Tuesday, October 28, 2008

IT at Wal-Mart

Wal-Mart is a leader in the IT world. The company is constantly trying to improve its IT infrastructure in order to make its daily business practices faster, cheaper, and more convenient. Wal-Mart does this, yet still manages to spend less than 1% of its global revenue on IT. Wal-Mart is currently developing a system that will automatically trigger a purchase order for a new product the moment it is taken off the shelves in a given store. This is an example how Wal-Mart encourages its suppliers to upgrade their IT as well so that the entire purchase and sale of items is easier on both ends.

I think that what Wal-Mart is doing as far as encouraging its suppliers to upgrade their current IT is great. This system of getting items on the shelves faster while having them spend less time in storage is better for everyone, including Wal-Mart and its customers. This new system of having a purchase order made the moment a customer buys a product is a great way for Wal-Mart to save money, and in turn, to pass some of the savings down to the customers. Wal-Mart is constantly trying to go out and be the first to get its hands on a piece of IT technology. This is why Wal-Mart is a leader in its field.

The more efficient Wal-Mart can run its business, the more enjoyable the public will find shopping at Wal-Mart. If new IT offers a better shopping experience, while at the same time decreasing Wal-Mart's costs, then it is a no-brainer; Wal-Mart must strengthen its IT in order to remain a leader with a loyal customer base. This is something that Wal-Mart realizes and will continue striving to upgrade. I do not believe that there will ever come a day where Wal-Mart or any other company totally maximizes its IT efficiency. There are always slight details that can be improved to make the purchase and sale of products by a company like Wal-Mart better. This is what Wal-Mart understands, and this is why Wal-Mart will not be failing anytime within the foreseeable future. Wal-Mart does not have to strive for perfection, it simply must consistently stay ahead of any competition in the IT field.



http://www.informationweek.com/news/mobility/RFID/showArticle.jhtml;jsessionid=L5MO1TXU0E2ZEQSNDLPCKHSCJUNN2JVN?articleID=47902662&pgno=3&queryText=&isPrev=

4 comments:

Caroline DiSilvestro said...

I agree that this sounds like a great investment for Wal-Mart. It seems that it will save time and increase customer satisfaction. I think the writer of this blog did a good job analyzing Wal-Mart's decisions as a business and its intelligence in doing so. However, I wonder whether the immidiate order of a product is always necessary. For example, seasonal products or products sold for a certain holiday may be ordered but not may not need to be reorded directly after its purchase. I assume that certain items can be taken off this technology system so that they are not always reordered, however that was not included in the write up so that is my only question about this new technology.

John McAvoy said...

I too think that this is a good idea for Walmart. Walmarts slogan is "rolling back prices." I think this technique would be a strong way for them to save money and roll their prices back even more than they have before. It will also enable them to meet supply and demand expectations better. Overall I think this would be a positive IT strategy for all companys to employ.

Bridget MacDonald said...
This comment has been removed by the author.
Bridget MacDonald said...

After reading this blog, I was very surprised to hear that Wal-Mart only spends 1% of their revenue on Information Technology. Because of this, they have been able to develop a system where upon purchase of a particular item, a replacement for that item is ordered immediately. Although this keeps inventory rolling, does it eliminate jobs for people? Wal-Mart will no longer need an employee to walk around the store with an inventory count device. This is less expensive for Wal-Mart but may not be as accurate because of theft issues. If a customer steals from the store, will a purchase order be triggered when the item is removed from the shelf but not accounted for in the company's revenue? Or is it only when the item is scanned at check out that the purchase order is placed? If items are stolen, and the store dos not manually check the inventory count, there may be problems in keeping up with ordering new products. It's definitely a cost effective system, but we still need to consider the consequences that may arise.