Walmart Final

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Production and Operations Management Report On WALMART Submitted To : Submitted By :

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Transcript of Walmart Final

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Production and Operations Management

Report On

WALMART

Submitted To: Submitted By:

Prof. Hersh Sharma PRATEEK THAKUR (06)

SHUBHAM MOHABE (07)

GAGAN SINGH (17)

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INTRODUCTIONWal-Mart Stores, Inc. (branded as Wal-Mart) is an American public corporation that runs a chain of large, discount department stores. It is the world's largest public corporation by revenue, according to the 2008 Fortune Global 500.[4] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. Wal-Mart is the largest private employer [5] and the largest grocery retailer in the United States. It also owns and operates the Sam's Club retail warehouses in North America.

Walmart operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly-owned operations in Argentina, Brazil, Canada, and Puerto Rico. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.

Wal-Mart has been criticized by some community groups, women's rights groups, grassroots organizations, and labor unions, specifically for its

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extensive foreign product sourcing, low wages, low rates of employee health insurance enrollment, resistance to union representation, sexism, and management efforts to pressure employees to vote for specific parties during national elections. Conversely, others point out that Wal-Mart's rapid growth and logistical efficiency has enabled it to bring lower prices to consumers and more jobs to the communities in which it operates.

OPERATIONS COMPETITIVE

STRATEGY

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

PRODUCTION AND OPERATION MANAGEMENT PRACTICES

Continuous Improvement in Wal-Mart

In the field of Operations Management, there are many aspects to consider in order to a company staying strong in the market. Especially the current markets are more competitive than ever before, differentiating with other competitors becomes a critical factor.WAL MART

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has adopted continues improvement theory to counter the competition and expanding his business empire. Wal- mart by using effective cost and IT technologies has become the retail giant in US. Time Company has adopted various strategies to increase its operational efficiency .These are as follows;

CORPORATE STRATEGY

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

OPERATION STRATEGY

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

LOW FLOW INVENTORY LEVEL: Inventory levels at walmart are very low as it helps them to reduce the cost of storage hence providing the customer base with good quality products at a low price. Inventory level is reduced to minimum.

WIDE VARIETY, LOW PRICES: Each week, about 100 million customers, nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores. Wal-Mart customers give low prices as the most important reason for shopping there, reflecting the "Low prices, always" advertising slogan that Wal-Mart used from 1962 until 2006.The average US Wal-Mart customer's income is below the national average, and analysts recently estimated that more than

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one-fifth of them lack a bank account, twice the national rate. A Wal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gas prices

EFFICIENT SUPPLY CHAIN MANAGEMENT: About 40% of products sold in Wal-Mart are private label store brands, or products offered by Wal-Mart and produced through contracts with manufacturers. The supply chain is directly linked with the producer or supplier of the product. This helps in maintain flexible relations .it also has its own brands that also provide them with efficiency in the supply management. "At the heart of Wal-Mart's supply chain today is the need for translate the many approaches manufacturers have of producing, selling and delivering products versus the significantly different processes that mass merchandisers need to be successful. Bridging this gap of communication and making transactions as efficient as possible, in effect creating what many industry experts call a lean supply chain, is Wal-Marts' ultimate goal. Underscoring this point during a recent AMR Research conference Gary Maxwell, Senior Vice President of Merchandise Replenishment, stated that "the top priority of the Wal-Mart supply chain operations is to bridge the gap between suppliers and retailers' approaches to doing business,"(Weston, Garf, 2005). Mr. Maxwell continued during the conference to outline the key goals and objectives for Wal-Mart's supply chain strategy in the near term. Wal-Marts' supply chain objectives are grouped into a focus into the three areas of efficiency, education and electronic enablement of transactions."

POS: Walmart follows a very strong point of sales as it a retail chain so the whole upgradation is done with the help stock which is sold out.

DISTRIBUTION WAREHOUSE:It has strong distribution network and warehouses facility to maintain the good fast flow time.

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PROCUREMENT FROM SUPPLIERS: Walmart generally goes for purchases in large bulk quantities and hence procure goods at a lower price from the suppliers.there major motive is to provide goods at low prices hence they try to reduce there procurement cost through bulk purchase.

STOCK UPGRADATION: Genrally stock upgradation is done with taking the help of the barcodes which are recorded while making out the sales.

ONLINE FEED BACK OF DATA: Walmart has technologies which automatically provide online feed back of data to there suppliers hence making them aware of the sales and the supplies of the products.

OPERATIONS STRUCTURE

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�RESULTING BENEFITS

Inventory at retail stores turned over twice a week (Industry averages once every two weeks)

Improved targeting of products to markets

Sales per square foot increased from $102 in 1985 to $140 in 1991 (Industry average increased from $102 to $110

COST MINIMIZING STRATEGY

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

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

USE OF INFORMATION TECHNOLOGY

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

INCREASING DISTRIBUTION EFFICIENCY

The first initiative involves using Radio Frequency Identification (RFID) with their top 100 suppliers. This will further improve their distribution

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efficiency, as it will reduce the need for unloading to check products, as well as, serve as an internal control function in dealing with shrinkage. It's been estimated that such technology could unlock supply chain cost savings of 6%.

USE OF RFID

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

FINANCIAL SERVICES

The third factor is that by implementing yet another service, such as financial services, it will not only give customers more convenience; this service will truly be a complementary service. For example, if a customer has to go to the bank and do groceries, they would be very inclined to do it all under one roof, again adding to the operational excellence strategy of providing customers convenience.

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CUSTOMER INTIMACY STRATEGY

Customer Intimacy, as defined by means segmenting and targeting the markets precisely and then tailoring offerings to match exactly the demands of those niches. One would only have to look at Wal-Mart's Modular Category Assortment Planning System (MCAPS) to see this strategy in use. The MCAPS system examines store traits and historical selling data to establish store specific modular, which essentially plan the layout of products to best, suit a particular market. There are literally thousands of specific layouts, all of which can alter the size and merchandise mix for the target market. This data is collected, integrated and analyzed in the various information systems, which serve both as great supply chain management tool and a way to establish purchasing patterns of target costumers.

CONCLUSION

Good business strategies plot changes in where a company is going. A winning operations management strategy translates that direction into operational reality, creating strategic competitive advantage in the process. Operational strategy finds new ways to structure your business operations and economics to create breakout results in top-line growth, earnings, and valuation.

Our experience points to five essential ingredients of operational strategy:

1. Transform Market Forces into Operational Advantage

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

2. Do One Thing Extraordinarily Well

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

3. Think End-to-End, Continuous, Real-Time, and Horizontally

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

4. Drive Innovation in Your Operations and Business Model

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

5. Execute Relentlessly

A complete operations management strategy requires a commitment to execution, identifying the critical programs to integrate efforts and making the necessary changes in 1) organization and management systems 2) talent, culture, and leadership, 3) business technology systems, and 4) process architecture. Our research shows that companies with commanding leads in their markets execute relentlessly across all four of these dimensions of execution, informed by their global marketplace insight, aligned to a singular competitive focus, emboldened by a clear innovation intent, and guided by a sound operational model aligned with business strategy and business economics. Walmart is one such company to do great and simple things in a very extraordinary way

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which proves to be there unique seeling point.This is what that makes them just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last year.