Business Project of Walmart
It has been determined that Walmart is the company most suited to handle the management of this Business project because of its extensive experience. Walmart Inc.’s primary administrative offices as well as its corporate headquarters are located in the city of Bentonville, which is located in the state of Arkansas.
Walmart Inc. is a multinational retail corporation that was founded in the United States and has its headquarters in the same country. The corporation is responsible for the management of a chain of inexpensive department stores and grocery stores in addition to hypermarkets, which are also known as supercenters.
My services as a consultant have been retained by the firm so that I may assist with the investigation, and they have requested that I carry out study on the matter that the company is now addressing. Walmart is currently dealing with a significant degree of stress as a result of the issue of having an excessive amount of inventory. Because of the seriousness of this problem, which is having a negative impact, the revenue of the company is suffering in a way that is directly equal to the severity of this issue.
This report presents an in-depth analysis of the matter for which the organization is currently exerting a lot of effort to find a solution, and it does so in the form of a report. In order to get an awareness of the capabilities of the firm, as well as the issues that it is currently dealing with and the potential solutions to those challenges, several different approaches are used.
This study also contains an examination and explanation of how the problem is affecting the various stakeholders, in addition to an investigation and explanation of how that fact itself is affecting various stakeholders. At the very end, a number of suggestions are presented as possible solutions to the problem that was covered earlier in the piece.
Read more: International Human Resource Management of Walmart
Challenges
In the year 2022, the most significant challenge for Walmart is going to be learning how to effectively manage an excessive number of inventories. Customers had a difficult time navigating their way through the crowded back rooms of the store as a result of issues with the supply chain and rising pricing. The interaction of the two elements led to this result directly. The rooms were completely overrun with piled pallets till there was no more room.
Walmart has made it very clear since the month of May that it wants to make a significant effort to sell off its surplus inventory, and the retailer has been true to its word throughout the course of this process. In May, when the company was presenting the results of its first quarter, it stated that the rise in inventory had gone up by 32% year-over-year.
This was done while the company was reporting the results of its first quarter. On the other hand, the company only reported a rise of 13% during the conference that it conducted in November to announce its most recent earnings. The conference was organized to discuss the company’s most recent financial results.
During the quarterly results call that took place on Tuesday, Walmart officials disclosed that the business has reduced its excess inventory in the United States by around one-third between the second and third quarters.
- Walmart’s inventory in the United States saw a year-over-year increase of 12.4%, with inflation accounting for over 70% of that growth. This is an improvement from the previous quarter’s increase in inventory, which was 25.6%, with 40% of the increase attributed to inflation.
- The current inventory of unsold goods at Walmart in the United States is estimated to be worth one billion dollars, as stated by John Furner, president and CEO of Walmart in the United States. As was anticipated at the beginning of the first quarter, we are continuing to work through the inventory.
Walmart stopped shipping products via chartered ship this year because it had too much stock in some general merchandise categories. As prices rise, consumer spending on gadgets, household goods, and clothing has slowed this year.
By the third quarter of 2018, the merchant has eliminated much of this inventory surplus. It has canceled billions of dollars in orders, lowered prices, and focused price cutbacks to specific product categories. More stores have followed suit.
Walmart CEO and President Doug McMillon said merchants have helped by adopting “an item-by-item, category-by-category approach” to balance supply and demand. Business owners must decide stocking levels in uncertain economic times.
“We can be more aggressive on items with shorter lead times, like food and consumables,” McMillon said. “However, we must exercise extreme caution when making quantity decisions for imported goods with longer lead times.”
Walmart anticipates higher stock levels by year’s end despite price increases.
Furner said things are looking good after visiting an import center last week. Accordingly, “the orders are in line.”
Purpose of the Report
As a consultant of Walmart, the purpose of this research is to provide an investigation into the issue that Walmart is currently dealing with, as well as an analysis of how the issue is hurting the performance of the firm and its income.
In addition, each problem has ramifications for the company’s many stakeholders, either directly or indirectly, depending on how you look at it. As a consequence of this, the scope of this research includes an analysis of the consequences of the problem for the various stakeholders, as well as the presentation of prospective solutions.
