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Case Study Information Systems Utilizationof Walmart Inc

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Information Systems Utilization of an Organization: The Case of Walmart Inc.

Research DOI: 10.13140/RG.2.2.34979 · February 2020

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COLLEGE OF COMPUTER AND INFORMATION SCIENCE

Academic Year 2019 - 2020

INFORMATION SYSTEMS UTILIZATION

Of an organization: the case of, walmart inc..

Student: Gene Joseph Villalobos Garcia

Course Adviser: Dr. Ellenita R. Red

A Final Project Submitted In Partial Fulfillment of the Requirements for the Course of

IS100 Fundamentals of Information Systems

BACKGROUND OF WALMART INC.

Wal-Mart, now known as Walmart Inc., founded by Sam Walton on 1962 in Rogers, Arkansas, with the help of his brother Bud. However, Sam is already running a store, Walton’s Five and Dime. The business model of Sam Wilton, compared to others, was different; it focused on providing discounts and putting up branches in some small towns in Arkansas (Muhammad Atif, 2013). In 1968 branches in Oklahoma and Missouri was built (Brenner, Eidlin, & Candaele, 2006, as cited in Muhammad Atif, 2013). Moreover, they’ve also introduced Sam’s Club that opened in Iowa, Nebraska, and Indiana in 1983.

Walmart Inc. is one largest multinational retailing corporation that operate on various segments; Walmart Inc. deals with an operation inside the United States, The Sam's Club, membership-only retail warehouse clubs, and Walmart International, that operates outside the US, such as Japan, United Kingdom, Argentina, Brazil, Chile, etc. (Jacques, P., Thomas, R., Foster, D., McCann, J., & Tunno, M., 2003, p. 515). It also provides different services such as, Walmart- 2-Walmart money transfer service, Walmart MoneyCard, Store Pickup, and Walmart Pay (Course Hero, 2013, pp. 2-3). On the other hand, Walmart has a division named Walmart Supercenter. This division provides its customers with a wide array of products and services, such as pet shops, pharmacies, optical centers, etc., that Walmart doesn't offer. Basically, Walmart Supercenter is a bigger Walmart store. The company implements the “Every Day Low Price” (EDLP) strategy to deviate from its competitors.

MISSION, VISSION, OBJECTIVES, AND GOALS

Mission Saving people money so that they can live better.

Vision To be the best retailer in the hearts and minds of consumers and employees.

Objectives Sell more goods to American consumers who shop online (Ferguson, E., 2019). Provide the best quality goods with lowest price (Essays, UK., 2018). Walmart hopes to make progress in areas that are the basis of long-term growth and higher shareholder returns (Course Hero, 2017, p. 2).

Goals To bring Mr. Sam's culture and philosophy to the Internet (Walmart, n.). To support the dignity of workers in the retail value chain (Gading, D. K., 2019, p. 6). To bring together stakeholders, international organizations, governments, civil society, and industries, to address major potential risks (Gading, D. K., 2019, p. 6).

Slogan Save money. Live better.

INFORMATION SYSTEMS ECOSYSTEM

Database System, Data Center, and Business Intelligence

Walmart, the world’s biggest retailer with 20,000 stores in 28 countries, developed and build one of the world’s biggest private cloud, where, it could process more than 2 petabytes of data every hour (Bernard, 2017, as cited in Mohammed Kemal, 2019). It is in Bentonville, Arkansas and named Data Café, state-of-the-art analytics hub (Marr, B., 2017). Since, it caters many customers worldwide, and to ensure affordability of products they have developed their own cloud to help in analyzing customer, competition, and market data, also ensures the security of these data. Walmart has full control of their infrastructure they may, in their own discretion, implement appropriate security measures. Walmart’s transactional database in 2012, estimated, contained about 2 petabytes of customer data (Edosio, U. Z., 2014, p. 3).

Data Café helps in cutting down time data processing to 20 or 30 minutes from two or three weeks, when given large amount of clean and verified data. In article of Forbes by Bernard Marr (2017), the grocery team was puzzled and unsure why a product category declined, Data Café have

Plant products needs to be watered continuously, however, a lot of waters are being wasted and at the same not all plants are watered.

According to Accenture (2013), “retailers are using cloud-based tools to engage customers,” because different companies implements strategies to increase their sales. Walmart in 2012 hosted a contest named Get on the Shelf, where every customer has the chance to pitch their own product invention (p. 18). The winners that was selected by the public, according to Walmart, will be invited to personally sell their products at their eCommerce website, Walmart. The latest contest happened in November 2013; the winning products are Elvis Presley Home Bedding Collection, bedding sets decorated with Elvis Presley, and SKRIBS Customizable Wristbands (Walmart, 2013).

Electronic and Mobile Commerce and Enterprise Systems

Utilizing the internal cloud network of Walmart, they have showed to grab a larger portion of online shopping. Furthermore, they are aiming to beat Amazon’s use of cloud-powered big data that drives digital sales (Mohammed Kemal, 2019).

Walmart has bought Jet, an online shopping site, to take a big step in competing against Amazon (Lunden, I., 2016). They are expanding their online shopping to various independent company to further widen their scope of customers.

Walmart Labs teamed up with Salsify to develop a product content management platform for their suppliers (Salsify, n., p. 3). Together, they have successful integrated it with Walmart’s API. The software allows suppliers to push their products online, then, those products, through the API, will uploaded to Walmart in seconds. They are empowering the suppliers to a more immersed role in merchandising their products to the market. Walmart knew that they could not rely on customers that buys item in the aisles of the store, moreover, these customers are owners of smartphones that could the experience shopping with their hands; hence, the company brought the convenience to its customers and to be at par with competitors.

According to Thi Thu Ha, Nguyen (2017), the supply chain management (SCM) of Walmart is the key to its growth. They consider three factors: procurement and distribution, logistics, and inventory management. To continually offer low prices the company eliminated the middleman and directly transact with suppliers, including the procurement (p. 106). The logistics or the trucking system of Walmart is also known to be successful because it can delivery from inbound to outbound trailers without intermediate storage (p. 104). The private trucking system is able to deliver to stores and replenish stock inventory in a short amount of time, hence, reducing expenses (p. 107). The inventory management system of Walmart can detect products that are low in stocks and will notify the store and distribution center for replenishment (p. 108).

Information and Decision Support Systems

More companies are giving back and helping the people and the community. Similarly, Walmart is giving to the local communities by donating goods to various charities. Moreover, Global Governance Digital Solutions developed Global Donation Management System (GDMS) that scans and validates products to be donated and verifies if it complies with the policies (Walmart, 2018, p. 205).

Furthermore, Walmart also launched an initiative for identifying harmful chemicals, namely Chemical Intensive Product Initiative, integrated to some products. They have partnered with The WERCS to develop a software that screens chemicals and was named GreenWERCS Chemical Screening Tool. Current and future suppliers of Walmart must submit the added chemical ingredients in the products, the system would then now analyze and identify the harmful chemicals. It produces a score, red, yellow, and green, for the supplier to identify on whether the product is free from harmful chemicals and materials, moreover, the tool provides alternative ingredients that would be environmentally friendly (Torrie, Y., Buczek, M., Morose, G., & Tickner, J., 2009, 29-30). This assures the products are eco-friendly and encourages the suppliers to produce sustainable products.

A social media start-up focused on e-commerce named Kosmix, currently known as Walmart Labs, was bought in 2011 by Walmart. Kosmix have developed a system that can search

Walmart has also used a knowledge management system, it incorporates knowledges, such as discussion forums, corporate libraries, mentoring program, and professional training. The KMS has also help Walmart cut operational cost and has allowed the growth of value for the shareholders. It made big financial gains on annual products in Walmart stores. Furthermore, skills of employees are enhanced through the various knowledges that can be queried in the KMS. The human resource management of Walmart has learned to properly lead the people and business operations in a well-planned framework or guidelines. On the other hand, the managers have discovered to tackle issues with staffs without receiving grievances from them. Managers have learned it from the shared knowledge. Walmart is aiming the employee retention until retirement by providing rewards and bonuses, and performance appraisal (Knowledge Management-A Case Study of Walmart, 2014, pp. 1-3).

Walmart Neighborhood Market, located in Levittown, New York has transformed. Walmart has been integrating artificial intelligence to its retail experience. A unique real-world experience in shopping of Walmart is named Intelligent Retail Lab (IRL). The store is installed with cameras and sensors that detects product movement and current stock in aisle (Smith, M., 2019). Various touch screen devices, Informational Stations are installed to help customers. Moreover, it houses processors, that retailers can see through glass window, that could process at high rate and produces 1 terabytes of data. Meat products’ standby time in the aisle is recorded to ensure quality, moreover, once a movement of product going out of the shelves is detected the sensors and cameras are triggered, notifying staffs to restock if needed.

