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The Role of Service Operations Management

Executive Summary of Walmart Operations Management

Walmart is an American retail store which has its grocery and departmental stores in America as well as other nations where it has established its supply chain. The company is progressing in the economic environment and has attained the first position in the retail market. The assignment aims to understand and state the organizational objectives that can be linked to Operations and Quality processes. It evaluates the success of existing operations management processes & quality management processes in achieving Walmart strategic management objectives. A review was conducted to find out the operations strategy of your organization, exploring both the current & long-term solutions to address the challenges your firm is experiencing. It also evaluates how each of the following tools and techniques specifically contributes to achieving organizational objectives and competitiveness of Walmart. It even discusses how information management system enhances overall business operations of Walmart and analyze the role of ICT applications in Operations optimization. It evaluates how operational strategies involving the use of ICT applications help gain a competitive advantage in Walmart. It discusses how AI can enhance overall business operations of the organization in both the domestic and global contexts while highlighting challenges organization may probably face if implemented. At last, it concludes the findings of the entire research and recommends strategies for the organization.

Contents

Introduction.

Operation management system..

Two tools of operation management

Lean management

Benchmarking.

Information management system..

Artificial intelligence.

Conclusion &Recommendation.

References.

Introduction to Walmart Operations Management

Walmart is a multinational organization headquartered in Bentonville, Arkansas. It was founded by Sam Walton in 1962 and was incorporated in 1969. The company operates in departmental stores, grocery stores and hypermarkets. The company has 11,956 stores in 27 countries operating under different names. It is one of the largest company in terms of revenue and listed as the number one company in the Fortune 500 list in 2020. It has approx. 2 million employees in the organization. The main objective of the company is to provide quality merchandise that is safe and affordable products for its millions of customers (Reich and Bearman 2018). The company try to achieve this by enhancing economic opportunity, social and environmental sustainability and business value for local communities. The objective statement of the company is linked with quality process. The mission statement of the organization is to save money of its customers so that they can live a better life. The company’s strategic decision depicts the same. Its mission statement is aligned with the operational goal which focuses on efficient logistic requirements, technology and inventory system to reduce the cost of the products which is passed on to the consumers. Walmart knows that its success is based on effective retail operations.

Operation Management System

The company has many strategic areas where it operates like the design of service and goods, quality management, capacity design, location strategy, supply chain management, layout design, inventory management, scheduling, maintenance and human resource management. Each of these areas is reviewed to find out whether the organization is doing well or there is a need for improvement in some of them (Smith 2019). To check whether an operation strategy is consistent, a review was conducted. Every element was evaluated. Besides, the feasibility of the strategy was also checked. The disadvantages of the operation strategy were also identified to improve the quality of the products.

Walmart's operation management address the strategy to design retail service to emphasize efficiency and cost-effectiveness. It uses a three-tier management system for maintaining quality products for most of its brands. The lowest tier of the management specifies about the minimum quality expectation of the majority of the customers whereas middle-tier describe low quality for low-cost retailers and the highest tier of management exceeds the market average in the industry. The three-tier approach maintains the high quality of the products in the area of management. It is found that appropriate quality measurement contributes to identifying the strengths of the organization (Bacelis et al. 2019). It is found after reviewing that the company is selling a low-quality product which is having a direct impact on its brand image. The company needs to overcome it by improving the quality so that the company's brand image improves in the market and consumers start purchasing products from Walmart instead of searching anything else for both short and long term.

It uses behavioural analysis and forecasting to identify and manage the process and capacity design of the retail business. It is because the behaviour of the consumers is changing. Earlier they used to like to go and purchase products from brick and mortar store but later the decision to purchase goods from an e-commerce store. Thus it has become important to understand the changing behaviour of the consumers. It is because it serves as the basis of the company's process and ever-changing capacity design of the organization. It was difficult to analyze the behaviour of such a large consumer thus the company capacity design was not exact either it was exceeding or else it was decreasing. The company thus needs to have a long term monitoring facility which can help the company with the capacity design and behavioural processes. They need to change their current capacity design process (Xin et al. 2017). On the other hand, location strategy of Walmart helps to move the material and other things within the organization. it even uses the shopper's behaviour to create layout design of the retail stores and e-commerce websites.

