How an Intelligent Supply Chain Fuels Walmart’s Growth

By Centific Editors
Supply Chain

Businesses often rely on earnings announcements to brag about how customer-centric they are becoming. But in a recent investor meeting, Walmart made it clear that the company’s future growth comes from doubling down on automating the supply chain with AI. Banking the company’s growth on its supply chain is a bold move. The global disruption of supply chains in retail has been one of the biggest news stories of the past few years – and yet Walmart sees that disruption as an opportunity to grow. How? By leaning into intelligent, AI-fueled technology.

What Walmart Announced

At its meeting, Walmart said:

  • The company is reengineering its supply chain to fulfill customer needs with a more intelligent and connected omnichannel network that is enabled by greater use of data, more intelligent software, and automation.

  • By the end of fiscal year 2026, roughly 65% of Walmart stores will be serviced by automation, approximately 55% of the fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.

The company demonstrated how better automation helps the company’s distribution centers provide a more consistent, predictable, and higher quality delivery service to stores and customers and react more quickly to customer demand.

Why the Walmart Approach Makes Sense

Making the supply chain more efficient through automation makes sense in today’s climate. Chronic inflation has put more pressure on retailers to squeeze efficiencies out of their operations. And automation helps soften the impact of the chronic labor shortage in retail. “As the changes are implemented across the business, one of the outcomes is roles that require less physical labor,” according to Walmart.

But will Walmart succeed? After all, the global supply chain crisis appears to be subsiding, but it is probably not over. Walmart, though, weathered the worst of it by taking ownership of its own supply chain network from sourcing to last-mile delivery. For instance:

  • In 2016, the Walmart began rolling out its pick-up-and-fuel model, which laid the groundwork for its current network of stores offering curbside delivery.

  • In 2021, Walmart announced it was automating key processes such as using bots to retrieve orders in fulfillment centers, and Walmart said those fulfillment centers would exist increasingly inside Walmart stores or besides them. That way, Walmart would accelerate shipments to customers directly from stores (the last mile of delivery) in competition with Amazon.

The company says it is acting nimbly as demand shifts, too. Chief Financial Officer John David Rainey told CNBC that shoppers have bought more private-label products and opted for cheaper proteins like peanut butter and hot dogs. As customers spend more on groceries and other essentials, they are buying less general merchandise — a shift that Walmart is reacting to by adapting its sales mix.

The AI Factor

Artificial intelligence is crucial to Walmart’s growth strategy. Walmart relies on AI to analyze myriad inputs, including customer trends, shopping trends, seasonality, and in-demand items. From there, Walmart improves daily supply chain workflows by anticipating cycles in demand, especially amid peak or unexpected events in customer traffic.

Srini Venkatesan, Walmart’s executive vice president of U.S. Omni Tech at Walmart Global Tech, recently said that this effort has required a multiyear push toward data collection and curation, the creation of flexible algorithms, and a global approach to technology.

Walmart’s push to automate its supply chain has been years in the making. With AI, the company has put itself in a position to press its advantage. To learn how Centific can help you improve your supply chain with AI, contact us. Our retail team has deep experiencing using AI to improve all facets of retail by designing human-centered experiences.

Supply Chain