Wal-Marts Operations Management - Case Study Example

Operations Management Contents Executive Summary 3 Introduction 3 Discussion 4 Quality Management 4 Operations Improvement 5 Supply Management 6 Inventory Management 7 Conclusion and Recommendations 8 References 10 Appendices 12 Appendix 1 12 Executive Summary This study is focused on Wal-Mart’s operations management. There are two important agenda of this firm constant quality improvement and achievement of business goals and objectives. This report will reflect upon operations improvement, inventory management, quality management and supply management. These theoretical frameworks will be then applied on Wal-Mart. This shall highlight operational procedures implemented by the company and its significant loopholes. At the end of the study certain recommendations shall be portrayed that can be used by the company in future years. Introduction Operations management is a management area inclined towards controlling, designing and overseeing production process. In this procedure business operations are designed to produce services and goods. Operations management encompasses responsibility of utilizing minimum resources and effectively addressing customer requirements. It is highly concerned with input process of converting raw materials, energy and labour into valuable outcomes. In any organization, production or manufacturing process plays a critical role in terms of delivering desirable output to customers. The level of customer satisfaction depends on how efficiently hidden customer demand is been addressed. This study shall focus on different operation management related concepts like operations improvement and quality management. On the other hand, two important theoretical concepts will also be incorporated such as supply management and inventory management. These frameworks would be applied on a real time organization Wal-Mart. Wal-Mart is a multinational retail corporation based in America. It was incorporated in 1969 by Sam Walton and operates through a chain of warehouse and discount departmental stores (Soderquist, 2005). This study is centred towards analyzing operations management at Wal-Mart. It is a multinational retail corporation and has its operations spread across wide number of regions. The company not only focuses on quality management of its products or services but even takes effective measures to achieve their business goals. This report will elaborate on important topics of operations management like operations improvement, quality management, inventory management and supply management. All these frameworks are then applied on the retail firm in order to identify their problems and competitive advantages. The current scenario of the firm is portrayed along with some future recommendations for future years. Discussion Quality Management Quality management is an approach which ensures that service or organization or product is consistent. This mechanism has four vital components such as quality control, quality improvement, quality assurance and quality planning (Kelemen, 2003). Quality management is not only centred towards service or product quality but also highlights means to achieve quality as stated in Appendix 1. This approach increases performance level of an organization. There are certain related principles such as keeping customer first, implementing proper leadership skills, involving more number of people, following a systematic approach, and being inclined towards continuous improvement (Ayers and Odegaard, 2007). Quality management also involves building effective relation with suppliers in order to enhance ability of value addition. Quality improvement is done through wide array of techniques such as six sigma approach where established methods are combined like statistical process control, failure mode and effective analysis or FMEA, and experimental design. DMAIC method stands for define, measure, analyze, improve and control and PDCA or plan-do-act-check cycle is utilized as a quality control process. The cycle of plan, does, check and act is implemented to continuously improve quality management process. Quality standards in Wal-Mart are well maintained even through its global procurement activities (Deming, 2002). This organization procures raw materials from suppliers across the globe. There are certain quality standards set for all suppliers which they need to maintain while delivering goods. The company mainly focuses on total quality management since target audience demands for world class quality. Apart from superior quality products, management even pays attention towards delivering high quality of customer service. Six sigma approach is followed across the retail chain with efforts made to reduce overall lead time (Gotzamani and Tsiotras, 2002). Six Sigma approach is a set of techniques and tools that is widely used for process improvement. It aims at improving process quality and eliminating any cause for defects. Through this approach variability aspect linked with business processes and manufacturing is