Learn about:
What distribution centers are
What Walmart's distribution network looks like
How Walmart distribution centers function
Potential distribution challenges suppliers face
A distribution center (DC) is a warehouse that receives, stores, and distributes products. These centers typically receive and store products from manufacturers or wholesalers until the products are ready to move to their retail location. DCs are strategically designed to store finished goods in a way that optimizes picking and packing and, ultimately, the timely delivery of goods to their final destination.
Walmart relies heavily on its distribution centers, with nearly 81% of the merchandise sold in Walmart stores being processed through these facilities. For suppliers, being part of Walmart's distribution network increases access to a vast retail network, ensures efficient delivery of goods to stores, streamlines inventory management, and bolsters their market presence and sales potential.
Understanding Walmart's Distribution Center Network
As of early 2024, Walmart has 210 distribution centers. This vast network is responsible for shipping general merchandise, groceries, and other specialty categories. Each center is strategically located to service 90-100 stores in a 150+ mile radius, allowing Walmart to remain agile and responsive to regional demand while minimizing transportation costs and ensuring timely delivery of goods.
Types of Distribution Centers
There are many types of Walmart DCs, categorized by function:
Regional Distribution Centers (RDCs) receive and store non-refrigerated general merchandise.
Fashion Distribution Centers (FDCs) manage the distribution of apparel and footwear.
Grocery Distribution Centers (GDCs) handle perishable and nonperishable grocery items.
Import Distribution Centers (IDCs) manage imported goods and their distribution.
Center Point Distribution Centers (CP) act as consolidation centers for domestic suppliers to ship inbound merchandise to a single location.
Specialty Distribution Centers cater to specific product categories (e.g. pharmacy, optical, tire, return, and export distribution centers).
Sam's Club Distribution Centers support the distribution needs of Sam's Club stores.
E-Commerce Fulfillment Centers fulfill online orders, handling direct shipping to end consumers.
Distribution Center vs. Fulfillment Center
Walmart operates fulfillment campuses exclusively for e-commerce. While DCs dispatch goods to retail outlets, fulfillment centers are dedicated to serving the end consumer. These centers are responsible for fulfilling orders for online customers by direct shipping to their homes or preferred stores for pick-up.
Distribution Center Locations
Walmart's distribution centers span the whole of the continental United States. It can be challenging for suppliers to stay ahead of Walmart's ever-expanding network. In Retail Link, Walmart maintains a current list of stores, clubs, and distribution centers. Suppliers can log into their Retail Link account, click on Docs, and search for Store/Club/DC & GLN list to download Walmart's most recent list.
Shipping to Walmart Distribution Centers
Prepaid vs. Collect
Shipping merchandise to Walmart DCs depends on how the supplier chooses to fulfill their purchase orders: prepaid or collect.
Prepaid freight refers to products the supplier is responsible for delivering to Walmart's distribution centers. This might mean the supplier utilizes their own transportation fleet to complete the delivery or hires a third party to transport the goods. Either way, the supplier is responsible for transportation costs.
Collect freight refers to products that Walmart is responsible for scheduling, picking up, and transporting to its distribution centers. This also means that Walmart is responsible for the costs associated with transportation.
It's also important to note that some suppliers utilize both shipping methods, depending on the specific requirements of each shipment or the terms negotiated between the supplier and Walmart. This flexibility allows suppliers to choose the most cost-effective and efficient shipping option based on factors such as distance, urgency, and the nature of the products being transported.
Related reading: There's no one-size-fits-all approach to shipping. This slide deck lays out the pros and cons of prepaid and collect.
Delivery Windows
OTIF, a Walmart compliance program, sets standards for On-Time In-Full deliveries. In order to meet these requirements, all prepaid suppliers must schedule delivery appointments that arrive by the Must Arrive by Date (MABD) at the distribution center. Walmart will include the MABD on each purchase order.
Although the MABD is a single date, there is a delivery window the supplier must deliver within that varies based on the department of the product being purchased. There are four delivery windows:
The MABD window means the product must be delivered on the exact MABD date.
The MABD-1 Day window means the product must be delivered the day before or the day of the MABD date.
The MABD-2 Day window means the product must be delivered up to two days before or the day of the MABD date.
The MABD-3 Day window means the product must be delivered up to three days before or the day of the MABD date.
