Wal-mart supermarket - Essay Example

?Wal-Mart: Information Technology and Systems Company Profile Wal-Mart is the largest grocery retailer in the world. According to Daniel ; the company had around $405 billion worth sales in the fiscal year 2010. Wailgum (2007) stated that this company initiated its business in United States of America; they have expanded their business in 50 states of USA while the global expansion of the company has made it appear in over 15 countries. The company has over 8500 employees working for it worldwide. Wal-Mart opened their first store in 1962; the mode of operations and business have evolved and improved within the company over the years thereby providing them with continued success in their endeavours. The company has never aimed to become the largest company of the world, rather the best one. The management believes in sharing the company’s revenues with the consumers by providing discounted prices on different commodities. They try to generate revenue by the greater number of sales rather than keeping bigger margin of profits on commodities. The incorporation of technology in the business processes has enabled the company to be aligned with the latest market trends and consumer needs. 2. Information Technology Strategy Useem (2003) and Zellner (2001) stated that Wal-Mart has managed to stay at the top because they realized the importance of the incorporation of technology in their business at the right time. Their commitment to information technology and systems can be identified from their strategy for technical integration. Lundberg (2002) stated that the strategy is three-folded. The IT system is centralized rather than decentralized. They run the centralized information system from Arkansas to promote unison in all the business operations in their global offices. Another aspect that is taken care of by Wal-Mart is the presence of common platforms and systems among the operating units so that the systems are compatible with each other and the branch offices are able to share data without any problems. The maintenance of similar platforms and versions in every unit also facilitates the transfer of employees from one region to the other. Not much time is wasted in the transition since the employees do not face any difficulty in adapting to the systems of the new workplace. The final important consideration by the company is that they should prioritize business processes and procedures more than the technology at hand; technology should be incorporated on the basis of business needs rather than joining the race of being equipped with the latest technology. The formulation of this strategy helps the company to maintain the technological development and ensure that it is directed towards the acquisition of the company goals. The founders of Wal-Mart have always treasured their customers and employees by giving them the status of ‘associates’; Koselka (1992) stated that Wal-Mart benefits these stakeholders in the following manner; by giving better prices and quality to their customers and empowering their employees. Information has been an integral part in the growth of the organization. Relevant and latest information has been available to the company with the help of their information systems. 3. Point of Sales System K-mart was initially considered to be the biggest competitor of Wal-Mart. When K-mart started improving their business processes with technology, Wal-Mart also realized the need and deployed point of sales system in their stores. This system identifies each product in the store on the basis of its unique number and gives the respective price of the product from a database that is maintained by the IT department. A receipt is automatically generated with the respective product numbers and prices. This information is added in the sales reports and also used in the process of reordering inventory when more quantity is needed. The hardware technology that is used to identify the products is the barcode scanner. Barcode scanner makes the data available in the database immediately which can then be used for analytical purposes. 3.1 Benefits Point of sales system facilitates the avoidance of manual entry thereby reducing chances of losses and errors. Receipt is generated automatically and accurately without any manual intervention. Product sales are tracked in an effective manner thereby giving accurate revenue and profit figures. The sale of every type of product can be analyzed that facilitates the re-ordering process; if a certain type of product is not being sold on a large scale then it might be re-ordered from the suppliers in a lesser number and vice versa. Consumer behaviour can be analyzed and judged as to which products are gaining popularity among the masses. Overstocking can be avoided by using this analysis as well as providing to the increasing demands of the consumer for a certain product. This analysis provides Wal-Mart a competitive advantage in the market since they never face the problems of overstocking or less availability. 3.2 Challenges The shift from manual entries to barcode technology needed training and guidance. The barcode technology was introduced in the company in the 1980s; computer technology was not very common in those as it is in the modern world. The integration of this type of technology faced resistance by the employees as different types of hesitancies were witnessed. Some employees were insecure and felt that the new technology would threaten their jobs. Some employees did not feel equipped with the right skills to use the system therefore resisted the change while others did not support the introduction of the new technology due to their comfort level with the existing systems and procedures. Training sessions were conducted by the management to explain the different types of functions that were possible with the new system. The need of the technological change was communicated to the people so that the employees would understand its relevance and make efforts for its incorporation. 4. Networking with Suppliers According to Koselka (1992); the stores are attached to a central computer in their region that gathers the information about the sales and requirements of each store. The re-ordering information is collected from each store by the central system and thus communicated automatically to the suppliers’ systems. It is carefully administered that the suppliers systems can be effectively connected with the central system so that the re-ordering process is not delayed and commodities can be made available to the consumer in the least possible time. Grean and Shaw (n.d.) provided relevant information about such networking that has been established between P&G and Wal-Mart. P&G is one of the most renowned suppliers in the world. The timely exchange of data between these two parties benefits both of them and increases their revenues while saving resources and time. This aspect of information systems is called inter-organizational information systems (IOIS); it also enables the concerned parties to fulfill the needs of the customers in a better manner. Darling and Semich (1996) and Bonacich (2004) stated that Wal-Mart understand the need for establishing close ties with their suppliers with the help of information technology. In other words, the suppliers and manufacturers depend on retailers in the modern world that are equipped with information technology to retrieve reliable data about the sale of their products. Such technologies have given more power to the retailers instead of the manufacturers since retailers can have extensive knowledge about the buying trends and consumer behaviours. 