Production and Operations Management

Report On

WALMART

Submitted To: Submitted By:

Prof. Hersh Sharma PRATEEK THAKUR
(06)
 SHUBHAM MOHABE (07)
GAGAN SINGH (17)

INTRODUCTION
Wal-Mart Stores, Inc. (branded as Wal-Mart) is an American public
corporation that runs a chain of large, discount department stores. It is
the world's largest public corporation by revenue, according to the 2008
Fortune Global 500.[4] The company was founded by Sam Walton in 1962,
incorporated on October 31, 1969, and listed on the New York Stock
Exchange in 1972. Wal-Mart is the largest private employer [5] and the
largest grocery retailer in the United States. It also owns and operates the
Sam's Club retail warehouses in North America.
Walmart operates in Mexico as Walmex, in the United Kingdom as Asda,
in Japan as Seiyu, and in India as Best Price. It has wholly-owned
operations in Argentina, Brazil, Canada, and Puerto Rico. Wal-Mart's
investments outside North America have had mixed results: its operations
in the United Kingdom, South America and China are highly successful,
while it was forced to pull out of Germany and South Korea when ventures
there were unsuccessful.
 Wal-Mart has been criticized by some community groups, women's rights
groups, grassroots organizations, and labor unions, specifically for its
extensive foreign product sourcing, low wages, low rates of employee
health insurance enrollment, resistance to union representation, sexism,
and management efforts to pressure employees to vote for specific
parties during national elections. Conversely, others point out that Wal-
Mart's rapid growth and logistical efficiency has enabled it to bring lower
prices to consumers and more jobs to the communities in which it
operates.

OPERATIONS COMPETITIVE

STRATEGY

Operations Management Strategies plays very important role in achieving

an organizational goals. By using these strategies an organization controls
and maintains all its operations. So these should make after a
comprehensive marketing analysis, according to capabilities and
resources of an organization. Total Quality Management enables an
organization to have improved products, high and competitive product
environment and customer satisfaction.

PRODUCTION AND OPERATION MANAGEMENT

PRACTICES
Continuous Improvement in Wal-Mart

In the field of Operations Management, there are many aspects to

consider in order to a company staying strong in the market. Especially
the current markets are more competitive than ever before,
differentiating with other competitors becomes a critical factor.WAL MART
has adopted continues improvement theory to counter the competition
and expanding his business empire. Wal- mart by using effective cost and
IT technologies has become the retail giant in US. Time Company has
adopted various strategies to increase its operational efficiency .These
are as follows;

CORPORATE STRATEGY
(Gain competitive advantage by) providing customer’s access to quality
goods, when and where needed, at competitive prices

OPERATION STRATEGY
• SHORT FLOW TIMES: Walmart follows the very short flow time of
the goods and services.

• LOW FLOW INVENTORY LEVEL: Inventory levels at walmart are very

low as it helps them to reduce the cost of storage hence providing
the customer base with good quality products at a low price.
Inventory level is reduced to minimum.

• WIDE VARIETY, LOW PRICES: Each week, about 100 million

customers, nearly one-third of the U.S. population, visit Wal-Mart's
U.S. stores. Wal-Mart customers give low prices as the most
important reason for shopping there, reflecting the "Low prices,
always" advertising slogan that Wal-Mart used from 1962 until
2006.The average US Wal-Mart customer's income is below the
 national average, and analysts recently estimated that more than
one-fifth of them lack a bank account, twice the national rate. A Wal-
Mart financial report in 2006 also indicated that Wal-Mart customers
are sensitive to higher utility costs and gas prices

• EFFICIENT SUPPLY CHAIN MANAGEMENT: About 40% of products sold

in Wal-Mart are private label store brands, or products offered by
Wal-Mart and produced through contracts with manufacturers. The
supply chain is directly linked with the producer or supplier of the
product. This helps in maintain flexible relations .it also has its own
brands that also provide them with efficiency in the supply
management. "At the heart of Wal-Mart's supply chain today is the
need for translate the many approaches manufacturers have of
producing, selling and delivering products versus the significantly
different processes that mass merchandisers need to be successful.
Bridging this gap of communication and making transactions as
efficient as possible, in effect creating what many industry experts
call a lean supply chain, is Wal-Marts' ultimate goal. Underscoring
this point during a recent AMR Research conference Gary Maxwell,
Senior Vice President of Merchandise Replenishment, stated that
"the top priority of the Wal-Mart supply chain operations is to bridge
the gap between suppliers and retailers' approaches to doing
business,"(Weston, Garf, 2005). Mr. Maxwell continued during the
conference to outline the key goals and objectives for Wal-Mart's
supply chain strategy in the near term. Wal-Marts' supply chain
objectives are grouped into a focus into the three areas of efficiency,
education and electronic enablement of transactions."

• POS: Walmart follows a very strong point of sales as it a retail chain

so the whole upgradation is done with the help stock which is sold
out.
• DISTRIBUTION WAREHOUSE:It has strong distribution network and
warehouses facility to maintain the good fast flow time.
• PROCUREMENT FROM SUPPLIERS: Walmart generally goes for
purchases in large bulk quantities and hence procure goods at a
lower price from the suppliers.there major motive is to provide goods
at low prices hence they try to reduce there procurement cost
through bulk purchase.
• STOCK UPGRADATION: Genrally stock upgradation is done with
taking the help of the barcodes which are recorded while making out
the sales.
• ONLINE FEED BACK OF DATA: Walmart has technologies which
automatically provide online feed back of data to there suppliers
hence making them aware of the sales and the supplies of the
products.

