Moving up the WalMart supply chain

Many case studies have been written about WalMart's business model and you'll likely digest several in any business school program. Is it the efficient hub-and-spoke distribution, investment in POS data collection, dominance in small rural markets with big stores, subsidy with public road and energy infrastructure, etc. etc.? What is WalMart's sustainable competitive advantage? You'll struggle with this question in Professor Lacey's Organizational Structure and Strategy class (and get his views on the question), but the discussion takes on new meaning when working for a WalMart supplier.

The Shell lubricants and car care business is one of those suppliers to whom WalMart is supplying data, and asking for cost reduction and market analysis in return. Just like a good manager pushing work out into the divisions of her company (with encouragement and support for success), WalMart is pushing work back up the supply chain (with support). A strategy of everyday low price (not unique to WalMart - that's not the answer for Lacey's class) requires everyday low cost from suppliers. So WalMart works with Shell to make use of backhaul trucks returning to the distribution centers. They require no stock-outs with efficient inventory management but provide Shell the POS data to do the careful market-by-market forecast which, by the way, helps Shell plan for offering the products WalMart customers will ask for next year. Standing here in the eye of the WalMart hurricane (a metaphor shout-out to H-town), it's quite peaceful.