The company has a vendor managed inventory model and just in time cross-docking. In this model, the company gives the vendor the authority to access about the products and supply according to the company's information and deliver the products based on the real-time data and inventory products. The company has adopted this operational management to overcome itself from stock-outs. On the other hand, Walmart is also trying to minimize the size of the inventory and this is why it supports cost minimization strategies. These approaches help to maximize the performance of the retail business. However, it was found despite such a perfect inventory Walmart experienced a serious lockdown in the fourth quarter of 2020 (Gao and Su 2017). The major issue experienced by the company was overstocking of the products. The company's inventory was overstocked with the seasonal items making it very hard for the organization to fulfil everyday product sales and this is due to this reason the company decided to damp up online sales of the products. The company needs to find a long term plan to overcome all the challenges of overstocking of the products and damping up an online sale for those products.

Apart from this, Walmart’s supply chain management information system is directly linked with Walmart’s objective that is to minimize the cost of operations. This system enables the managers to decide when there is a need to move merchandise across the supply chain. It helps the managers to maintain business competitiveness and also gain a competitive advantage over the others in the market. The company being the biggest retailer in the world impose their demands on the suppliers. This strategy helps the company to even overcome supply chain management issues which the company might be experiencing (Agrawal and Smith 2019). The companies' stakeholders and corporate social responsibility strategy help balance the business needs and the needs of the suppliers of the organization. As the suppliers are a major stakeholder of the organization. The major issues the company experiencing in the supply chain is volatility. The re-setting of the merchandise display is tricky because customers are becoming fickle and this is the reason the company needs to work on both in-store logistics and e-commerce business. It is another thing which makes the manager anxious about how to conduct the business. There are other competitors as well in the market. If the customer needs a camera and it is not available, then he or she will search it at some other departmental store (Patel, Guedes and Pearce 2017). This states that competition in the market is very high and the company needs to maintain volatility in its supply chain. These strategic decision helps Walmart to become one of the successful retail operation company in the world for a long time.

Two Tools of Operation Management

There are many tools for operation management. However, two of them are described below.

Lean Management

It is a process by which a company can become more productive and responsive to the demand. It helps the company to turn out the products of the best quality by minimizing resources available (Mayr et al. 2018). It also reduces the waste that was previously generated by the organization. This term was introduced to manage the existing resources and maximizing the output. This is why this process is termed as lean management. Walmart follows lean management process. In the organization and t has thus involved itself in corporate social responsibilities. The company is trying to reach zero per cent of waste by the year 2025 (Bertagnolli 2018). It has come up with strategies which will help the company to overcome it. These include a donation of leftover food in food banks, recovering inedible food through animal feed and composting them in the anaerobic directions. The company is also trying to convert all of its no renewable sources into 100 per cent renewable source of energy. The company is also trying to manufacture its products without utilizing many resources.

Benchmarking

It is a process by which the company measures its performance and identify at the position it is and where to its competitors stand, is the company doing well or its need improvement in the form of strategies and so on. This process also helps to know how the company has reached a certain position and who it is going to maintain it further to enhance or else maintain the position at which it is right now. After analyzing it was found that Walmart is best in the class company in the world for its supply chain (John and Eeckhout 2018). It is due to this practice the company can achieve leadership in the retail industry. Supply chain practices have increased efficiency and even improved customer satisfaction level. It is identified from benchmarking that Walmart is at the leading position when compared with 20 retailers in America including Amazon. The companies benchmarking is also analyzed through a net promoter score (Li et al. 2018). It is found through research that Walmart's NPS score is -4. Generally, a score higher than zero is considered good but since the company's score is very less thus it is very important to find out why the score is low. NPS is a customer loyalty metric that helps to find out whether the customer will return for the purchase or will they not. It also finds out whether they will refer the company to family and friend or will they not. The importance of NPS is that it helps the company to create a close correlation between the company's growth and consumer loyalty behaviour. It can be read through collection, interpretation and communication of the data.

