Walmart dramatically increases supply chain commitment in China

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Walmart dramatically increases supply chain commitment in China

By Dan Berthiaume - 07/08/2019
Walmart is putting its money where its mouth is when it comes to providing logistical support for China operations.

As previously reported by Reuters, Walmart plans to increase investment in its supply chain logistics in China by about $1.2 billion. The discount giant will build or upgrade more than 10 logistics distribution centers in China over the next 10-20 years.

Walmart’s sizable investment in solidifying its logistics infrastructure in China follows some other recent significant supply chain projects in that country. This includes an investment of more than $100 million to build Walmart’s 33,700-sq.-m South China Fresh Food Distribution Center, which has been in operation since March 2019. It currently serves more than 100 Walmart stores in Guangdong and Guangxi, China, with daily distributing capacity of up to 165,000 cases of products.

The new fresh food distribution center passed the Brand Reputation through Compliance (BRCGS) Warehousing and Distribution Global Standard Certification, making it the first distribution center in China's retail industry to attain this certification.

Walmart South China Fresh Food Distribution Center is Walmart China's first distribution center specially designed and built according to leading international standards. At 33,700 square meters, it is the largest, multi-temperature perishable The center can store and process more than 4,000 kinds of temperature-regulated, refrigerated or frozen goods simultaneously, and is configured with advanced temperature-control hardware. The centralized refrigeration system is based on ammonia refrigeration, combined with other refrigerants in various temperature zones, increasing efficiency, and sustainability. The design of the storage area saves more than 330,000 kilowatt-hours per year.

In the transportation stage of the cold chain, Walmart requires that goods be cooled before they are loaded into temperature-regulated trucks. The pre-cooling temperature is then checked by a “transportation monitoring system” and the container is only loaded once the temperature meets the set level. All shipping vehicles that serve Walmart have devices onboard that monitor the temperature in the vehicle along the delivery route to ensure that the fresh produce is protected and arrives at the store on time.

In addition, Walmart's China supply chain enhances data storage and analytics using the Data Lake international big data platform, and new mobile applications that enable supply chain managers to mobilize and visualize performance management. In addition, Walmart China's supply chain develops standard operating procedures and employee training programs according to international standards, with a goal of continuously improving operational efficiency through digitalization.

A quality testing laboratory has been set up in the distribution center to conduct front-line inspections on issues like food legal and regulatory compliance and agricultural pesticide residues. The data from these tests are shared with all stores nationwide.

Other supply chain efforts Walmart has launched in China include a scattered-sorting solution that provides flexible distribution for community stores, and an effort to streamline processes to reduce inventory during trial operations, saving about 50% of space and improving efficiency by nearly 300%.

“Walmart continues to increase investment in supply-chain logistics in order to enable our omnichannel development, continue to provide our Chinese customers with great fresh products, and improve our service,” said Ryan McDaniel, senior VP of Walmart China supply chain. “We will invest to build more than 10 in China in the next 10-20 years.”

Walmart entered the Chinese market in 1996 and opened its first store in Shenzhen, China. The Walmart Global Procurement Office was established in Shenzhen in 2002. Walmart currently operates a variety of formats in China, including shopping malls, Sam's Club stores, and Huisafe supermarkets.