Wednesday, May 27, 2009

Process Selection

What type of product flow do they use?
Even though Wal-mart does not make products I would say Wal-mart uses the batch flow for their product flow oppose to the line process that is regular and sequential. They have a variety of products and receive them in batches. Wal-mart orders a variety of products frequently in small amounts to keep inventory down. The main reason they are considered to use the batch flow is because they try to handle low volume orders with many different products. They use the batch operations because it is the most economical and incurs the least risk.

What type of customer order do they process?
Wal-mart has a make to stock process where they can provide faster service to customers from available stock and lower costs. Wal-mart has an efficient system that keeps their inventory on target. When someone buys a product in Wal-mart the cash register reads the bar code, and in fourteen seconds the Wal-mart central warehouse is aware that the Wal-mart retail store needs that product. Also, the manufacturer is informed that Wal-mart central warehouse needs that product. The raw material suppliers are notified almost in the same way. The raw materials can be a light bulb, plastic housing, and a switch. This goes all the way up to the supply chain almost instantly. They have a great MTS process because products are carried in inventory to immediately fulfill customer demand. They run their operations efficiently because are able to produce inventory in advance of actual demand in order to have proper products in stock. This system allows inventory management to forecast and plan for capacity.

Which cell do they fall into in the process characteristics matrix?
Wal-mart falls in the batch and make to stock cell. They fall in this cell because they try to keep volume as low as possible because it is expensive to keep inventory and they sell many different products. Furthermore, they fall in this cell because they use the MTS process where the production cycle is being operated to replenish stock. Production is geared to future orders and replenishment of inventory.

What are some of the factors influencing their process selection?
One factor in Wal-mart process selection is market conditions. They provide a variety of products. They also have priced product for all different types of consumers. They keep their prices very competitive in the market. They have entered the market at the right time and gain an advantageous position. Another factor that has influence their process selection is capital. Since they have a batch flow their investment are medium, they keep their warehouses with enough inventory to fulfill customer demands. Lastly, they have general equipment to do their task more efficiently such as a forklift, tape machines, and hand trucks. In addition, labor has also influence their process selection because they need skilled labor. They do not have a routine task. What has influence their process selection the most is technology. Wal-mart is the 5th largest company based on 2008 revenue in the country and the biggest retail store in the world because of their JIT system. The system allows Wal-mart to have lesser inventory by having recurring orders. The EDI system is the core of their strength. The EDI system entails direct computer to computer transactions into the sellers’ ordering system. Basically the sellers’ find out instantly when inventory is down.

Can they adopt any of the mass customization methods discussed?
Wal-mart does not need to adopt a mass customization but their suppliers such as Proctor & gamble and Gillette has adopted a mass customization. If they wanted to adopt a mass customization method they can adopt a postponement. Wal-mart sells clothing so they can sell t-shirt which they can put a unique design on the customer’s T-shirt at the point of purchase

Wednesday, May 20, 2009

Inventory Management

Wal-mart is known for their efficiency in the inventory management department. They run an EOQ system where their demand rates are continuous, frequent, and known. Wal-mart manages an efficient JIT system. The JIT system stands for the just in time inventory systems, which allows Wal-mart to have lesser inventory by having recurring orders. The problem with recurrent ordering is that it can result to extravagant ordering costs. Companies frequently miscalculate their ordering cost; in return can make it seem costly. This is where Wal-mart shines because they run a flawless EOQ system which is the essential tool that tells them the ordering cost, holding costs, and demand. This system works well for Wal-mart because the ordering cost are low; therefore, it is better to let the suppliers hold on to the rest of the inventory.

The key to Wal-mart strategy in the inventory management is their EDI system which makes their ordering cost almost absent. EDI system is a electronic data interchange. This means that this system is used for electronic communication of business transactions between organizations. These business transactions include orders, invoices and confirmations. The EDI system entails direct computer to computer transactions into the sellers’ ordering system. Basically the sellers’ find out instantly when inventory is down.

Wal-mart has a no tolerance level where they place high demands on service from their suppliers. They refuse to buy in bulk so that they can keep surplus inventory to a minimum. The zero tolerance policy applies for late shipment. Companies like Wal-mart are demanding shorter lead time as well.


Wal-mart serves customers in 15 different countries and has more than 7,800 retail stores. Wal-mart has more than 2.1 million employees worldwide. Wal-mart has been guides in maintaining a well manage worldwide organization. This fiscal year they made 401 billion dollars in sales. They have been guides in the desire of benefiting humanity as a whole and giving people employment opportunity. They are ranked #1 in the 2009 Fortune Magazine as Most Admired Companies survey.

The first Wal-mart was located in Rogers, Arkansas and it was established in 1962. They became a corporation on Oct.31, 1969 as Wal-mart Stores Inc. This organization’s shares started trading on the over the counter markets in 1970 and two years later was listed on the New York Stock Exchange. In a decade Wal-mart grew tremendously by expanding to 11 different states with 276 stores. In 1983, Wal-mart set off its first Sam’s Club membership warehouse. In 1988 they launched the first supercenter. Now they present a complete grocery with general merchandise, which has showed as an ascendant design. In 1991, Wal-mart became an international company.