Both the above-mentioned tools contribute ow each of the following tools and techniques specifically contribute to achieving organizational objectives and competitiveness of Walmart in operations Management, in the domestic and international context. Benchmarking helps the company to find out where it is and where it needs reach whereas lean management helps the company to provide a high-quality product in affordable range by using minimum resources in the manufacturing process.

Information Management System

Walmart's information system is a big advantage to the organization. the company believes that it is due to its information management system that the company can compete in the market and can sell products at low prices. The information system of the Walmart plays a very important role in the success of the company. The company has moved towards full implementation of Radio frequency identification(RIFD) (Reformat 2016). It will help the company to send receive real-time data networks. This approach gives the company a path to reach out and communicate important information to the retail manager and remain competitive in the retail industry. RIFD has made it very easy to manage things from a distance just by tracking the flow of the goods and supply chain. It is far better than bar codes that were used before. The company is using different types of retail information system since its inception in the market. These include Point of sale, electronic data interchange, web-based platforms, satellite communication system, data warehouses and retail linked systems. ICT technology is used by the company for various things. These include sustainable production, reduction of waste, renewable use of energy and overcoming the challenges of natural resources and so on. ICT is used for meeting the requirements of the customer and that of the organization by giving the appropriate authority access to information of the company. The operational strategy involved in ICT helps Walmart to achieve and work towards its objectives. It is due to ICT application that the company can gain a competitive advantage over the others (Pederzoli 2016). Walmart would not be able to achieve this much without information and communication technology. It is the ICT technology which helps the company prevent and respond to the conflicts that may arise at any point in time. Walmart has thus hired some ICT leaders who can manage the information and establish good communication with the clients. It is ICT that enhances the overall business operations and quality process of Walmart.

Artificial Intelligence

Walmart unveiled its artificial intelligent store in the neighbourhood market Levittown in New York. The company named this unit as an intelligent retail lab. The store is spread in 50,000 square foot. It utilizes an artificial intelligence system to get knowledge about the in-stock and position of the products, its freshness in the store. It is developed with a motive to not only transform the retail industry but also ensure the customer that the product which they are purchasing is of high quality. It will make them feel that their shopping trip to the store was successful. The company has an entirely new concept and it is not a replica of Amazon go rather it notify the managers when the inventory is empty and which product is needed and so on. The customer of the store still has to go to checkout counters and pay the bill for the purchase. The store has cameras installed everywhere they trigger the manager when the customer picks up the last piece of the product. It quickly tells the stores ability to restock the item. The cameras installed in the company produce 1.6 TB data per second (Karmakar et al. 2020). The data centre of the company is just behind the walls and even customer can see and get a peek of what is going inside. The company's move in this direction is smart. The company also provide an education screen where the customers can ask their queries if they are anxious to become technicians. Walmart is known for servicing goods quickly and the store has moved it one step ahead in this direction. The company is using artificial intelligence to develop this leading retailer. AI technology is a technological innovation which is improving the profitability of the store and at the same time also saving the consumer's time and if required it also assists the customers with associates of the store. Walmart has also opened Sam's club as a cashier-less store. The company is trying to develop itself in this direction by keeping aligned with the objectives of operation management (Dauvergne 2020). The company believes that technology can empower people and this is why they are investing a lot of amount in the development of retail shops. These retail stores will not only make the shopping at present good but will also help in enhancing the future in a global context. However, the company also has to face certain challenges while implementing and using IRL. The biggest challenge for the company is breach privacy. There a lot of consumers who are concerned about their privacy because the company has installed more than 100 cameras in the store and each of the camera does not focus on the food or shelves it records each and everything which keeps the consumer is doubt and dilemma that whether the company is recording their personal information. To gain the trust of the customer is the biggest challenge for the company has to face now as well as in future.

