Analysis: This section should include the issue register as a bare minimum, but may include also why-why diagrams, a Pareto chart, a waste table and/or value-added analysis table. Flow analysis or simulation of this case study might be possible but might require making a lot of assumptions given the provided data.
The first part of the project:
Walmart has continued to retain the top position on the Fortune 500 list for a consecutive fifth year. The brand has continued to grow based on its everyday low prices strategy and has taken fast advances into the digital market. The brand that started as a small discount retailer in Rogers, Ark in 1945 has spread through US and to several other parts of the globe. It is investing heavily in technology so its customers can shop from anywhere anytime. It is in a bid to win market share away from its rivals Amazon, Target and Costco. While its Sam’s club has kept struggling with Costco, the earlier investments that the brand made in groceries seem to have started paying off.
At the core of Walmart’s business model is price leadership. The brand has led the US retail market through its lowest prices. Today, it operates more than 11000 physical stores in 28 countries and has ecommerce websites in more than 11 countries. The focus of Walmart is now on creating a seamless experience for its customers whether they are shopping from their mobiles or in the stores. The brand employs around 2.3 million workers whom it calls associates. 1.5 million of them are working in US. This is a discussion of the business strategy that Walmart has adopted and the kind of wins the brand has registered with its help.
Organization Description Section
Wal-Mart is a successful hypermarket that specializes in selling their products at low cost. The company is one of the most successful in the nation making over $100 billion in revenue. Wal-Mart has continued to find success in a world where buying products and groceries online has become more popular in recent years. Wal-Mart’s mission statement is, “Saving People money so they can live better” is exactly what they practice. The reason why Wal-Mart is so popular among consumers is that their products are prices that people can afford often times in bulk. Wal-Mart often boats that their products are the cheapest compared to any of their competitors such, as Target and K-Mart. The company will even match any price that is lower than there is. Costumers believe that if they shop at Wal-Mart they will be able to use the money they save on other important things that pertain to them. Thus Wal-Mart is able to build an excellent customer loyalty relationship with their consumers. Wal-Mart’s consumers know exactly what type of products that are being provided. Wal-Mart never claims to sell the best products either rather the type of products that consumers will be willing to spend on their budget and price.
Wal-Mart has also emphasized using technology to improve the lives of their employees and customers. Wal-Mart has begun to deliver products to the consumers to makes their lives easier. Many people have a hard time finding when to shop. People often find shopping to be a burden especially when it comes to dealing with time and efficiency. Wal-Mart has begun to sell their products online which allows consumers to shop as long as they want, whenever they want, and with convenience. Once the order has been placed employees will deliver it to the costumer’s residence. The shipping is done as quickly as possible without any burden of having a shipping fee. The shopping can be done on a website, however, Wal-Mart believes apps make it easier than sitting on a computer. It allows convenience to their consumers to order whenever they feel they want to. Wal-Mart also uses technology to study their customers behaviors. Employees examine what is on the shelves by using robots and image analytics to determine which products are needed and how the items are being presented. Wal-Mart also uses computers and machines to use advanced algorithms in pricing their products based on behavior. For example, after a customer buys a product a copy of the receipt is saved on their computer. The computer begins to analyze things such as the product’s price, what was the quantity amount bought, how frequent is this product bought, etc. From here Wal-Mart employees will begin to make decisions such as what products should they promote more, whether or not they should increase or decrease the price, and if they should discontinue the product as a whole. If a consumer seems to enjoy buying particular products that Wal-Mart will send them coupons pertaining to those products.
Wal-Mart has been a dominant competitor for years because of their focus on always wanting to improve its operations. Wal-Mart continues to want to improve their relationship with customers by making their lives easier when it comes to price, delivery, and hours to shop. Wal-Mart also emphasizes the use of technology to improve customers’ lives as well increasing the efficiency of operations. Many other stores refuse to change the way they conduct their operations. However, Wal-Mart continues to adapt to ways that make their operations run more efficiently. It seems to be a business that adapts efficiency, low price products, and customer loyalty will be the most successful in the long haul.
