Easier, Faster Customer-Focused LogisticsThu, 09/01/2016 - 12:00
Q: In a company as big as Walmart, how do logistics come into play?
A: In a market in which almost 80 percent of all trucking companies are managed by owner-operators, being a leader in logistics is more a necessity than a choice to guarantee the smooth running of our operations. We have one of the most complex logistics networks in Latin America since our deliveries have to be perfectly on time to more than 2,400 distribution points, more than once a day
From a global perspective, logistics have been among the key pillars of Walmart’s success and three of our previous CEOs had backgrounds in logistics. Although we do not own a fleet in Mexico, over the past few years we have strived to have control over our transport operations as a private fleet would. We help our customers wherever they might be and regardless of the region’s infrastructure conditions. The efficiency of our fleet determines how well we serve our customers, as well as the flexibility of our entire company.
Q: How much input does Walmart have in equipment management and selection?
A: Rather than just selecting which vehicles to use, we want to participate in the development of new equipment, from special refrigerator boxes that target large distribution points to specific solutions that help the final client through e-commerce activities. Needs differ across business divisions. We now work with a specific company that designs 3.5-ton trucks to address the growing e-commerce market. Within our fleet, we have specific units that target small distribution centers like Bodega Aurrera Express or Mi Bodega, which are sometimes located in areas with no highways. We also want our operations to be as green as possible so we are now pushing the use of double-trailer 12m trucks.
Even though we outsource our fleet operations, we do have full control over equipment procurement. We are striving for a more dedicated fleet that actively participates in the equipment selection process for each operation. We have a detailed program separating all available carriers into three different segments, all of which are crucial for the development of Walmart in Mexico and Central America. One of these divisions consists of midsized and family owned companies that could grow with further investment. This makes them perfect long-term allies. We have other carriers that might not be ready for that commitment but who are experts in certain regions, offering us competitive advantages. The company is planning to double its business over the next 10 years but there is still a gap in the market when comparing growth opportunities with the available equipment. Our responsibility as part of the private sector is to ensure the industry’s growth capacity keeps pace with the market. Even though we are not in an equipment availability crisis, we expect a couple of years of shortage in vehicles and drivers to catch up with market growth.
Q: Considering the variety of carriers subcontracted by Walmart, how do you integrate numerous companies into a single logistics plan?
A: We are working with approximately 200 companies, so we need a strong combination of technology and process engineering to integrate them. Technology is the area in which we are investing most and globally Walmart has the advantage of a dedicated IT department at our Bentonville headquarters that develop the best tracking, routing and management tools for our operations. We continuously learn from our parent company’s experience in the US and adapt it to international market environments and conditions.
Process engineering requires talent development. Our international logistics academy program facilitates the recruitment of either Mexican talent studying in the US or Canada, or to send our current associates to our headquarters for a 12-month training program. Both approaches help us implement the best international practices, adapted to the realities and restrictions of the Mexican market.
Q: As manufacturing vehicles is not Walmart’s core business, how did the company acquire expertise for its 3.5 ton truck company?
A: Walmart de México y Centroamérica partnered with manufacturers and trucking companies interested in working with us and improving logistics processes across EASIER, FASTER CUSTOMERFOCUSED LOGISTICS MARIANO FISCELLA Logistics and e-commerce Director of Walmart México and Centromérica VIEW FROM THE TOP 303 the industry. Walmart has a huge private fleet in the US and a dedicated team that implements the most advanced trends in the market, so we try to appropriate that process as much as possible. The Walmart Advanced Vehicle Experience (WAVE) concept truck is the result of a partnership between many vendors and represents the latest development in our fleet efficiency program. This prototype combines aerodynamics, microturbine-hybrid powertrain, electrification, advanced control systems and cutting-edge materials like carbon fiber all in one vehicle.
Q: Where do you see the biggest opportunities for Walmart’s logistics division in the years to come?
A: We want to continue being a competitive advantage for Walmart, offering a world class service to our stores at the lowest possible cost. In line with that, apart from focusing on a dedicated fleet for our operation, we offer reverse logistics services to our clients and providers. This has won us recognition from the Ministry of Environment and Natural Resources (SEMARNAT) and the National Logistics Award in 2014, as we are reducing the number of empty trailers on the road. We use them to move cardboard, metal, wood or plastic scrap to be recycled or reused, reducing our fleet’s overall impact on the environment. The company has a strong sustainability strategy. This includes the use of sustainable energy in vehicles from certain distribution centers, light and water saving measures in our entire infrastructure and our own reusable plastic containers, completely designed by Walmart.
Even when we consider several macroeconomic trends hindering the market, such as oil prices and China’s economic situation, Walmart remains a market leader. We are working to become the biggest e-commerce player, having detected interest from several carriers and automotive companies to participate in this segment. Just as digital media once revolutionized the way we lived, e-commerce is driving market trends. This presents a significant challenge in logistics and we will have to focus on accelerating our e-commerce strategy. Our long-term priority is creating the best-designed logistics network in the country
Talent and technology will remain one of our foremost concerns as we strive to make things easier, faster and completely customer-focused. We will continue exploring new trucking designs as well as fleet management and big data solutions to achieve greater supply chain integration and connectivity. We are already working with the main regional universities and will continue reinforcing those relationships. All these measures and challenges relate to the Walmart way of working, which focuses on the healthy development of relationships, integrity in our processes and a continuous search for excellence in everything we do.