reduced. Six Sigma doctrines are inclined towards sustained quality improvement throughout business operations. This approach is well maintained at Wal-Mart by adoption of Deming’s PDCA cycle. In this organization plans are initially set for strategic improvement and then simultaneously every step is evaluated as per set standards. Quality standards are framed by the management and have to be adapted both by suppliers and internal members of the company. Operations Improvement Operations improvement can be stated as an important element within the framework of quality management. Through operational strategies plans and policies are formulated for utilizing productive resources of a firm. These resources help to support long term objectives or competitive strategy (Slack, 2001). Operational management can be classified into two metrics such as effectiveness and efficiency metrics. There are few elements encompassed within effectiveness metrics like price, time, quality, stock availability, flexibility and ecological soundness (Schroeder, 2010). Quality improvement is also linked with some other factors such as equipment maintenance management, production and manufacturing systems, production control, etc. There are certain essential elements which are required for overall success. These elements are creativity, people skills, technical knowledge and rational analysis (Slack, 2013). Operations improvement at Wal-Mart is a major aspect in its entire business operations. It can be stated that improvement in business operations can be accomplished through utilizing minimum resources possible so as to achieve maximum benefit. Wal-Mart initially was witnessing a lot of challenges in terms of remaining competitive in the market place (Kujala and Lillrank, 2004). In current scenario this retail company faces problem for sustaining quality standards amongst all its competitors. For overcoming such competitive scenario, Wal-Mart maintains low inventory level in order to control cost and focuses on global procurement activities (Chopra and Meindl, 2007). Proper training programs are organized for all team members so that they are able to deliver superior quality level of customer service. Contingency plans are structured for efficiently dealing with business related risks. Productive lead time is the major area of concern for the company so as to facilitate stock availability at right time and right place (Kelemen, 2003). Supply Management Supply management can be regarded as processes or methods implemented for institutional or corporate buying. This might deal with supply purchase for internal usage related to indirect services or goods, raw material purchase for consumption during entire manufacturing process, or goods purchased for maintaining stock which would be converted into goods and then sold. There are companies who refer buying or acquiring services as contracting and in context of goods it is called as procurement or purchasing (Kumar, 2007). Supply management function encompasses various aspects like collaboratively working with business leaders for acquiring quality products from well qualified suppliers, managing performance of suppliers, supplier relationship management through implementing policies, processes, procedures and technologies for enhancing purchasing procedure, development and maintenance of supplier relationship and staying aligned with demand and supply theories. Traditional buying is a systematic business procedure and is not a part of supply management (Wincel, 2004). This mechanism focuses on internal pre-production logistics, inventory management, etc. The performance of supply management is measured through evaluating amount of money saved by a firm. Wal-Mart in the present scenario focuses more on outsourcing operations and does not follow traditional business approach (Chan and Lee, 2005). This technique is incorporated by the company for enabling savings and these savings are then passed on to the customers. The company’s business strategy is to offer products at least cost possible. Wal-Mart maintains a base of expert suppliers across the globe (World Watch Institute, 2014). These suppliers form a long term relationship with the company and delivers required stock at appropriate time interval. Managing risk is a central component in this form of approach but Wal-Mart to some extent is not able to develop a risk-free business environment. Inventory Management Inventory management is an essential aspect for any organization and is regarded as a major cost factor. There are different forms of inventories such as raw materials, spares, stores, work-in-progress or finished products, coal, etc (Mitra, 2012). Inventory cost not only comprises of interest on stocks but even undertakes cost of storage, obsolesce and insurance. This cost factor even deals with materials to be utilized so as to convert them into final finished goods (Fishman, 2006). There are two major objectives of inventory management such as minimizing possibility disruption within overall production schedule and reduce total capital