Operations Management Research Online Virtually

Question :

Choose a company that you can research online virtually.  If you cannot find sufficient information for a question directly from the organization, what that company would likely use in that situation, based on its industry, market, product, or service with evidence that your proposal would be viable.

Answer :

1 Introduction

From procurement to sales Walmart stores have been known to have controlled operations in every location globally. Walmart Canada has been chosen for the purpose of this report because of its independent business structure and rapid success in the Canadian market. The deeper aspects of the company’s supply and logistics of the company have been discussed in the following sections.  

The company’s mission statement reflects its beliefs, i.e Saving Canadians money so they can live better. Although Walmart Canada is a part of Walmart Inc., it functions independently. The principles and the values of the parent company are followed but daily business decisions are independently made by Walmart Canada. By 2014, the company had also launched a subsidiary named Walmart Canada Bank which manages Walmart Rewards MasterCard (Walmart Canada, 2014). Since the company’s inception, it has grown to be the best retail company in Canada. Its customer centric policies have ensured its success in e-commerce as well. Its flagship online store has grown over 40% in 2015. It offers online grocery pick up at 11 locations in Ottawa which means customers have the facility to order and pick up their order 24*7 at any required location. This service is offered free of any cost to the customers. In order to facilitate the e-commerce service known as Walmart Grab & Go Locker, Walmart Canada has partnered with 7-Eleven Canada Inc. The company’s business commitments are reflected in its efforts to launch a private fleet that provides free delivery services till 9 pm every day and same day delivery in Toronto. This retail business has one of the most effective supply chains in the world which adds value to the Canadian economy as well. In the year 2016 the company invested $350 million CAD which generated more than 4000 employment opportunities in the country. Canadian suppliers are important associates of Walmart Canada which injects $19 billion CAD into the economy annually. 

2 Operations functions at Walmart Canada

It depends on the inventory turnover information to distribute the products. From manufacturers to stores the entire procurement and distribution process uses modern technology. Next is the logistics function of Walmart (Hayden, Lee, McMahon, & Pereira, 2002). The company has a private truck system which is the key contributing factor to its efficient logistics management. Its major operations functions include inventory refill on a weekly basis which is achieved in a short period of time using the truck fleet. The functions involve strategies such as cross-docking which ensures speedy transfers from factories to warehouses. In this method extra storage is not required as the goods transfer between inbound and outbound transports happen directly. Products such as bread and vegetables are considered high velocity products and their transportation fully depends on automated process functions. Inventory management is the company’s final process function. Walmart Canada’s inventory management is dependent on information systems. The products in stores form the output of the company and the use of information technology helps it to track consumer demand which quickly reduces the inventory amount and vendors can be contacted for immediate re-ordering. Thus inventory is never out of stock due to delayed re-orders or delivery, rather it is maintained at all times. It has special collaborations with companies such as P&G which are appropriate examples of information systems application in process functions to achieve timely procurement and delivery. 

3 Competitive Priorities and Order Qualifiers: Walmart Canada

All of these priorities are integrated to give the company competitive edge in the retail market. As an appropriate example of Walmart’s competitive priority, the company’s pricing strategies can be considered. It follows price leadership which is closely connected to its cost leadership. It has the lowest cost of operations in the industry which enables it to offer products at a lower price than its competitors. Research suggests that Walmart’s products are 25% to 28% cheaper than its competitors on an average basis. Raw price differences between Walmart and its competitors indicate that the company offers 0.25% to 2% discounts on products on a daily basis (Marcilla, 2014). 

The order qualifiers for Walmart Canada are mainly based on service level and flexibility. Therefore, these include zero empty shelves, products always on stock due to efficient inventory management, efficient product placement which means having the required product in the appropriate place at the required time, customers’ priority based store timings which means customers’ preferences play the decisive role in store accessibility at the appropriate timing, and brand variety which means multiple brands for a single product category or sub-category. Store accessibility qualifier also consists of sufficient and convenient parking spaces and dedicated service assistance. 

requirements of retailers.  

