Wal-Mart Just Can’t Keep Products on the Shelves (In a Bad Way)
Wal-Mart has seemingly had a considerable amount of trouble keeping shelves in its stores adequately stocked since reducing the number of employees on staff at once in stores. This is odd for a retail location since when products are not on shelves, there is not a large chance of them being purchased. Especially disconcerting is that Wal-Mart has become the largest retailer in the world on the back of a supposed mastery of its supply chain.
Wal-Mart is now taking measures to ensure that the issue with product stocking is corrected. The latest effort employed to do so is an external auditing process which entails a detailed process of checking each and every Wal-Mart location to make sure that products (when in stock) are on the shelves for consumption.
Wal-Mart refers to whether or not stores are adequately stocked via a metric known as on-shelf availability or OSA. Due to the recent issues and the need to involve an external company to help stores ensure that they are stocked properly, shareholders are expected to vote at the next meeting as to whether or not Wal-Mart managers and executives should have their performance reviews and potential compensation tied to OSA.
When visiting a Wal-Mart location, check for neon green stickers next to the price tags on certain products; those are the ones that the auditors are going to be looking for. Originally, the idea was to have the auditors go into the Wal-Mart stores and check on certain pre-determined items (unknown the store employees) and assign a grade based on how stocked those products were. However, before the actual auditing process ended up taking place, it was determined that it would be beneficial to the employees at the stores to know the products that were being checked because those would most likely be highly driven items for the time of the year. This entailed a rather tedious process for store managers as they had to allocate employees to the task of sticking green stickers next to products that needed to be stocked instead of actually just stocking them.
While the idea is good in theory, the actual outcome has been less than stellar since a good portion of the stores now have incredibly well-stocked green dot items with very poorly stocked products immediately next to them. This should have been expected since the employees could focus purely on the products they would be evaluated on.
This situation is a very direct link to supply chain concept discussed in class. In this case, the retail stores a sort of bottleneck. After the products are produced and shipped to retail locations, they are not being put out fast enough to get to the customers. Managers need to focus on properly allocating their limited employee resources to getting the task completed.
Do you think that this process will work? How else could Wal-Mart improve its product stocking?
To me it seems like instead of actually stocking the items they rather just put a green dot next to the tag saying that it needs to be stocked. I think of this as creating a to-do list and just check marking each item that you need to do, rather than actually completing the task. If keeping products on shelves is tied into salaries of managers then I am sure more items will be stocked and each item will be thoroughly checked. It is hard to say if the process will work. This may make restocking items easier but if the employees do not care then this process will not work. I believe that ultimately Wal-Mart should make incentives for its managers and employees to keep the shelves stocked. If employees feel a sense of accomplishment and a reward for their actions then they will be more willing to help out the store. I think we will be able to see if this process works in a short time span due to the amount of customers that shop at Wal-Mart and how quickly their shelves need to be restocked.
This was an interesting blog post because it connected to the activity we did in class, which involved deciding how often to place purchase orders for a particular company. Since WalMart has gained a competitive advantage in its industry due to the high volume of products they carry and their commitment to low cost, this problem might affect them significantly in the future. Why? Simply because people will begin to get irritated if the products they want are not available. I think the auditors need to assess and evaluate the effectiveness of this particular “control” they are using. In my opinion, this situation calls for the creation of a more organized and disciplined business process that both the operation managers and auditors can decide on. For example, keeping record of who and how many people restock a particular department each week will allow operation managers to forecast how many labor hours need to be allocated into restocking each department every week. By successfully implementing and monitoring this process, WalMart will be able to sell more of its products, which in turn prevents them from sitting elsewhere collecting dust or becoming obsolete.
This is a very interesting blog post also the comments on this blog post were very intriguing. I believe that since Walmart is such a huge company they have an advantage of sales over the whole industry, just like the comment above me said i completly agree that they have the high volume products and they have so many because of the low cost they get them at. They can improve their product stocking by being precise in the inventory they take upon delivery and the supply chain management is the one in charge.
For example they should take account of how many deliveries come in and count the overall product pallets in each truck. After working for Walgreens Supply chain I learned that counting pallets upon delivery is a key essential to gain perfect and precise count on their supply.
The post did a great talking about it, very interesting read.