Contextual Application of IT in Walmart Business Operations

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Introduction

Walmart is an American supermarket chain that currently holds the position of the largest retailer in the world. It is characterized by a recognizable brand, an easily identifiable target audience, and innovative technology. The leading stakeholders of the firm reinvest large amounts of profit into further development of the potential upcoming changes in its regular operations. Additionally, Walmart continues to design and establish new apps and other online features, despite the potential limitations they are likely to have.

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IT solutions, despite their superior technical and functional capabilities, are not universally helpful tools capable of tackling any organizational issue. This is also true when personnel’s knowledge and devotion to the new technology are on their side. Technology itself, no matter how innovative, cannot optimize business processes without a proper application, which is only possible if the digital tools are studied in relation to the company (Caraway, 2018). On a case-by-case basis, larger variables, both technological and societal, that incorporate IT must be accounted for. Thus, this project aims to examine the contextual application of IT within Walmart’s business operations, provide a comparison with some of the firm’s competitors and discuss efficiency.

Organization Description

Walmart is an American supermarket brand that operates a nationwide chain of megastores (also referred to as supercenters), grocery shops, and cheap homeware outlets. Walmart also owns Sam’s Club retail facilities and has its operating structure. According to statistics, Walmart has 10,524 department shops and clubs in 23 countries across the world (Caraway, 2018). The retail warehouses are given different names depending on the country the branch is based in, with the brand calling itself Flipkart Wholesale in India.

Walmart has a functional organizational structure that is hierarchical, which makes it easier for the company to conduct business in the United States and worldwide. The retail industry is where the majority of the activities take place. In the management hierarchy, the CEO is the most powerful individual (Smith, 2019). As a result, every employee, except for the CEO, has a superior. Its rating varies depending on each employee’s command and general function, with the tool accounting for the employees reporting to different superiors. Top-level management issues directives, while middle-level management takes the message and puts it into action by issuing directives to lower-level employees. The arrangement is suitable since it allows Walmart to make rapid choices throughout its distribution centers. The functional-based aspect, on the other hand, includes arranging people to carry out a certain task. Walmart offers a variety of divisions, including human resources and technology, to mention a few.

Rather than being tied to a single head, each shop is given equal power and chances to work independently. Such organizational structure allows businesses to make their various stores and operations self-sufficient and effective since they can now satisfy consumer requirements while keeping up with the rapid changes in the business environment. It also assists employers in gaining a first-hand understanding of how to run a retail business, which opens up the possibility for future workers. Walmart has benefited from a hierarchical functional-based organizational framework in many ways by improving its capacity to manage and direct the whole organization. Walmart selected this organizational formation to improve the marketing power of smaller-scale agents, which are not reliant on the economic climate of a region and are less based on physical geographies.

The capacity of head managers to quickly affect the whole company is the major impact of Walmart’s hierarchical functional organizational structure. New policies and initiatives created at the corporate level, for example, are transmitted down to regional managers and then to store managers. Walmart’s hierarchical organizational structure allows for effective monitoring and management in this way. However, the hierarchical structure does not allow for much freedom and variation, even on a case-by-case basis. The necessary communication tends to occupy extended periods of time and involve multilayered bureaucracy, meaning that lower managerial staff does not get to contribute to the decision-making process to the fullest of their expertise.

IT Systems Description

The major management emphasis area for retail stores is operations management. This is primarily since retail outlets have numerous direct encounters with their consumers, necessitating greater management of activities that directly influence their customers to provide better service. Modern retail shops, with supermarkets as the greatest example, have heavily invested in information technology systems to aid in the management of their operations. There are several benefits as well as drawbacks to this. Because operations management is such a broad term in retail management, all elements should be considered while deciding which method to use.

