{"id":26875,"date":"2017-11-15T22:58:19","date_gmt":"2017-11-16T03:58:19","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/digitization-of-walmart\/"},"modified":"2017-11-16T21:46:51","modified_gmt":"2017-11-17T02:46:51","slug":"digitization-of-walmart","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digitization-of-walmart\/","title":{"rendered":"Digitization of Walmart"},"content":{"rendered":"

Walmart is digitizing its entire supply chain as it\u00a0moves to an omni-channel strategy<\/strong>, wherein it provides an integrated shopping experience across online and offline channels, and looks to compete against Amazon. As Walmart makes this shift, it is leveraging technology to share information across the supply chain, track inventory,<\/strong> better select and manage inventory<\/strong> across stores & warehouses<\/strong> and provide expedited deliveries for online orders\u00a0while maintaining competitive prices and quality. While Amazon continues to disrupt retail through its digital-first supply chain and go-to-market strategy, Walmart is digitizing its business processes to accurately anticipate and respond to customer trends. Furthermore, as Amazon pursues vertical integration<\/strong> through its private label products, Walmart is leveraging its position as the largest retailer in the US to help its suppliers embrace digitization<\/strong> and compete against Amazon<\/strong>.<\/p>\n

Walmart is taking critical, strategic steps to embrace digitization:<\/p>\n

Near-term steps:<\/u><\/p>\n

1. Expansion of online channels:<\/strong>\u00a0acquisition of Jet.com for $3.3 billion in August 2016\u00a0<\/strong>to expand its online presence and provide a more competitive online experience for customers. Since the acquisition, Walmart\u2019s digital inventory of goods has grown from 10 million to 67 million and is now able to target the millennial customer base. Furthermore, the technical expertise from the Jet.com team is enabling Walmart to embed technology and modernize processes across its businesses. [1] [2]<\/p>\n

2. Information sharing across the supply chain: <\/strong><\/p>\n

(a)\u00a0Large investments in big data, analytics and machine learning capabilities in the form of projects such as Data Caf\u00e9 <\/strong>(Collaborative Analytics Facilities for Enterprise) [3] \u2013 one of the world\u2019s biggest private clouds to analyze internal and external data source to generate insights about customer demand, assess supply chain efficiencies and optimize operations. Walmart is making Caf\u00e9 available to all its suppliers for free to get insights into customer demand<\/strong>, assess campaign conversion rates and better manage their supply and inventory.<\/p>\n

(b) Leveraging content service providers such as Salsify to aggregate digital data from all suppliers<\/strong> so that it can quickly order new merchandise based on customer demand [4]. For example, when a customer searches on Walmart.com for a product that Walmart does not have, Walmart can quickly look-up service providers such as Salsify to determine which supplier has the product and the deliver the product to the customer\u2019s home.<\/p>\n

3. Optimize delivery of goods using store associates and machine learning<\/strong>: Walmart is leveraging its large network of store associates to make deliveries for customers on their way to work and on their way back home. It is using machine learning to ascertain which products should be delivered by which associates and what routes should they take to optimize the deliveries.<\/p>\n

Medium-term steps:<\/u><\/p>\n

1. Leveraging next-generation technologies such as blockchain, a public, decentralized ledger, to digitally track products across the supply chain<\/strong>: Walmart is partnering with IBM to leverage blockchain to digitally track food products across the supply chain to ensure quality and authenticity. Blockchain makes all the parties in the supply chain more willing to share information which makes the supply chain more efficient<\/strong>. For example, Walmart, completed a test using traditional methods to trace the origin of mangoes in 6 days, 18 hours and 26 minutes. By using blockchain, it took Walmart just 2.2 seconds. [5] [6]<\/p>\n

2. Investing in in-store IoT to make the customer experience more seamless:<\/strong> digital carts that help customers shop by making recommendations and informing about promotions, automated checkout, unifying online and offline customer profiles to better target products and promotions at customers. It is also experimenting the use of RFID chips on products to better monitor product usage and manage product placement and inventory.<\/p>\n

Other steps Walmart can take to digitize its supply chain and operations<\/u>:<\/p>\n

1. Walmart can work with suppliers to provide more real-time visibility into inventory levels across its offline and online channels to prevent stock-outs and improve customer retention.<\/p>\n

2. Walmart can also look to collaborate with selected other retailers to achieve efficiencies across warehousing and deliveries and more effectively compete against Amazon.<\/p>\n

Open questions:<\/u><\/p>\n

1.How can Walmart better optimize and leverage its 5000 stores across the US to provide a smarter and cheaper omnichannel experience for consumers?<\/p>\n

2.How does Walmart transition its large, existing customer base to its online channels instead of losing them to Amazon?<\/p>\n

References:<\/p>\n

[1] Business Insider, October 2017 http:\/\/www.businessinsider.com\/walmart-stock-price-jet-acquisition-one-year-later-2017-10<\/a><\/p>\n

[2] Business Insider, August 2016 http:\/\/www.businessinsider.com\/walmart-is-buying-jetcom-2016-8<\/a><\/p>\n

[3] Forbes, January 2017 https:\/\/www.forbes.com\/sites\/bernardmarr\/2017\/01\/23\/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud\/2\/#17223541113f<\/a><\/p>\n

[4] Digital Commerce, April 2016\u00a0https:\/\/www.digitalcommerce360.com\/2016\/04\/28\/wal-mart-suppliers-help-us-identify-new-products-sell\/<\/a><\/p>\n

[5] Forbes, August 2017 https:\/\/www.forbes.com\/sites\/rogeraitken\/2017\/08\/22\/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety\/#70d956683d36<\/a><\/p>\n

[6] Chartered Institute of Procurement and Supply, 2017 https:\/\/www.cips.org\/supply-management\/analysis\/2017\/june\/case-study-walmart\/<\/a><\/p>\n

[Word Count: 744]<\/p>\n","protected":false},"excerpt":{"rendered":"

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