Related reading: OTIF -- How To Meet Delivery Appointments
Inside Walmart's Distribution Centers
Size and Scale
Walmart's DCs are among some of the largest warehouses in the world. According to Walmart, each center:
Is more than 1 million square feet
Employs 600+ personnel
Ships over 200 trailers each day
Day-to-day operations at each DC vary greatly, depending on various factors, like the type of products, the geographic location it serves, the volume of incoming and outgoing merchandise, and the level of automation at the center. Regardless of its specific qualities, each Walmart DC is a massive facility that employs a large workforce and highly sophisticated technology to manage the complexities of product distribution.
Cross-Docking
Cross-docking plays a key role in Walmart's inventory strategy at distribution centers. With this process, Walmart synchronizes the scheduling of all inbound and outbound items. This means that when inbound inventory arrives, it is immediately loaded onto a waiting outbound truck/trailer. This method reduces the need for storage space and helps keep costs down.
Vendor-Managed Inventory
Walmart also utilizes a strategy called Vendor-Managed Inventory (VMI). The VMI process means the product manufacturer or source takes the responsibility for managing the inventory within Walmart's DCs. Walmart's VMI model shares inventory and sales data with their suppliers through Retail Link. Using that data, suppliers decide where and when to send products. Walmart then oversees the distribution and stocking process. Overall, this strategy fosters a closer supplier-retailer relationship, cuts inventory costs, and helps keep fulfillment at 100% of its potential.
Technology
Walmart's advanced technologies allow the company to develop highly customized logistical solutions tailored to the needs of each distribution center. These technologies enable Walmart to optimize warehouse layouts, streamline inventory replenishment, enhance efficiency, and, most importantly, meet the needs of its customers with precision.
In 2021, Walmart partnered with Symbotic to bring high-tech automation into its supply chain processes. With Symbotic technology, Walmart's regional distribution centers can automatically sort, store, retrieve, and pack merchandise onto pallets. This automation reduces the manual labor of their employees while increasing efficiency and minimizing errors.
In their initial partnership announcement, Walmart committed to rolling out the technology to 25 RDCs. More recently, Walmart has announced plans to bring high-tech automation to all 42 RDCs. The Symbotic partnership is just one example of Walmart's work to continue serving as an innovation leader in the supply chain.
Sustainability
In addition to its ever-increasing technological capabilities, Walmart is focused on expanding its sustainability efforts. By 2040, Walmart wants zero emissions across its global operations. This goal will fundamentally change certain ways that DCs currently operate. Walmart plans to:
Use 100% renewable energy to power their facilities, including their DCs.
Zero out emissions on all transportation, including their long-haul trucks shipping merchandise to and from their DCs.
Move to low-impact refrigerants for cooling and electric equipment for heating at their DCs.
In addition to its efforts, Walmart also leans on its suppliers to meet sustainability goals by implementing sustainability standards and initiatives across the supply chain. This includes encouraging suppliers to adopt environmentally friendly practices, reduce greenhouse gas emissions, minimize waste, and responsibly source their products.
Potential Distribution Challenges for Suppliers
Both suppliers and retailers face distribution challenges due to the complex nature of supply chain operations. A few challenges suppliers should keep in mind are:
Timely Delivery: Suppliers must maintain on-time delivery to DCs to avoid OTIF fines. Failure to meet OTIF requirements results in a 3% cost of goods sold fine from Walmart.
Quality Control: SQEP, Walmart's Supplier Quality Excellence Program, requires suppliers to meet a certain standard of quality, including purchase order accuracy, barcoding and labeling, packaging, loading, and pallet quality. Failure to meet standards can induce fines on a PO and unit level.
Compliance: Walmart has a high standard for its suppliers, requiring them to adhere to a comprehensive set of policies and regulations encompassing areas such as product safety, ethical sourcing, and supply chain security.
Communication: In order to avoid problems or resolve issues, suppliers need to stay in close communication with their merchant team, ensuring the effective distribution of their products.
SupplyPike's Solution
For suppliers, these challenges can translate into fines, deductions, and lost dollars and time. SupplyPike is on a mission to transform the day-to-day of suppliers by preventing retailer fines with automated software.
Meet with our team to find out how SupplyPike can help you fight deductions, meet compliance goals, and analyze root causes with our software for Walmart.
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