Operation Management for Walmart

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This presentation file includes facts, issues and operation management for Walmart

This presentation file includes facts, issues and operation management for Walmart

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  • 1. WELCOME
  • 2.
  • 3. Company background
  • 4.
    • Founded by Sam Walton in 1962
    • 5. Walmart has 8,446 retail units under 55 different banners in 15 countries.
    • 6. The largest private employer
    • 7. Sales of $405 billion in 2010,
    • 8. It has employee more than 2.1 million.
  • 9. Wal-mart & the COMPETITION
    • To sustain competitive advantage, a firm must ensure that its competition finds it hard to imitate its chosen position.
    • Operations Management ("POM") is about the transformation of production and operational inputs into "outputs" that, when distributed, meet the needs of customers
    Outputs
  • 10. Strategy
  • 11. Operation Strategy
    Capturing market share with “everyday low price” strategy.
    “the process of creative destruction”.
    Responding competitors strategy. (opened “Pennies-n-Cents” stores in against dollar stores).
    Cultural adaptation.
    Training employees because people are key to Wal-Mart's business
    Buy at less to sell at less.
    Withdrawal strategy.
  • 12. Competitive Strategy
    Different shop design for each demographic groups.
    All product in one store.
    Competence in use of information technology for logistics system.
    Highest customer satisfaction
  • 13. Productivity
  • 14. Productivity
    Creating more than 210,000 jobs in the U.S.
    Saves working families more than US $2,500 per year.
    Discounting on food alone boosts the welfare of American shoppers by approx. $ 50 billion per year.
  • 15. Industry Environment - Porter's five forces of competition
  • 16. 1.Rivalry of Existing Competitors:
    · Wal-Mart has a strong competitive advantage against its competitors Kmart and Target.   · Rivalry in this industry is not as strong for the competitors compared to Wal-Mart.2.Barriers to Entry:
    · High because it is hard to form a large organization that will be competitive at the same size as Wal-Mart with such low prices.· This industry has high barriers because it is too expensive for new firms to enter and to be competitive.
  • 17. 3.POWER of Buyers:· Weak because basically the prices are low from the beginning so there would not be any potential for buyers to bargain with.4.POWER of Supplies:· Weak because Wal-Mart uses its own distribution centers that are located close to its stores.   · Wal-Mart is also far and away the biggest customer of virtually all of its suppliers.   It's scale of operation allowed it to bargain...
  • 18. 5. Substitutes:· Medium because it depends on where you live and what type of Wal-Mart stores are closer to you.
    · Substitutes would be going to another grocery store, a toy store, a hardware store; basically going to specialty stores instead of going to one store that has everything in one, as a Wal-Mart can.
  • 19. Wal-Mart product and service design
  • 20.
  • 21. Service Layout
  • 22. Wal-Mart Shelf management
  • 23. Capacity Planning for Wal-Mart
  • 24. Capacity Planning
    • The process of determining the production capacity needed by an organization to meet changing demands for its products.
    • 25. The process of determining product quantity needed by a firm to meet the demand of consumers.
  • Essential elements of Capacity Planning
    Among all elements for capacity planning, followings are essential for Wal-Mart:
    • Facility
    • 26. Product & Service
    • 27. Human Resource
  • Facility Factor
    • In USA
    • 28. Operating in 5 0 states
    • 29. 4,3 0 0 facilities for all sort of outlets
    • 30. Around the globe
    • 31. 14 countries
    • 32. 4 0 81 stores
    Shop location
    Shop layout
    Shop Si z e
    Warehouse Si z e
    Warehouse layout
  • 33. Facility Factor
    • New layout for customer experience.
    Shop layouts has been classified based on Wal-Mart's operation
    • Wal-Mart supercenters
    • 34. a full-service supermarket
    • 35. Discount stores
    • 36. discount department stores
    • 37. Neighborhood Markets
    • 38. Shop for daily necessary goods
    • 39. Sam’s Club warehouses
    • 40. membership based stores
    Shop location
    Shop layout
    Shop Size
    Warehouse Size
    Warehouse layout
  • 41. Facility Factor
