Walmart Debuts Program to Streamline Distribution Network

Walmart has introduced a logistics strategy designed to simplify the way suppliers move products into its distribution network.

The Prepaid Consolidation program, announced Tuesday (May 26), is aimed at getting products to stores and shoppers faster by simplifying inbound supplier logistics, while expanding Walmart’s first-mile capabilities for prepaid suppliers via its national supply chain network.

“We’re focused on making our supply chain simpler, faster and more efficient for suppliers, while also keeping products in stock for our customers,” Mike Gray, senior vice president of Supply Chain at Walmart U.S., said in a news release. “By strengthening our first-mile capabilities, we’re reducing complexity and keeping goods moving, so we can deliver even more value every day.”

Under the new system, suppliers are no longer required to manage deliveries to multiple individual sites. Instead, they can ship products under a single national purchase order to one designated facility.

Once received, Walmart combines the inventory and handles the subsequent distribution to its 42 regional distribution centers (RDCs) across the U.S. The program employs Walmart’s automated consolidation centers (ACCs) to process incoming goods, with suppliers paying a set price-per-case rate that covers both the handling at the ACC and the outbound transportation to the final regional hubs.

Walmart said the program will be introduced in phases, with supplier participation prioritized according to volume alignment and the ongoing expansion of network capacity.

In announcing its earnings last week, Walmart tied its delivery capabilities to the ongoing expansion of its eCommerce business.

The earnings showed the retailer’s enterprise eCommerce sales up 26% during the quarter, accounting for 23% of total net sales worldwide. Walmart U.S. saw its ninth consecutive quarter of digital growth above 20%, continuing a trend that management repeatedly connected to speed and convenience.

“Delivery remained a central driver of that convenience,” PYMNTS wrote. “Within Walmart U.S., delivery volume increased 45%, and more than 36% of store-fulfilled deliveries arrived in under three hours.

During analyst questioning, executives repeatedly came back to the idea that quicker fulfillment increases shopping frequency and widens the range of purchases customers make.

CFO John David Rainey said Walmart can now reach around 60% of American households in 30 minutes or less. He tied those capabilities to stronger engagement and greater participation in membership programs, which are becoming a bigger part of the business.

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