System Acquisition and Development

Walmart partners with different organization for certain software. Walmart tapped IBM for caching service, so that subset of data so that future request will be much faster. The developers of Walmart needed caching solution for new features into their systems. Session information from the server farm of Walmart are required to be stored and retrieved (Foley, J., et. al, 2016, p. 8).

To give back the people and communities Walmart implemented the software Global Donation Management System (GDMS) of the Global Governance Digital Solutions (Walmart, 2018, p. 205).

Walmart labs has used agile development lifecycle in developing their software. The lab had formed 130 teams to build software guided by the agile development (King, R., 2014). Walmart is adapting this development lifecycle because of the focus of the agile approach. They can develop software faster; there would be feature updates that are based on feedback from its users. The team will be able to push changes with a rational reason and not making assumptions of user needs. According to Mark Tallman (as cited in King, R., 2014), he stated that agile approach is just one tool, it is not always applicable to development, such as building data centers.

Expo, an in-house platform to test development and setup was developed by teams in Walmart Labs. Walmart was able to customize the program to satisfy its needs in testing their developments (Tang, A., 2018). The testing method they used is called A/B testing, they have integrated it with their software development life cycle. A/B testing, according to Optimizely, is creating variations of UI and UX of a webpage or an application, they now deploy the variations and would be used by their customers and clients. Engagement with each variation is measured and recorded and displayed in a dashboard.

Walmart’s mission and vision, to provide consumers with quality products that are economical and to make a lasting impression has been made successful through the use if different information systems. Prominent technology that Walmart have used are their SCM, where their delivery, stocking and inventory are managed well by their employees, Data Café, a data analytics hub in their large data farm where processing petabytes of data are effective solve problems, and IRL, that effectively monitors product stock and improvement store management.

No one could determine that a retail company would have integrated numerous systems and technology the improves their day-to-day and future operations and decision-making. Most

Essays, UK. (2018). Examining Wal Marts information system. Retrieved from ukessays/essays/management/examining-wal-marts-information- system-management-essay?vref=

Ferguson, E. (2019). Walmart’s mission statement & vision statement, generic & intensive strategies. Retrieved from panmore/walmart-vision-mission-statement- intensive-generic-strategies

King, R. (2014). Wal-Mart becomes agile but finds some limits. Retrieved from blogs.wsj/cio/2014/10/22/wal-mart-becomes-agile-but-finds-some-limits/

Lunden, I. (2016). Confirmed: Walmart buys Jet for $3B in cash to fight Amazon. Retrieved from techcrunch/2016/08/08/confirmed-walmart-buys-jet-com-for-3b-in- cash/

Marr, B. (2017). Really Big Data at Walmart: real-time insights from their 40+ petabyte data cloud. Retrieved from forbes/sites/bernardmarr/2017/01/23/really-big- data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/#7b8b099f6c

Optimizely (n.). A/B testing. Retrieved from optimizely/optimization- glossary/ab-testing/

Smith, M. (2019). Walmart’s new intelligent retail lab shows a glimpse into the future of retail, IRL. Retrieved from corporate.walmart/newsroom/2019/04/25/walmarts-new- intelligent-retail-lab-shows-a-glimpse-into-the-future-of-retail-irl

Walmart (2013). Walmart announces two grand prize winners of nationwide “get on the shelf” contest. Retrieved from corporate.walmart/newsroom/2013/11/07/walmart- announces-two-grand-prize-winners-of-nationwide-get-on-the-shelf-contest

[Online research]

Course Hero. (2017). Supply chain management (SCM) systems of Wal-Mart stores, Inc [Word File] . Retrieved from coursehero/file/22285905/Supply-Chain- Management-SCM-Systems-of-Wal-Mart-Stores-Inc/?justUnlocked=1#/doc/qa

Accenture (2013). A new era for retail. Retrieved from accenture/_acnmedia/accenture/conversion- assets/dotcom/documents/global/pdf/technology_4/accenture-a-new-era-for-retail

Edosio, U. Z. (2014). Big Data analytics and its application in e-commerce. Retrieved from researchgate/profile/Uyoyo_Edosio/publication/264129339_Big_Data_A nalytics_and_its_Application_in_E-Commerce/links/53cf8ef30cf2f7e53cf811e0/Big- Data-Analytics-and-its-Application-in-E-Commerce

Foley, J., Frerking, R., Hollands, M., Jackson, R., Mathis, K., Wakelin, P., & Webster, M. (2016). How Walmart became a cloud service provider with IBM CICS. Retrieved from redbooks.ibm/redbooks/pdfs/sg248347.pdf

Gading, D. K. (2019). Strategic management final exam assignment study of Walmart Inc. [PDF File]. Retrieved from academia/39737488/Strategic_Management_- _Study_of_Walmart_Inc

Garcia, F. (n.). Chapter 2: gaining competitive advantage with DSS. Retrieved from dsc.ufcg.edu/~garcia/cursos/SAD/Notas/Cap2DSSResources

Jacques, P., Thomas, R., Foster, D., McCann, J., & Tunno, M. (2003). Wal-Mart or World-Mart? A Teaching Case Study. Review of Radical Political Economics. 35. 513-533. 10/0486613403257808.

Kaup Mohamed (2014). Communication methods adopted by Wal Mart officials for its successful operations. Asia Pacific Journal of Research, Vol. 1(18), 72-77. Retrieved from apjor/downloads/011120149.pdf

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Home » Management Case Studies » Case Study: Analysis of Information Systems Application at Walmart

Case Study: Analysis of Information Systems Application at Walmart

Walmart is one of the world’s largest retailers that make up high amounts of profits. The business organization has grown top great extends from a single store to a large retail store with branches in many parts of the world. The main purpose of the business organization has been to provide value to its customers as well as empowering its employees to perform effectively in the business activities. The business organization is committed to meeting the needs of its customers effectively as well as providing quality products and services.

The business operations and management at the Walmart promotes a culture that is based on obtaining effective information that is most current. The information is usually based on the customers needs and wants in the market, obtaining the best business ideas from the employees on how to run the business operations effectively and ways of maximizing profits . The way in which the business organization carries out its operations has influenced the performance of the company in a positive manner since it has increased the productivity and the speed of operations in the business set up.

Application of Information Systems in Walmart’s Business

The organization has managed to succeed and gain the competitive advantage in the competitive business market through use of effective business information systems applications. Information systems are very important in the running of organizations and for that matter it is important to ensure that information systems applications in any business organization are followed. Information technology enables the business organizations to increase productivity through effective transfer of information from one department within the organization to another.

Information technology has been the backbone of success of the Walmart and has enabled the business organization to grow to greater heights. In order to ensure that all the information concerning the organization is followed up and is made available for references the business organization has been using different information technology strategies that have enabled it to succeed and gain competitive advantage in the competitive business environment . The organization has been using point-of-sale system that is computerized in order to catch up with all details in its operations.

The computerized point-of-sale system enables Walmart to identify each commodity sold in the organization in a given duration of time either a day or even within hours. This helps the organization to keep proper records of what has been sold for given period of time and what is remaining. This kind of information is very important in running of the organizations’ operations since it helps avoid some of the inconveniences that take place in business organizations. For instance without provision of such information it is very easy for the business to run out of stock unaware.

Also the system works in such a way that it provides the prices of the items sold in a database. This enables the business organization to keep track of what has been sold and at how much. Also it provides a good opportunity for the business organization in case of any problems in calculations and balancing of the book accounts, this database can be consulted and clarity of the matters found. This is one of the important aspects of the system and which enables the business to ensure that maters of accountability are maintained and encouraged. This gives the business competitive edges since operations are transparent hence raising enough income to cater for the other aspects of the business operations hence enabling it to gain competitive advantage.

The system also provides the customers with accurate sales receipt, the receipts are very essential to the customers since some use them for the reference as well as for other major purpose. Provision of such receipts gives customers confidence in the organizations’ products since through use of the receipts the customers can claim back if they have any complaints. This gives customer’s confidence in the organization since they gain trust and confidence in operations of the organization. This on the other hand gives the organization an added competitive advantage over their competitors in the business market.

The system is capable of storing item-by-item sales information, this kind of sales information is used by the management to come up with clear analysis of the sales as well as other operations in the organization. Also, the information provides an easier way of reordering of inventories, this is because based on the information it is possible to know the quantities of the product that have been sold and what is remaining hence being possible to know the reorder level as well as the appropriate time of reordering.

