Decades in the Making
The retailer started dealing directly with manufacturers in the 1980s, giving suppliers the job of managing inventory in its warehouses, the Arkansas Business article said. The result was something called vendor managed inventory, or VMI, that smoothed irregularities of inventory flow which helped ensure products were always available on store shelves.
The process involved cooperation and collaboration with suppliers that produced a more efficient supply chain with technology connecting everything.
Walmart was tapping technology even before it developed VMI when in 1975 the company started using a computer system for inventory control in its distribution centers and warehouses, according to a timeline of Walmart’s history from Supply Chain Digest.
Walmart’s inventory management now funnels information from stores such as point-of-sale data, warehouse inventory and real-time sales into a centralized database. The data is shared with suppliers who know when to ship more products.
By 1987, Walmart had its own satellite system that allowed voice and data communication between all segments of the company, according to CIO Online, a website for chief information officers.
By 1989, Walmart saw the benefits of its supply chain management when its distribution costs were 1.7% of its sales, or less than half Kmart’s cost and just under a third of what Sears was spending at the time, according to Arkansas Business.