Walmart: A Leader in The Implementation of Information Systems

Walmart: A leader in the Implementation of Information Systems
Introduction
Walmart, the world’s largest retailer in terms of revenue, is a U. S based multinational with over
11,000 stores spread across 27 countries. The company which employs approximately 2.2 million
employees and manages inventory to the tune of USD 32 billion is a paragon of excellence in the
realm of operations, inventory and supply chain management. Walmart could not have achieved its
monumental feat in the absence of a robust IT infrastructure, a testimonial of which is the fact that
the company reportedly spent a whopping USD 10.5 billion on Information technology in the year
2016.
Technology is at the heart of Walmart’s robust supply chain management. The company has the
most robust and largest IT infrastructure of any private company in the world, and it is this
remarkable state of the art IT infrastructure that enables Walmart to accurately forecast demand,
and inventory levels, manage customer relationships,
Leveraging Information Systems to manage its Supply Chain activities
Information systems are leveraged at various levels of the supply chain in order to effectively
manage operations and optimize costs. The prime objective of supply chain management is to move
the right product to the right customer at the right time by the most efficient means and Walmart
has mastered the art of effective SCM by leveraging its information systems.
USE OF TRANSACTION PROCESSING SYSTEMS AT WALMART
Walmart has been at the forefront in terms of registering point of sale transactions and creating a
mammoth database. The company has deployed Radio Frequency Identification (RFID) to track and
identify inventory through the supply chain thereby enabling real-time transfer of data. Therefore,
by using RFID, Walmart can keep track of each and every transaction that takes place and the
technology works in synergy with its inventory replenishment system. Walmart has linked its RFID
system with its Point of Sale (POS) and EDI (Electronic Data Interchange) thereby enhancing
interactions between systems.
MANAGEMENT INFORMATION SYSTEMS AT WALMART
USE OF DECISION SUPPORT SYSTEMS AT WALMART
In order to sustain its competitive advantage as the world’s largest and most profitable retailer, it
was imperative for Walmart to leverage Decision support systems to enhance operational efficiency.
The company created a proprietary tool known as Retail Link, which is extensively used by all of its
suppliers and vendors to access large amounts of online, real time, item level data to enable those
companies to improve operations. Walmart’s Retail Link is extensively used by suppliers to predict
buying patterns and seasonal product activity, managing inventory, anticipating consumer needs,
and increasing brand awareness.
USE OF EXECUTIVE SUPPORT SYSTEMS AT WALMART
Executive support systems enable executives of the highest order to devise strategic plans based on
unstructured data by leveraging the existing structured data. For instance, the decision whether to
remain or exit a particular market is driven largely by the performance of Walmart in the market, the
tastes and preferences of consumers, the general health of the economy and the maturity level of
the market amongst other factors. In such a scenario, executives cannot rely solely on structured
data retrieved from Information systems, and instead utilize a wide range of information from
internal as well as external sources to arrive at a plausible solution.
USE OF MANAGEMENT SUPPORT SYSTEMS AT WALMART
Walmart keeps a record of each item in the computerized system. This allows Walmart to keep
track of each item sold and price of an item. Also, it creates a sales receipt for each customer. This
helps Walmart to handle information more efficiently, analysis of sales and store item by item sales
data. Using Point of Sales avoids overstocking of the product if it's selling slowly. If any product is in
demand, then Walmart can reorder that product. Thereby it enables middle managers to report
accurate data to higher management.
TRANSACTION COST MINIMISATION OF WALMART
Walmart’s supply chain system is regarded as one of the most technologically advanced and
efficient, thus increasing efficiency and reducing transaction cost. Walmart was one of the pioneers
in using barcodes and RFID tags (Radio frequency identification technology). This helped in getting
detailed product information to the product. The use of advanced inventory management system
helped in improving the efficiency.
Walmart introduced the concept of “vendor partnership” to strengthen the business relationship by
exchanging information about sales and inventory levels and thus increasing efficiency by cutting
transaction cost. The other mean to reduce transaction cost was by placing the distribution centres
strategically to solve the replenishment problem that company faced in the beginning. Walmart
obtained discounts from vendors for bulk purchasing. Because the volume of sales was large it could
make substantial profits even in lower margins.
EBUSINESS INTIATIVE IN WALMART
Walmart is worlds third-largest online retailer and one of the fastest-growing E-commerce. Walmart
has acquired a number of online retailers since 2016 like Jet.com, Hayneedle.com, Shoes.com,
Moosejaw.com. Walmart does online retailing on the website (Walmart.com) as well as on the
mobile app. It also offers other online services like Walmart grocery, Pickup discount, Easy Reorder,
Free 2 Day Shipping, and Walmart Pay. This has significantly increased its online market and boost
its sales. Walmart has also bought 77% stakes in Indian e-commerce giant Flipkart. This way they will
enter the Indian market and end the monopoly of Amazon.
PORTERS 5 FORCE ANALYSIS OF WALMART
Firstly, Walmart has a strong threat from new entrants as it operates in a retail setup where entry is
easy, running costs are low and capital requirements are moderate. New firms may compete on
location, price etc. Also, some already established brands might enter into retail market.
Secondly, in the highly saturated retail industry, Walmart faces intense rivalry from competitors
which includes supermarkets, grocery stores, departmental stores etc. In order to survive, it needs
to innovate and achieve economies of scale.
Thirdly, threat of substitutes is not very relevant for Walmart as it sells large variety of products
having few substitutes. The existing substitutes have high costs. Also, bargaining power of buyers is
low due their large numbers, ultimately having negligible impact on the sales/revenue. The
amount/quantity of purchase is also small. Lastly, bargaining power of suppliers is also low, again
due to their large numbers and intense competition among themselves to secure a space within
large retails stores.

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Walmart: A leader in the Implementation of Information Systems

Leveraging Information Systems to manage its Supply Chain activities

MANAGEMENT INFORMATION SYSTEMS AT WALMART

USE OF DECISION SUPPORT SYSTEMS AT WALMART

USE OF EXECUTIVE SUPPORT SYSTEMS AT WALMART

USE OF MANAGEMENT SUPPORT SYSTEMS AT WALMART

TRANSACTION COST MINIMISATION OF WALMART

EBUSINESS INTIATIVE IN WALMART

PORTERS 5 FORCE ANALYSIS OF WALMART

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