Operation Management for Walmart

WELCOME

TAZKIA SANJANA TISHA093 0236 020

SADIA AFRIN 081 092 030

M FAZLAY RABBI081 409 030

LUBANA NUSRAT081 806 030

AL AMIN REDWANUR RAHMAN

081 162 030NAFEES KHAN073 483 030

COMPANY BACKGROUND

Founded by Sam Walton in 1962 Walmart has 8,446 retail units under 55 different

banners in 15 countries. The largest private employer Sales of $405 billion in 2010, It has employee more than 2.1 million.

Slogan • Starting

slogan: Always Low Prices

• New slogan: Save Money. Live Better. (from 2 0 0 7 )

Mission Statement:• To give

ordinary folk the chance to buy the same thing as rich people

Vision Statement:• To become the

worldwide leader in retailing

Wal-mart & the COMPETITION

• To sustain competitive advantage, a firm must ensure that its competition finds it hard to imitate its chosen position.

COMPANY SALES (MIL) FY2006

INDUSTRY AVG. 39,992

Wal-mart 312,427

TARGET 55,363

KOHL’S 14,247

DOLLAR GENERAL

8,941

BIG LOTS 4,534

• Operations Management ("POM") is about the transformation of production and operational inputs into "outputs" that, when distributed, meet the needs of customers

Outputs

Strategy

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.

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

Productivity

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.

Industry Environment - Porter's five forces of competition

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.

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...

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.

Wal-Mart product and service design

Provide services according to the consumers necessity to save money

and live a better life.

Product cost, product delivery-response time, product variety, product quality

Wal-mart’s product variety?

High

Wal-mart’s product quality?

Low - Medium

Introduced new Layout to improves Customer Experience with faster service.

Always offer unbeatable Prices.

Layout of the stores will save customers time as they shop for everyday necessities.

Its Service layout create an open shopping environment that helps customers find what they are looking for quickly.

Service Layout

Wal-Mart Shelf management

Capacity Planning for Wal-Mart

Capacity Planning

o The process of determining the production capacity needed by an organization to meet changing demands for its products.

o The process of determining product quantity needed by a firm to meet the demand of consumers.

Essential elements of Capacity Planning

FacilityProduct & ServiceHuman Resource

Among all elements for capacity planning, followings are essential for Wal-Mart:

Facility Factor

• Shop location

• Shop layout

• Shop Si z e

• Warehouse Si z e

• Warehouse layout

In USAOperating in 5 0 states4,3 0 0 facilities for all sort of

outlets

Around the globe14 countries4 0 81 stores

Facility Factor

• Shop location

• Shop layout

• Shop Size

• Warehouse Size


New layout for customer experience.

Shop layouts has been classified based on Wal-Mart's operation

Wal-Mart supercentersa full-service supermarket

Discount storesdiscount department stores

Neighborhood Markets Shop for daily necessary goods

Sam’s Club warehouses membership based stores

Facility Factor

• Shop location

• Shop layout

• Shop Size

• Warehouse Size


Wal-Mart U.S. 602.9 million sft.Wal-Mart international 269.9 million sftSam’s club 79.4 million sftTotal Size 952.2 million sft.

Average size of each outletWal-Mart supercenters

Varies between 51,000 sft to 51,000 sft. Average size 102,000 sft.

Discount stores Varying from 98,000 to 261,000 square with an average

of 197,000 sft.

Neighborhood Markets Averages about 42,000 sft.

Sam’s Club warehouses Average club size of 133,000 sft.

Facility Factor

• Shop location

• Shop layout

• Shop Size

• Warehouse Size


• Single large warehouse for a single state.

• Covers all stores of a state

• Also has warehouse for Sam’s club which is a membership based store.

Facility Factor

• Shop location

• Shop layout

• Shop Si z e

• Warehouse Si z e


Data warehousing layout

• A networked connection with store inventory with suppliers for inventory supply when needed.

Product and Service Factor

• Price

• Sales

• Suppliers

Every day low price.

Lower price than competitors (price leadership).

Lower price due lower operational cost.


• Price

• Sales

• Suppliers

Net Sales of walmart in 2009-2010

Wal-Mart U.S. $2 58.2 billionSam’s Club $ 46 .7 billionWal-Mart International $ 100.1 billionWorldwide Total $ 405 billion


• Price

• Sales

• Suppliers

• Partners with more than 2,5 0 0 minority-and women-owned business suppliers.

• 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

• 1.4 million employees only in U.S.

• Largest privet employers in US, Mexico & Canada.

Human Factor



• Skill

• Wages

• 869000 women working in Wal-Mart.

• More than 430,000 employees are 50 and over.

Human Factor



• Skill

• Wages

• Both Skilled and low skilled employees.

• Employs senior citizens who needs supplemental income.

• Employs Students who needs skill and experiences.

Human Factor



• Skill

• Wages

• Hourly wage rate.

• Wage of $ 1 2 per hour for semi skilled employees.

• Higher wage rate for skilled employees and in urban outlets.

• Bonus on performance.

Reliability

Suppliers View• Wal-Mart wants to be first• Wal-Mart is an innovator's

paradise• Wal-Mart has the space• Wal-Mart is great at

executing• Wal-Mart has scale• The science behind shelf

placement

Customers View• No "buying

committees" and nobody micromanages buyers

• Low price• Number of Outlets• Redundancy

SUPPLY CHAIN MANAGEMENT

• “ Supply chain management involves the flows of material, information and finance in a network consisting of customers, suppliers, manufacturers, and distributors”

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

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

RFID

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.

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.

RECOMMENDATION

• Get employees from places where labor is cheap.

• Increasing wage rate for employees• Keeping high quality products.• Should focus on service along with lower price.

Thank You !!!

ANY QUESTIONS?

Operation Management for Walmart

Education

retail units

different banners

largest private employer

company background

sam walton