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With the growing internationalization of retailing, both in terms of points-of-sale and points-of-supply, the retail sector’s information technology (IT) investment has risen substantially. In the administration of complicated retail operations, information technology is becoming increasingly crucial. Gaining a competitive advantage in the retail sector requires market knowledge as well as data and information control (Harrison, 2019). Markets are continuing to develop and get more complicated; the formerly simple process of retailing has begun to deploy more powerful retail information systems to handle all of the transactions. The tools and digital applications that enable merchants to succeed in a fast-paced, evolving environment are known as information systems. They perform a variety of tasks, such as strategic planning, budgeting, and sales objectives management, as well as point-of-sale financial operations. The list of IT systems consistently utilized within the industry continues to expand over time as technology develops and adjusts to the evolving needs of the market. Typically, it involves Inventory Management Software (IMS), Customer Relationship Management (CRM), and Accounting Information Systems (AIS).

IMS is a piece of software that keeps track of inventory, orders, sales, and delivery. It can also be applied to the production and distribution of orders, raw materials, or necessary tools when a business value proposition is centered around production. Companies use inventory management software to ensure no deficit or surplus is occurring and thus prevent the waste of resources. It is a program for organizing inventory data that was previously kept on paper or in spreadsheets. Asset Tracking is a feature of IMS that allows a product to be traced and identified based on its tracking code, reference number, or other numerical combination of this kind. Barcode, radio-frequency identification, and/or wireless tracking technologies are often used in the newer applications of the system, thus increasing information security.

It is important to mention, however, that the majority of information available on the implementation of IT systems in Walmart exceeds the general guidelines of the industry. As is proper for the largest retail business in the world, the brand has invested heavily in relevant innovation. Appropriate IT tools allow Walmart management to engage in mutual collaboration without compromising the quality of the firm’s services.

IT Systems in Walmart

To begin the discussion of the innovations implemented in Walmart, one must examine the largest private data cloud established by the brand. It is capable of processing over 2.5 petabytes of data at an hourly rate and is instrumental in the successful operation of the largest retail firm. When providing a large volume of clean and validated data, Data Café may assist reduce data processing time from two to three weeks to 20 or 30 minutes. The supermarket team was perplexed and unclear why a product category dropped, according to a Forbes article by Bernard Marr (2017). Data Café revealed that the goods have been priced mistakenly and charged incorrectly high rates. On the other hand, two businesses saw a drop in sales of novelty cookies around Halloween; Data Café successfully identified a logistical mistake that prevented the items from being displayed in-store.

Walmart has built the world’s biggest private communication network for corporate information, which enables two-way audio and one-way video transmission from its headquarters to Walmart shops across the world. Its main objective is for management to use video and audio conferencing to link all Walmart shops. Furthermore, it allows executives to get updates on their stores at any time, thereby enhancing operation management and adherence to corporate rules. One of the reasons Walmart’s performance has improved considerably is because of this. Instead of traveling to the physical geographic site, which affects efficacy, if management has a message for a shop, they may easily transmit it.

Walmart successfully takes advantage of a decision-making information system, referred to formally as AIS, which is a digital tool that organizes, stores, sorts, and distributes accounting and financial data and data analysis. In most cases, an accounting information system is a computer-based approach for tracking accounting activities using information technology resources (Harrison, 2019). The financial reports that arise can be used by management internally or by relevant stakeholders such as investors, lenders, and government-regulated taxation agents. The operations associated with accounting and taxation are typically managed through a united online system, where a manager might access the structured data from the relevant past if necessary. Financial reporting systems are the most frequently used accounting information systems.

Finally, Walmart was able to build Social Genome through Walmart Labs (Edosio, 2014). Walmart Shopycat is the name of the program, which collects data from social networking sites in real-time. Walmart Shopycat does semantic analysis, which allows it to analyze phrases, words, sentences, and paragraphs with separate meanings and identify trends and popular goods; it can even anticipate trends in specific Walmart retail locations (Harrison, 2019). It was advertised by Walmart as a gift-finding service. Since the launch of the service, the company has continued to increase its digital presence for organizational management and competitive advantage acquisition alike.

