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Walmart's Inventory Management System

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by Brittany Parker on 22 September 2013

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Transcript of Walmart's Inventory Management System

Simeng Feng, Daniel McElhenney, Brittany Parker, Nam Tran Walmart : Inventory Management Overview of Walmart Inventory Management Impact of Information Systems:
Walmart's inventory management process would not be possible without information systems. The entire organization relies on the linked inventory management and POS systems to maintain their standards for business and sales.
Allows for just-in-time stocking methods that reduce cost and resource requirements.
Provides all necessary information in one place
Provides more information for upper-management and other decision makers
Reduces responsibility on lower-level employees, which reduces training costs
The system increases the need for an effective Information Technology (IT) department
Information Management Issues:
Even with their complex and efficient inventory management system, Retail Link, Walmart often has a hard time keeping shelves stocked ("Is Walmart's Supply Chain Really That Good?", 2011). Vs. Competitors According to an article on Trefis, Walmart experiences more efficient inventory turnover than Target.

When compared to Costco, Walmart turns over its inventory about 12 times per year on average, while Costco averages about 13.8 times per year. This is partly due to the differences in the way the two stores sell their products. Costco sells in bulk, and therefore attracts more small businesses.

The net working capital for Walmart is also better than that of Best Buy. Best Buy's net working capital was around 0.75% in 2009, while Walmart's net working capital was around -2.6%. The negative value indicates better management and more cash in hand.

(Trefis Team, 2011) Conclusions Technology/System: Retail Link
Database system, developed by Walmart, that allows the company to track sales, manage inventory, review trends, and communicate with suppliers, among other tasks (Joe, 2010).

Infrastructure, Architecture, & Resources:
Linked computer network with intranet connection to all stores and corporate offices
Servers and software capable of processing massive amounts of data
Scanners
Barcodes or radio frequency identification (RFID) technology
Transmits data about a product to a scanner or data collection device
(Crosby, n.d.) In 1962, Sam Walton opened the first Walmart store. Walton’s dedication to providing quality goods at low prices and friendly customer service have helped Walmart to thrive throughout the years. Today, Walmart is a global leader and holds a secure position in the global industry ("History Timeline").

Products Manufactured/Sold:
Food
Clothing, shoes, and accessories
Electronics & entertainment
Home decorating items
Home improvement tools
Automotive tools & parts

Revenues: $443.9 billion in 2012
("2012 Walmart Annual Report")

Competitors: Target, Kmart, Costco, Best Buy, supermarket chains Inventory Management Overall, Walmart's Inventory Management System provides many benefits:
Faster inventory turnover
Decreased need for warehouse space
Reduction in safety stock
Better working capital utilization
(Atkinson, 2006)

These all contribute to improved performance and sales and better value for customers.

Walmart is able to provide better customer service due to its increased efficiency in operations. References "2012 Walmart annual report". (2012). Retrieved April 23, 2013 from http://www.walmartstores.com/sites/annual-report/2012/CEOletter.aspx
Atkinson, C. (2006). Walmart increases its supplier’s inventory levels. Inventory Management review. Retrieved April 23, 2013 from http://www.inventorymanagementreview.org/2006/04/walmart_increas.html
Crosby, T. (n.d.). How inventory management systems work. How Stuff Works. Retrieved April 23, 2013 from http://www.howstuffworks.com/how-inventory-management-systems-work.htm
Hamlett, K. (n.d.). The features of an inventory management system. eHow. Retrieved April 23, 2013 from http://www.ehow.com/list_6636015_features-inventory-management-system.html
"History timeline". (n.d.) Retrieved April 23, 2013 from http://corporate.walmart.com/our-story/heritage/history-timeline
"Is Walmart's supply chain really that good?" (2011). Retrieved April 26, 2013 from http://retailingtoday.com/article/walmart%E2%80%99s-supply-chain-really-good
Joe. (2010). What is walmart’s retail link system?. Retail Link Blog. Retrieved April 23, 2013 from http://retaillinkblog.com/what-is-walmarts-retail-link-system/3
Meng, J. (2011) Inventory management system in walmart. Blogspot. Retrieved April 23, 2013 from http://jiangmeng19880806.blogspot.com/2011/10/inventory-management-system-in-wal-mart.html
"Retail Link Performance Reports". (n.d.). Retrieved April 26, 2013 from http://www.retailright.ca/samplereport.htm
Trefis Team. (2011). Stacking up wal-mart's inventory management vs. costco and best buy. Trefis. Retrieved April 23, 2013 from http://www.trefis.com/stock/wmt/articles/38093/stacking-up-wal-marts-inventory-management-vs-costco-and-best-buy/2011-02-03 Benefits & Costs Features of Inventory Management Monitoring
Monitors inventory levels in all locations
Tracking
Tracks movement of all inventory
Automation
Automating routine functions like order fulfillment helps increase efficiency
Optimization
Data is used from inventory management systems to optimize inventory; examples of data used include fast-moving inventory, slow-moving inventory, and "dead" inventory
Radio Frequency Identification (RFID)
Sensors and barcodes are used to track the flow of inventory
Reporting
Inventory management systems can easily generate detailed, reliable reports of inventory statistics
Prediction
Uses collected data to predict future sales trends, allowing for more precise management of physical inventory
(Hamlett, n.d.) Benefits:
Effectively manages supply in regards to demand; this leads to better customer service and more sales
Streamlines operations
Reduces overstock
Increases inventory turnover
Allows each store to customize its inventory
Walmart also owns its own transportation system for inventory, which allows it to stock shelves 4 times faster than competitors
Simplifies tasks for many low level employees
In some cases prevents ownership until point-of-sale
Information sharing allows for closer supplier relations
Costs:
Inventory management systems can be expensive and complex, particularly if not used properly/inefficiently
(Meng, 2011) Global Growth (from "2012 Walmart Annual Report") Retail Link Reports This sample report shows the history of Walmart's dollar sales for 10 years. This is just one of the examples of the capabilities of Retail Link, Walmart's inventory management system.
("Retail Link Performance Reports") Summary In this presentation we will discuss the Inventory Management System used by Walmart.

An Inventory Management System is used to track all of the items that are kept in a Walmart store using technology. This has proved to be an invaluable tool at keeping so many stores running efficiently. By keeping track of their inventory Walmart has been able to save money maintaining stock and increase sales through the use of collected data.
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