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Branded as the world’s largest corporation, Wal-Mart started up as a small retail outlet in Arkansas, USA in 1940 (Azili 6). Its founder, Sam Walton, was successful in running the store. In 1945, he managed to acquire a lease with Butler Brothers to run a shop under his franchise name, Ben Franklin.
Butler Brothers was a renowned businessman during those days. He owned a chain of retail outlets in Arkansas. Despite the success, that he experienced, Walton was unable to renew the lease agreement. Instead of winding up his business, he opened another store in a different location under the name, Ben Franklin, where he enjoyed even much more success.
By the year 2000, Wal-Mart had already been ranked as the leading public corporation in the world on the Fortune Top 500 list. In 2002, the organization reported its sales at approximately $220 million and a net profit of $6.1 billion (Chandran 2). At the same time, the organization had over 3,800 stores in the United States of America and 2,800 other stores in other nations of the world.
Currently, the corporation has outlets in North America, South America, Europe, Asia, Australia and Africa. All through this time, the company has grown from a simple business venture to a multi-national corporation. In the course of its operations, the company has gone through several challenges and obstacles. These challenges have been both external and internal in nature. As a result, it has been able to identify its strengths and improved on its weaknesses.
The retail industry is highly characterized with free entry and exit into the market. This has greatly increased the number of participants in the global retail industry. At the present moment, the industry is characterized with small and medium scale businesses that operate at the local level. However, since the 1980s, multinational corporations have commenced dominating the global retail industry. As a result, the retail industry is characterized by stiff competition at the local and international levels.
In the United States of America, Walmart is the leading retail outlet. As stated earlier, the firm had approximately 3,800 outlets within the country. To ensure that its operations are effective and efficient, Wal-Mart operates under three divisions; Wal-Mart Stores U.S, Sam’s Club, Wal-Mart International. To meet the specific needs of its diversified customers, the firm operates under different retail formats. These formats include:
- Food Stores
- General Merchandize
- Discount Stores Apparel Stores
- Cash and Carry Stores
- Membership Warehouse Clubs
- Drug Stores
With this diversification, Wal-Mart has been able to meet and keep up with the changing needs of its customers.
This report focused on the Wal-Mart store that is situated along the 777 Story Road in San Jose, California. This outlet has been operational for several years now and is one of the leading outlets in California in terms of sales and product turn over rates. Operating under the Wal-Mart Store U.S brand, the outlet comprises of a pharmacy, McDonalds, Grocery Store, Vision Center, 1-hour photo center, Garden Center and may other auxiliaries.
The store opens at 6 am and closes at 1 am everyday of the week. Given its location, the store has high turnover rates of goods and services. Therefore, it needs to be supported by an effective and efficient supply chain. Consequently, the management of the outlet is committed to service delivery since it provides training to its employees, empowers and rewards its employees. As a result, the employees of the outlet are highly skilled and motivated to meet the needs and requirements of the customers that they serve.
Wal-Mart was the best organization to focus on for several reasons. First, I have been shopping in Wal-Mart for several decades now. I have therefore experienced the advancements that the organization has come up with to enhance the shopping experience of its customers.
I have also worked in Wal-Mart for several months. Despite the fact that I was not involved with managerial work, I developed a clear understanding of the manner in which the firm runs and manages its operations. Therefore, these factors played a critical role in ensuring that the information that I have gathered with regards to the organization is relevant, accurate and fully researched.
Analysis of Processes
The operations of the all Wal-Mart outlets are based on the core values of its founder, Sam Walton. Respect for individuals, striving for excellence, the customer is the king and always low prices, always are some Sam Walton’s philosophies that are now the main core value of the organization.
With these values, the firm has been able to develop strategies to achieve its mission and visions (Azili 4). For instance, to keep up with the increased needs of its customers, the firm has always sold its products at a cheaper price as compared to its rivals.
Consequently, the firm has embraced the concept of information technology. Since 1996, Wal-Mart customers have been able to shop online through its official website, WALMART.COM. This strategy has increased its customer base as well as repeat purchases. Through Sam’s Club, the firm has been able to strengthen its relationship with small businesses. These strategies have made Wal-Mart to be a leader in B2B as well as B2C markets (Azili 4).
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However, much of the success that the organization is enjoying originates from its effective supply chain management. Since its incorporation, Wal-Mart has always strived to offer its products and services at a price that is lower than its rivals are. To achieve this, it has been essential for the firm to develop an effective and efficient supply chain that reduces the operating costs and ensures delivery of high quality goods to its target market.
Once of the main strategies that the organization had applied is the elimination of intermediaries in the process of procuring its goods and services (Chandran 3). Wal-Mart deals directly with the manufactures of the goods and services it needs. The firm only purchases goods from a specific manufacturer once it is assured that it cannot access similar goods at a lower price elsewhere.