Provision of the information is not very important as it is the implementation of the information. In order to ensure efficiency the organization has ensured that the available information is used fully and effectively to avoid under stocking as well as overstocking of inventories. Effective implementation of the information systems and the information collected through the use of the systems the organization has been able to gain competitive advantage and remain to be the largest retail organization. The organization has invested a lot of finances in the information systems and because of the inventory and distribution system the business organization has managed to be a world leader in the business operations.

Together with the point-of-sale information system implemented in Walmart there are also other system applications that have been implemented to enable the organization succeed in its operations. Walmart also implements and uses telecommunications to create a direct coordination from the organizations’ stores to the fundamental computer system which is the central point in the operations of the organization. Telecommunications enables the organization to create a good connection between the main departments in the organization and the stores.

The departments like finance and purchasing and supplies are able to get the right information on the inventories from the stores at the right time. This helps in ensuring that there are no stock outs or high inventories that are maintained in the organizations’ stores. This coordination between the stores and the telecommunications systems are very important for the success of the organization .

Also the telecommunications system creates an effective link between the stores and the suppliers. This is because information is moved on inventories is moved directly from the stores to the suppliers. This helps the organization in ensuring that the organization’s operations are maintained at a higher level throughout. This is because the system enables an automatic reordering of the inventories from the stores to the suppliers computers. Also it helps in making sure that operations within the organization are coordinated effectively.

It becomes easier when there is proper coordination within the organization since it is easier to know what is selling and what is not selling in the organization. Through this it is easier to make wise decisions regarding essential factors within the organization. The organization has avoided tying up its inventories in the stores without selling through this information systems implemented in the organization, this has helped the organization in great extends to gain competitive advantage over competitors.

Walmart has computerized warehouses whereby the inventories as they come in and as they are dispatched they are recorded. The information in the warehouses is then dispatched to the other departments in order for the movement of the inventories to be monitored effectively. The organization through computerized systems in its operations and warehouses it has ensured that there are no gods that stored for a long period in the warehouses as this increases the cost. The system used ensures that as the inventories enter the warehouses they are not stored in the shelves since they are distributed to the appropriate departments. Through this the cost of maintaining inventories are reduced hence the total cost incurred reduced. This gives the organization a competitive advantage over its competitors in the market.

The better coordination through telecommunication systems in the organization has played great role in the success of Walmart. This is because it has resulted to better coordination between the key departments in the running of the organization. Suppliers have been able to have reliable manufacturing flows, reduced costs of production and also the general organization manages to make profits and savings that are transferred to the customers through reduced purchasing prices and high quality products.

Computers and communications equipment used in the organization have helped the organization in gaining competitive advantage. Apart from this the point-of-sale system used in the organization uses is based on certain technology that provides the high technical advantage of the system. Bar code provides the technical basis of the system and it helps the organization in making of clear sale records for all the items, in addition to this it makes the information to be available immediately that is used for reordering of other inventories as well as carrying out sales analysis.

Bar code scanners have been used for more than thirty years and for that period of time with enough experience it is the perfect system that ensures accurate inventory tracking especially for large organizations dealing with many different products. Walmart being one of the largest business organizations it has managed to gain a competitive advantage over its competitors by use of the bar code scanners. This is the reason the organization is the leading business organization and for the competitors to gain a competitive edge this is the best system.

In order for the bar code scanners system to work well in an organization the first thing is the development of Universal Product Code (UPC) system. This is a method that is used to identify products by use of numbers; the numbers are then coded in a way that each group of numbers represents certain item. This means that each item has its own code that is used to recognize it by the bar code scanners. Application of this system has enabled the organization to reduce the cost in the running of the business operations. This is because labor required in stamping of the prices and other manual work is eliminated hence the cost being reduced.

The bar code system though a competitive tool used in the organization it also presents certain disadvantages like elimination of jobs since manual work is reduced. Though this is a disadvantage to the society to the organization is an added advantage since cost is reduced which is translated to increased profits. Also the organization in certain cases uses the radio frequency identification which is a technology used to track inventories. The system is faster and easier to use than the bar codes, this is because it provides more information than the bar codes.

Radio frequency system has enabled the firm to manage inventories effectively since it is easier to keep track of inventories that are in the stores as well as the ones the organization orders from suppliers. This has enabled the organization to avoid stock outs and long lead time that bring in inconveniences in the running of the operations in the organization.

Walmart has also implemented the UCCnet, it is formed in such a manner that it represents a set of technical standards that the organization and its suppliers use to come up with product data in a faster way. The system is in such a manner that the supplier sends information to the organization regarding new products electronically instead of use of fax or even email. Through use of this technology it has been possible to cut down the new product data entry time between the ranges of two weeks to only two days. Reduction of the time used is translated into cost reduction as well as efficiency in the operations since that time is implemented in other areas hence efficiency and effectiveness in operations.

Inventory management in the organization is very important since it gives the organization a competitive edge over the rivals in the market. Because of the sensitivity of the issue Walmart has implemented other effective techniques of monitoring inventory to maximize the sales as well as profits. The organization implemented First In and Still Here (FISH) reporting system. This is a kind of a system that is used to outline how long the different inventories in the organization have remained in the shelves. The major purpose of this system is to know the kind of inventories that take long in the shelves. From this it is possible to know the products that are selling and the ones taking long to sell, this helps in inventory management since it is possible to adjust the levels of inventory accordingly such that much money is not tied in the inventories that take long to sale. This system has enabled the organization to save high amounts on cost and to increase the sales of the organization as well as the profits.

In conclusion, information technology systems are very vital in the survival of business organizations in the competitive business market. Information systems enable the business organization to keep track of every activity in the organization and also make the operations within the organization to be very fast. Walmart has implemented efficient and effective information systems in its business operations and it has managed to gain a competitive edge in the competitive business environment. In addition the organization has managed to cut costs and increase the profitability levels within the organization hence being referred to as the largest discount retail stores in the world.

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Walmart Information System Processes Report

Introduction, general explanation of wal-mart’s business process, how does walmart use information systems, walmart information systems strategy – process improvement, suggestion for improvement, works cited.

Have you ever wondered how does Walmart use information systems? You can learn about it right here!

Wal-Mart Company, which was opened by Sam Walton in 1962, is among the largest retail stores in the world. Walton opened it to sell products at reduced prices, allowing customers to save money and use it to improve their lives. The company was therefore started as a small discount store.

Wal-Mart was committed to satisfying the needs of its customers by serving them in a friendly manner and offering them low prices. Until today, the company has maintained its initial commitment to serve its customers.

The company’s shares started trading on the New York Stock Exchange in 1972 (McKeefery 3). Currently, Wal-Mart has more than 9600 retail outlets that are spread in different countries and a total of 2.1 million workers. Most of them are based in the United States.

Wal-Mart has limited competitors because it has been able to establish a big business empire. It operates about 700 discount stores in the United States and 2900 supercenters, which stock groceries. In addition, it has smaller format stores that have been growing fast. The company has stores that perform well in Canada and Mexico and runs its activities in several Asian countries (Organizational Structure 6).

Wal-Mart is among the business organizations that have been able to implement information systems successfully. The company’s information systems aim at centralizing its operations to develop common practices that can be applied in its stores around the world.

All business activities carried out by Wal-Mart use technology. For instance, technology is applied to keep records of inventories from suppliers and maintain a good relationship with customers, which attracts and retains them.

The application of information systems has benefited Wal-Mart since it has enabled the company to maintain its status as a leader in the market. One of the most important information systems that Wal-Mart applies is the bar code system. The company is among organizations that successfully organize data gathered from different places into meaningful information.

The data, which are gathered from bar codes, are used to monitor sales. Wal-Mart has access to information on product sales, such as the type of products purchased and their prices. This is combined with advanced telecommunications to facilitate the transfer of information between different branches and the centralized system. This enables Wal-Mart to sustain a real-time database with adequate company transaction data.

Radiofrequency identification, commonly referred to as RFID, is another information system that is used by Wal-Mart. This is a technology that uses small tags, which contain microchips with data on particular items. The technology transmits radio signals along short distances. The signals are received by RFID readers, which pass the data to computers for processing.

RFID tags are easy to work with. Hence the company can access information used to identify different products (Wal-Mart stores Inc 5). This type of information system enables Wal-Mart to increase its effectiveness in terms of inventory control and management of supply chains. The company can track its products along supply chains (Laudon & Jane 45).

Wal-Mart is also credited with the introduction of self-check-out lanes. Since the company serves many customers simultaneously, they are sometimes forced to queue for many hours. This information system makes it easy for customers to move in and out of the company’s premises without difficulties.