Impact of Research on Stakeholders
Walmart is successful in handling the issues that arise from the concerns of its many different stakeholder groups, including those of its customers and investors. Despite the efforts of the company, the interests of employees are only partially served by the corporation. This is due to the fact that employees continue to receive low compensation despite the efforts of the company.
In addition, the company is unable to fulfill its suppliers’ requirements in a satisfactory manner. As a consequence of this, Walmart is only approximately half as effective as it could be in resolving the issues that its stakeholders are concerned about.
In order for Walmart to improve its performance in terms of satisfying its stakeholders, it is necessary for the company to make some modifications to the way it manages its business. For all of the company’s workers, for instance, the firm may want to execute a salary increase that is not excessive but is nonetheless regarded as being beneficial. In addition, in order for Walmart to restore its connections with its suppliers, the company ought to try to meet them in the middle rather than insisting on prices that are artificially lowered.
This would allow for a more equitable exchange of financial information. Even though the execution of these recommendations could result in a minor increase in retail pricing at Walmart stores, the company’s reputation as a responsible corporate citizen and its stakeholder management capabilities would likely improve as a result of the implementation of these recommendations.
An issue with Walmart’s excessive inventory could have a variety of repercussions for the company’s numerous stakeholders, including the following examples:
Stakeholder
If there is an excessive amount of stock on hand, it may be harmful to investors if this leads to a decline in sales or earnings per share. This may be the case if there is an excessive number of stock on hand. It is possible that Walmart’s stock price will fall since there is an excessive amount of inventory; this is a possibility.
Customer
If Walmart’s greater inventory results in stock outs of popular items or a congested store atmosphere, it could result in a negative customer experience, which could lead to lower levels of consumer loyalty and less sales. If Walmart’s enormous inventory leads to the sale of all of the available inventory of certain items, then there is a possibility that the retailer will run out of supply of popular items.
Employees
If Walmart’s surplus inventory causes slower sales or the need to cut expenses, this may have an effect on the employees’ job security and may result in reduced work hours. Alternatively, it may not have an effect. If this happens, Walmart will have to find ways to lower its prices.
Supplier
The Amount of Money That Walmart’s Suppliers Make, along with Their Profits If Walmart is forced to cancel or postpone orders because of an excess of inventory, this may have a negative impact on the revenue and profitability of Walmart’s suppliers. This could happen if Walmart is forced to cancel or delay orders because of an excess of inventory.
Environment
The Current Condition of the Natural World Having an excessive number of inventory might result in waste and have a detrimental impact on the environment since Walmart would need to get rid of things that have either gone out of time or have not been sold. Having an excessive amount of inventory could also have a negative influence on the company’s bottom line. This is due to the fact that Walmart would be required to dispose of items that have either reached their expiration date or have not been sold.
Mendelow’s matrix
| Low Level of interest High | |||
| Low Level of Power High | |||
| Minimal Effort Supplier | Keep Informed Employee | ||
| Keep satisfied Customers | Key player Investor Environment | ||
To summarize, an issue with Walmart’s excess inventory can have considerable ramifications for the company’s stakeholders, and Walmart needs to maintain an efficient inventory management system in order to decrease the severity of these negative effects.
Evaluation and Analysis of Secondary Data
PESTLE Analysis
Political Factors
Political issues that have an effect on Walmart include, but are not limited to, governmental rules and regulations, tax policies, trade agreements, and political stability. Other examples of political topics that have an effect on Walmart include international trade agreements. Walmart is subject to the legal frameworks and political structures of each of the countries in which it does business because the company conducts business in a number of countries.
Walmart has been involved in a variety of legal battles, including as anti-trust litigation and labor disputes, during the course of its history. According to revenue, Walmart is the largest retailer in the world. Two examples of the types of regulations that governments use to exert control over the retail industry are laws that mandate a minimum pay and standards for product labeling. These are only two examples. Walmart is obligated to adhere to these regulations in order to avoid the possibility of being sanctioned financially.