OPERATIONS STRUCTURE
 •RESULTING BENEFITS
• Inventory at retail stores turned over twice a week (Industry
averages once every two weeks)

• Improved targeting of products to markets

• Sales per square foot increased from $102 in 1985 to $140 in

1991 (Industry average increased from $102 to $110

COST MINIMIZING STRATEGY

Wal-Mart has effectively implemented an operational excellence strategy
in its quest to continually lower costs and deliver products and services
with minimal difficulty or inconvenience. Whether it be through reducing
costs, through its various relationships and practices with suppliers or
controlling energy consumption by monitoring and controlling lights, heat,
A/C, etc from their head office or even managing inventory efficiently,

Wal-Mart has effectively minimized both variable and fixed costs while
also ensuring stock outs are minimized. Wal-Mart has also effectively
eliminated (non-value) added production steps as it successfully re-
defined the integrated retailers relationships with its manufacturers

USE OF INFORMATION TECHNOLOGY

Wal-Mart has also been successful in implementing a variety of IT
systems that have also facilitated this strategy. Whether it's through their
own private satellite networks, or their EDI systems with suppliers or even
the implementation of UPC scanners at the registers, Wal-Mart has been
an industry leader in using technology to facilitate this strategy. Wal-Mart
has also successfully incorporated convenience in their strategy, as some
stores are open 24-7, and if one was to look at the multiple services
offered, whether it is the automotive garage, pharmacy, restaurant, photo
lab, they are effectively becoming a one stop shop.

INCREASING DISTRIBUTION EFFICIENCY

The first initiative involves using Radio Frequency Identification (RFID)
with their top 100 suppliers. This will further improve their distribution
efficiency, as it will reduce the need for unloading to check products, as
well as, serve as an internal control function in dealing with shrinkage. It's
been estimated that such technology could unlock supply chain cost
savings of 6%.

USE OF RFID
The second initiative, involves improving its efficiency with customers. By
using RFID tags in stores to further reduce check out labor requirements,
as well as shrinkage, Wal-Mart would again be lowering operational costs
due to improved efficiencies. It's important to note, that with technology,
its inevitable that new products and procedures will always be emerging
that will continue to enhance and facilitate this strategy. Wal-Mart's
current practices are also undoubtedly not 100% effective and efficient,
thus, it is reasonable to expect Wal-Mart to continue to make advances in
the practices currently in place and become even more cost efficient and
profitable within an operational excellence strategy.

FINANCIAL SERVICES

The third factor is that by implementing yet another service, such as

financial services, it will not only give customers more convenience; this
service will truly be a complementary service. For example, if a customer
has to go to the bank and do groceries, they would be very inclined to do
it all under one roof, again adding to the operational excellence strategy
of providing customers convenience.
 CUSTOMER INTIMACY STRATEGY
Customer Intimacy, as defined by means segmenting and targeting the
markets precisely and then tailoring offerings to match exactly the
demands of those niches. One would only have to look at Wal-Mart's
Modular Category Assortment Planning System (MCAPS) to see this
strategy in use. The MCAPS system examines store traits and historical
selling data to establish store specific modular, which essentially plan the
layout of products to best, suit a particular market. There are literally
thousands of specific layouts, all of which can alter the size and
merchandise mix for the target market. This data is collected, integrated
and analyzed in the various information systems, which serve both as
great supply chain management tool and a way to establish purchasing
patterns of target costumers.

CONCLUSION
Good business strategies plot changes in where a company is going. A
winning operations management strategy translates that direction into
operational reality, creating strategic competitive advantage in the
process. Operational strategy finds new ways to structure your business
operations and economics to create breakout results in top-line growth,
earnings, and valuation.
Our experience points to five essential ingredients of operational strategy:
1. Transform Market Forces into Operational Advantage

Examine the external macro and micro global market forces shaping the
operational context in your business strategy, including macroeconomic,
demographic, regulatory, technology, competitor, and customer shifts.
Wal-Mart greatly follows with this ingredient.

2. Do One Thing Extraordinarily Well

Some companies focus on product leadership, and are consistently first to

market with the right new products. Wal-Mart is all about cost leadership,
attaining the lowest end to end operational cost and the highest
productivity. Others are focused on winning based on customer intimacy,
delivering an exceptional total product and service customer experience.
Wherever you choose to play, the key is to have the discipline of focus in
operations management.
3. Think End-to-End, Continuous, Real-Time, and Horizontally

Every organization have a set of core operational domains that make up

its operational model. For most, these comprise some combination of the
development chain, the supply chain, and the customer chain.
Operational business strategies configure these operational domains to
deliver against business strategy, and create a competitive advantage in
their own right.

4. Drive Innovation in Your Operations and Business Model

Peter Drucker defined innovation as change that creates a new dimension

of performance. He also stated that a key accountability of the CEO is
innovation. Too often innovation management is perceived to be a
technical or product-oriented activity. The reality is that operations
management innovation is creating the commanding leaders today. Sam
Walton lays great stress on operational techniques. In walmart best
operational techniques is the greatest innovation.

5. Execute Relentlessly

A complete operations management strategy requires a commitment to

execution, identifying the critical programs to integrate efforts and
making the necessary changes in 1) organization and management
systems 2) talent, culture, and leadership, 3) business technology
systems, and 4) process architecture. Our research shows that companies
with commanding leads in their markets execute relentlessly across all
four of these dimensions of execution, informed by their global
marketplace insight, aligned to a singular competitive focus, emboldened
by a clear innovation intent, and guided by a sound operational model
aligned with business strategy and business economics. Walmart is one
such company to do great and simple things in a very extraordinary way
which proves to be there unique seeling point.This is what that makes
them just the world's largest retailer. It's the world's largest company--
bigger than ExxonMobil, General Motors, and General Electric. The scale
can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last
year.