Walmart of China’s poor transportation system contributed to their supply chain inefficiencies. The issues with the transportation was caused by the various amounts of disbursement centers and the distance between them. Although, the company had large cube trucks the issue was that they would only ship with full loads and with the various disbursement centers carrying limited inventory it could take up to two weeks before a shipment was ready.
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(Johnson, 2015) With this cost effect method for the transportation department many inefficiencies were created for the stores, either empty shelves for lack of product or over packed inventory spaces to avoid running out of goods for sale.
The inefficiencies in Walmart of China’s transportation department is largely since the countries transportation infrastructure is very poor, according to Robert Salomon in his article, Here’s Why Walmart Stumbled on the Road to China. Although recently China has invested heavily in its transportation infrastructure it is still inefficient to transport goods due to both the country’s size and its air, ground, and rail infrastructure does not meet developed country standards. (Salomon, 2016) These inadequacies burdens Walmart financially and erodes its ability to properly supply their facilities with scheduled inventory levels. Especially their highway systems only the larger cities in the country have adequate roadways for travel making the trucking distribution of inventory extremely difficult. Until China’s transportation methods are more efficient the delivering of goods and meeting those supply demands will remain impossible.
Transportation costs of goods in China is four times as high as western countries. (Yanrong, 2013) This is a major concern for Walmart of China, because there is a high risk of impacting profit margins if transportation and logistics were to encounter any inefficiencies. The need to evaluate and rectify any potential gaps in the supply chain can reduce business strains and improve product flow from suppliers to consumers. They have already been successful in consolidating both its distribution centers and purchasing locations to aid in a more efficient distribution hub. With a strong centralized distribution they can now expand its capabilities and connect with the growing distribution networks According to Knowler as of July 2018, China now has over 12,500 miles of high speed rail lines that are now beginning to be utilized to ship cargo items, (Knowler, 2018) and with these new connections to their distribution centers items can be shipped across longer stretches in shorter timelines.
This implementation will enable Walmart to keep pace with a growing economy and the necessity to maintain inventory levels for consumers.
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