Information systems would bring numerous benefits to Wal-Mart since advancements in technology have compelled companies to embrace the concept to serve their customers better. Information systems would enable Wal-Mart to reduce costs and increase profits. For instance, RFID would enable the company to monitor its supply chains (Wailgum 5).

This would eliminate possible losses that occur due to a lack of proper tracking of different processes. Information systems would also ensure that customers and the company’s employees do not waste much time.

For instance, self-check-out lanes would facilitate the entry and exit of customers into the company’s premises. Without this system, customers would be required to queue for many hours. However, this problem would be solved through the use of information systems.

Wal-Mart should take several measures in order to improve service delivery. The first thing that the company should do is redefine the RFID mandate by restricting it to products that do not have high amounts of liquid and metal. This would give vendors and suppliers enough time to confirm the reliability of tags for all products.

The company should use its powerful nature to develop a buying consortium. Wal-Mart should also endeavor to ensure that its customers are aware of the different information systems that the company uses. This would ensure that its investment in information systems is utilized accordingly.

Laudon, Kenneth, & L. Jane. Managing information systems-managing the digital firm . Upper Saddle River, NJ: Pearson Prentice Hall, 2010. Print.

McKeefery, Kevin. Wal-Mart restructures to boost e-commerce . 2010. Web.

Organizational structure 2011. Web.

Wailgum, Thomas. 45 years of Wal-Mart history: a technology time line . 2007. Web.

Wal-Mart stores Inc . 2011. Web.

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IvyPanda. (2019, June 8). Walmart Information System Processes Report. https://ivypanda.com/essays/information-system-processes-in-wal-mart-company/

"Walmart Information System Processes Report." IvyPanda , 8 June 2019, ivypanda.com/essays/information-system-processes-in-wal-mart-company/.

IvyPanda . (2019) 'Walmart Information System Processes Report'. 8 June.

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Walmart Supply Chain: Building a Successful Integrated Supply Chain for Sustainable Competitive Advantage

• Case Studies

Introduction

The global business landscape has witnessed an increasingly fierce competition, pushing companies to seek effective strategies to maintain and enhance their competitiveness. Among these strategies, the role of supply chain capability stands out as a key factor in driving success. A well-optimized supply chain not only ensures efficient delivery and cost-effectiveness but also provides companies with a competitive advantage in the market. In this context, Walmart, the world’s largest retailer, has demonstrated a highly successful and integrated Walmart supply chain, propelling its growth and dominance in the retail industry.

This case study aims to delve into the significance of supply chain capability for enhancing a company’s competitiveness and how it serves as a competitive advantage for companies. Additionally, we will explore the imperative need for supply chain redesign in the global economy to adapt to the challenges of the modern era of globalization. Focusing on Walmart’s exemplary supply chain practices, the purpose of this case study is to analyze the features of its successful integrated supply chain while identifying relevant issues in the context of the current globalized market.

[Read More: Rivian: Navigating Supply Chain and Operational Challenges and Embracing Growth ]

Walmart’s Supply Chain: Integrated Supply Chain Success

Data-driven success factors.

In the realm of modern supply chain management, data-driven strategies play a pivotal role in enhancing a company’s competitiveness. Walmart’s remarkable success as the world’s largest retailer can be attributed to its astute utilization of data analysis and advanced technologies within its integrated supply chain. This section delves into the key data-driven success factors that have propelled Walmart’s supply chain to the forefront of the retail industry.

[Read More: ERP Master Data: A Guide to Improve Quality & Governance ]

Role of Data Analysis through Barcode Scanning and Point-of-Sale Systems

Data analysis is at the core of Walmart’s supply chain prowess. The company has implemented sophisticated barcode scanning and point-of-sale systems to collect real-time data from its stores. By employing these technologies, Walmart gains valuable insights into customer buying behavior, sales trends, and inventory levels. The ability to analyze this data enables the retail giant to make informed decisions on product procurement, inventory management, and demand forecasting.

Efficient Supply Chain Practices: Automated Distribution Centers and Computerized Inventory Systems

Automation is a key component of Walmart’s efficient supply chain practices. The company has strategically invested in automated distribution centers, streamlining the flow of products from manufacturers to stores. These automated facilities not only optimize the handling and movement of goods but also enable faster order fulfillment and replenishment. Additionally, computerized inventory systems provide Walmart with accurate and up-to-date information about stock levels, allowing for precise inventory control and reducing the risk of stockouts or excess inventory.

Utilizing Walmart’s Own Trucking System and Cross-Docking Logistics

Another critical factor contributing to Walmart’s supply chain success is the utilization of its private trucking system and cross-docking logistics. By maintaining its own trucking fleet, Walmart gains greater control over transportation and delivery schedules, leading to improved efficiency and timely product replenishment. Furthermore, the adoption of cross-docking logistics techniques has enabled Walmart to minimize the need for intermediate storage, leading to reduced handling costs and faster product movement through the supply chain.

[Read More: The Ultimate Guide to Contract Logistics: What You Need to Know ]

Information Technologies Driving Efficiency

In Walmart’s journey towards becoming a global leader, information technologies have played a pivotal role in driving efficiency within the integrated Walmart supply chain. The retail giant has strategically adopted various IT initiatives to optimize its operations, enhance collaboration with suppliers, and achieve real-time inventory targeting. These technologies have contributed significantly to Walmart’s supply chain success, allowing them to maintain a competitive edge in the retail industry.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

One of the key information technologies that have bolstered Walmart’s supply chain efficiency is the implementation of Collaborative Planning, Forecasting, and Replenishment (CPFR). This system facilitates seamless communication and coordination between Walmart and its supply chain partners, including suppliers and distributors. By sharing real-time sales data and demand information, CPFR enables accurate forecasting and demand planning, minimizing information distortion, and promoting synchronized inventory replenishment. The CPFR program has been instrumental in enhancing overall supply chain visibility and efficiency, allowing Walmart to respond promptly to fluctuations in demand and supply, reducing stockouts, and optimizing inventory levels.

Vendor-Managed Inventory (VMI) and Its Benefits

Walmart’s adoption of Vendor-Managed Inventory (VMI) has been another critical information technology-driven initiative. Through VMI, Walmart empowers its suppliers to take on the responsibility of managing their inventory stored in Walmart’s warehouses. By granting suppliers access to real-time inventory data and sales information, Walmart facilitates efficient inventory tracking and replenishment. This hands-on approach by suppliers results in streamlined inventory management, reduced delays in replenishment, and lower stockouts. The VMI model has proved particularly advantageous for Walmart due to its vast product range and numerous suppliers, making inventory management complex and costly if managed solely by the retailer.

[Read More: Vendor Managed Inventory: A Comprehensive Guide ]

Leveraging RFID Technology for Real-Time Inventory Targeting

RFID (Radio Frequency Identification) technology has been a game-changer in Walmart’s pursuit of real-time inventory targeting and enhanced supply chain visibility. By employing RFID tags on products, Walmart can track the movement of inventory throughout the supply chain in real-time. RFID enables accurate and automated inventory tracking, reducing the need for manual counting and minimizing errors in inventory management. The technology also provides crucial details, such as production time, location, and expiry dates of goods, allowing for efficient inventory targeting and better control over inventory turnover. RFID technology has been instrumental in Walmart’s cost reduction efforts, ensuring optimal stock levels while avoiding overstocking and unnecessary inventory holding costs.

Achieving Competitive Advantage through Strategy

Walmart’s competitive strategy: “everyday low prices” (edlp).

Walmart’s competitive advantage is deeply rooted in its strategic focus on offering “Everyday Low Prices” (EDLP) to its customers. The EDLP strategy revolves around providing high-quality products and services at the lowest possible prices, ensuring that customers can benefit from affordable prices every day. This approach sets Walmart apart from its competitors and has been instrumental in establishing the company as a dominant force in the retail industry.

Implementing the “Everyday Low Costs” (EDLC) Policy through Direct Procurement

To support its EDLP strategy, Walmart follows an “Everyday Low Costs” (EDLC) policy in its supply chain management. One of the key elements of the EDLC policy is the direct procurement of items from suppliers, eliminating intermediaries in the process. By procuring directly from manufacturers, Walmart can negotiate and understand their cost structure, enabling them to make informed purchasing decisions and obtain the best prices for their products.

Walmart’s emphasis on direct procurement is further bolstered by the use of technology and information systems. The company has implemented a central database, store-level point-of-sale systems, and a satellite network, along with barcodes and RFID technology as previously mentioned. These technologies allow Walmart to gather and analyze real-time store-level information, including sales data and external factors like weather forecasts, to enhance the accuracy of purchasing predictions. This integration of information technology helps Walmart optimize its procurement process and maintain low costs throughout the supply chain.

