Wal-Marts Dilemma In The 21st Century: Sales Growth Vs. Inventory Growth

Abstract

Wal-Mart has been a leader in the retail industry since 1980s. In the 21st century, Wal-Marts RFID initiative is another innovation for Wal-Marts supply chain management. Wal-Marts recent business target in the 21Century is making a higher sales growth rate than inventory growth rate. Comparing with financial ratios of Wal-Marts competitors, Wal-Mart has significantly better ratios for days-in-inventory, inventory-sales-ratio, and cash-conversion-cycle. However, there is no significant evidence of better ratios for supply chain related profit ratio. Regression analysis reveals that while days-in-inventory has a similar effect on both sales growth rate and inventory growth rate, supply chain ratio has more effect on inventory growth rate than sales growth rate.