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Overall, the brand effectively incorporates modern technological advances into its business model and organizational management to maintain relevance and ensure skilled customer service. As the world’s largest retailer, it may afford as big an R&D budget as necessary, meaning that the IT innovation is being supported from within the company. Compared to some of its smaller competitors, Walmart has secured the niche of the megamarket of tomorrow that changes in unison with the overall progression of the business world. This advantage is an especially important one in the times of online shopping as an easily accessible alternative to physical stores.

Analysis of Systems

The firm places a high priority on educating its employees about food safety so that they may better serve their customers. Walmart teaches food handling using a combination of web-based and computer-based instruction. The company’s use of 3D animation technology to teach has been acknowledged by the industry. The 3D technology was used to plan the preparation of a chicken rotisserie as a test run for the future applications of the technology in question.

Walmart incorporates RFID tags into its products and systems to improve inventory management, including product sales and stock replenishment. It also aids in determining the precise position and amount of items without having to physically search for and count them. It may also include information such as the production date, expiration date, and so forth. Walmart chose RFID tags over barcodes because RFID tags can store more data (Thi Thu Ha, 2017). This improves product management efficiency and reduces the amount of time it takes to handle items.

Walmart has also launched a series of internal training programs that increase the technical literacy level of its employees and provide them with better development opportunities in general. The KMS has also assisted Walmart in lowering operating costs and increasing shareholder value. On annual items at Walmart shops, it realized significant financial advantages. Furthermore, the numerous insights that may be queried in the KMS help to improve staff abilities (Smith, 2019). Walmart’s human resource management has mastered the skill of leading people and company processes in a well-structured framework or set of rules. Managers, on the other hand, have figured out how to deal with problems with employees without receiving complaints. It was passed down to managers through shared expertise. Walmart aims to keep employees until they retire by offering incentives, bonuses, and performance evaluations.

The Walmart Neighborhood Market in Levittown, New York, has undergone a transformation. Walmart has begun to incorporate artificial intelligence into its shopping experience. Walmart’s Intelligent Retail Lab is a one-of-a-kind real-world shopping experience (IRL) (Smith, M., 2019). The store is equipped with last-generation cameras that are able to track movement and identify one’s temperature level, which reduces the opportunities for robbery. To assist consumers, several touch screen gadgets and Informational Stations have been placed. Such measures are likely to increase the security of in-store operations but might become a discouraging factor in the general shopping of potential customers. Furthermore, it has processors that retailers can see via a glass pane, and that can process data at a rapid pace and create 1.6 terabytes. The standby time of meat items in the aisle is recorded to guarantee quality; moreover, when product movement off of the shelves is identified, sensors and cameras are triggered, alerting personnel to replenish if necessary.

Walmart’s supply chain management (SCM), according to Thi Thu Ha Nguyen (2017), is the key to its development. It covers the production, distribution, and retail logistics of a large mass of various goods over an extended period of time. To maintain cheap pricing, the firm cut out the middlemen and dealt directly with suppliers, including procurement. Walmart’s logistics or delivery infrastructure is also well-known for its ability to move the goods between a variety of geographically remote trailers without requiring intermediate storage.

The private trucking system can supply to retailers and restock stock inventories in a short period of time, lowering costs. Continuous optimizations and improvements are needed in order for the company to maintain the status of an industry innovator, as existing competitors continue to emulate their technological literacy. Walmart’s inventory management system can detect low-stock items and alert the store and distribution center, prompting restocking.

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Similar Organizations Research

As a company, Walmart is characterized not only by its assortment but by the scale of operations that are being run within a store. Thus, it was not a simple task to determine which organizations can be considered similar to the question presented. Lidl and Ikea were identified as companies similar either structurally or in terms of the target market to Walmart to conduct a review of IT technologies among competitors. Both share relevant functional organizational structures with Walmart and, to a degree, an industry. As a firm, Lidl is a more direct competitor to Walmart, but Ikea is closer to the brand at hand in terms of operational scope.