4.1 Benefits The direct link between the stores and the suppliers never leaves shelves empty for any type of product neither does it create an oversupply. Updated list of suppliers saves time in communication and re-ordering. 5. RFID Another technology is being utilized to keep track of products and reduce unwanted scenarios of overstocking and undersupply; Radio Frequency Identification (RFID). Wal-Mart was among the few retailers that took the initiative of incorporating the RFID technology with commodities to track the inventory in a better manner. Weier (2007) explained that RFID technology has been incorporated in the systems of Wal-Mart in few stores to evaluate its benefits and acceptance by the consumer. RFID tends to track the movement of the commodity with the help of the RFID tags that are put on the commodities; this type of tracking can give valuable information about the buying behavior of the consumer and hence provide a service that would be desired by the masses. Eventually, it will be used to replace the barcode technology. RFID 4 U (2010) explained that the main aim of this technology is to improve customer service and promote more effective coordination between the supplier and manufacturers. It will also help to prevent losses for companies at a greater degree than barcode technology. 5.1 Benefits RFID technology can help track the commodities and even prove to be helpful if some items are stolen or lost. This technology will save consumer trips to the store since the desired product will be available at all times. 5.2 Challenges One of the challenges that have been faced by the company in the incorporation of this technology is that supplier cooperation and commitment is very necessary to make this endeavour a success. Initially, only some of the suppliers agreed to join hands with the retailer giant and stamped their commodities with the RFID tags. The Enterprise System Spectator (2004) provided the names of some of those suppliers; Proctor and Gamble, Unilever, Kraft Foods, HP and Johnson and Johnson. Later in 2008, Wal-Mart showed their commitment to the incorporation of RFID tag technology in the commodities and announced a fine for the suppliers that did not comply with the requirement of RFID technology tags. Wailgum (2008) stated that the fine amounted to $2 for each non-RFID tagged pallet that was supplied to Wal-Mart. This fine was said to be increased by another dollar if the company continued to supply the retailer with the non-compliant commodities. Some suppliers might hesitate from the incorporation of RFID tags because of the overhead that they will be suffering due to the introduction of the new technology, for example, greater expertise technical staff, new systems to handle RFID tags etc. Wal-Mart also needed to make great investments to introduce the technology in their service but the return on this investment seemed to be worthwhile therefore they are committed towards this step. 6. Conclusion The technological advancement in the field of business has leaped the mode of business operations to a new level. Business can be done in a more effective and accurate manner. Organizations tend to adopt the technological mode of operations either as a first mover’s advantage or to follow the on-going trends in the market. Wal-Mart adapted the barcode technology while being influenced by its competitor. The incorporation of technology in the company reflects their commitment to providing value to their customers and improving their service. The point of sales system that was equipped with barcode technology proved to benefit the company in many different aspects; from automatic generation of receipts to accurate entries of transactions, from immediate entry of records to providing latest data for analytical purposes. However, barcode technology was adopted by the respective organization when computer technology was not as common as it is today. The lack of skills of several employees in this regard caused a certain level of resistance towards the technological change. Effective measures were taken to get the system accepted by the employees. Wal-Mart also utilized information technology to develop effective networking links with their suppliers. This technique reduced their communication barriers and avoided instances of undersupply. Timely re-orders resulted in a constant supply of products in the store and results in effective service for the consumer. The suppliers networking with the retailers provide them with useful information about the buying behaviour of the consumer so that they can alter their products according to the consumer requirements. RFID is a developing technology that will prove to be even more effective than the barcode technology. However, the biggest challenge in the adaptation of this IT is the attainment of the supplier’s commitment. The suppliers need to understand the relevance of the incorporation of this technology and put RFID tags on their products. Some companies have already joined hands with Wal-Mart and support this technology. Wal-Mart has been able to maintain its position as the market leader and attain competitive advantage in the market due to their commitment to developing technologies. References Bonacich, E 2004, ‘Inside the World’s Largest Company’, PBS, viewed 4 Jan 2010, Darling, CB, Semich, JW 1996, ‘Wal-Mart's IT secret: Extreme integration’, Datamation, viewed 6 Jan 2010, Daniel, F 2010, ‘Head of Wal-Mart tells WFU audience of plans for growth over next 20 years’, Winston-Salem Journal, September 29. Grean, M, Shaw, MJ n.d., Supply-Chain Integration through Information Sharing: Channel Partnership between Wal-Mart and Procter & Gamble, University of Illinois, viewed 6 Jan 2010, Koselka, R 1992, ‘Distribution revolution’, Forbes, May 25, pp. 54-61 Lundberg, A 2002, ‘Wal-Mart: IT Inside the World's Biggest Company’, CIO, viewed 5 Jan 2010, RFID 4 U, 2010, RFID in the Retail Industry, viewed 4 Jan 2010, The Enterprise System Spectator 2004, Wal-Mart launches RFID pilot, but will privacy concerns stall adoption?, viewed 4 Jan 2010, Useem, J 2003, ‘One Nation under Wal-Mart’, Fortune, March Issue, p. 64-68. Wailgum, T 2008, ‘Wal-Mart Is Dead Serious about RFID’, CIO, viewed 5 January 2010, Weier, MH 2007, ‘Wal-Mart Rethinks RFID’, Information Week, viewed 6 Jan 2010, Wailgum T 2007, ‘45 Years of Wal-Mart History: A Technology Time Line’, CIO, viewed 5 Jan 2010, Zellner, W 2001, ‘How Well Does Wal-Mart Travel?’, Business Week, September Issue, pp. 82- 84. Read More