Todayís Wal-Mart is not the Wal-Mart of Sam Walton. Todayís Wal-Mart may be a sales leader, but has lost its moral compass. Wal-Mart must restore the integrity and respect for the individual that were the hallmarks of Sam Waltonís values.
Technology
At the core of Wal-Martís principles is a commitment to low prices. Managing its inventory is critical to keeping costs down and is especially important to a large enterprise like Wal- Mart, which has thousands of stores and tens of thousands of suppliers.
Wal-Mart requires up-to-date sales information as well as good communication with its suppliers.
Wal-Mart turned to technology in the early 1980s-first for collecting and analyzing sales data, then for transmitting orders to suppliers through electronic data exchange. By the 1990s, Wal-Mart was collaborating electronically with thousands of suppliers using its own applications, known collectively as Retail Link.
Although Retail Link elevated Wal-Mart to a new level of efficiency, the company was saddled with the task of sending the necessary software to vendors, making sure the vendors had the proper versions, and maintaining a bank of dial-up modems.
Wal-Mart is also strongly committed to effective employee communications. But with more than a million employees, the company found it difficult to keep staff informed and connected to one another. Such a connection is especially important to Wal-Mart: Founder Sam Walton believed that store associates should be thoroughly knowledgeable about their corner of the business. When employees have important information to share, they need to know where to send it.
Challenge
To keep costs down, Wal-Mart needed to build on the success of its Retail Link application, while making the inventory management system easier for vendors to use and for the company to administer and manage. It also needed to increase productivity by improving communication among employees.
These challenges were complicated by the fact that Wal-Mart has tens of thousands of suppliers-all using their own disparate computer systems and technologies. It also has more than 1 million employees spread out among approximately 4,000 stores, clubs, and super-centres worldwide.
Solution
Wal-Mart partnered Cisco Systems to transform Retail Link from a traditional dial-in network to an Internet application and to create-Pipeline, its company-wide intranet. Vendors can learn how their products are selling, create what-if scenarios, and then work with Wal-Mart on sell-through and pricing. Password protection provides varying levels of access to information.
The Cisco solution provided immediate benefits to Wal-Mart:
The system is easier for vendors to use because they need only a Web browser,
rather than specialized software, to access the network.
It is simpler and less expensive to maintain.
Because the system is Internet-based, more of Wal-Martís international suppliers can use it.
It can deliver information more quickly, because data transmission is no longer
limited to the speed of dial-up modems.
Software can be updated on the Web instantly.
Connectivity between the stores, the centralized database, and the distribution centres
is more reliable.
To complement the supplier-focused Retail Link, Wal-Mart introduced Pipeline, a company- wide intranet. Pipeline delivers company news, policies, procedures, and other relevant information to Wal-Mart employees. It also provides a complete, up-to-date telephone directory of the entire company organized by name, location and function. Pipeline is a much more efficient way of locating phone numbers both within and outside the company: it eliminates the cost of directory-assistance calls, as well as the need to distribute telephone books to all Wal-Mart locations. Employees can also use Pipeline to sign up for insurance, review company policies and check out benefits information, all online.
Results
The solutions, that Cisco offered ñ Internet applications for supply-chain management and a companywide intranet ñ helped Wal-Mart to:
Satisfy customers by providing them with products they wanted at low prices
Work with the companyís buyers to manage store inventory, including forecasting,
planning, producing and shipping
Lower its inventory costs
Communicate better with its many vendors and suppliers
Improve internal efficiencies and employee self-service functions Wal-Martís Pipeline intranet offers many additional benefits:
It serves as a vital resource for internal information, delivering company news,
policies and procedures to more than 1 million Wal-Mart employees.
It provides employees with crucial industry information and access to a company-
wide phone directory.
It helps keep human resources information current and allows employees to easily
access their benefits data, sign up for insurance and update their records.
Notes
Legal
The latest reports indicate that Wal-Mart is fighting 38 different state and federal lawsuits filed by hourly workers in 30 states, accusing the company of systematically forcing them to work long hours off the clock. Two years ago, Wal-Mart settled a similar suit in Colorado reportedly for $ 50 million. Most lawsuits are waiting to be certified as class actions so that thousands of workers with similar claims can be represented together. According to the New York Times, June 25, 2002, 23 states are awaiting rulings for class action status, two states were denied class status but are appealing, and three states have been granted class action status.
In addition, there are about 150 different lawsuits filed across the United States.
Notes Socio-Cultural
Wal-Martís founder Sam Walton believed in servant-leadership, which makes it their mission to serve their associates and customers with compassion and integrity. Their emphasis is on their associates, children, families, the local community and other local programmes that improve the quality of life in their communities.
Specifically, Wal-Mart focuses their giving on:
Community education and scholarships
Family health and welfare needs-particularly the youth
Economic and workforce development programmes that benefit the communities
Environmental issues
Community-based organizations
Challenges
Today with the legal problems that Wal-Mart has, a lot of its good work goes unnoticed. Although Wal-Mart claims to generate employment in the community where it sets up shop, research shows that for every three jobs generated, two are lost. It takes Wal-Mart three years to completely wipe off the small retailers in the community. With its supply chain well networked, local companies have no option but shut down. Wal-Mart needs to be compassionate towards local communities.
To conclude, Wal-Mart will have to revise its employee policies worldwide, if it is aiming to be an employer of choice. It would need to introspect while expanding, especially in international markets where competition is more intense and price is not really an issue. Questions
1. If Wal-Mart were to enter India, how should they evaluate their environment?
2. Is there a case for them to ignore SLEPT factors - as there are hardly any regulations on retailing?
3. Give Socio-cultural reasons to elucidate why Wal-Mart may not succeed in India.
Source: Service Marketing: Concepts, Planning and Implementation, C K Bhattacharjee, Excel Books