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In business management planning, organizing and networking functions require coordinated and cooperative action. The key to operative organization, planning, and networking in business management is to create the proper foundations and structures that enable the organization to respond seamlessly to market differences. Organizations can only operate properly in a demarcated structure where responsibilities are allocated to various parts and personnel of the organization. Additionally, the principles in which to carry out organizational activities must be planned and premeditated. The management process must always act based on methodical management studies and pinpoint apt management functions in the organization. Therefore, implementing planning methods, organization of efficient operations and networking remains important to the functionality of the organization.
With this in mind, this report will critically evaluate planning methods and the organization of operations and networking in Wal-Mart stores. In this case, the module will analyze the challenges of controlling component activities in the franchise. Additionally, the paper will elaborate on the activities the Wal-Mart franchise engages in to control its quality. In business management, planning is simply the function of management, which involves setting organizational objectives and establishing a course of action towards achieving the objective. The planning process mostly begins with an understanding of environmental factors. This means that the organization planners would need to be conscious of the perilous contingencies that face the organization especially in economic complexities. Also, functioning management entails the development of the organizational structure and operations of the firm.
Figure 1 showing the objectives of Walmart
There are several objectives that operations managers and institutions strive to achieve. These performance objectives influence the strategic approach of operations in an organization. The various performance objectives that organizations can choose accomplish include the following:
Speed: As a performance objective, speed entails doing thing quickly. A more technical description of speed is the quick delivery of goods and services. In order to achieve speed in the operations of an organization, it is imperative to make quick decisions, move the required materials rapidly and also convey information within the organization in real time. In business, many organizations have relied on automation in order to attain speed as a performance objective. In supermarket chain, billing at the tills is automated using barcodes and barcode readers (Batista, 2009).
Dependability: Dependability as a performance objective entails delivering goods and services in a timely manner as promised to the customers. It entails developing trustworthiness as a virtue in the operations of the organization. To achieve dependability as a performance objective, organizations can use reliable equipment, efficient scheduling systems, effective communications, transparency of the operations and processes and a motivated workforce (Batista, 2009).
Flexibility: This performance objective entails the ability of organization to make alterations in the operations in order to meet new requirements. It is not implausible that the needs of organization can change within a given production term. A flexible organization will develop the ability and capacity of its operations in order to introduce modified or new services and products in order to meet the new requirements. It is noteworthy that flexibility also entails the ability to cope with alterations in the volume of goods and services required over time and flexibility in the ability to cope with alterations in the delivery time. In order to achieve flexibility as a performance objective, organization can use suppliers who also have good flexibility in terms of performance, the use of versatile equipment and a multi-skilled workforce. Some business used many shifts in order to operate around the clock, thereby meeting the demands of the customers (Batista, 2009).
Quality: As used in operations, quality entails doing this in the right way. The more technical description of quality in the context of operations is the consistent delivery of goods and services that not only meet, but also surpass the expectations of the customer. Organizations use different approaches in order to achieve quality. Some of the tested and proven methods include adequate job specifications, effective communication, skilled workforce, and the use of proper technology. An approach that combines the above factors gives the organization the capacity to provide error-free services and products that not only meet but also exceeds the expectations (Batista, 2009).
Cost: as a performance objective, cost brings economic sense into the operations of an organization. It is always an attractive aspect for an organization to lowers its cost of production. A reduction in the cost of production is felt by the customer through the reduction in the prices of the goods and services. In order to achieve cost as a performance objective, organizations pursue good and mutually beneficial relationships with other partners such as suppliers, optimizing the mix of resources, and proper contract negotiation (Batista, 2009).