Lidl generally operates under significantly less numerous technological innovations and designs, utilizing the widespread central retail systems as the core of their IT application. Lidl, a discount supermarket operator, has teamed up with Software AG to unify data transmission between its shops across Europe and its core retail information system. Lidl’s 10,000 shops in 29 countries have been equipped with the new computerized Lidl Retail Information System. To standardize data interchange amongst all systems, each shop transmits its data to a single data warehouse in Germany. The technology thus facilitates a detailed real-time information exchange ensuring transparent report mechanisms for the Lidl branches.

Lidl applies its existing satellite for official communication in three directions: downward, upward, and horizontal. Downward communication for management, including information, goals, operational processes, staff motivation, and so on. Employees offer input on management, problems, and other topics through upward communication. Horizontal communication, on the other hand, allows each shop to share its own improvements with other locations in order to help Walmart succeed. As a tool, this software significantly facilitates international communication between the Lidl outlets, which is a handy result considering the multinational nature of the brand.

For IKEA, however, IT facilities have played a critical role in the development of innovative solutions in fields such as graphic and printing, biotechnology, and bioinformatics, among others. In these domains, IT system features are used and advantageously embedded in other resources, each of which uses IT in some way. The researchers must analyze the sorts of interactions between this IT system and the other resources we encountered in order to comprehend PIA’s function in IKEA’s product development activity. Over time, business ties link trade and interaction events between purchasing and selling units. As a result, if the other three categories of resources (facilities, goods, and business units) are involved, a link connects interaction patterns. Consecutively, for the actors concerned, connections imply both opportunities and constraints (ibid).

IKEA-related discussions concerning the PIA, if they are to be expected, are evolving as well. Using PIA as a comprehensive tool to manage every development project revealed its significant rigidity and lack of anchoring in the context where product development takes place. IKEA-oS will take a new approach to PIA starting in 2002: its primary job will be as a document administrator. The burden of raw data feeding is being eased by encouraging product developers to utilize PIA more actively during projects. Product developers will no longer be required to enter all of the hundreds of projects and subprojects they are managing at the same time, as well as every single detail about them, into PIA.

Both Ikea and Lidl utilize customer relationship management software in their operations to improve their market research and ensure up-to-date information is being considered. The software analyzes data about existing and potential customers in order to assist a firm in better understanding the customer in order to keep and grow customer relationships. Customer Relationship Management systems collect a variety of personal information to assist merchants in increasing sales and better understanding their customers. The details in question typically involve contact information, family and hobby background, sales history, communication records, and feedback instances.

Commentary on Effectiveness

Walmart Labs developed its software using the agile development methodology. The lab has created 130 teams to produce software using the agile development methodology. Because of the agile methodology, Walmart is changing its development lifecycle. They will be able to build software more quickly, with feature upgrades based on customer input. The team will be able to make adjustments based on logic rather than assumptions about user demands. Arguably, agile is only one tool that is not always relevant to development, such as data center construction.

Walmart’s purpose and vision, to supply consumers with high-quality, low-cost items while leaving a lasting impression, has been realized via the usage of various information technologies. Overall, Walmart has demonstrated the precedents of successful and efficient use of technology in the areas of people management, inventory management, process optimization, and performance review. The firm’s use of IT systems has been on par, if not greatly superior, to the other similar firms in the industry.

No one could predict that a retail firm would have incorporated a variety of systems and technologies to better their day-to-day and long-term operations and decision-making. Most people, including myself, have assumed that Walmart’s procedure is as simple as ordering items from vendors and stocking them in their inventory (Thi Thu Ha, 2017). Walmart has demonstrated that in order to be successful, one must identify the most effective strategies to improve. Walmart’s battle with Amazon has prompted the latter to create their own data farm in order to compete with Amazon’s massive eCommerce. Indirectly, the company’s ongoing commercial success in the era of online retail proves that the IT application and the modernization practices of Walmart are finding their target.