Thus, the organization spends a considerable amount of time and money in meeting prospective vendors, analyzing their manufacturing costs as well as the quality of their products and ascertaining whether they meet their requirements. Once all this has been approved, there is a high possibility that Wal-Mart will develop a long-term relationship with the vendor.
To minimize on its operating costs, Wal-Mart usually prefers dealing with local and regional vendors. According to Chandran (2003), transportation costs play a significant role in increasing the final price of a given product (5). Wal-Mart is aware of this fact and thus it prefers to contract local manufacturers to further minimize operating costs.
By the close of the 20th century, Wal-Mart had over 40 distributing centers in the United States alone. This move ensured that the organization stood at a competitive edge since it only required a maximum of 2 days to replenish its stocks in any location within the United States as compared to other firms that usually take between 5-7 days (Chandran 5).
To ensure that the warehousing process is effective and efficient, Wal-Mart uses a mixture of IT and barcode technology to ensure that the process of storing, retrieving, packaging, and maintaining inventory is effective and efficient. The incorporation of these technologies has highly reduced the operating costs as well as time hence playing a critical role in enhancing the efficiency of the corporation.
Wal-Mart also has an effective logistic system that ensures timely delivery of products to all its outlets. First, all its distributing stores are situated at strategic locations to reduce the distance covered by each truck. Consequently, each distribution store has a specific number of outlets that it serves (Chandran 6).
With the help of a coordinator, the dispatch and arrival of products from distribution centers to Wal-Mart outlets is also effective and efficient. The cross-docking technique has greatly reduced the handling and distribution of Wal-Mart products. According to this technique, goods are sorted out, packed and distributed directly to the customer from the manufacturer (Chandran 6). This technique has greatly enhanced the relationship that Wal-Mart has with its customers, especially small businesses.
With the effective inventory management systems that it has, the operation of Wal-Mart has been sustainable, effective, and efficient. For instance, the corporation has developed several strategies to sustain its store operations. For instance, the firm has always strived to achieve individual needs of every store (Chandran 7).
There are those stores that usually exhibit high turnover rates. Therefore, given the fact that most of their products are usually in demand, such stores usually have an accelerated delivery system that ensures replenishment of inventory every 24 hours irrespective of their size or geographical location.
Recommendation for Improvement
To enhance on its operations, Wal-Mart needs to have a recruitment exercise that is effective and efficient. This will ensure that qualified individuals who possess specific skills and qualifications are assigned specific roles and duties within the organization. This will ultimately increase the effectiveness and efficiency of the firm’s operations in the short run and in the long run.
For instance, the firm should come up with stringent measures while selecting drivers to run its fleet of over 3,500 trucks within the United States. For one to qualify as a driver for Wal-Mart in accordance to this proposal, he/she needs to have a driven over 300,000 accident free miles with minor violations.
Consequently, with the help of the Private Fleet Driver Handbook, the company will ensure that its drivers are well aware of the codes of conduct that governs the organization. This handbook will also guide the drivers in ensuring that the handover process of trailers with store personnel is effective to safeguard the safety of Wal-Mart properties. In the process therefore, goods will be transported in an effective manner from the distribution stores to the outlets.
Implementation and Managerial Implications
Other than having a strong workforce, Wal-Mart needs to increase their reliability. It has been identified that Wal-Mart is among the companies that has low wage rates in the USA (Azili 9). While corporations such as McDonalds and Starbucks pay their employees a minimum wage of $12.04 per hour, the minimum hourly rate at Wal-Mart is $11.75 (Azili 9).
Consequently, Wal-Mart employees do not have a collective labor union. Therefore, it is difficult for them to bargain for better wages and working conditions. Therefore, Wal-Mart needs to improve on these factors since it will increase the effectiveness and efficiency of its operations as well as its overall credibility as the leading retail outlet in the United States.
While focusing on Wal-Mart, the major surprise I had is the level at which the corporation has adopted and implemented information technology in its operations. With the help of IT, the management of inventory has been enhanced by managing and monitoring sales and merchandise inventory (Chandran 6).
Due to its efficiency, Wal-Mart now allows each outlet to take and manage its inventory. To monitor the movement of products from distribution centers to respective outlets, Wal-Mart launched a satellite program in 1983. With this system, the management is capable of tracking each and every inventory that is within the system before it is sold. Wal-Mart’s IT system is also linked with its suppliers.
For instance, through this system, Wal-Mart is capable of tracking merchandize inventory from Procter & Gamble warehouses to its delivery centers and outlets. The system also has an automatic re-order mechanism that ensures a steady availability of products according to their demand (Chandran 6). In the process, Wal-Mart is capable of meeting the needs of its customers as well as maintaining long-term relationship with its suppliers.
Azili, Muhamed. The Case Study of a Company: Wal-Mart. Web.
Chandran, Mohan 2003, Walmart’s Supply Chain Management Practices. Web.