    Wal-Mart U.S. 602.9 million sft.
    Wal-Mart international 269.9 million sft
    Sam’s club79.4 million sft
    Total Size 952.2 million sft.
    Average size of each outlet
    • Wal-Mart supercenters
    • 42. Varies between 51,000 sft to 51,000 sft.
    • 43. Average size 102,000 sft.
    • 44. Discount stores
    • 45. Varying from 98,000 to 261,000 square with an average of 197,000 sft.
    • 46. Neighborhood Markets
    • 47. Averages about 42,000 sft.
    • 48. Sam’s Club warehouses
    • 49. Average club size of 133,000  sft.
    Shop location
    Shop layout
    Shop Size
    Warehouse Size
    Warehouse layout
  • 50. Facility Factor
    • Single large warehouse for a single state.
    • 51. Covers all stores of a state
    • 52. Also has warehouse for Sam’s club which is a membership based store.
    Shop location
    Shop layout
    Shop Size
    Warehouse Size
    Warehouse layout
  • 53. Facility Factor
    • Data warehousing layout
    • 54. A networked connection with store inventory with suppliers for inventory supply when needed.
    Shop location
    Shop layout
    ShopSi z e
    Warehouse Si z e
    Warehouse layout
  • 55. Product and Service Factor
    Price
    Sales
    Suppliers
    Every day low price.
    Lower price than competitors (price leadership).
    Lower price due lower operational cost.
  • 56. Product and Service Factor
    Price
    Sales
    Suppliers
    Net Sales of walmart in 2009-2010
    Wal-Mart U.S. $2 58.2 billion
    Sam’s Club $ 46 .7 billion
    Wal-Mart International $ 100.1 billion
    Worldwide Total $ 405 billion
  • 57. Product and Service Factor
    Price
    Sales
    Suppliers
    • Partners with more than 2,5 0 0 minority-and women-owned business suppliers.
    • 58. Networked communication & Just In Time .
  • Human Resource Factor
    Number of employees
    Age, Gender and sexual orientation
    Skill
    Wages
    • 2.1 million employees all over the world
    • 59. 1.4 million employees only in U.S.
    • 60. Largest privet employers in US, Mexico & Canada.
  • Human Factor
    Number of employees
    Age, Gender and sexual orientation
    Skill
    Wages
    • 869000 women working in Wal-Mart.
    • 61. More than 430,000 employees are 50 and over.
  • Human Factor
    • Both Skilled and low skilled employees.
    • 62. Employs senior citizens who needs supplemental income.
    • 63. Employs Students who needs skill and experiences.
    Number of employees
    Age, Gender and sexual orientation
    Skill
    Wages
  • 64. Human Factor
    Number of employees
    Age, Gender and sexual orientation
    Skill
    Wages
    • Hourly wage rate.
    • 65. Wage of $ 1 2 per hour for semi skilled employees.
    • 66. Higher wage rate for skilled employees and in urban outlets.
    • 67. Bonus on performance.
  • Reliability
  • 68.
  • 69.
  • 70.
  • 71. SUPPLY CHAIN MANAGEMENT
    “ Supply chain management involves the flows of material, information and finance in a network consisting of customers, suppliers, manufacturers, and distributors”
  • 72.
  • 73.
  • 74. THE REASON!
    Efficient supply chain
    Deals with suppliers for e.g P & G
    Service Differentiation- different deals with different customers.
    Sets different service policies, such as service intervals, or delivery times, for different groups of accounts and often products.
     key to providing excellent, consistent service at a reasonable cost
  • 75. Just in time (JIT)
    Lowers holding cost
    Lowers ordering cost
    Wal-Mart has made ordering small batches with greater frequency a profitable reality.
    R educes safety stock and EO Q
    R educes lead time
  • 76. RFID
  • 77. RFID
    Radio frequency identification
    Keep track of goods at any point in time, and also tells you where it is.
    Eliminates physical counting of inventory
    Is in line wit JIT.
    As soon as inventory levels go down, Walmart can re-order.
    Implemented in 2 0 0 5.
  • 78. Why RFID ?
    Reduce the possibility of inventory shrinkage and out-of-stock situation.
    Improve fulfillment rates.
    Improve the customer service.
    Reduce inventory and labor cost.
    Eliminate many manual process and improve the operation efficiency.
  • 79. RECOMMENDATION
  • 80.
    • Get employees from places where labor is cheap.
    • 81. Increasing wage rate for employees
    • 82. Keeping high quality products.
    • 83. Should focus on service along with lower price.
  • Thank You !!!
  • 84. ANY QUESTIONS?