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Carton-Mix Optimization for Walmart.com Distribution Centers

Walmart's Internet shopping business has grown considerably since 2006. To effectively and efficiently serve this business model, Walmart launched distribution centers DCs in the United States; these DCs focus on fulfilling orders placed online at the Walmart.com website. The Carrollton, Georgia distribution center CDC handles a significant portion of the volume of products shipped directly to customers and stores for customer pickup. In spring 2011, the CDC executed a focused cost-improvement project to optimize its carton mix, defined as the sizes of the shipping cartons that can be erected using automation or built manually. The goals of this project were to develop a process to create an optimal mix of carton sizes to reduce shipping, material, and labor costs of conveyable orders, and improve customer satisfaction. Working in close coordination with CDC managers and Walmart's corporate supply chain team, we developed an Excel-based solution algorithm to determine the optimal carton sizes for four automated and six manual carton sizes. Walmart has fully implemented this solution algorithm into a decision support system for reconfiguring the carton mix at the CDC. The company has certified order-fulfillment cost savings of $600,000 per year and has projected annual cost savings of $2 million across the entire Walmart.com network.