Walmart Ecommerce Ops
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What is Wal-Mart dong that seems to fit a definition of “successful” e-commerce operations? What cold they do better? How does shopping on-line compare to your experience looking for a similar type of item at a bricks-and-mortar store? How does this site compare to other experiences youve had with e-commerce??
When you talk about Wal-Mart the first thing that you have to remember is that they are the largest retailer in the world. Wal-Mart employs more people in the United States than any other company and is second only to the federal government in the number of employees that they have on the payroll. These are important facts to consider in that due to their tremendous size, Wal-Mart has an enormous effect on the economy and the way that business is conducted. In many instances, if a company wants to continue to do business they have to either follow what Wal-Mart is doing or attempt to compete against Wal-Mart in some other fashion. It is not unreasonable to state that Wal-Mart is the reason why many businesses are in business today. They were forced out by the sheer size of Wal-Mart.
So, with this in mind it is interesting to note that Wal-Mart ranks only third on the e-commerce scale behind Dell computers and Amazon. (Sullivan 2004) What is the reason for this? Its hard to say and point to one specific reason why Wal-Mart doesnt lead this list but maybe looking at the criteria outlined in the background reading will help to answer this question. (Wollan 2003)
In the background reading a list of criteria is given that outlines the advantages of e-commerce as it relates to operations management. The companies that are able to capitalize on these are the ones that will be successful. Wal-Mart is able to capitalize and continues to do so as it improves and expands into the e-commerce environment. Some of these advantages are:
Better availability of service
Cost reduction in information processing
Better of timeliness of service
Better access to customer markets
Initial cost of operations less expensive
Operating costs of operations less expensive
Better purchasing prices from suppliers
Improved product development
Improved scheduling
Better supplier quality
Some of these might not be as clear unless you take the time to understand how Wal-Mart operates. (Wal-Mart, 2005) Wal-Mart treats each of its different divisions as separate companies. The Wal-Mart Corporation consists of Wal-Mart stores, Sams Club, Wal-Mart International, and Walmart.com. Each of these entities is a separate company that is not dependent on the other. As such the success of the initial start up of the companies is not based on how well or poorly the corporation is doing.
Further in the background readings, Dr. Wollan outlines eight areas that can be linked as critical success factors for the operations of e-commerce.
Supply Chain Management
Product and Process Design Management
Purchasing Management
Forecasting and Scheduling Management
Inventory Management
Quality Management
Human Resource Management
Reengineering and Consulting Management
In my opinion the most important of these factors is the Supply Chain Management. If the customer is not able to get the product when they want it or the product is always sold out, they will go somewhere else. Wal-Mart has taken the role of leader in how suppliers will do business with companies. In August 2002, Wal-Mart told its suppliers they would have to start sending and receiving electronic data over the Internet. As a result, more than 98% of Wal-Marts Electronic Data Information (EDI) exchanges are done over the Internet using AS2 software. (Zimmerman 2003)
This leads me back to my first point in that what Wal-Mart does others will do also. The suppliers began to get their AS2 infrastructures up and running in anticipation