The operational strategy for sustainable business success for WalmartSurface Transport & Logistics
The operational strategy for sustainable business success for Walmart
This report shed light on the consistent operational challenges faced by Walmart as a result of out-of-stock inventory and empty shelves due to the unpredictable surge in customer demand specifically during the Covid-19 pandemic.
Consequently, this has attributed to declining stock and crunch in selling position of the brand that needs immediate attention for effective inventory management. This report presents a comprehensive analysis on a range of efficient operational strategies that include advanced capacity planning and process designing with respect to sophisticated logistics system of Vendor managed inventory model and Just-in-time cross-docking and innovative technological application of BOPIS that emphasizes leveraging competitive advantage in order to give improved levels of customer service. The critical evaluation of the Triple-A supply chain model justifies its application in respect to the specific context of chosen issue while presenting a robust rationale for the development of efficient operational strategies to address the current issue faced by Walmart. The report concludes with a brief overview of the discussion along with a set of recommendations for further improvement.
Challenge
Business process redesign – Process Design and Capacity Planning This strategic decision emphasizes the operational management of Walmart by the forecast prediction and monitoring capabilities through behavioural analysis. The behavioural analysis of the customer demands and supply through the e-commerce and store purchase data serves as the basis company’s capacity planning and process designing for optimizing the personnel, space and equipment (Chen et al 2021). The managers of Walmart must monitor the capacities continuously and inform its corporate managers to adjust the process design and production planning of the goods and services to ensure sustainable inventory and meeting the continuous and changing demands of customers. For effective capacity planning, Walmart may utilise its forecasting strategy to manage its capacity specifically to address its human resource constraints. The forecast on customer purchase behaviour set a clear direction of responsibilities and day-to-day responsibilities, and make suitable scheduling to discover the level of output while minimizing the overall operational costs. In argument, Fattahi et al (2015) capacity must have enough room for instant changes i.e., Walmart must have adequate provision in terms of personnel, inventory space, and sufficient budget to increase or decrease the production level or alter the production capacity on the basis of changing demand of customers. Hence, for effective capacity planning, the company must ensure adequate facility layout, warehouses to store the excess of production and appropriate equipment, personnel capacity with maximized efficiency and desired time for the inventory movement warehouses to the Walmart stores.
Walmart is an American retail giant facing extreme operational challenges during the Covid-19 pandemic. According to Scott Muskin, the R5 capital analysts have highlighted the declining stock of the brand to a sell position by lowering the target price to $131 from $157. The
operational challenges faced by Walmart are a result of out-of-stock inventory and fresh standards of groceries that have not been applied uniformly across the 5500 stores of the brand. The overstocks, out-of-stocks, and under-stocks of supplies are a persistent operational challenge faced by Walmart that has a significant effect on its earnings in the near future (Harsoor and Patil, 2015). Hence, Walmart must emphasize making the hefty investment to improve its omnichannel businesses. The lean inventory of products in Walmart before the pandemic has led to the specific operational challenge; however, the unpredicted surge in demand led by the pandemic on Walmart exerted additional pressure over the brand. Although Walmart is exercising intensive efforts to get the products back in stock, however without an efficient operational strategy, it becomes difficult for the organization to improve their operational efficiency and level of customer satisfaction.
Solution
Just-in-Time cross-docking While Walmart employs multiple methods for its inventory management, Just-in-time inventory is an efficient approach that involves activities and measurement aimed at the operational objective to attain minimum storage and costs (Boysen and Fliedner, 2010). The application of JIT inventory approach can be applied in the form of cross-docking where the company’s truck and supplier truck meet the company’s warehouse or the distribution centre of merchandize (Tootkaleh, Ghomi and Sajadieh, 2016). This helps in transferring the goods directly from the supplier trucks to the Walmart’s truck to deliver the goods directly to the Walmart stores thus reducing inventory pipeline, cutting operational costs and ensure seamless scheduled delivery of the customer orders. The major competitive advantage of JIT cross-docking leveraged by Walmart warehouse is the reduction in inventory size (Vogt, 2010). As a small number of goods are stored in the warehouse, hence the reduced size of inventory is cost-effective to maintain (Jindal et al 2021). In addition, the cross-docking approach will enable Walmart for easy and quick delivery of goods at the stores which enables the firm to respond to the demand fluctuations and related market changes in real-time. Hence, this effective initiative to inventory management enhances the operational efficiency and business resilience of Walmart. Vendor Managed inventory Model Walmart can achieve the desired outcome by the efficient management of inventory by the implementation of vendor managed inventory model in its operations. This model enables the Walmart suppliers to retrieve data from the information system of the company, for example, data on the current inventory status of Walmart and the rate of goods outflow or the rate at which certain goods are sold to the customers (Bookbinder, Gümüş and Jewkes, 2010). The suppliers get the information beforehand and decide when to send the additional goods to the inventory, whereas Walmart control and monitor the real transit of the goods from warehouses to the store. In critic, Beheshti, Clelland and Harrington (2020) argue that Vendor managed inventory model shifts the inventory control over the suppliers to great extent. However, this model proves to be efficient in minimizing delays in inventory movement across the supply chain. This benefit is crucial in the improved leverage of competitive advantage and better customer service due to cost minimization in inventory management activities. As the suppliers have direct access to the current data on inventory data of Walmart, hence the company does not require making the hefty expenditure for the additional personnel assigned for monitoring and controlling the inventory flow. Moreover, the expenses associated with human and financial resources are directly passed on to the Walmart suppliers for undertaking the inventory management in the company.