Economic Factors
Walmart is susceptible to the effects of a wide range of economic factors, including but not limited to inflation, exchange rates, economic growth, and consumer spending. Customers are able to purchase items at Walmart, which is a cheap department store, at prices that are acceptable. This suggests that the company is highly attuned to shifts in the manner in which customers spend their money and reacts quickly to accommodate for these changes.
Profitability at Walmart can be affected by a number of factors, including both the rate of inflation and the expansion of the economy. When the economy improves, individuals have more disposable income; as a result, Walmart’s revenue goes up as a direct result of this trend. On the other hand, when the economy is in a downturn, individuals have less money to spend, which leads in a fall in Walmart’s overall sales. When the economy is in a downturn, individuals have less money to spend.
Social Factor
Walmart is susceptible to the effects of a variety of societal influences, including, but not limited to, shifting cultural ideas and patterns of behavior. Alterations in population makeup are another illustration. Walmart is required to make accommodations for a diverse range of cultural mores and ways of life as a result of the fact that the company does business in a number of different nations and regions. For example, Walmart needs to stock a variety of products that are well-liked in certain regions or nations to cater to their customers’ preferences.
In addition to this, the company must take into account the fact that its clients span a wide range of ages and genders. Walmart has been under scrutiny for its labor practices, particularly its low wages and poor working conditions, both of which have been mentioned as grounds for the criticism that has been leveled against Walmart. In order for the company to maintain its stellar reputation, it has been compelled to implement more morally responsible business practices.
Technology Factor
Technology Some examples of technological factors that have an impact on Walmart include the introduction of new technologies, the development of improvements in supply chain management, and the rise of internet shopping. Walmart has been making substantial investments in technology in order to improve the standard of its company processes as well as the shopping experience it offers its clients.
RFID tagging and automated inventory management systems are only two of the technological solutions that the company has utilized as part of its attempts to optimize its supply chain. The company has also utilized a number of other technical solutions. Walmart has been attempting to improve its capabilities in the e-commerce market in order to be in a better position to compete with online retailers such as Amazon.
Legal Factors
Regulations concerning intellectual property, labor laws, and consumer protection laws are some examples of the kind of legal concerns that have an effect on Walmart. Other examples include environmental laws and antitrust regulations.
Walmart has been accused of breaching intellectual property rights and engaging in unfair labor practices, both of which have resulted in a number of legal conflicts in the company’s history. In addition, the company has come under fire for the effects it has had on the communities in which it operates and the small businesses in those towns, which has led to an increased level of scrutiny on the part of regulatory agencies.
Environmental Factor
Walmart is susceptible to being influenced by a variety of environmental factors, including but not limited to climate change, sustainability, and environmental regulations. Walmart has been making attempts to decrease the damage it causes to the environment by adopting more environmentally friendly practices into its corporate operations.
These efforts were made in an effort to lessen the company’s overall impact on the planet. The group has concluded that it wants to be entirely run on energy derived from sustainable sources and produce no garbage whatsoever as part of its long-term mission. In addition, Walmart has been making efforts to reduce the negative effects that its operations have on the environment by improving its supply chain and reducing the amount of energy that is used in its retail stores.
Value Chain Analysis
According to Value Chain Analysis, there are two basic routes to the creation of value:
Obtaining market leadership in terms of costs by cutting down on spending on contracts and other areas differentiating yourself from the other businesses in your industry by providing value to your product so that you can charge a higher price for it.
Studies on profitability have demonstrated that both of these strategies can increase earnings. However, as we can see, Walmart’s primary business objective is to gain cost leadership by lowering expenses and contracting for lower costs, which indicates that strategy 1 is essential to the success of the organization. However, before digging deeper into the Value Chain Analysis methodology, it is vital to first identify and define the fundamental operations that Walmart carries out.
Inbound Logistics
Strategic relationships with suppliers are one way that Walmart can work toward its objective of having as few linkages as feasible in its supply chains. This goal can be advanced in a number of ways. It exerts pressure on its suppliers by making consistent and big purchases in an effort to negotiate cheaper prices, which is one of the strategies it uses to preserve its position as the industry leader in terms of cost.
