The Operation Management at Wal-Mart - Essay Example

? Operation Management Table of Contents Executive Summary 3 Introduction 3 Operational Issues 5 Research Methodology 8 Analysis 9 Findings 13 Conclusion 14 Recommendation 15 Works Cited 17 Appendices 18 Executive Summary Wal-Mart has established itself as a giant player in the retail industry and has maintained an enviable operations management process since its inception. But recently the company has started facing major operational issues that are likely to affect the business if the managers do not find effective solutions for these problems in the near future. The company should pay critical attention to improve on the operations management processes and deal with the critical factors underlying the issues in the operations management of Wal-Mart. This research deals with the operation management issues at Wal-Mart. The organization implemented several unique strategies in the business operation processes in order to gain competitive advantages. A primary data collection process has been adopted in this study to understand the view of the respondents who have participated in the interview process. Managers, employees and customers of Walmart have been chosen as the respondents. The respondents discussed about several reasons behind the growing operational management issues in Walmart. The report has analyzed each and every response that is gathered during the data collection process. Finally, some recommendation plans have been proposed for the operation management team of Walmart in order to improve the present scenario. Introduction Wal-Mart is one of the leading retail giants across the globe and is regarded as one of the most valued businesses in the world. The highly efficient performance of the company is mainly driven by its state-of the art operations management and logistics system. The retail industry is a highly concentrated industry with a number of major players like Wal-Mart, Carrefour, Home Depot, Royal Ahold N.V., Metro etc. Wal-Mart has established itself as a market leader in the industry. The companies can be classified as market qualifiers and the market order winners based on the strategic perspective. The market order winners are those companies that are clearly distinguishable from the competitor companies and have more potential to be chosen as the source of buying by the consumers. The market qualifiers are those companies which have the minimum requirements to be considered as a potential source of buying by the customers. The factors driving the capabilities of a business as a market qualifier or a market order winner are given below. (Source: Kapner 51) Clearly, Wal-Mart is a market order winner because of the high quality, service and operational processes used in the business. The company has a robust technology system to forecast demand, supply, determine optimum inventory levels, determine efficient transportation routes and maintain customer relations efficiently. The efficient operations management in Wal-Mart has benefited the company in many ways like keeping the product cost low, reduced storage costs, ability to maintain a variety of stock and providing it at a competitive pricing. Wal-Mart continuously monitors and improves its technology so that all its operational systems function as per the demand and it does not lose out on even a single customer by not providing the right product at the right time and at the right place. The operations strategy of the company is particularly critical in driving the success of Wal-Mart as an established market order winner and is represented in Appendix 1. The main objective of the study is to find out the different operational and strategic issues faced by the operations manager in Wal-Mart. Other objectives are to find out the process of operations management and service delivery in the organization. Operational Issues The operations management of Wal-Mart is much superior as compared to the other players in the industry. The company has established an efficient supply chain thereby delivering excellent service quality to the customers and implementing different service policies. Wal-Mart’s supply chain goal is to provide the customers with the goods they want and where they wanted them. The next goal of Wal-Mart was to develop a cost-structure which allowed the company to provide everyday low pricing. The way Wal-Mart replenished its inventories was made the centrepiece of the strategy and relied on a logistics technique known as cross docking (Johnston 98). In this method the inventory lies idle for minimum time and is moved from suppliers to customers in lesser time. The savings from this strategy is passed on to the customers thus providing more value to the customers. Wal-Mart then focused on building a robust supply chain system to harness this competitive advantage. Wal-Mart has been able to retain its leadership position mainly due to excellent integration of manufacturing, distributing and suppliers to stores (Kapner 163). The transportation costs, times and errors are kept low by Cross docking, establishing an efficient distribution management, and transportation management. Technology forms the foundation of Wal-Mart’s supply chain system. The company has a robust technology system to forecast demand, supply, determine optimum inventory levels, determine efficient transportation routes and maintain customer relations efficiently. But recently the company has started facing a number of operational issues regarding cost cutting, inventory pile up and major issues in the work environment which are hampering the operational management process of the company. The value chain analysis of Wal-Mart is done to understand the different operational strategies and challenges faced by the organization. Primary Activities: Inbound logistics: The inbound logistics of Wal-Mart include innovative practices like Vendor Managed Inventory (VMI), Electronic Data Interchange (EDI) and continuous replenishment. Operations: The operation of Wal-Mart is divided into three segments: Wal-Mart stores including the discount centres, neighbourhood markets and Super centres, Wal-Mart International and SAM’ s club (Palmatier 151). Outbound Logistics: The outbound logistic of the company include efficient logistic methods like the Hub and spoke distribution system and the cross docking system. Marketing and Sales: Wal-Mart uses everyday low pricing scheme to provide better service at a lower cost. Also, Wal-Mart uses word of mouth publicity as the major mode of promotion. Service: