?

7. What is the Transportation Cost per Unit, and what opportunities exist to optimize logistics and reduce transportation expenses?

8. What is the Cash-to-Cash Cycle Time, and how can we improve cash flow and working capital management?

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Data Interpretation

Here's what the analysis of the data revealed: Now in this process you’ll make sense of what you discovered in EDA, for example you may discover the followings:

• The on-time delivery rate from suppliers varied widely, indicating inconsistencies in their performance. This variability can lead to stockouts or excess inventory, impacting customer satisfaction and operational costs.

• Digging deeper into the data, it was evident that certain product categories had significantly lower inventory turnover ratios compared to industry standards. This suggested overstocking issues in those categories, tying up capital and potentially leading to obsolescence.

• Additionally, a correlation was observed between supplier performance and inventory turnover. Suppliers with a higher on-time delivery rate seemed to align with better inventory turnover, indicating a relationship between supplier reliability and effective inventory management.

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Recommendation

In this step you’ll provide some actionable insights to the team: you may recommend the followings:

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On-Time Delivery Rate-

Action 1: Collaborate with suppliers to improve on-time delivery rates through clear expectations, better communication, and perhaps renegotiating contracts to include stricter delivery timelines.

Action 2: Implement a supplier performance monitoring system, rewarding punctuality and reliability. This can foster a sense of accountability and motivate suppliers to meet delivery deadlines consistently.

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Inventory Turnover Ratio -

Action 1: Reduce inventory levels in overstocked categories by closely monitoring inventory turnover ratios and optimizing order quantities. This might involve renegotiating purchase agreements and adjusting ordering patterns to align with actual demand.

Action 2: Conduct a thorough analysis of consumer demand patterns for products in the overstocked categories. Utilize this insight to re-strategize marketing efforts and potentially boost sales, aligning demand with inventory levels.

Action 3: Consider implementing automated inventory tracking systems that provide real-time data on product movement. This will aid in proactive inventory management, ensuring products are neither overstocked nor out of stock.‍
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Modeling

Next you’ll develop predictive models to identify market trends, forecast customer demand, enabling the company to allocate resources efficiently.

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Reporting

Finally, you’ll organize everything you’ve discovered and present them on dashboarding softwares like PowerBI, Tableau, or good ol' PowerPoint, you craft visualizations and presentations that tell your supply chain story. You'll make it easy for everyone to understand what's happening and what needs to be done.

In a nutshell, that's how a data analyst at Walmart optimizes the supply chain. Making sure that billion-dollar goods move gracefully and efficiently is no small feat, but hey, someone's got to do it, right?

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