Utilizing Information Systems for Better Inventory Management

Effective inventory management is critical for Walmart to sustain its competitive advantage through the EDLP strategy. The company relies on information systems and information technology (IT) capabilities to control inventory levels efficiently. By capturing customers’ demand information, Walmart can identify popular products and stock them adequately, leading to an overall reduction in inventory.

One notable example of Walmart’s successful utilization of information systems is its collaboration with Procter & Gamble (P&G) through the Collaborative Planning, Forecasting, and Replenishment (CPFR) program. This program links all computers of P&G to Walmart’s stores and warehouses, allowing for efficient replenishment orders based on real-time inventory needs. Additionally, Walmart’s Retail Link , developed in the early 1990s, serves as another vital IT application for storing data, sharing it with vendors, and aiding in shipment routing assignments.

Challenges and Opportunities

Supplier cooperation and collaboration.

Walmart’s supply chain success can be attributed to its strong relationships with suppliers, but achieving and maintaining supplier cooperation and collaboration is not without challenges. Let’s explore the challenges and opportunities in this area:

Challenges in Obtaining Suppliers’ Cooperation

• Supplier Resistance to Direct Procurement: Walmart follows an “Everyday Low Costs” (EDLC) policy by directly procuring items from suppliers, eliminating intermediaries. However, some suppliers may be reluctant to cooperate with this approach as it can disrupt existing distribution channels and potentially reduce their bargaining power.
• Complex Supplier Networks: With thousands of suppliers across various product categories, managing diverse supplier networks can be challenging. Each supplier may have different production and delivery schedules, making coordination difficult.
• Balancing Profit Margins: As Walmart emphasizes low prices, maintaining a balance between cost savings and ensuring suppliers’ profitability can be a delicate task. Suppliers may resist pressure to reduce prices further to maintain their margins.

Opportunities for Enhanced Supplier Cooperation and Collaboration

• Establishing Transparent Communication Channels: Walmart can create transparent and open communication channels with its suppliers to foster better cooperation. Clear communication regarding demand forecasts, inventory levels, and potential disruptions can help suppliers plan their production and deliveries more efficiently.
• Supplier Incentive Programs: Introducing incentive programs that reward suppliers for meeting certain performance metrics, such as on-time delivery or cost reduction, can motivate suppliers to actively collaborate and improve their supply chain capabilities.
• Collaborative Planning, Forecasting, and Replenishment (CPFR): Walmart can leverage technology, such as CPFR, to share real-time sales data and demand forecasts with its suppliers. This collaborative approach allows suppliers to align their production and inventory management with actual market demand, reducing the bullwhip effect and optimizing the supply chain.
• Sharing Inventory Visibility: Providing suppliers with access to inventory data, including stock levels and sales information, can help them plan production and deliveries more effectively. This visibility can prevent stockouts and overstocking issues.
• Long-term Partnerships: Building long-term strategic partnerships with key suppliers can create a sense of mutual commitment and trust. By assuring consistent business over an extended period, Walmart can foster stronger relationships and supplier loyalty.

[Read More: 3 Types of Supplier Segmentation Matrix You Can Use to Classify Suppliers ]

Importance of Collaboration to Enhance Supply Chain Efficiency

• Reducing Lead Times: Effective collaboration with suppliers can help shorten lead times by streamlining production and transportation processes. Faster lead times enables Walmart to respond quickly to changes in demand, reducing the risk of stockouts.
• Efficient Inventory Management: Collaborative efforts with suppliers enable better inventory planning and management. Suppliers can adjust production based on actual demand, reducing excess inventory and associated costs.
• Supply Chain Flexibility: Collaboration fosters agility and adaptability in the supply chain. When Walmart and its suppliers work together closely, they can quickly adjust to market changes, supply disruptions, or new opportunities.
• Cost Reduction: Improved supplier collaboration can lead to cost-saving opportunities. By eliminating unnecessary intermediaries and optimizing production and transportation, overall supply chain costs can be minimized.

The Incentives Alignment Issue

In any supply chain, maintaining a balance of profit margins among different parties is essential for efficient collaboration and sustained success. However, achieving incentives alignment can be challenging, and this issue is particularly relevant in the case of Walmart supply chain. Addressing misalignment of interests between Walmart and its suppliers is crucial for optimizing the overall performance of the supply chain and ensuring long-term success. The following points highlight the incentives alignment issue faced by Walmart:

1. Balancing Profit Margins Among Different Supply Chain Parties:

Walmart’s success is attributed to its ability to offer high-quality products and services at the lowest affordable prices. To achieve this, Walmart employs various cost-cutting strategies, such as direct procurement from suppliers and streamlined distribution practices. While these strategies help Walmart maintain competitive prices, they can create challenges for suppliers who may face pressure to lower their own profit margins to meet Walmart’s demands. This misalignment of profit margins can lead to strained relationships and potentially impact the overall efficiency of the supply chain.

2. Misalignment of Interests Between Walmart and Suppliers:

Walmart’s size and market dominance can lead to power imbalances in supplier relationships. Suppliers may feel compelled to comply with Walmart’s demands to maintain access to its large customer base. However, this can lead to situations where suppliers may not have enough leverage to negotiate favorable terms, impacting their own profitability. As a result, suppliers may be less inclined to invest in innovations or improvements that would benefit the supply chain as a whole.

3. Conflict Between Inventory Growth and Sales Growth:

Walmart faced inventory growth issues in the past, with the inventory growth rate outpacing the sales growth rate. This can be indicative of conflicting incentives between Walmart and its suppliers. Suppliers may prioritize producing and delivering more inventory to ensure they meet Walmart’s demands, even if the sales growth does not keep up with the increased inventory. This misalignment can lead to excess inventory, increased carrying costs, and potential stockouts.

4. The Need for a New Triple-A Supply Chain:

Addressing the incentives alignment issue requires a fundamental shift in the supply chain strategy. Lee (2004) proposed the concept of a new Triple-A supply chain for Walmart and other companies in the 21st century. The Triple-A supply chain emphasizes agility, adaptability, and alignment to create a sustainable competitive advantage. Achieving alignment among all participating parties is crucial to optimize supply chain performance and ensure that risks and rewards are distributed fairly.

The Triple-A Supply Chain Approach

In today’s competitive business landscape, companies like Walmart recognize that a successful supply chain is not just about having a fast and cost-effective system. To maintain a sustainable competitive advantage and address the challenges of the global economy, it is essential to redesign supply chains that incorporate agility, adaptability, and alignment. This section explores the concept of the Triple-A Supply Chain Approach, which emphasizes these three key qualities that an ideal supply chain should possess: agility, adaptability, and alignment of interests among all participating parties.

The Three Qualities of an Ideal Supply Chain

Agility for quick and cost-effective responses:.

Agility refers to a supply chain’s ability to respond quickly and cost-effectively to sudden changes in demand, supply, and external disruptions. In the fast-paced business environment, companies must be able to adapt swiftly to fluctuations in customer preferences, market conditions, and unforeseen events. For Walmart, agility has been a critical factor in maintaining its leadership position in the retail industry. The company’s investments in technology and supply chain optimization strategies have allowed them to optimize inventory levels and respond rapidly to changing customer demands, ensuring the availability of products while minimizing inventory costs.

Adaptability to Handle Changes in Demand and Supply:

Supply chains should be adaptable and flexible enough to handle variations in demand and supply patterns. Demand forecasts can be uncertain, and unexpected supply chain disruptions may occur, making adaptability a vital quality. Walmart’s focus on omnichannel and various fulfillment options, such as in-store pickup and ship from store, demonstrates their commitment to adaptability. By utilizing multiple channels, Walmart can cater to diverse customer preferences, ensuring an uninterrupted flow of products to meet demand.

Alignment of Interests among All Participating Parties:

One of the significant challenges in supply chain management is ensuring alignment of interests among all parties involved, including suppliers, manufacturers, distributors, and retailers. Walmart’s scale and dominance in the retail market have allowed them to establish strong relationships with vendors, enabling strategic partnerships with vendors who can meet their high-volume demands. Additionally, Walmart’s adoption of Vendor Managed Inventory (VMI) allows suppliers to manage their own inventory stored in Walmart’s warehouses. This collaboration aligns the incentives of suppliers and Walmart, streamlining inventory management and ensuring timely replenishment.

In conclusion, Walmart’s integrated supply chain has been a crucial factor in the company’s global dominance and sustained competitive advantage. By strategically investing in technology and optimizing its supply chain, Walmart has managed to maintain its position as the world’s largest retailer with over $572 billion in revenue in 2022.