Wal-Mart guarantees customer satisfaction and has an easy returning policy. But the service delivery time is considered as a long process thus decreasing the efficiency of the operation process flow. Support Activities: Infrastructure: Wal-Mart has a close-knit infrastructure with the headquarters monitoring and controlling the activities of all the individual stores and distribution centres. Human resources: Wal-Mart is one of the best private employers known to provide a number of benefits for the employees. But the company has been facing discrimination and biasedness issues within the work environment in the organization. Technology: Technology is intricately embedded in all the operations of the company and is a major driving factor of success for the business. But the competitor companies are fast replicating the innovative processes that were once only used by Wal-Mart. Procurement: The procurement process is simple and innovative with Wal-Mart moving the products in the stores directly from the suppliers thus minimizing the inventory levels (Batemen 87). The main challenges faced by Wal-Mart are that the competitors are fast replicating the innovative techniques used in Wal-Mart. Also, the era of electronic commerce has increased the interests of different companies towards the online retail segment. Research Methodology A proper and effective research process is required in order to determine and identify the major principles of the positive incidents. Appropriate information and data are effectually sources, recorded, gathered and analysed during the research of operation management process of Wal-Mart in a systematic and objective manner in order to forecast how people feel, think and behave towards the research topic. Generally, there are types of research methods, such as quantitative and qualitative research. Each of these research methods used to encompass several of research approaches that are used to determine on the nature and behaviour of collected data. This part will provide discussion about several theories about research methods. Moreover, this part will undertake and determine most appropriate research approach for the specific topic. The sampling details will be discussed too in this part. Generally, the research methods are broadly classified as quantitative and qualitative methods. The quantitative research process is based on the evaluation and analysis of statistical data and trends. In contrast, the qualitative research is related to interpreting and analysing the behavioural factors of the people who are taken in the sampling process. Quantitative research is more accurate and explanatory as compared to the qualitative research. For the research report under study, qualitative analysis is majorly carried out to understand the behaviours, attitudes and motivations of the managers and employees of Wal-Mart as well as the customers of Wal-Mart. The qualitative research method is used in this study considering thee exploratory requirements for the report. In general research method can be categorized in a dichotomy between qualitative and quantitative research. The qualitative research is implemented to analyse the emotional factors and in-depth feelings of a human being. Thus, the qualitative research process is extensively incorporated to explain the whole process of assessing and defining the different factors. The report is based on both primary data collection and secondary data collection. The primary data collection is done by designing an open ended questionnaire based on the operational issues present in the business. The secondary data collection is done by referring to academic journals and books related to different operations management concepts and theories and the implementation of these theories in the operations management of Wal-Mart. The sampling process is carried out by selecting a group of 10 people of who two are the managers in the company, three people are the employees of the company and five people are the customers of Wal-Mart. This leads to the creation of a homogeneous sampling group. The non-probability sampling tool has been incorporated in the study which is used to focus on the purpose of the sampling group. The non-probability sampling is a combination of the quota sampling and convenience sampling methodologies. An open ended questionnaire is designed to be used for the process of research as given in Appendix 2. The participants are interviewed on the basis of a semi structured interview pattern. Analysis It is clear from the research methodology that 2 operation managers, 3 in-store employees and five customers of Walmart have been chosen for the purpose of the interview process. Their values, thoughts and attitudes towards developed interview questions. Two operation managers have replied that the organization has able to meet the market demand and target customers as the organization used to provide differentiated and various ranges of products to the target customers. In addition to this, the managers have replied that the organization ensures effective customer service to maintain its strong client base. However, the employees have replied that recently the organization is facing difficulty in meeting the market demand and needs of the target customers due to inadequate operation management strategies and processes. The management of the organization does not provide effective training processes to the employees before the adoption and implementation of any operation process. However, the employees replied that some customers are really unhappy against the products or service that they are consuming. The customers have provided a mixed review. Four customers stated that they are not happy with the service delivery and several products that they are gaining. Moreover, they are trying to shift over the brand due to inadequate knowledge of employees about several in-store business operation processes (Lewis and Slack 43). On the other hand, the other customer replied that he is quite happy with the customer service of the organization. The operation managers accepted that the organization is failing to replace its old stock from the inventory in limited period of time. The organization takes 6 months to complete its inventory management cycle. According to the operation managers, low supply chain lead time and high inventory turnover are the major reasons behind these issues. Therefore, they have to display old stocks in the retail stores that are forcing the customers to switch over to another brand. The employees have replied