Operation Management for Walmart
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Transcript of Operation Management for Walmart
WELCOME
TAZKIA SANJANA TISHA093 0236 020
SADIA AFRIN 081 092 030
M FAZLAY RABBI081 409 030
LUBANA NUSRAT081 806 030
AL AMIN REDWANUR RAHMAN
081 162 030NAFEES KHAN073 483 030
COMPANY BACKGROUND
Founded by Sam Walton in 1962 Walmart has 8,446 retail units under 55 different
banners in 15 countries. The largest private employer Sales of $405 billion in 2010, It has employee more than 2.1 million.
Slogan • Starting
slogan: Always Low Prices
• New slogan: Save Money. Live Better. (from 2 0 0 7 )
Mission Statement:• To give
ordinary folk the chance to buy the same thing as rich people
Vision Statement:• To become the
worldwide leader in retailing
Wal-mart & the COMPETITION
• To sustain competitive advantage, a firm must ensure that its competition finds it hard to imitate its chosen position.
COMPANY SALES (MIL) FY2006
INDUSTRY AVG. 39,992
Wal-mart 312,427
TARGET 55,363
KOHL’S 14,247
DOLLAR GENERAL
8,941
BIG LOTS 4,534
• Operations Management ("POM") is about the transformation of production and operational inputs into "outputs" that, when distributed, meet the needs of customers
Outputs
Strategy
Operation Strategy
• Capturing market share with “everyday low price” strategy.• “the process of creative destruction”.• Responding competitors strategy. (opened “Pennies-n-
Cents” stores in against dollar stores).• Cultural adaptation.• Training employees because people are key to Wal-Mart's
business• Buy at less to sell at less.• Withdrawal strategy.
Competitive Strategy
• Different shop design for each demographic groups.• All product in one store.• Competence in use of information technology for
logistics system.• Highest customer satisfaction
Productivity
Productivity
• Creating more than 210,000 jobs in the U.S. • Saves working families more than US $2,500
per year.• Discounting on food alone boosts the welfare
of American shoppers by approx. $ 50 billion per year.
Industry Environment - Porter's five forces of competition
1.Rivalry of Existing Competitors:
· Wal-Mart has a strong competitive advantage against its competitors Kmart and Target. · Rivalry in this industry is not as strong for the competitors compared to Wal-Mart.
2.Barriers to Entry:
· High because it is hard to form a large organization that will be competitive at the same size as Wal-Mart with such low prices.· This industry has high barriers because it is too expensive for new firms to enter and to be competitive.
3.POWER of Buyers:
· Weak because basically the prices are low from the beginning so there would not be any potential for buyers to bargain with.
4.POWER of Supplies:· Weak because Wal-Mart uses its own distribution centers that are located close to its stores. · Wal-Mart is also far and away the biggest customer of virtually all of its suppliers. It's scale of operation allowed it to bargain...
5. Substitutes:
· Medium because it depends on where you live and what type of Wal-Mart stores are closer to you.
· Substitutes would be going to another grocery store, a toy store, a hardware store; basically going to specialty stores instead of going to one store that has everything in one, as a Wal-Mart can.
Wal-Mart product and service design
Provide services according to the consumers necessity to save money
and live a better life.
Product cost, product delivery-response time, product variety, product quality
Wal-mart’s product variety?
High
Wal-mart’s product quality?
Low - Medium
Introduced new Layout to improves Customer Experience with faster service.
Always offer unbeatable Prices.
Layout of the stores will save customers time as they shop for everyday necessities.
Its Service layout create an open shopping environment that helps customers find what they are looking for quickly.
Service Layout
Wal-Mart Shelf management
Capacity Planning for Wal-Mart
Capacity Planning
o The process of determining the production capacity needed by an organization to meet changing demands for its products.
o The process of determining product quantity needed by a firm to meet the demand of consumers.
Essential elements of Capacity Planning
FacilityProduct & ServiceHuman Resource
Among all elements for capacity planning, followings are essential for Wal-Mart:
Facility Factor
• Shop location
• Shop layout
• Shop Si z e
• Warehouse Si z e
• Warehouse layout
In USAOperating in 5 0 states4,3 0 0 facilities for all sort of
outlets
Around the globe14 countries4 0 81 stores
Facility Factor
• Shop location
• Shop layout
• Shop Size
• Warehouse Size
• Warehouse layout
New layout for customer experience.
