2. How will the creation of a Sustainability Index help Walmart manage quality and performances Walmart Part Six: Controlling Saving the World through Supply Chain Management*

Walmart’s supply chain management is revolutionizing the world of business. The company’s obsession with selling more merchandise more efficiently and at a lower cost than anyone is a powerful competitive advantage. In 2010, that advantage made the U.S. retailer the most successful business in the world.

In a sense, supply chain management is Walmart’s business. As one Walmart executive explains, “The misconception is that we’re in the retail business. We’re in the distribution business—it’s Walmart’s job to bring product from the dock to the customers’ trunks in as little as 72 hours.”

Founder Sam Walton agreed: “The efficiencies and economies of scale we realize from our distribution system give us one of our greatest competitive advantages.”

To achieve its superior efficiency, Walmart employs tactics ranging from buying in bulk to optimizing the number of stores served by a single distribution center. The path to perfect logistics requires more than teams of savvy efficiency experts, however: it requires automation. Like many retailers, Walmart introduced computers in the 1970s. But in the 1980s, Sam Walton made an unprecedented move: he purchased a satellite communications system and established electronic linkages with suppliers using Retail Link, the company’s sales and inventory database. Paper-based purchase orders and invoices were soon replaced by electronic data interchange (EDI), and radio-frequency identification (RFID) tags began tracking inventory shipments from manufacturers’ warehouses to Walmart’s stores. This automated end-to-end system kept products flowing to Walmart’s shelves at the right time, and in quantities suited to customer demand.