4 Forecasts in Walmart Canada

At Walmart Canada the main role of forecasts lies in the capacity design. It uses forecasts to manage company capacity because of the natural constraints of human capital in capacity designs. It uses various demand forecast tools which are based on customer’s purchasing behavior. These forecasting data is useful for the supply chain managers. Some pillars of demand forecast at the company include machine learning robustness, CUDA, Rapids and GPU (Woodie, 2019). Demand forecasting is important for Walmart because it is the largest grocer in the world. There has been times when the company has faced demand related data challenges when there has been sudden increase or decrease in demand. These forecasts issues would always remain but the company has designed robust machine learning programs which can manage the erratic nature of the grocery market demands and adjusts the system accordingly. However, it is a slow method because of the complex data computations involved. Initially the company used Scala machine learning system inspired by Apache Spark. However, the method failed because of the complex amount of data processing involved where the algorithm had to process huge amount of data and it could do it successfully only during the first time. Hence the shift to CUDA happened in a rush which means it went on to apply Nvidia’s Rapids software. The software uses a combination of C++ and R and CUDA and it can successfully process clustered data. Walmart had to change the coding system in order to generate forecast results. The new coding system was effective as the integration of CUDA actually finished the forecast pattern. The company uses an ensemble of algorithms such as the internal TensorFlow and gradient boosting XGBoost code which are parts of the Rapids. These tools use around 350 features of the data which is to be processed. Historical data analysis is a part of the system. The implementation of four GPUs on every server enabled Kalman filter, which is the main algorithm that increases the speed of the process. Although GPU did not handle the entire forecasting system earlier, by the end of 2020 it is expected to become the sole tool for forecasting in the company.

5 Inventory Management at Walmart Canada

The company has various inventory management techniques for its store products. It is an advocate of the Vendor Managed Inventory and relies on Electronic Data Interchange or EDI to communicate with its suppliers. The company saves both costs and time through this method because there is no need to order products and pay the bills. Vendors can directly see the inventory situation for every product. The vendors manage the inventory in the sense that they can use the information access to improve their own operations and test new product’s performance. However, Walmart has control over the product schedules and as a result, from distribution centers to stores the flow of products are as per expectation. Refiling for Walmart is a twice a week occurrence while for its competitors it is only twice a month. There is no re-ordering involved in the process. Besides, the cross-docking system mentioned earlier is the most important part of the company’s inventory control operations. When the inventory arrives from the suppliers to the distribution centers all products are unloaded and divided into smaller segments. Multiple small lots of inventory are generated from every delivery truck and then these are arranged in smaller sized trucks and distributed to the stores. The key here is to save on additional storage space and transfer products directly from inbound to outbound logistics. The company’s inventory turnover is usually around 8x. This means that the average shelf storage of each product is only 45 days i.e. they would be sold within 45 days. The company deals in finished goods and groceries only and these are stored in the inventory. 

6 Conclusion

The discussion above has revealed the keys to the success of Walmart Canada’s supply chain and process management. The key findings indicate that the company uses intelligent process management which is its instrument to success. Also, its adaptability is commendable and adaptability here refers to the ability to adjust to the needs of the market, the changing needs of the workforce and the product and service upgradation requirement. The company has duly invested in market and consumer research and its strategic business management has led to expansions which can withstand any kind of change. Walmart Canada is therefore a true example of a leader in the retail sector. 

7 References

Malur, R. (2019). Pillars of Walmart’s Demand Forecasting. 

Marcilla, B. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals. 

Nguyen, T. T. (2017). Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century . Journal of Economics and Management .

Ostrega, J. (2016). Three Ways Wal-Mart's Labor Scheduling Overhaul Will Transform Retail. 

Smithson, N. (2017). Walmart: Operations Management 10 Decisions, Productivity.