A value chain analysis of Wal-mart identifies business processes that create value and a competing edge against other businesses. Over fifty percent of Wal-mart products in the US come from foreign suppliers and 3 quarters of Wal-Mart’s online sales are not from stored inventory. Inbound logistic processes revolve around 3 key elements. One is minimizing the number of links within the supply chain. By working directly with manufacturers, Wal-Mart would remove any unnecessary steps to receive a product reducing operating costs. Wal-Mart also forms strategic relationships with suppliers. They want to purchase products at the lowest price point possible and engage in a long term contract for high quantity purchases. This gives them a cost leadership competitive advantage. The third method Wal-Mart within their inbound logistics is having a cross docking layout in their distribution centers. This process maximizes processing efficiency by creating a direct link between inbound to outbound. By being able to unload and sort products and directly load them onto outbound trailers in this effective way reduces the amount of time a product is stored within a warehouse as well as the time it takes for product to travel to other destinations.
A fundamental concept of effective supply chain management is to expedite the process of order fulfillment. Effective order fulfillment involves integrating the firm’s manufacturing, logistics and marketing agenda. The firm should develop partnerships with essential partners of the supply chain to meet customer expectations and minimize overall delivered cost to customers.Our project will focus on Wal-Mart’s order fulfillment system which involves many processes and subprocesses. We will analyze their operation to identify any issues, problems, and errors that exist. The first sub-process reviews customer service market strategy, customer service goals, and supply chain format. The conditions for order fulfillment are stated, along with the order to-cash cycle. Primary inputs include manufacturing abilities, and customer service requirements. Effective order fulfillment requires integration of the firm’s manufacturing, logistics and marketing plans. Manufacturing flow process provides an input. Evaluations within order fulfillment determines which facets of the processes differentiate processes. Evaluation of logistics is a crucial part of order fulfillment. The architecture and operation of the network significantly influences system performance and cost. Evaluating branches of the network including which facility produces which products, where warehouses, plants, and suppliers are located, and which transportation methods should be used. A significant input for this sub-process from the interest of managing and return process. Next sub-process is to plan for order fulfillment, determine how orders from customers will be fulfilled. The customer relationship management process unit verifies that customer expectations have been met. The final sub-process, framework metrics develop and communicate to the customer relationship management process. This process measure includes order-to-cash cycle time, order fill rate, and order completeness.
One of the issues or problems Wal-Mart has been experiencing within their supply chain has to do with On-Time In-Full (OTIF). OTIF is a measurement of logistics or delivery performance within a supply chain. OTIF means suppliers should deliver their products to buyers when and how they need them. Problems that occur with OTIF is picking and packing item mistakes, transportation delays, and communication issues. When Wal-Mart is not receiving their items on time they can end up with stock outs which results in a loss of sales because people are unable to order the item they want because it is unavailable. Walmart also had an inventory problem in their warehouse where they were having to much inventory in the warehouse and not in the stores. In April of 2016 Wal-Mart was losing money due to the lack of inventory software. Managers were wasting thousands of hours searching inventory trying to find products. The horrible inventory system lead to frustrated customers who can't find the items they are looking for, wasted time spent on employees trying to look for these items for the customer, which then lead to a damaged reputation and a loss of revenues.
Due to the problems in Wal-Mart's supply chain and inventory there are a few improvement opportunities. Walmart follows a cost leadership strategy, their plan is to have low prices on their products but to also have a large amount of sales volume. In order to fix inventory problems Walmart should consider investing in a Inventory Optimization (IO). Having a successful IO system could help minimize inventory and free up working capital while making sure the right stock is on hand where and when it is needed. Using sophisticated algorithms an IO system can make stocking recommendations to satisfy stocking issues in the company. An IO system can help minimize costs while satisfying customer service requirements.
