{"id":23136,"date":"2017-11-15T21:52:03","date_gmt":"2017-11-16T02:52:03","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/temp\/"},"modified":"2017-11-15T22:11:03","modified_gmt":"2017-11-16T03:11:03","slug":"walmart-its-my-party-and-i-can-cry-if-i-want-to","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/walmart-its-my-party-and-i-can-cry-if-i-want-to\/","title":{"rendered":"Walmart: It\u2019s my party and I can cry if I want to"},"content":{"rendered":"

Nobody knows where my Johnny has gone<\/em>
\nJudy left the same time<\/em>
\nWhy was he holding her hand<\/em>
\nWhen he’s supposed to be mine<\/em><\/p>\n

— “It’s my party and I can cry if I want to” by Lesley Gore<\/em><\/p>\n

Introduction<\/h4>\n

In our digital age of Amazon and Uber, we don’t think of Walmart as operating at the frontier of technological innovation. Walmart, after all, has physical aisles that take an eternity to navigate compared with a one-click checkout. But Walmart was not always a technological laggard. Quite to the contrary, much of Walmart’s success was built on technological innovations of their supply chain that offered an unforeseen combination of value, selection, and availability to its customers. Today, as the world’s largest retailer by revenue, Walmart attempts to maintain its lead by continuing its legacy of technological advancement in a brave new world where cost and convenience are requirements for retail success.<\/p>\n

If you can’t measure it, you can’t improve it<\/h4>\n

Walmart’s supply chain has long been a complex network where inefficiencies are costly. Too little inventory leads to unsatisfied customers and missed sales opportunities, while too much causes costly inefficiencies in storing superfluous goods. The goal of digitizing\u00a0a supply chain is the accurate and timely measurements of both supply and demand, so you and your collaborators can consistently deliver value to your customers [1]. Recognizing this general principle in 1966, Sam Walton attended an IBM school in upstate NY and committed himself to hire the smartest person in the class to start\u00a0digitizing his operations in Bentonville, Arkansas [2].<\/p>\n

A history of digitalization<\/h4>\n

Building a distribution network for the first Walmart stores was a result of necessity rather than choice: suppliers simply weren’t willing to drive their trucks to remote areas of rural Arkansas where the first Walmart stores were located [3]. Since then Walmart has repeatedly introduced new technologies such as RFID, Vendor Managed Inventory, Collaborative Planning Forecasting and Replenishment and Retail Link. Unfortunately, there’s not enough time to explore each one in turn, but let it be said that Retail Link was the largest civilian database in the 90s, it contained data on two decades of every sale made at Walmart and suppliers were given access to historical and real-time data [3].<\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

Continuous innovation paid dividends for Walmart: As recently as 2017 Walmart is still operating\u00a0at the leading\u00a0edge of efficiency with an inventory turnover rate of\u00a0 8.11 compared with Amazon’s rate of 8.66 and Target’s of 5.68 [4].<\/p>\n

What tomorrow’s customer needs<\/h4>\n

Playin’ my records, keep dancin’ all night<\/em>
\nLeave me alone for a while<\/em>
\nTill Johnny’s dancin’ with me<\/em>
\nI’ve got no reason to smile<\/em><\/p>\n

— “It’s my party and I can cry if I want to” by Lesley Gore<\/em><\/p>\n

Despite this long history of applying technology to its operations, Walmart was slow to catch on to the e-commerce revolution. The company is now in a challenging position where it’s trying to catch up with Amazon while simultaneously anticipating what the future will demand. In an article written for the World Economic Forum, Walmart’s CEO Doug McMillon mentions how “[t]he historic trade-off between price and service has been altered by technology and customers expect to save time and enjoy the experience while saving money” [5].\u00a0This realization represents a fundamental shift in Walmart’s strategy. Historically, their focus was on minimizing cost through efficient supply chains. Today, Walmart needs to think about how their technological innovations can extend beyond the supercenter to conveniently deliver products directly to customers who expect to receive service and convenience in return for low prices.<\/p>\n