Walmart’s success serves as a compelling example of the importance of a well-integrated supply chain in achieving and sustaining competitive advantage in the global market. As businesses continue to navigate the complexities of the 21st-century economy, building and enhancing supply chain capabilities will remain a critical aspect of ensuring sustainable growth and profitability. By prioritizing agility, adaptability, and alignment, companies can follow in Walmart’s footsteps and position themselves for continued success in the dynamic and ever-evolving global marketplace.

References:

• Lee H.L. (2004): The triple A supply chain. “Harvard Business Review”, Vol. 82, No. 10, pp. 102-112. 
• Nguyen T.T.H. (2017): Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century. “Journal of Economics and Management”, Vol. 29(3), pp. 102-117

About the Author – Dr. Muddassir Ahmed

Dr. Muddassir Ahmed is the Founder & CEO of SCMDOJO. He is a global speaker , vlogger , and supply chain industry expert with 19 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East, and South East Asia in various Supply Chain leadership roles. Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and has founded the leading supply chain platform SCMDOJO to enable supply chain professionals and supply chain teams to thrive by providing best-in-class knowledge content, tools, and access to experts. You can follow him on  LinkedIn ,  Facebook ,  Twitter  or  Instagram.

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• Assignments
• Assignment: RC TOM Challenge 2017

Digitization of Walmart

Walmart is digitizing its entire supply chain as it  moves to an omni-channel strategy , wherein it provides an integrated shopping experience across online and offline channels, and looks to compete against Amazon. As Walmart makes this shift, it is leveraging technology to share information across the supply chain, track inventory, better select and manage inventory across stores & warehouses and provide expedited deliveries for online orders while maintaining competitive prices and quality. While Amazon continues to disrupt retail through its digital-first supply chain and go-to-market strategy, Walmart is digitizing its business processes to accurately anticipate and respond to customer trends. Furthermore, as Amazon pursues vertical integration through its private label products, Walmart is leveraging its position as the largest retailer in the US to help its suppliers embrace digitization and compete against Amazon .

Walmart is taking critical, strategic steps to embrace digitization:

Near-term steps:

1. Expansion of online channels:  acquisition of Jet.com for $3.3 billion in August 2016   to expand its online presence and provide a more competitive online experience for customers. Since the acquisition, Walmart’s digital inventory of goods has grown from 10 million to 67 million and is now able to target the millennial customer base. Furthermore, the technical expertise from the Jet.com team is enabling Walmart to embed technology and modernize processes across its businesses. [1] [2]

2. Information sharing across the supply chain:

Pathways to Just Digital Future

(a) Large investments in big data, analytics and machine learning capabilities in the form of projects such as Data Café (Collaborative Analytics Facilities for Enterprise) [3] – one of the world’s biggest private clouds to analyze internal and external data source to generate insights about customer demand, assess supply chain efficiencies and optimize operations. Walmart is making Café available to all its suppliers for free to get insights into customer demand , assess campaign conversion rates and better manage their supply and inventory.

(b) Leveraging content service providers such as Salsify to aggregate digital data from all suppliers so that it can quickly order new merchandise based on customer demand [4]. For example, when a customer searches on Walmart.com for a product that Walmart does not have, Walmart can quickly look-up service providers such as Salsify to determine which supplier has the product and the deliver the product to the customer’s home.

3. Optimize delivery of goods using store associates and machine learning : Walmart is leveraging its large network of store associates to make deliveries for customers on their way to work and on their way back home. It is using machine learning to ascertain which products should be delivered by which associates and what routes should they take to optimize the deliveries.

Medium-term steps:

1. Leveraging next-generation technologies such as blockchain, a public, decentralized ledger, to digitally track products across the supply chain : Walmart is partnering with IBM to leverage blockchain to digitally track food products across the supply chain to ensure quality and authenticity. Blockchain makes all the parties in the supply chain more willing to share information which makes the supply chain more efficient . For example, Walmart, completed a test using traditional methods to trace the origin of mangoes in 6 days, 18 hours and 26 minutes. By using blockchain, it took Walmart just 2.2 seconds. [5] [6]

2. Investing in in-store IoT to make the customer experience more seamless: digital carts that help customers shop by making recommendations and informing about promotions, automated checkout, unifying online and offline customer profiles to better target products and promotions at customers. It is also experimenting the use of RFID chips on products to better monitor product usage and manage product placement and inventory.

Other steps Walmart can take to digitize its supply chain and operations :

1. Walmart can work with suppliers to provide more real-time visibility into inventory levels across its offline and online channels to prevent stock-outs and improve customer retention.

2. Walmart can also look to collaborate with selected other retailers to achieve efficiencies across warehousing and deliveries and more effectively compete against Amazon.

Open questions:

1.How can Walmart better optimize and leverage its 5000 stores across the US to provide a smarter and cheaper omnichannel experience for consumers?

2.How does Walmart transition its large, existing customer base to its online channels instead of losing them to Amazon?

References:

[1] Business Insider, October 2017 http://www.businessinsider.com/walmart-stock-price-jet-acquisition-one-year-later-2017-10

[2] Business Insider, August 2016 http://www.businessinsider.com/walmart-is-buying-jetcom-2016-8

[3] Forbes, January 2017 https://www.forbes.com/sites/bernardmarr/2017/01/23/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/2/#17223541113f

[4] Digital Commerce, April 2016  https://www.digitalcommerce360.com/2016/04/28/wal-mart-suppliers-help-us-identify-new-products-sell/

[5] Forbes, August 2017 https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/#70d956683d36

[6] Chartered Institute of Procurement and Supply, 2017 https://www.cips.org/supply-management/analysis/2017/june/case-study-walmart/

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Student comments on Digitization of Walmart

Really interesting to see what a giant like Walmart has done as compared to a slightly smaller giant such as Target (who I wrote about). I’m curious what you feel the biggest risks are for Walmart… you mentioned the future of using IoT for better customer experience in store. I wonder how you feel that relates to inventory management. In particular, I feel that one of the biggest challenges in going into omnichannel is the difficulty in the unification of inventory management, and while it’s nice to have an enhanced customer experience through IoT, that feels almost secondary to inventory management risks.

It’s interesting to me that Walmart is giving its suppliers access to the Data Café. While I can see how this is beneficial to both Walmart and its suppliers in the short-run, I wonder if it will speed up Walmart’s disintermediation in the long-run.

Walmart is essentially training its customers to leverage technology to improve their operations. Digital technology is often the most common avenue suppliers use to disintermediate their retailers. By training their suppliers to be more tech-savvy, is Walmart essentially training them to become more independent? Right now I recognize that Walmart owns this technology and data, so it would be difficult for suppliers to go out on their own and operate without it. As customer data continues to proliferate across the economy, however, I wonder how long it will be before suppliers won’t need Walmart to provide data access or infrastructure.

It’s a significant and essential move to go e-commerce. Moreover, digitalization is important to retail business nowadays. With strong information system, retailers can collect shopper’s data efficiently. With e-commerce site, retailers can even trace shopper’s action and journey effectively. Thus, Walmart should keep investing in digital analysis to upgrade their supply chain efficiency and inventory control.

While the trend towards omnichannel is largely supported, I’m not sure brick & mortar is going away. The article states that Walmart needs to move online is a defensive move to continue competing with Amazon. While I don’t disagree that the acquisition of Jet.com was largely a reactionary move (not to mention other ecomm acquisitions in the space, such as Shoebuy (in reaction to AMZN/Zappos), Moosejaw, Modcloth, Bonobos), WMT may be endangering its core by chasing dilutive digital sales, warns retail analyst Nick Egelanian, president of retail development consultants SiteWorks International. WMT may simply be trying to find “speedboats” that are the cool kids on the ecommerce block, and as a result, taking shortcuts to gain an online presence rather than building their online brand the right way as digitally native brands have been doing by developing a loyal following. Brick & mortar locations will be around to come, but how that experience may look like in the future will almost undoubtedly be different – perhaps moving to more experiential shopping – think Costco’s free samples. Happy to chat more about my thoughts on that offline!

I get worried that Walmart is going away from its core business model and customer value proposition by trying to directly compete with Amazon. For example, targeting millennials seems like a fool’s errand for Walmart. Walmart’s investments in things like the Bonobos acquisition, machine learning, and AI – while potentially beneficial – are likely expensive and longer-term in nature, and likely pay off less directly/quickly than Amazon given their different customer bases and corporate competencies (this article helps articulate my viewpoint: https://www.forbes.com/sites/panosmourdoukoutas/2017/05/19/walmart-will-never-beat-amazon/#29654b079ed3 ) . Rather than trying to compete with Amazon directly on digital tech and distribution, I feel like Walmart would do well to stick to its core by expanding geographically and increasing share of wallet with its targetable market.