Distribution facilities and cross-docking play a significant role in ensuring that goods are readily available in retail establishments and that prices are kept low. With the assistance of supply chain management and inventory management, they are able to keep their costs for the supply chain under control.
Operations
In a general sense, they can be placed into one of the following three categories: Walmart, Inc.; Sam’s Club; or Walmart International. The first group includes traditional brick-and-mortar companies, retail outlets, and internet purchasing options available throughout the United States. The second group comprises of businesses that are involved in retail, wholesale, and other types of commerce. These businesses come from 26 different countries.
The third category consists of the warehouse clubs that have a membership base in 48 out of the 50 states in the United States. By effectively dividing up operations and primary responsibilities on a national and international scale, costs may be cut and strategic partnerships can be developed to boost inbound and outbound logistics.
Outbound logistics
Walmart is always looking for new ways to improve the efficiency of the load building and routing operations while reducing the costs that are involved with those activities. The load building and routing solutions provided by ORTEC have resulted in a 4-million-gallon reduction in diesel use. Warehouses that are heavily cross-docked make it possible to maintain a constant supply of goods, which in turn helps to keep costs low.
Marketing and Sales
Due to the fact that the Walmart brand is synonymous with low costs, the retail giant’s pricing strategy is an integral part of the entire marketing plan for the company. However, they also invest a significant amount of money in marketing their goods and services, which includes producing films for social media platforms in order to disseminate information regarding discounts and other promotional deals.
Because of the decreased expenses connected with delivering the brand’s message, targeting clients, and growing sales, there has been a modest movement toward online platforms, which has been recognized as an important trend that has been brought to light.
Services
Despite the company’s poor track record in providing quality customer service, it has just announced the commencement of a large program that will specifically concentrate on improving worker remuneration and training for floor shop employees.
They are seeking to reduce product and labor losses caused by employees’ lack of training and incorrect product handling, and they are raising wages in order to keep people from leaving in droves. Both of these issues are related to the employees’ inability to properly handle the products.
Support Activities
The next thing that needs to be done in the study of the value chain is to precisely pinpoint the support operations. This is due to the fact that although if support activities are not essential in the value chain, they do contribute in some roundabout way to the viability of the overall plan.
After the primary activities have been determined without a doubt, the following phase in the value chain analysis is to determine without a doubt which activities fall under the category of support. The following are examples of Walmart participating in these activities:
Infrastructure
Walmart has made substantial expenditures in the company’s infrastructure, including the development of many centers for its various departments, with a special emphasis on improving their supply chain. These centers are located throughout the United States. These expenditures include the development of digital retail as well as the creation of distribution infrastructure that support their locations.
According to Walmart’s business model, the company’s infrastructure is supposed to offer direct assistance to the company’s outbound and inbound logistics operations, as well as the company’s purchasing procedures. This involves the creation of distribution centers that are intended only for the purpose of providing service to retail establishments.
Human Resource Management
Walmart has been under fire in recent years for having rules about its human resources that are inadequate. Because of this, the business has decided to make a significant investment, the key objectives of which are to increase the minimum pay and promote staff, with the remaining money going toward education and training. They are focusing their efforts on enhancing the quality of the human resources in order to support the strategy of maintaining a low level of expenses.
The Development of Technology They have been leveraging technology for a variety of goals, such as assisting with the management of their supply chain, developing improved applications and e-commerce sites, keeping managers informed, and ensuring that stores are well stocked. One example of this is that they have been using technology to ensure that their stores are properly stocked. They are hopeful that technology will be able to assist them in being more efficient.
Procurement
The department of Procurement is one of the most important departments in guaranteeing the continuity of their business plan and maintaining the strategic relationships it has with its suppliers in order to keep costs as low as possible. They are placing a large emphasis on technology as a means of increasing their procurement-related activities in order to achieve their aim of maximizing efficiency while simultaneously decreasing expenses.
Recommendations and Conclusion
Walmart, in addition to a large number of other retailers, is forced to deal with the challenge of having an excessive amount of goods in stock at all times. Walmart may choose to execute one or more of the following potential measures in order to remedy the situation:
To get things rolling, Walmart can choose to upgrade to a more robust inventory management system that makes use of data that is updated in real time. Walmart would be able to more efficiently track both their sales and their stock levels if they did this.
