The Rule of Logistics summary

Want to dine on fresh lobster? You don’t have to live in Nova Scotia. No matter where you are, a company called Clearwater has you covered. 

Operating from its headquarters at the Louisville International Airport, Clearwater uses specialized containers to ship live lobsters anywhere in the world at a moment’s notice. Just put in an order and your appetite moves entire ecosystems.

Picture yourself inside a Walmart store. You stand under bright fluorescent lights and are surrounded by thousands of products. Where are you? Is it Walmart 5861 in Warrenton, Oregon? Maybe. It could also be Walmart 5428, in Mesa, Arizona. 

Don’t worry if you can’t tell the difference. Once you’re inside a Walmart store, the location almost doesn’t matter. Despite having thousands of stores in diverse locales, the interiors of the company’s retail outlets are strictly standardized.

The year is 1975, and a small Cessna propeller plane is cruising over rural Arkansas. Inside is Walmart CEO Sam Walton. He looks down at the landscape and makes note of the network of highways and neighborhoods below. From this vantage point, high above the earth, he sees the ideal spot for a new Walmart. 

Since its founding, Walmart has grown exponentially. Over just a few decades, it has opened more than 10,000 locations. To manage this growth, the company has to think strategically, and each new site is chosen with logistics in mind. 

The barometer is dropping and wind speeds are picking up: a hurricane is headed toward the US. Walmart’s granular data analysis has correlated this weather with increased sales of certain items. The company’s inventory software sends a message to distribution centers across the south: send Pop-Tarts!  

Walmart’s servers process roughly twenty million sales transactions a day. This vast array of data is used to forecast and optimize the ideal allocation of merchandise throughout Walmart’s stores. Yet these algorithmically generated distribution models must still be translated into the physical world. 

Most major corporations place their headquarters in bustling world cities like New York, London, or Tokyo. Not Walmart. It was founded in Bentonville, Arkansas and it remains in Bentonville, Arkansas. Why?

Well, for a start, if Walmart had centered its operations in an established metropolis, it would need to have integrated its headquarters into the existing urban fabric. In contrast, Bentonville was only sparsely populated. It never had a traditional city center or busy downtown core.

In a traditional warehouse, you must seek out each item. Wouldn’t it be better if the items instead came to you?

That’s how things work in a distribution center run by Amazon Robotics. In these facilities, a system of algorithmically controlled robotic drive units, or RDUs, continuously rearrange the shelves. As the RDU’s move, the most-ordered items also become the most accessible ones.