I agree to the general direction of digitalization for Wallmart, but I would suggest to keep the offline channel from two reasons. First, standardized product such as electronics, household goods, and clothes can be digitalized whereas non-standardized product such as food would continue to stay in the brick and mortar stores for consumers to choose by it’s appearance and freshness. For example, some consumers are still going to Wholefoods instead of purchasing through Amazon Fresh due to it’s foods delivered doesn’t match the consumers standards. Secondly, there are certain sets of consumers that goes to brick and mortar stores in order to enjoy the space and experience. An easy example is how Barnes and Nobles doubled down on their business model and Amazon actually started to follow their success by starting a brick and mortar store themselves.

Walmart has shown itself to be a very nimble competitor to Amazon. Walmart’s acquisition of Jet.com (and acqui-hire of Marc Lore) was the right move but the rules of the game have changed since Amazon’s acquisition of Whole Foods. Whatever Amazon is trying to do through its entry into brick-and-mortar retailing, Walmart should be able to do better. You suggest a lot of great initiatives but behind the initiatives are people. Walmart is based in Bentonville, Arkansas and the last time I checked, no one wants to move there. Amazon is building a second headquarters in some lucky U.S. city and Walmart needs to keep up in order to attract strong, technical talent.

I worry that Walmart’s acquisition of Jet.com was ultimately detrimental to the business. While they saw it as a way to expand their ecommerce offerings, Jet was an ecommerce company riddled with problems that desperately needed to be sold. Walmart may have been able to acquire tech talent through the purchase of the company but I am not sure it will prove to be an ecommerce asset in the long term.

I think there is a lot of potential for Wal-mart to become even more efficient, to be a better partner to suppliers, and to provide an even better customer experience, through digitization. Ideas such as providing customers with digital shopping carts and making suggestions for other products the customer might want increases sales for Wal-mart and can also provide a useful service to customers. Expanding to e-commerce can allow customers to buy product from the comfort of their own home. And digitizing inventory data can be useful so that orders are automatically re-filled when quantities run low.

I very much agree with Jason on this; I am convinced that brick & mortar locations will not go anywhere, but that experience in these locations will potentially look very different in the future. If anything, Amazon’s recent moves into physical retail (e.g., their bookstores, the acquisition of Whole Foods) support the idea that brick & mortar is far from dead.

Walmart is a company that has deep pockets to compete, but more importantly, it is a company that has innovation in its DNA (from basically making bar codes universal to transforming the way shoppers think about value). A big challenge will be around the acquisition of the top technical talent that is needed to compete with Amazon.

In any case, very interesting write-up – very happy to discuss offline.

Not to play the same tune, but I also feel that the future of retail looks like a blended B&M/e-comm model. In a way, Amazon and Walmart could eventually converge to a similar form although they come from opposite ends of the spectrum. Walmart’s recent acquisitions – both Jet.com as well as others such as Bonobos – are attempts to jump start their earlier efforts to become more digital, with limited success to date. One initiative that Walmart recently launched that has been tremendously successful is leveraging their current B&M footprint to enable order online/pick-up in store which provides some of the convenience of traditional e-commerce and solves for some of the challenges in e-comm market growth beyond the wealthier, more urban/suburban core. Here, we see Walmart is leaning in to their edge and differentiate themselves compared to Amazon rather than chase after bolt on pure play acquisition targets.

In China, Walmart is closing over 30 stores in recent years because of the strong impact from Alibaba and J.D. com. People, there are not willing to spend the time to shopping and are craving for high value and personalized products from worldwide. Reaching a much broad assortment of goods in a few seconds, paying a good price even lower than Wal-mart and having it delivered to your home within one-day, I don’t see any chance the billion Chinese consumers will return to the brick-and-mortar Wal-mart. While the digitization of supply chain for sure improve the efficiency and optimize the cost of Wal-mart, the fundamental concern the loss of business model comparing with e-commerce. I was wondering how much Wal-mart wants to change itself, maintaining its identity and competitive edge and keeping up with the trend. Will digitalizing supply chain suffice or will it digitalize its business model? If it’s the latter, is it still Wal-mart? Is it still a leader in retail industry or a follower that has to strive to find a place in a new era of consumption?

This was a strong overview of the efforts towards digitalization that Walmart has pursued over the past years. I believe that the greatest demonstration of these efforts, as you astutely pointed out, was the acquisition of Jet.com for $3.3billion. Jet.com acts as a standalone entity with Walmart but is able to leverage their data and online expertise with the wealth of product and consumer information that Walmart has amassed. Further, they have acquired several businesses since the induction of Jet.com raising the question of what is their goal in the ecommerce space and at what point might we see Jet.com simply turn into Walmart.com?

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Digital Transformation at Walmart: A case study.

Walmart (NYSE: WMT), the largest physical retailer based in the United States, has achieved enormous growth over the years through its EDLP pricing strategy and a customer-friendly brand image. In recent years, the company has focused on digitalization to grow sales and improve customer service. Its e-commerce sales have continued to strengthen worldwide.

Physical retailers in the US are turning to digitalization to serve their customers better, whose lifestyles are now heavily influenced by digital technology. Walmart acquired the Indian online retail brand Flipkart in 2018. Since then, it has also made a significant investment in its US e-commerce infrastructure.

While investing in technology is essential for retailers to serve their customers more efficiently, Amazon’s growing influence in the retail industry has also proved to be a key driver of digitalization across the US-based retail brands. The need to focus on digital technology was never more highlighted than during the pandemic. Customer behavior changed profoundly with the spread of the Covid-19 pandemic . Customers mostly switched to online shopping during lockdowns. These changes will last longer since the impact on people’s lifestyle has been profound. 

Walmart has been investing in e-commerce over the past several years and is reaping its benefits now. However, Walmart’s focus is not just on e-commerce but on a complete digital transformation that drives superior associate performance while driving higher customer satisfaction also apart from stronger financial returns. Cloud technology is driving similar transformations across other retailers too. Walmart is leveraging cloud technology to strengthen its competitive position and accelerate its growth momentum.

Back in 2018, Walmart partnered with Microsoft to accelerate its cloud journey and more expeditiously deliver on changing customer expectations. Walmart’s digital transformation has also come in the face of growing competitive pressure from the e-commerce giant Amazon. From its online store to supply chain and logistics, digital technology, AI, IoT, and Machine Learning are driving rapid changes. Walmart’s continuous growth in the future depends on its ability to leverage technology to swiftly respond to the changing market scenario and customers’ purchasing habits.

Factors that drove rapid digitalization at Walmart.

Walmart is the largest physical retailer in the United States. The company has been enjoying enormous growth over the last several years. However, the retail landscape in the United States is changing swiftly.  Five main factors drove digitalization at Walmart: 

• Demographic changes in the US population.
• Changing consumer habits and expectations.
• Rise of mobile computing.
• Need for more speed and efficiency.
• Growing challenge from Amazon

Demographic changes and other changes like the rise of e-commerce has also changed how people shopped. Since the retail landscape is changing, Walmart’s traditional operating model was insufficient to serve the customers’ evolving needs in the US. Millennials are now the largest segment of the US adult population (Pew Research, 2020). 

They are also the most important customer segment for retail brands like Walmart. The expectations of the millennial generation are very different from the  Baby Boomers. The millennials are tech savvier and live highly digital lives. They like to shop online for a large range of products and services. Apart from their general needs, these people also depend on online channels for their daily entertainment and various other needs like music and fashion.

The rise of social media and the millennials’ consumption habits all required the businesses that wanted to serve them to adopt a better model driven by technology. Walmart’s competitive moat lay in its pricing strategy mainly apart from the large array of products it sells. However, these things are no longer sufficient to cater to the millennial generation’s expectations fully. Walmart needed to transition to a better model that could handle things with higher speed and efficiency.

 Both these things are important for maximizing customer satisfaction in an era driven by computers, the internet, data and analytics. The dependence of retail brands on technology was also destined to grow because of the growing use of mobile computing. The need for higher mobility also drove higher investment into technology. Digital technology has altered the buying habits of the customers, who like to compare prices on their smartphones before they go for the final purchase.

Lower prices attract the millennials but there are more factors they consider before making a purchase. Customer convenience matters more than ever to win in a highly competitive retail landscape. It affects demand and sales. However, to grow the level of customer convenience requires a focus on digital technology which saves time and also helps reduce costs.