that the organization is facing low sales growth rate comparing to other competitors due to lack of implementation of differentiation strategy. They have stated that the customers always expect to consume new trendy goods and services or values against their paid consumption money or effort. But, poor operation management processes are affecting the business performance of the organization. On the other hand, the organization always tries to implement new strategies in the business operation process. But, inadequate communication process between the top management and employees is affecting the workplace performance. The consumers totally disagreed that the organization provides differentiated products. They have stated that it takes more than six months to display new stocks. In addition to this, the employees are unaware about the new available stocks in the inventory. The consumers are trying to switch over to the other brand in order to consume differentiated products and newly developed trendy goods. All of the respondents accepted that high quality customer service is the major growth driver for a retail chain organization. Two operation managers have replied that offering quality goods to target customers with high efficiency enhances effective customer service. However, the managers have accepted that recent issues in inventory management affected the service delivery aspects of the organization. The managers replied that the organization adopted online business operation process to enhance the customer service management process. In addition to this, the organization installed latest CRM application to maintain effective and strong relationship with the target customers. But, lack of effective performance management process affected the workplace performance of the organization. On the other hand, the in-store employees replied that the organization makes huge invest5ment in the business operation processes to improve the operation management scenario. But, maximum employees do not know about the functions and characteristics of several newly installed tools or processes. On the other hand, the management of the organization is failing to recruit right people for right job. Inade1quate training and development process and lack of employee motivation is affecting the entire service process. Customers usually place order through online. It is true that the organization has the ability to make delivery of the placed order within a given period of time. But, inadequate performance management process is affecting the service delivery process. According to the respondents, it is the major reason behind this poor service delivery process. The consumers also denied that the operation management of the organization is failing to improve the entire situation as the management of the organization is finding it difficult to understand the current market demand. According to the operation managers, the organization has the capability to maintain its leading position within the global market place for a longer period of time. They are pointing out the inadequate workplace performance and lack of skilled workforce as the major reason behind the operational issues. The operation managers have stated that the organization needs to review and monitor the performance level of the employees on weekly basis. Apart from this thing, the managers think that the organization has the potentiality to gain competitive advantages with the presence of such business resources (Murthy 39). On the other hand, the employees have replied that the top level management of the organization should try to improve the communication process between the upper and bottom level of hierarchy. The employees replied that inadequate decision making and strategy development process is the major reason behind these issues. The organization needs to take the feedback from both the employees and customers to implement change management process. In addition to this, they have replied that the organization should try to adopt improved leadership style in order to support and motivate all the employees within the workforce to encourage them to perform effectively. The customers have replied that it is quite special about Walmart that the organization introduces huge product portfolio in low price level. But, they are unhappy with the organizations old stock for more than six months. The respondents have replied that the organization should try to reduce the lead tome of the logistics and supply chain management process to increase the efficiency of the supply chain network so that the organization can limit its inventory and introduce new and differentiated products for the target customers. The managers of the organization strongly replied that it is the lack of effective collaborative work performance of the employees that is affecting the business performance of the organization. According to the operation managers, the employees are failing to grab the knowledge about newly developed customer relationship management tools. This inadequacy is the major reason behind the workplace conflicts and inadequate in-store customer service aspects (Cooke 25). On the other hand, the employees replied that the managers and top level management of the organization is failing to maintain effective workplace environment due to inadequate leadership style. According to the respondents, the organization adopts strong workplace diversity. But, they are failing to motivate the employees of different cultural background to work collaboratively. Cultural issues, conflict of idea, gender discriminations and inadequate performance appraisal are the major reasons behind the operation management issues. The management of the organization is failing to maintain corporate ethics and transparency in the strategy development and performance management process. On the other hand, the customers have different view on this question. Two customers have replied that the employees are quite friendly to them. They have the knowledge to guide and assist the customers. But, it is the inadequate in-store operational tools and processes that de-motivate the customers. On the other hand, rest of the three customers have replied that the lack of knowledge and skills of employees force them to switch over to the other brands. Findings It is clear from the above analysis that the operation management process of Walmart is seriously lacking of efficiency and integrity. It is true that the organization adopted several unique strategies to achieve potential competitive advantages