This would let companies quickly identify products that have a low rate of movement, which would allow them to make the necessary adjustments to their ordering and stocking processes. This would be beneficial to both the company and the customer.
Second, Walmart has to enhance the frequency with which it conducts inventory audits in order to be able to discover instances of excess stock more rapidly and take the necessary actions. This will allow Walmart to take advantage of opportunities to reduce inventory levels. Audits of this kind could utilize both physical counts and statistical analysis of sales data in order to find products that aren’t selling at a fast enough rate for the company’s needs.
Businesses such as Walmart may be able to increase their ability to foresee future demand for their items by employing data analytics and predictive modeling. You can boost your own capability by doing just one action, which will help you in the long run. They would be able to make an order for precisely the proper quantity of products, which would relieve them of the responsibility of liquidating any surplus stock that might be there.
Fourth, you should have sales in order to get rid of any excess stock: It is possible for Walmart to hold sales in order to get rid of any surplus stock it may have of a certain item in the event that it has more of that item than it requires. Promotions such as buy-one-get-one offers, clearance reductions, and other programs of a similar sort are examples of this type of deal.
If you have any extra inventory, consider donating it to a nonprofit organization so that it can be resold and used to help people who are having trouble making ends meet.Last but not least, Walmart could investigate the prospect of donating unsold products to charitable groups. This would be a win-win situation for everyone involved.
After that, these groups could provide the products for resale to customers who are in need of them. This would not only show Walmart’s sympathy for the community, but it would also assist in finding a solution to the problem of the surplus inventory.
Cost Transactional Theory
According to the transaction cost theory, the fees that companies must pay in order to trade with one another have a substantial impact not just on the levels of productivity that they achieve but also on the bottom lines of their enterprises. When Walmart has an excessive amount of items on hand, it falls into financial issues as a result of the additional money that needs to be paid in order to store the goods, transport them, and compensate for the possibility that some of the goods would be lost.
Walmart is able to make a contribution toward the resolution of this issue by collaborating closely with its suppliers in an effort to reduce the quantity of stocks. Walmart is able to assist its suppliers in meeting their requirements for inventory and reaching their delivery timelines because of the data and demand projections that it provides to them. This has the potential to eliminate wasted production as well as the requirement for Walmart to keep redundant stock, both of which would be desirable results if they came to pass.
It’s feasible that Walmart may improve their situation if they shifted to a different and more advanced system of tracking their stocks. This is something that they have been considering doing. Walmart is able to more accurately forecast customer demand and stock levels thanks to the use of data analytics and machine learning algorithms, which enables Walmart to provide superior service to its clientele. This has the ability to boost the efficiency of Walmart’s supply chain and help in lowering the amount of surplus stock that is kept on hand.
In addition, Walmart ought to give some thought to making the transition to a JIT inventory system, which is a system in which things are only bought and brought in immediately before they are required for consumption or sale. JIT is an abbreviation for just-in-time, and it stands for just-in-time ordering and just-in-time receiving. As a result of this, Walmart may be able to lessen the amount of excess inventory that it needs to keep in storage, which will enable the corporation to realize cost savings.
Walmart has the opportunity to enhance its bottom line by reducing the quantity of inventory that is wasted and boosting the efficiency of its supply chain through the deployment of technology and close engagement with its suppliers. This might result in an increase in the amount of money that is returned to the company.
Conclusion: Business Project of Walmart
Walmart, as one of the most successful retail chains in the world, is well aware of the significance of effective inventory management. When you have a greater quantity of inventory, the cost of storing it rises, the amount of money you make decreases, and your consumers will become increasingly dissatisfied.
Walmart might handle this issue by developing a more sophisticated inventory management system doing inventory inspections at more frequent intervals, improving its capacity for forecasting hosting sales to get rid of excess stock or donating the product to charity. If Walmart were to implement these enhancements to its inventory management process, it might provide better service to its consumers and maintain its competitive position in the retail business.