Another important factor that drove Walmart towards rapid digitalization was the rise of the e-commerce giant Amazon. Prior to that, Walmart was the undisputed leader in the US retail sector. Amazon is right next to Walmart on the Fortune 500 list, where the physical retail giant has managed to remain at the top for several years. In 2020, Walmart is on the top of the list for the eighth time (Fortune, 2020).

In terms of e-commerce sales in the US, Walmart is just next to Amazon (despite the substantial gap). There is still a substantial difference in the market shares of the two in the e-commerce industry but Walmart is trying to strengthen its position through continuous investment in digital technology. Amazon poses a major challenge before the other  US-based retailers whose continuous growth now depends on how well they can serve their tech-savvy consumers.

The drive towards a highly digital future has accelerated with the pandemic. People’s buying habits are being reshaped, and consumers will likely depend more on online shopping in the future. Walmart needed to take Amazon’s challenge since, over time, Walmart’s influence could substantially reduce due to the growth in Amazon’s, which is aggressively demanding lower prices from its sellers using its clout in e-commerce. Leveraging its existing competitive strengths for superior results was only possible if Walmart invested in digitalization.

Supply chain digitalization at Walmart

Walmart has focused on higher digitalization in nearly all areas of its business system. From the supply chain to sales, customer service, marketing, and store operations, the company has steadily been investing in digitalization to grow its operational efficiency and cost-efficiency. Walmart’s supply chain digitalization was an important pillar of its omnichannel strategy.

Digitalizing the supply chain was the first important step towards making its omnichannel strategy a success. To really gain from its investment in technology and digitalization, Walmart first needed to leverage the strength of its supply chain. A highly optimized supply chain is a critical source of competitive advantage for the retail brand. It has helped Walmart maintain consistently lower prices and could be further optimized using digital tools to gain higher cost-efficiency and derive better employee performance. 

Moreover, the traditional supply chain management model was insufficient to serve the evolving needs of US customers. Digitalizing the supply chain has enabled the retail giant to pursue its omnichannel strategy with a higher success rate. Walmart is leveraging digital technology to share information across the supply chain, and for tracking and managing inventory across its stores and warehouses in the United States.

An efficient and modernized supply chain has played a critical role in helping the company gain higher cost-efficiency. Walmart’s competitive position as the leading physical retailer in the US has strengthened with growing digitalization across its supply chain, which also helped it access a large pool of data. It gains valuable insights from the data to understand consumer behavior. Walmart’s large supply chain produces tons of data daily used to make important inventory management decisions. It also helped the company grow its supply chain resilience to serve customer needs better during a crisis like a hurricane or in the event of a pandemic like Coronavirus.

Walmart also secured its supply chain against fast-changing market conditions by leveraging data and analytics. In 2017, it invested in Data Cafe, one of the largest private clouds in the world to grow its data and analytics capabilities and process more than 40 Petabytes of data being generated from internal and external sources daily (Marr, 2017). Walmart’s data cafe is its analytics hub located at its headquarters in Bentonville, Arkansas. Data Cafe allows Walmart to model, manipulate, and visualize recent transactional data, it collects from more than 200 internal and external streams.

It enabled faster decision making at Walmart and provided solutions to several critical supply chain management related problems that could otherwise take a lot longer to answer. Walmart made Data Cafe available to its suppliers so they could gain free insights into customer demand and manage their supply and inventory better. 

In 2018, Walmart introduced its Connected Content Provider Program, whose main focus was to help suppliers scale content to Walmart’s catalog and other retailers (Ogura, 2018). The program aimed to bring harmony between retailers, suppliers, and content. With its syndication partners like Salsify, the company aimed to help its suppliers deliver content with higher speed and agility. Suppose a customer comes to Walmart looking for a particular product that is not available at the time. Walmart looks up its syndication providers like ‘Salsify’ to find which supplier has the product and then arranges for home delivery. 

Walmart is also using other latest technologies like AI and Blockchain to track inventory down its supply chain (Aitken, 2017). The retail brand partnered with IBM to leverage blockchain technology and leverage and track food products’ movement across its supply chain to ensure their quality and authenticity. The use of IBM blockchain allowed Walmart to track the movement of goods in its supply chain faster. Something that could take days or weeks to trace using the traditional tracking methods was now possible in seconds. Blockchain -based decentralized ledgers have simplified the process of tracking goods in Walmart’s supply chain.

Digital Transformation through Cloud Technology

Cloud technology is also driving rapid transformation across the retail landscape. Retailers turn to cloud technologies to grow their efficiency and transform a large pool of data they generate daily into actionable insights. 

In 2018, when Walmart was already using a large set of Microsoft services for critical workloads, the company announced a strategic five-year partnership with the cloud leader to make its digital transformation possible. This partnership with Microsoft allowed Walmart to leverage machine learning, artificial intelligence, and data platform solutions for a wide range of external customer-facing services and internal business applications (Walmart, 2018).

Walmart aimed to transform digitally, bring innovations that saved its customers time and money, and change how work was carried out inside the organization for increased productivity. To achieve its target, the company selected a full range of Microsoft cloud solutions that included Microsoft Azure and Microsoft 365. The main advantages of using cloud technology for Walmart were going to be as follows:

• Leverage the capacity of Microsoft’s enormous compute capacity.
• Ability to manage workloads seamlessly in an elastic environment.
• Bring innovations faster through the new toolsets
• Drive costs lower through a cloud native environment.

From reducing energy consumption in the Walmart stores to managing logistics, the company uses cloud technology to make its work processes more efficient and save time and money. The company uses machine learning to route thousands of trucks in its supply chain. Apart from that, Walmart gained access to various tools that allow its associates to improve their productivity and collaborate on projects. Tools like Microsoft workplace analytics, Microsoft Stream, and Microsoft One Drive allow associates to collaborate, save time, and work better.

Walmart owned Jet.com also uses cloud technologies heavily to serve customers efficiently. It has built an innovative eCommerce engine on the Azure cloud platform in less than 12 months. The Jet.com platform is composed of open-source software, Visual F#, and Azure Platform as a service (PaaS) like Azure Cosmos DB. The next-generation architecture of Jet.com is built for speed. It uses Panther, Azure’s next-generation inventory processing system to make its service faster, smarter, and more efficient. 

“Within just a few weeks, a prototype based on Service Fabric proved that Panther could support the massive scale and the functionality Jet needed plus high availability and blazing fast performance across multiple regions. But what really made Panther possible was adding Azure Cosmos DB for the event store. Coupling an event-sourcing pattern with a microservices-based architecture gave them the flexibility they needed to keep improving Jet.com and delight their customers.” (Microsoft, 2020)

Sources Used:

Pew Research. (2020, April 28). Millennials overtake Baby Boomers as America’s largest generation . PewResearch. Retrieved 2020, from https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

Fortune. (2020). Fortune 500 . Fortune. Retrieved 2020, from https://fortune.com/fortune500/2020/search/

Marr, B. (2017). Really Big Data At Walmart: Real-Time Insights From Their 40+ Petabyte Data Cloud . Forbes. Retrieved 2020, from https://www.forbes.com/sites/bernardmarr/2017/01/23/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/?sh=1c6727f26c10

Ogura, F. (2018, September). Introducing the Connected Content Partner Program . LinkedIn. Retrieved 2020, from https://www.linkedin.com/pulse/introducing-connected-content-partner-program-frank-ogura/

Salsify. (2018). Salsify Selected By Walmart To Join Its Connected Content Partner Program . Salsify. Retrieved 2020, from

Aitken, R. (2017). IBM Forges Blockchain Collaboration With Nestlé & Walmart In Global Food Safety . Forbes. Retrieved 2020, from https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/?sh=66710fac3d36

Microsoft. (2020, June). Jet.com powers innovative e-commerce engine on Azure in less than 12 months . Microsoft Azure. Retrieved 2020, from https://customers.microsoft.com/en-in/story/822088-jet-com-powers-innovative-e-commerce-engine-on-azure-in-less-than-12-months

Walmart. (2018, July). Walmart establishes strategic partnership with Microsoft to further accelerate digital innovation in retail . Walmart Newsroom. Retrieved 2020, from https://corporate.walmart.com/newsroom/2018/07/17/walmart-establishes-strategic-partnership-with-microsoft-to-further-accelerate-digital-innovation-in-retail

Abhijeet Pratap is a passionate blogger with seven years of experience in the field. Specializing in business management and digital marketing, he has developed a keen understanding of the intricacies of these domains. Through his insightful articles, Abhijeet shares his knowledge, helping readers navigate the complexities of modern business landscapes and digital strategies.

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Management Information Systems: A Case Study of Walmart

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