and increase the market growth rate. However, high supply chain lead time, long service delivery time, high inventory turnover and the inadequate performance management of the operation management leaders are the major reason behind the Walmart’s growing operational management issues. The organization adopted unique customer relationship management proves. In addition to this, the organization installed advanced customer relationship management software application in order to improve the customer relationship management process (Greasley 94). But, it is the lack of knowledge and efficiency of the employees to handle the tools or applications that affect the entire customer service management process. The managers and top management level of the organization is failing to ensure effective training and development programmes for employees (Schneider 83). It is true that effective training and orientation process increase employee loyalty, employee motivation and skills of employees. However, the management of the organization is trying to improve the service delivery management process by reducing the strength of the workforce. The customers are trying to switch over to the other organizations or brands to gain highly valuable service and trendy differentiated products. It is the high supply chain lead timer and large inventory that is forcing the organization to stock the old items in the inventory. Despite the adoption of cost leadership strategy, the organization is failing to attract the new customers and also failing to maintain existing customer base due to lack of differentiated and trendy product lines in the store display and inventory. Conclusion Walmart is known as the leading retail chain organization in this globe. Despite the implementation of several unique and aggressive business operation strategies, the organization is failing to maintain its constant market share due to several operational management issues. A primary data collection method has been implemented in this research work in order to determine the major reason behind these issues. However, it is clear from the analysis and findings part that inadequate leadership of the operation managers and poor strategy development process is affecting the entire workplace performance of Walmart. However, operation management and customer service are closely related to each other. It is true that despite the implementation of advanced technological processes, the organization is facing difficulty in the customer service process due to inadequate training and development programmes for the employees in Walmart. On the other hand, issues like cultural conflicts, gender discrimination, biased performance appraisal and conflicts of ideas between the employees are affecting in-store customer service management process. Long service delivery time and several mentioned operational management issues are affecting the business performance of Walmart. Recommendation The company has already implemented innovative and successful practices in its operations management processes. But with the changing global scenario, new challenges and issues are arising in the operational management in the retail industry. The main challenges that are being developed in the operations management processes are being driven by globalization and technology (Hammer 8). But the company should aim to improve the service delivery time and find a solution to the increasing inventory pile up problem. The company should also come up with more innovative operational management techniques that are difficult to be replicated by the competitors in the industry. The company should also try to improve on the cultural perspectives in the work environment of the organization. The company should also ensure adequate training to the employees to make them more efficient in performing the different operational functions in the organization. Since the process of operations management largely affects the customer service deliver process, the company should pay major attention to improve the operations management processes so as to ultimately increase the value delivered to the customers which will lead to an increase in the market share of the company. Wal-Mart should take major steps to decrease the long lead time in the supply chain processes as well as effectively monitor the inventory turnover in the business with the objective to improve the operational management of the business. Also, a better performance management system should be implemented in the organization to boost the work environment and create motivation for the employees who form a major part of the operations and the service delivery process. Wal-Mart is also recommended to cut down on the inventory piling up which has forced the company to cancel their orders with the suppliers in the recent times. The company should take steps to accelerate the movement of the inventory cycle so that the problems of inventory pile up and loss of orders can be effectively dealt with. Works Cited Batemen, Thomas. Management: The New Competitive landscape, Sixth Ed. New York: McGraw Hill. 2003. Print. Cooke, James. Operations Management. London: Ecademy Press, 2012. Print. Greasley, Andrew. Operations Management. London: Sage, 2007. Print. Hammer, Morris. Deep Change: How Operational Innovation Can Transform Your Company. Harvard Business Review, Vol. 82(4). 2004. Print. Johnston, Robert. Operation Management: Theory and Practice. New Jersey: Prentice Hall. 2007. Print. Kapner, Suzzane. Changing the guard at Wal-Mart -Meeting the new boss. International Human Resource Management. Vol. 4. 2008. Print. Lewis, Michael, and Nigel Slack. Operations Management. New York: Taylor and Francis, 2003. Print. Murthy, Rama. Production and Operations Management. New Delhi: Tata McGraw-Hill. Palmatier, Gerard. Demand Collaboration: What's Holding Us Back? Supply Chain Management Review, Vol. 8(1). 2004. Print. Schneider, Mitch. Operations Management. Stamford: Cengage Learning, 2003. Print. Appendices Appendix 1 (Source: Hammer 82) Appendix 2 Interview Questions Name: Age: Designation: Nationality: 1. Does Walmart meet the market demand and needs of target customers? 2. Des the organization always provide new and differentiated products to target customers? 3. How do you moderate quality of the service delivery process? 4. Does the organization need to adopt new strategies to overcome the operation management related issues? 5. Do the employees of Walmart are skilled enough to maintain efficiency in the operation management process? Read More