Conclusion & Recommendation on Walmart Operations Management

It can be concluded from the findings that Walmart is the best retailer in the world due to its adoption of technology in all of its operations. The company is doing well in attracting consumers providing them affordable, high-quality products and making them feel satisfied for what they have shopped from the departmental stores and grocery shops. However, this is not sufficient. The company needs to find out whether the company's operation management can meet the strategic goals of the organization or not. Besides, the company also evaluated all of its operation management to identify challenges so that it can overcome the current issues and find out a permanent solution for the future perspective. Apart from this, the company's progress and growth are evaluated from the two most common tools that are benchmarking and lean management. Through benchmarking it was found that the company is a leading position in the world although its net promotes score is -4 whereas it was identified from lean management that the company is trying to adopt lean practices and is avoid waste by planning to become zero waste manufacturer by 2020. The company also found that the success of its lies in its information and communication technology. The company's operational strategies are it logistic management, inventory management or supply chain, ICT applications are used everywhere. Besides this, Walmart is using artificial intelligence in developing intelligent retail lab. It will help the company to know the inventory present in the store. Various types of algorithms have been put to analyze the data which is collected in terabytes and zettabytes every year. Despite Walmart success, there are many areas where there is a need to find some strategies as the company failed to overcomes these challenges.

Here is a list of challenges for Walmart.

  • Exploit opportunities in the global market

The company has immense potential and this is why it must start a business in the global market.

  • Improve the quality of the products

The main reason behind getting net performance score low is that the company's product quality is not good and thus there a need to improve the standards and provide good quality products for its varied customers.

  • Inventory management

It was identified that the company overstocked regional items and paid less attention to everyday items. It hurt the company’s reputation as there was an economic slowdown in the turnover and revenue of the company. The company needs to bring innovative technology which will help in capacity management based on the current and future demand.

  • Low-cost initiatives

Since the objective of the organization is to sell affordable ranged price thus the company need to come up with low-cost initiatives which will make the life of the consumers better.

References for Walmart Operations Management

Agrawal, N. and Smith, S.A. 2019. Optimal inventory management using retail pre-packs. European Journal of Operational Research, 274(2), pp.531-544.

Bacelis, C., Funderburg, A. and Doughty, C.J., Walmart Apollo LLC 2019. Systems and methods for verifying machine-readable label associated with merchandise. U.S. Patent Application 16/257,238.

Bertagnolli, F. 2018. Lean management. Springer Fachmedien Wiesbaden.

Dauvergne, P., 2020. AI in the wild: Sustainability in the age of artificial intelligence. MIT Press.

Gao, F. and Su, X., 2017. Omnichannel retail operations with buy-online-and-pick-up-in-store. Management Science, 63(8), pp.2478-2492.

John, L.K. and Eeckhout, L. eds. 2018. Performance evaluation and benchmarking. CRC Press.

Karmakar, S., Das, A.J. and Sudhodanan, A., Walmart Apollo LLC 2020. Artificial intelligence system and method for auto-naming customer tree nodes in a data structure. U.S. Patent 10,678,769.

Li, B., Ren, W., Fu, D., Tao, D., Feng, D., Zeng, W. and Wang, Z. 2018. Benchmarking single-image dehazing and beyond. IEEE Transactions on Image Processing, 28(1), pp.492-505.

Mayr, A., Weigelt, M., Kühl, A., Grimm, S., Erll, A., Potzel, M. and Franke, J., 2018. Lean 4.0-A conceptual conjunction of lean management and Industry 4.0. Procedia Corp, 72(1), pp.622-628.

Patel, P.C., Guedes, M.J. and Pearce II, J.A. 2017. The role of service operations management in new retail venture survival. Journal of Retailing, 93(2), pp.241-251.

Pederzoli, D. 2016. ICT and retail: state of the art and prospects. In Information and communication technologies in organizations and society (pp. 329-336). Springer, Cham.

Reformat, B. 2016. Information and communication technologies as a source of marketing innovations in retail–trends. Journal of Economics & Management, 23, pp.45-53.

Reich, A. and Bearman, P.2018. Working for Respect: Community and Conflict at Walmart. Columbia University Press.

Smith, J. 2019. Big Box Supermarkets (Walmart Supercenters). Increasing Access to Food: A Comprehensive Report on Food Supply Options, p.5. 

Xin, L., He, L., Bewli, J., Bowman, J., Feng, H. and Qin, Z.2017. On the performance of Tailored Base-Surge policies: theory and application at Walmart. com. Com (December 18, 2017).

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