One of the issues Walmart has been dealing with is a reduction in online sales which has been hurting their business. This is most likely due to online competitors such as Amazon. Since Walmart makes a large portion of their revenues off of their food/produce it would be a great opportunity for them to maybe let people order their food online and deliver the food to the customers door almost like Shoprite currently has. I believe this is an opportunity that can help get their online sales back on track. Also Walmart can use their current stores as fulfillment centers for e-commerce. If customers pick up the items they ordered online in the store they may get a discount and it would also save Walmart money on shipping costs.
Another opportunity for Walmart could be implementing digital solutions for its supply chain. If Walmart uses more digital technologies within their supply chain they should be able to cut down costs and improve service levels. Investing in digital technologies could help Walmart obtain real time data, predict future demand, optimize deliveries, and cut down their cycle time. In the past ten years online sales have doubled which shows that the traditional supply chain needs to be revamped.
In order to lower costs and improve efficiency in Walmarts distribution centers, Walmart can implement a labor management system within their warehouse management system. This would help Walmart lower labor costs, predict when and where more workers are needed, provide companies with real-time visibility into their operations, and greatly improve individual employee overall performance and productivity. A LMS can save money by tracking the time required for tasks and forecasting the amount if employees you need to get the job done in the cheapest and fastest way possible. The LMS can also determine which distribution centers are underperforming and can help identify inefficient activities or processes occuring in the distribution center. Walmart can also use LMS data to reward their employees on good performance.
Other opportunities that Walmart has is expansion into developing countries, improving their human resource practices such paying lower level employees better wages and incentives based on their performance, and improving in their quality standards.
Walmart has not only become the most dominant hypermarket in the nation but also around the world. It has been able to capitalize on so much by selling their products at low prices and by marketing digitally. Walmart had made lives easier for the consumers and has build customer loyalty. Walmart’s success continues to grow and adapts to the times. Walmart is constantly wanting to better improve themselves. Though Walmart is dominant in what they do, there are still areas where they need to improve on such as inventory and selling more products online. If Walmart can capitalize on this aspect there's no telling what more they can achieve in the future.
Walmart has had success by selling products at low costs thus continuing to target to the right customers. Walmart has also used technology to further enhance their business. Their technology also allowed them to study what consumers want in order to make their shopping experience a better one. Walmart uses robots and image analytics to figure out what products are wanted and how they should be presented. Walmart also has a devoted staff that will analyze what products need to be sold more and how to promote it. One of the strengths that Walmart has is their business process. One thing that Walmart has done which many other hypermarkets have struggled with is cutting the number of links that are in their supply chain. By doing this, it makes the process much more efficient and saves time and money. Walmart is able to work with suppliers to make strategic plans that will benefit them in the long run. Walmart gets these products at low costs at a high quality.
However, like any other company, Walmart can always learn and adopt new strategies and techniques to become more efficient and effective. Walmart must learn to improve managing their inventory. Often times when Walmart cannot keep count of inventory, this results in loss of sales and consumers becoming frustrated. While Walmart has been successful in dealing with sales online, it still suffers from stiff competition from the likes of Amazon. Walmart needs to find a more productive way to compete with them such as selling their food/produce online, selling their products at lowers costs, or a faster delivery. Walmart also has the ability to save more on expenses by using more digital technology for supplying chain. Another area Walmart can improve is investing in a Labor Management System that would lower labor cost, save money by tracking time, and improve employee performance. Overall Walmart does an amazing job continuing to provide for their consumers with low costs products and giving them what they want. By capitalizing on their opportunities, Walmart will be able to achieve higher success than ever imagined.
Analysis of issues in the case
Walmart follows one time in full (OTIF) supply chain method. In this method supplier is responsible to deliver the product to its customers resulting in transportation delay, error in packing, and communication issues. Hence causing loss in sales.
Second issue lack of inventory management facility resulting in
excess time consumed in order to find the product to be delivered
to customer. This has resulted in damaged reputation and loss of
revenue of Walmart.
Third issue is related to online sale which is due to presence of major competitors like Amazon.
Fourth issues is related to labour management system. Additional cost is getting piled up by not tracking activities performed by labour and time devoted in order to accomplish certain task.
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