Focus of Walmart
Of the performance objectives highlighted above, Walmart focuses on cost. This is exemplified by the mantra under which the company operates. The company’s mantra "Every Day Low Price," demonstrates their commitment to low prices (Walmart, 2013, pg.5). The focus on this performance objective gives the company a competitive edge in the industry. Wal-Mart's strategic goal is to provide quality products and services to its consumers at costs that are affordable (Walmart, 2013, pg.5). More precisely, the core feature in the business level strategy that is used by Walmart is low-cost leadership. By supplying the widest variety of general merchandise of the lowest, Walmart attracts customers from different segments (Walmart, 2013, pg.5).
In order to achieve low-cost leadership, Walmart controls the drivers of cost and relentlessly wrings cost efficiencies from its supply chain (Flannery, 2006, pg.3). Planning and organization of Wal-Mart's operations revolves around efficient logistics that require technology and an inventory management system aimed at reducing costs (Flannery, 2006, pg.3). In addition, Walmart's strategic goal is to provide its customers with quality merchandise at low costs that are affordable to its consumers (Walmart, 2012, Web). This has led them to be the industry leader for world shoppers who are interested in low affordable prices (Chittock, 2013, Web). In order to leverage a winning formula, Walmart made Everyday Low Price the cornerstone of its business level strategy. The focus on the prices charged on the various merchandise is ever strong (Ireland et al. 2008, pg.87).
This is because of an understanding of the needs of the consumer for convenience and affordable prices (Walmart, 2013, pg.5). This is incorporated in all the media campaigns where the organization markets itself as a low price market basket. In order to fortify the low-cost culture of the organization, Walmart constantly fuels the productivity loop in the organization by leveraging expenses of the organization (Walmart, 2013, pg.5). This enables them to lower the prices of the merchandise sold. The company also drives innovations at every level in the company’s supply chain as well as store operations in order to reduce the cost and by that the prices of the merchandise. The use of productivity initiatives such as MyGuide and One-Touch helps the organization manage its expenses (Walmart, 2013, pg.5).
Economies of scale, access to raw materials, and proprietary technology are some of the elements that facilitate a company's position on cost advantage. Wal-Mart adopted cost as its strategy to gain competitive advantage and has employed several elements to make its strategy a success. One of the factors that have caused Wal-Mart’s success in the industry as a low cost producer is the simplicity of its supply chain. In a supply chain, a link refers to the flow of goods from one supplier to a manufacturing or a distribution site (Chopra, 2004, 36). The management of Walmart’s supply chain has greatly contributed to the company’s success. Sam Walton owned Be Franklin Franchise stores before establishing the first Wal-Mart store in Rogers in 1962. Walton adopted a selective method of purchase of bulk merchandise and transported the products directly to his store. Innovation of Walmart’s supply chain started with the company getting rid of links in its supply chain and by 1980s, Wal-Mart started to work directly with manufacturers. Cutting links in a supply chain helps the company save on costs and makes management of the supply chain more efficient. Wal-Mart introduced a supply chain initiative called the Vendor Managed Inventory (VMI), which made manufacturers responsible for managing their products present at Walmart’s warehouses. The result was the company expecting close to 100% fulfillment of orders for their products.
Apart from ensuring fewer links in its supply chain, Wal-Mart developed strategic vendor partnerships. Wal-Mart adopted a low-cost strategy to establish its competitive advantage in the retail industry. In a supply chain, a supplier is key to ensuring a business organization generates revenue by implementing an effective supply chain (Fawcett, Eldam & Ogden, 2009, 13). Wal-Mart's intention was to obtain products from suppliers at the best price.
Apart from price, Wal-Mart required the suppliers to be able to meet the store's demand. After identifying such suppliers, the company established strategic partnerships with them, offering the vendors a potential long term and high volume purchase and asking for the lowest possible prices. The idea was obtaining products at a low price in order to offer the products to consumers at an affordable price, setting Wal-Mart apart from its competitors. In addition, Wal-Mart streamlined its supply chain management. The organization constructed communication and relationship networks with its suppliers to improve the flow of materials with lower inventories. The result was the network of retail stores, suppliers, and warehouses operating as a single firm, and the collaboration resulting in the success of the company's strategy (Walmart, 2012, Web).