Shop layouts has been classified based on Wal-Mart's operation
Wal-Mart supercentersa full-service supermarket
Discount storesdiscount department stores
Neighborhood Markets Shop for daily necessary goods
Sam’s Club warehouses membership based stores
Facility Factor
• Shop location
• Shop layout
• Shop Size
• Warehouse Size
• Warehouse layout
Wal-Mart U.S. 602.9 million sft.Wal-Mart international 269.9 million sftSam’s club 79.4 million sftTotal Size 952.2 million sft.
Average size of each outletWal-Mart supercenters
Varies between 51,000 sft to 51,000 sft. Average size 102,000 sft.
Discount stores Varying from 98,000 to 261,000 square with an average
of 197,000 sft.
Neighborhood Markets Averages about 42,000 sft.
Sam’s Club warehouses Average club size of 133,000 sft.
Facility Factor
• Shop location
• Shop layout
• Shop Size
• Warehouse Size
• Warehouse layout
• Single large warehouse for a single state.
• Covers all stores of a state
• Also has warehouse for Sam’s club which is a membership based store.
Facility Factor
• Shop location
• Shop layout
• Shop Si z e
• Warehouse Si z e
• Warehouse layout
Data warehousing layout
• A networked connection with store inventory with suppliers for inventory supply when needed.
Product and Service Factor
• Price
• Sales
• Suppliers
Every day low price.
Lower price than competitors (price leadership).
Lower price due lower operational cost.
Product and Service Factor
• Price
• Sales
• Suppliers
Net Sales of walmart in 2009-2010
Wal-Mart U.S. $2 58.2 billionSam’s Club $ 46 .7 billionWal-Mart International $ 100.1 billionWorldwide Total $ 405 billion
Product and Service Factor
• Price
• Sales
• Suppliers
• Partners with more than 2,5 0 0 minority-and women-owned business suppliers.
• Networked communication & Just In Time .
Human Resource Factor
• Number of employees
• Age, Gender and sexual orientation
• Skill
• Wages
• 2.1 million employees all over the world
• 1.4 million employees only in U.S.
• Largest privet employers in US, Mexico & Canada.
Human Factor
• Number of employees
• Age, Gender and sexual orientation
• Skill
• Wages
• 869000 women working in Wal-Mart.
• More than 430,000 employees are 50 and over.
Human Factor
• Number of employees
• Age, Gender and sexual orientation
• Skill
• Wages
• Both Skilled and low skilled employees.
• Employs senior citizens who needs supplemental income.
• Employs Students who needs skill and experiences.
Human Factor
• Number of employees
• Age, Gender and sexual orientation
• Skill
• Wages
• Hourly wage rate.
• Wage of $ 1 2 per hour for semi skilled employees.
• Higher wage rate for skilled employees and in urban outlets.
• Bonus on performance.
Reliability
Suppliers View• Wal-Mart wants to be first• Wal-Mart is an innovator's
paradise• Wal-Mart has the space• Wal-Mart is great at
executing• Wal-Mart has scale• The science behind shelf
placement
Customers View• No "buying
committees" and nobody micromanages buyers
• Low price• Number of Outlets• Redundancy
SUPPLY CHAIN MANAGEMENT
• “ Supply chain management involves the flows of material, information and finance in a network consisting of customers, suppliers, manufacturers, and distributors”
THE REASON!
• Efficient supply chain• Deals with suppliers for e.g P & G• Service Differentiation- different deals with different
customers.• Sets different service policies, such as service
intervals, or delivery times, for different groups of accounts and often products.
• key to providing excellent, consistent service at a reasonable cost
Just in time (JIT)
• Lowers holding cost• Lowers ordering cost• Wal-Mart has made ordering small batches with
greater frequency a profitable reality.• R educes safety stock and EO Q• R educes lead time
RFID
RFID
• Radio frequency identification• Keep track of goods at any point in time, and also
tells you where it is.• Eliminates physical counting of inventory• Is in line wit JIT.• As soon as inventory levels go down, Walmart can
re-order.• Implemented in 2 0 0 5.
Why RFID ?
• Reduce the possibility of inventory shrinkage and out-of-stock situation.
• Improve fulfillment rates.
• Improve the customer service.
• Reduce inventory and labor cost.
• Eliminate many manual process and improve the operation efficiency.
RECOMMENDATION
• Get employees from places where labor is cheap.
• Increasing wage rate for employees• Keeping high quality products.• Should focus on service along with lower price.
Thank You !!!
ANY QUESTIONS?