Vendor Managed inventory Model
Walmart can achieve the desired outcome by the efficient management of inventory by the implementation of vendor managed inventory model in its operations. This model enables the Walmart suppliers to retrieve data from the information system of the company, for example, data on the current inventory status of Walmart and the rate of goods outflow or the rate at which certain goods are sold to the customers (Bookbinder, Gümüş and Jewkes, 2010). The suppliers get the information beforehand and decide when to send the additional goods to the inventory, whereas Walmart control and monitor the real transit of the goods from warehouses to the store.
In critic, Beheshti, Clelland and Harrington (2020) argue that Vendor managed inventory model shifts the inventory control over the suppliers to great extent. However, this model proves to be efficient in minimizing delays in inventory movement across the supply chain. This benefit is crucial in the improved leverage of competitive advantage and better customer service due to cost minimization in inventory management activities. As the suppliers have direct access to the current data on inventory data of Walmart, hence the company does not require making the hefty expenditure for the additional personnel assigned for monitoring and controlling the inventory flow. Moreover, the expenses associated with human and financial resources are directly passed on to the Walmart suppliers for undertaking the inventory management in the company.
Launch of BOPIS
The launch of BOPIS is a strategic operational initiative aimed at the effective delivery of end products to customers. BOPIC (buy Online Pickup in-store) let the customers place their orders on the company’s website and pick it up from the designated Pickup tower in selected stores (Walk-Morris, 2019). The pickup tower works as a high-tech huge vending machine that holds, retrieve and dispense online orders by scanning of displayed barcode on the smartphone screen of the customer. It offers a seamless inventory of supply and customer delivery with no requirement of employee direction and no hassle of in-store shopping. As a critic, Walk-Morris (2019) argues that a failed BIOPIC transaction would result in an unprofitable outcome while leaving the customers to feel frustrated which may spread negative reviews; negative word of mouth thereby hampering its brand loyalty. For example, the brand website confirms that the product is in stock and it will be ready on the specified date and time. However, if it fails to provide adequate supply, the valuable time and effort of customers get wasted followed by a breach of trust and negative experience affecting the customer loyalty towards the brand. Alternatively, if BOPIS is executed with efficiency will reap brand loyalty, lower the operational costs (i.e., waive off the shipping cost) with profitable opportunities for increasing market-share (Paramannand, 2021). However, to ensure effective execution of the BOPIS strategy, the retailers must maintain two overarching objectives of (1) seamless customer experience irrespective of their order touchpoint and (2) maintaining sufficient in-store inventory before expanding digital buying opportunities.
Result
In reference to the inventory issues and significant decline reported in its operational performance, this study developed effective operational strategies focusing on the areas of process design and capacity planning, technology and innovation. In respect to relevant research on the selected issue, this report suggests efficient capacity planning in Walmart through Just-in- time Cross-dock, the implication of vendor managed inventory model and the launch of BOPIS in reference to the subsequent application of Triple-A supply chain focusing on the short and long-term success of Walmart in a highly volatile business market. The combined approaches of these operational strategies have a sound rationale that ensures efficient inventory and supply chain management in Walmart that effectively leverage competitive advantage to ensure an improved level of customer service in a volatile market.
Recommendations
In reference to the constantly shifting paradigm of market demands and supply chain volatility, Walmart may foster its competitive advantage by consistent adaptability to new markets and advanced supply bases by monitoring the economies of scale.
Walmart must focus on establishing advanced logistics infrastructure and fresh supplies through the incorporation of intermediaries.
Walmart must be sufficiently flexible in product designing by the real-time assessment of immediate needs of customers to address the dynamic needs of customers and maintain adequately stock up the inventory. Moreover, in order to incorporate the operational strategies discussed in this report, Walmart must be efficient in establishing new contacts with fresh supplies and vendors while emphasizing infrastructural renewal and market scanning in an attempt to remain competitive in the industry.
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