investment in inventory levels (Walmart, 2014). It is essential to maintain safety stock level but excess investment should not be made in stock keeping. Inventory control techniques are ABC analysis of inventories. Each item within the inventory are represented as A, B or C (Tamimi and Sebastianelli, 2008). The most high value items are given A which kept under responsibility and tight control of highly expertise personnel. Other techniques are raw materials pricing, perpetual inventory system and standard norms of inventory holdings (Hoyle, 2007). Wal-Mart over the years has been able to maintain its inventory level and this has given them competitive advantage in the market place. Low inventory level facilitates reducing operational costs and regulating work-in-progress and finished products (Soderquist, 2005). This in turn helps the company to address high market demand and control efficiently overall stock level in the system. The standard norms of inventory holdings are well observed within Walmart. There is safety stock maintained by this retail chain in order to cater unexpected consumer market demand. Apart from this mechanism there is constant flow of inventory so as to reduce lead time and minimize operational costs. Conclusion and Recommendations As per this study Wal-Mart has been able to efficiently manage its business operations over the years. Operation management encompasses wide array of factors which are associated with optimal utilization of resources and delivering desirable outcomes. There are various aspects combined within the concept of operations management. Walmart need to be customer focused so as to analyze hidden customer demand and address it efficiently. Quality control or management plays a critical role when it comes to dealing with internal and external business operations. It is essential for Walmart to establish a strong coordination between internal and external operations. There are different mechanisms through which quality is controlled by a firm. The total quality management, Deming’s cycle, six sigma approach is frameworks utilized for controlling quality and improving operations. It is recommended that Wal-Mart should focus more on its global sourcing activities and build long term relationship with suppliers. The company should be able to separate its long term and short-term business activities. This would provide a clearer picture regarding present business situation and future goals or objectives. Inventory control techniques are recommended to be incorporated with every region where Wal-Mart has its presence. Advanced technology based techniques shall help the company to remain competitive and even make entire process simpler and eradicate any form of human error. References Ayers, J.B., and Odegaard, M. B., 2007. Retail Supply Chain Management. US: CRC Press. Chan, C. K, and Lee, H.W.J., 2005. Successful Strategies in Supply Chain Management. Pennsylvania: Hershey. Chase, R., et al. 2008. Operations & supply management. London: McGraw Hill Higher Education. Chopra, S., and Meindl, P., 2007. Supply Chain Management: Strategy, Planning, &Operation. New Jersey: Upper Saddle River. Deming. 2002. Quality, Productivity and Competitive Position. Cambridge: Massachusetts Institute of Technology. Fishman, C., 2006. The Wal-Mart Effect: How the Worlds Most Powerful Company Really Works. New York: Penguin. Gotzamani, K. D., and Tsiotras, G. D., 2002. The True motives behind ISO 9000 certification. Their effect on the overall certification benefits and their long term contribution towards TQM. International Journal of quality and Reliability Management. Vol. 19(2). Hoyle, D. 2007. Quality Management Essentials. Oxford: Butterworth-Heinemann. Kelemen, R., 2003. Managing Quality. London: Sage Publications. Kujala, J. and Lillrank, P., 2004. Total Quality Management as a cultural phenomenon. Quality Management Journal. Vol.11 (4). Kumar, S., 2007. Connective technologies in Supply Chain. New Delhi: CRC Press. Mitra, A., 2012. Fundamentals of Quality Control and Improvement. New Jersey: John Wiley & Sons. Schroeder, R., et al. 2010. Operations management: contemporary concepts & cases. London: McGraw Hill Higher Education. Slack, C., 2001. Operations Management. Harlow: Prentice Hall. Slack, N., et al. 2013. Operations management. London: FT Prentice Hall. Soderquist, D., 2005. The Wal-Mart Way: The Inside Story of the Success of the Worlds Largest Company. USA: Thomas Nelson Inc. Tamimi, N., and Sebastianelli, R., 2008. The barriers to total quality management. Quality Progress. Vol.31 (6). Walmart. 2014. Walmart global procurement enhances quality control in China. Available at: http://news.walmart.com/news-archive/2008/07/11/walmart-global-procurement-enhances-quality-control-in-china [Accessed 24th January 2015]. Wincel, J. P., 2004. Lean Supply Chain Management. New York: SAGE. World Watch Institute. 2014. Wal-Mart Scrutinizes Supply-Chain Sustainability [Online]. Available at: http://www.worldwatch.org/node/6200 [Accessed 24th January 2015]. Appendices Appendix 1 Read More