The management of a supply chain on a global level is the most important factor for companies that desire to eliminate procedural and informational bottlenecks and increase their efficiency in decisions involving inventory or timing of orders. Wal-Mart, a retail store in constant pursuit of operational efficiency, uses technology to support its strategy of keeping prices low in order to attract customers who mind price and avoid accumulation of excessive inventory. Technology helps to increase the efficiency of operations and reduce complexity involved in the process. As part of its use of technology, Wal-Mart adopted the RFID system as part of its supply chain management to increase efficiency of inventory management. However, it is mandatory that both the retail store and its suppliers handle inventory, and this means suppliers also have to adopt the RFID system. Suppliers are reluctant about use of the technology as it is costly to implement (Barut et al., 2006, 292). Suppliers do not find the system to be valuable to their operations. However, they have to bear the costs of purchasing the technology and also training its staff on the use in order to maintain its relationship with the retail store.
The adoption of RFID system has several benefits as its adoption helps a company minimize the costs that are associated with the downstream flow of good and the upstream flow of information on demand. In a scenario that companies and suppliers adopt the system, they can see real-time results. Therefore, this makes it easy to improve on reorder timing, to forecast the anticipated demand accurately and to reduce labor costs (Barut et al., .290). In addressing the cost of implementing RFID and to encourage suppliers to adopt the system, Wal-Mart should share the costs of implementation with the supplier. In other situations, they should offer incentives for suppliers who can increase efficiency. An example is Wal-Mart could lease computer systems to its suppliers and give discounts to suppliers who exhibit the efforts of increasing process efficiency by adopting technology.
Effective supply chain management enables a company to eliminate any lags within the process and generates profits for the company. Wal-Mart's supply chain management has given the company a sustainable advantage over its competitors in the industry. This is through lowering its costs of production, reducing the carrying cost of inventory, improving variety available in-store and facilitating it's highly competitive price. Wal-Mart is intent on technological advancements to refine its supply chain management system. Further. In adopting any new technology, the retail store should develop a plan that ensures implementation is uniform throughout the supply chain.
Barut, M., Brown, R., Freund, N., May, J., & Reinhart, E., 2006, RFID and Corporate Responsibility: Hidden Costs in RFID Implementation. Business and Society Review, 111(3), 287-303
Batista, L. (2009). Key operations performance factors on trade and transport facilitation. In: Logistics Research Network Conference, 09 - 11 Sep 2009, Cardiff, UK.
Chittock, M. (2013). Rise of the Supermarket Own Brand. Available Online http://www.guardian.com/lifestyle/wordofmouth/2-13/feb/04/rise-of-own-brand Accessed March 13, 2015
Chopra S, and Meindl P, (2004 ).Supply chain management. Strategy, planning, and operation. 2nd edition. Upper Saddle River, NJ: Prentice Hall
Fawcett, S., Ellram, L. and Ogden, J. (2009). Supply chain management – from vision to implementation. Upper Saddle River, NJ: Pearson
Flannery, M. (2006). Walmart case study. Retrieved from http://people.ucsc.edu/~rbaden/ Case%20Study%20Example.pdf
Hill, C. W. L., & Jones, G. R. (2013). Strategic management theory. Mason. Cengage Learning.
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.
Walmart (2013). 2013 Annual report: A history of delivering strong results. Retrieved from http://c46b2bcc0db5865f5a76-91c2ff8eba65983a1c33d367b8503d02.r78. cf2.rackcdn.com/88/2d/4fdf67184a359fdef07b1c3f4732/2013-annual-report-for-walmart- stores-inc_130221024708579502.pdf
Walmart, 2012, 50 Years of Helping Customer. (Online) Available at http://www.walmartstored.com/sites/annual-report/2012.WalMart_AR.pdf (Accessed March 12, 2015
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