Walmart has pursued multiple strategies to accelerate their entry into e-commerce. First, they’ve acquired e-commerce companies such as Jet.com and Bonobos (you might have missed the latter as it was same-day news with Amazon’s acquisition of Whole Foods) [6]. Second, they’ve been investing in fulfillment centers designed for e-commerce [7]. Walmart’s traditional distribution centers are designed for palettes of product to be shipped in bulk to stores, but e-commerce calls for warehouses where orders can be composed of individual SKUs that are packaged and shipped directly to a customer’s home. Third, they’ve been leveraging their brick-and-mortar presence to provide online\/offline hybrid services such as in-store pickup of online orders and grocery deliveries which require shorter delivery routes to minimize product spoilage [8].<\/p>\n

If I were CEO…<\/h4>\n

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” <\/em><\/p>\n

— Sam Walton<\/em><\/p>\n

If I were CEO, I’d focus Walmart’s digitization efforts on services that have a palpable impact on the customer’s experience. For years this meant investing in supply chain efficiencies located upstream of the customer’s store visit. Today it means working directly on the interface between the customer and the store. In-store pickup and short-haul delivery of groceries are aligned with this strategy. The challenge I would like to see Walmart face is how it can bring the digital experience to the store in an effort to convert in-store customers to online users. For example, they could build a loyalty program through their app that can also be used for making e-commerce orders.\u00a0 But that’s just my $0.02 and I’d love to hear yours. Can Walmart remain its competitive edge in the digital age?<\/p>\n

(783 words, lyrics and quotes omitted)<\/p>\n

References<\/h4>\n

[1] Christopher, Martin.\u00a0Logistics & supply chain management<\/i>. Pearson UK, 2016.<\/p>\n

[2] Walton, Sam, and John Huey.\u00a0Sam Walton, Made in America: My Story<\/i>. Bantam, 1993.<\/p>\n

[3] R. Fraser Johnson, Ken Mark. \u201cHalf a Century of Supply Chain Management at Wal-Mart.\u201d Case No. 9b12d010. London, Canada: Ivey Publishing, Richard Ivey School of Business Foundation, 2012.<\/p>\n

[4]\u00a0\u201cWal-Mart Inventory Turnover Ratio\u201d, https:\/\/csimarket.com\/stocks\/singleEfficiencyit.php?code=WMT, accessed November 2017.<\/p>\n

[5] McMillon, Doug, \u201cInvestor Resources,\u201d https:\/\/www.weforum.org\/agenda\/2017\/01\/3-predictions-for-the-future-of-retail-from-the-ceo-of-walmart\/, accessed November 2017.<\/p>\n

[6]\u00a0\u201cAmazon vs. Walmart: Which One Will Prevail?\u201d, http:\/\/knowledge.wharton.upenn.edu\/article\/amazon-vs-walmart-one-will-prevail\/, accessed November 2017.<\/p>\n

[7] Nash, Kim, \u201cWal-Mart Builds Supply Chain to Meet E-Commerce Demands\u201d,\u00a0Wall Street Journal<\/em>\u00a0(May. 7, 2015)<\/p>\n

[8]\u00a0Ignatius, Adi, \u201cWe Need People to Lean into the Future,\u201d\u00a0性视界 Busines Review<\/em>\u00a0(March-April 2017)<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Is the party over or can the world's largest retailer reverse the trend?<\/p>\n","protected":false},"author":9868,"featured_media":26150,"comment_status":"open","ping_status":"closed","template":"","categories":[3235,2029,16,637],"class_list":["post-23136","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-supply-chain","category-digitization","category-retail","category-walmart","hck-taxonomy-organization-walmart","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nWalmart: It\u2019s my party and I can cry if I want to - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/walmart-its-my-party-and-i-can-cry-if-i-want-to\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Walmart: It\u2019s my party and I can cry if I want to - 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