Tim Cooper, senior vice president of supply chain and grocery and reverse logistics at Walmart, spoke Wednesday (Dec. 1) about lessons learned in the past 20 months since the COVID-19 pandemic gripped the nation.
He made his comments at the WalStreet Speaker Series, a virtual event presented by the Greater Bentonville Area Chamber of Commerce.
Cooper said Walmart has learned a lot about the supply chain since the spring of 2020 and now operates differently in reaction to the pandemic. Cooper said Walmart has an end-to-end grocery supply chain that includes an upstream grocery network of 13 import, storage and consolidation centers and a grocery distribution network that has 47 grocery distribution centers (DCs).
He said there is inbound freight from suppliers that go into the Walmart distribution centers and then Walmart trucks send that outbound freight to Walmart’s stores and clubs – and now to customer homes in some cases. Cooper also oversees a reverse network of reusable pallets, recalls and defective products.
He said the upstream business consists of consolidation volume from smaller suppliers which is about 80% of the intakes. He said fresh and repack volumes amount to about 14% of the freight and imports are 6% of the volume. Upstream volume has grown from 228 million pallets in 2019 to 235 million in 2020. He said returns and mailbacks are up with more groceries being purchased online in the past two years. Defective and recalled items have decreased 20% from 2019.
All the extra freight meant Walmart delivered 104 million more pallets. If all the pallets were lined up end to end they would circle the earth 6.5 times, Cooper said.
He said it was daunting to see empty shelves in Walmart stores nationwide in March 2020 and subsequent months. Cooper said Walmart has done a better job this year keeping shelves stocked despite a period of record buying. He said winter storms in Texas rendered 16 DCs closed for several days and that was unprecedented for the center of the country where Walmart has a huge store presence.
“We also pulled through 5 tropical storms and hurricanes late last year and one grocery DC in Louisiana is still struggling to get back online,” Cooper said.
Also in 2020, Walmart’s supply chain division saw a massive decline in workforce numbers despite hiring events, added incentives and wage increases.
“For four straight months last year, we had more exits than hires which equated to net negatives in just about all of our facilities. It was a dire situation for several months, but another round of wage increases and two national hiring events helped the DCs get staffed back up,” Cooper added.
Cooper said Walmart added 2,600 net hires so far in 2021 bringing the grocery supply workforce up to 36,400. He said the employees work in 36.3 million square feet of DC space. Walmart grocery is on track in 2021 to ship 4.99 billion cases, up from 4.39 billion in 2018 and 4.64 billion in 2019. Last year, Walmart shipped 4.87 billion cases which equals the output of an additional DC in two years. Cooper said the retailer only added one DC, an indication that each DC was running more efficiently. The highest week of output in 2020 was 106.8 million cases that occurred in March of that year as the country began to shut down.
“I didn’t think that record would ever be broken, but the week before Thanksgiving this year it was topped with 108.5 million cases shipped to stores,” Cooper said. “The difference was that in 2020 we were scrambling, running with smaller crews, somewhat exhausted. This year our changes in operations, more automation and better staffing we could have shipped more, except the store operators told us they had nowhere to put more product. This is a great place to be when you run a supply chain,” Cooper said.
Also in the busiest week of 2021, Cooper said Walmart made 117,000 discreet truck deliveries to U.S. stores with a 98.7% on-time performance. Cooper said Walmart will continue to add automation to its legacy fulfillment and distribution centers. He said micro-fulfillment centers are also a way Walmart is getting consumable inventory closer to the consumers.
He said the automation going into DCs and fulfillment operations remove some redundant tasks. He said average warehouse workers would walk an average of 10 miles a day, stooping and bending for 10 hours and lifting a total of roughly 50,000 pounds throughout their shifts.
“It’s no wonder it’s hard to keep people in these roles. But automating those tasks we can use the employee in more important ways running these machines and adding more efficiency to the operations. An automated facility can do almost double the output of a traditional legacy facility,” Cooper said.
He said the path to the consumer is also becoming more complex. Cooper said there is a wider assortment of products than ever before and there are some distinct logistics requirements depending on the item. He said grocery and cold chain foods will most likely continue to be purchased in stores and via online grocery pickup and delivery via last-mile partners.
But shelf-stable foods have more possibilities with direct shipping to homes from the fulfillment centers, automated replenishment, store delivery for in-store shoppers, curbside pickups and final-mile deliveries with various partners like DoorDash and Walmart’s Spark drivers. Cooper said the supply chain for grocery continues to evolve as the message from consumers is clear.
“They want what they want when they want it and where they want it and it’s up to Walmart to respond to their demands. We have learned so much in the past 18 months and we continue to invest for the future with automation, building a strong workforce and continue to manage the costs of our end-to-end supply chain which is best-in-class,” Cooper said.
Walmart CEO Doug McMillon took part this week with the Biden administration’s meeting on supply chain. McMillon said Walmart is seeing a 51% increase in throughput at the congested San Pedro Bay ports in the past month after shifting to 24/7 shipping. Walmart has moved cargo 26% faster nationally “in terms of getting containers through ports” over the last four weeks, McMillon said.
“We have more inventory than we did a year ago and have the inventory that we need to be able to support the business. And we are seeing progress. The port and transit delays are improving,” McMillon said.