Walmart aims to help customers save money so they may live better lives, which in modern reality can only be achieved through digitalization and optimization. Walmart sells goods at a discount, which allows customers to save money. Technology, in turn, ensures the viability of this business model, securing Walmart its profitability regardless o the pricing strategy. The firm has already achieved its goal of becoming a top retailer in the retail market. In terms of financial benefits, the firm has also had a significant impact on the minds of consumers and workers. Employees get paid, but customers save money owing to Walmart’s discounted prices.

Walmart’s sustainability aims have prompted them to incorporate information systems in monitoring their environmental effect, such as the GreenWERCS Chemical Screening Tool. Companies used to be solely concerned with making a profit; however, today’s businesses are working to improve their operations in order to aid in the mitigation of global warming. Even the tiniest element, such as the irrigation system, has been incorporated to be ecologically friendly by Walmart. The correct application of IT allows the firm to preserve its leadership and, together with the beneficial impact of the economies of scale, guides it to consistently high performance.

Finally, it is essential to recognize that Walmart does not shy away from the growing dominance of online retail. Walmart had a golden year in 2020, with e-commerce sales in the United States increasing by 79 percent as pandemic-weary customers consolidated their shopping visits to fewer stores and took use of the big-box retailer’s excellent curbside pickup service (“Walmart | 2021 Fortune 500”, 2021). For similar reasons, its Sam’s Club and overseas operations grew rapidly. With COVID-19 softening, the retailer is attempting to safeguard market share gains by committing to a $14 billion capital expenditure budget for 2021, which is about 40% greater than last year’s (“Walmart | 2021 Fortune 500”, 2021). Priorities for the initiative will include a better supply chain, automation, including in-store robots, grocery order fulfillment, and technology to facilitate consumer shopping.

Conclusion

The extensive success of the brand does not happen within reason, regardless of the industry. Walmart’s corporate culture is made up of four major elements, which are all linked together to a sense of excellence at low cost. These elements influence employee behavior, which influences the organization’s ability to create value in the supply of retail and associated services to customers. Walmart’s principles are also classified as cultural components, including such values as customer service, personal recipe pursuit of excellence, and integrity in action. Customers are prioritized in the company’s operations when it comes to customer service. Walmart also appreciates each employee’s contribution to the company’s success. Furthermore, the company aspires to the highest standards of integrity and excellence in every worker’s daily performance as well as in the general code of the company. Fairness and lack of bias in any work-related discussions are particularly appreciated in the firm.

Technology greatly assists Walmart managers and employees in honoring these principles, as in the modern world, it is the biggest getaway to optimization and efficiency. Low-cost production is achieved through inventory management and KPI trackers, which then makes room for the existing pricing strategy of the brand. Without IT tools, the production and distribution costs would rise, as would the waste-related expenses, meaning an unavoidable price spike. Thus, IT innovations are inherently woven into Walmart’s business model, which justifies the amount of investment that the firm delegates towards them. Future technological developments are likely to be reflected in Walmart’s business operations as well, provided they can beneficially contribute to operational efficiency. In conclusion, Walmart remains the dominant major retailer in the United States, supported by the latest advancements in commercial IT.

References

Caraway, B. (2018). Collective action frames and the developing role of discursive practice in worker organisation: The Case of OUR Walmart. Work Organisation, Labour and Globalisation, 12(1), 7-24. Web.

Edosio, U. Z. (2014). Big data paradigm-analysis, application, and challenges. In 13th Research Seminar Series Workshop, 6(1), p.7, Web.

Fortune 500. (2021). Walmart. Web.

Harrison, V. (2019). Legitimizing private legal systems through CSR communication: A Walmart case study. Corporate Communications: An International Journal 24(3), Web.

Smith, J. (2019). Big Box Supermarkets (Walmart Supercenters). Increasing Access to Food: A Comprehensive Report on Food Supply Options, vol. 5. Increasing Access to Food: A Comprehensive Report on Food Supply Options (vcu.edu).

Thi Thu Ha, N. (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 & Management, 29(1), pp. 102-117, Web.

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