What You Need To Know About Walmart Inventory System

Virginia Miller

June 14, 2024

In this article

As a business owner, you're likely familiar with Walmart. It's the largest retailer in the world, and chances are your business has at least some dealings with it. But you may not know that Walmart runs on an inventory system that is quite different from what most companies use. In this blog post, we'll give you a brief overview of Walmart's inventory system so that you can be better prepared when dealing with it. Stay tuned for more tips on how to do business with Walmart successfully!

How Does Walmart's Inventory System Work?

Walmart employs an inventory management system of Walmart that allows suppliers to access data on the inventory levels of their products. This system supports the Walmart vendor-managed inventory model used by the company, which helps to reduce operating costs and allows the company to offer low selling prices.

Benefits Of The Inventory Management Of Walmart

There are several benefits of using an inventory management system, and Walmart has reaped the rewards of using such a system.

Reduced Inventory Size

One of the most significant advantages of Walmart's warehouses is the reduction of inventory size. Warehouses are storing fewer goods. A smaller inventory is less expensive to keep. Cross-docking also allows Walmart to deliver goods to stores more quickly. This condition enables the firm to respond rapidly to fluctuations in demand and market changes. As a result, Walmart's inventory management method contributes to operational efficiency and business resilience.

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Helps Reduce Costs

Walmart's inventory management helps to keep track of products and their stock levels so that Walmart can order the necessary amount of products and avoid ordering too much or too little. This can help save on costs, as it reduces the amount of wasted product.

Eliminates Stock-Outs

Another benefit of Walmart's inventory management is that it eliminates stock-outs. By having an accurate view of what products are in stock, Walmart can ensure that they always have the items their customers need available for purchase. This helps to keep customers happy and coming back to shop at Walmart again.

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Improves Customer Service

Another great benefit of Walmart's inventory management is improving customer service. By having a well-managed inventory, Walmart can ensure that its shelves are always stocked with the products customers need. This can help to reduce wait times and make shopping at Walmart a more enjoyable experience for customers.

Related: What Is Walmart FBA?

Types And Functions Of Walmart's Inventory

Walmart employs a wide range of inventory. However, a few of the most important types of inventory in Walmart's practices are:

Finished Goods Inventory

This type is the most important one in Walmart's business. First, the finished goods arrive at the company's retail locations. Then, these items are stored, and the inventory is regularly replenished. As a result, the purpose of this inventory is to support Walmart store operations, where finished products are moved from the company's merchandise distribution centers to be sold to retail buyers at the stores.

Transit Inventory

The transit inventory type is the second most important in supporting Walmart's retail operations. This category of inventory refers to goods held while in transit. Because of the global scope of Walmart's supply chain, some goods may be in transit for days or weeks. This inventory type's purpose is to aid in the replenishment of finished goods inventory in merchandise distribution centers and Walmart stores.

Buffer Inventory

Walmart employs the buffer inventory type in its stores, keeping a small margin of extra goods on hand to ensure business continuity when demand fluctuates unexpectedly. Walmart stores will always have an excess supply of goods for this purpose. The prominent role of this type of inventory is to ensure that the company has enough capacity to meet sudden increases in demand, given that current retail market prediction models are accurate but not perfect at modeling such fluctuations.

Anticipation Inventory

This type is based on seasonal/changes and the market's corresponding empirical data on seasonal changes. Walmart, for example, significantly increases its inventory size just before and during Black Friday to meet the massive increase in demand during special shopping days. The company also uses anticipation inventory for Christmas and some long holiday weekends. Most of the year, Walmart does not use anticipation inventory during regular shopping days. This inventory type's purpose is to allow the company to meet expected seasonal increases in demand.

Conclusion

So what can you do to ensure your business is ready to take on Walmart? First, it's essential to understand how Walmart's inventory system works. Once you have a basic understanding of the system, you need to ensure that your business can fulfill orders quickly and efficiently. If you're having trouble fulfilling orders or don't know where to start, don't worry! Simpl has got your back. We offer Walmart fulfillment services to help you get your products in Walmart stores nationwide. Contact us today for more information.

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FAQs

How does Walmart's inventory management system work?

Walmart uses a vendor-managed inventory model where suppliers can access real-time data on inventory levels and sales of their products. This gives Walmart lower carrying costs and helps suppliers ensure popular items are well-stocked.

What are the key benefits of Walmart’s system?

Key benefits include lower inventory size, cost savings, reduced stock-outs, and better customer service due to real-time visibility into product availability.

What are some of the main inventory types Walmart uses?

Main types include finished goods, transit inventory, buffer inventory to meet demand spikes, and seasonal anticipation inventory to stock up for holidays or events.

How does Walmart improve supply chain speed?

Cross-docking distribution centers allow Walmart to transfer goods rapidly from inbound to outbound trucks, getting products onto shelves faster.

How can other retailers compete with Walmart?

Building inventory management systems that provide visibility and efficiently move product helps retailers better compete with Walmart.

What fulfillment options exist for ecommerce brands?

Ecommerce brands can leverage fulfillment providers to handle warehousing, inventory management, and shipping at scale like Walmart.

What are the benefits of partnering with a 3PL like Simpl?

Outsourcing fulfillment to 3PLs allows online retailers to focus on sales and marketing while leveraging the operational expertise and warehouse networks of fulfillment experts.

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