Walmart Efficiency and Effectiveness

The organization that I am doing my efficiency and effectiveness report on is Walmart Stores Inc., also known as Walmart. Walmart is a multinational mass merchandiser that provides consumers with low-cost options on many products; mainly groceries and consumables. With more than 50% of Walmart’s sales coming from groceries and consumables, it’s obvious that their major work activity is distribution. Walmart’s mission statement is “We save people money so they can live better”. Is this because they operate more efficiently or do they operate more effectively? I rated Walmart with a score of 4 on the effectiveness scale for 3 reasons: 1. their large customer base allows them to demand lower rates from suppliers than their competitors, 2. their supply chain ranks number 13 on Gartner’s (a research and analysis company) annual rankings, and 3. in fy15 they made $486 billion in net revenue; more than 4 times as much as its next closest competitor. According to an article on the website Cerasis.com, “Not only has Walmart excelled over the decades in traditional supply chain management, but now they are focused on continuous improvement in the e-commerce market as well as sustainability”. Walmart uses an integrated, centralized supply system that allows suppliers to know when to ship products to certain stores. The aforementioned statements were the reason I gave Walmart a rating of 4 in efficiency. Walmart isn’t satisfied with its current standing and would like to increase its efficiency and effectiveness and are investing millions into new and innovative technologies that would allow it to decrease its expenses and increase its revenue streams. Walmart’s vision statement is “To be the best retailer in the hearts and minds of consumers and employees”. Walmart is currently one of the best in the business at operating efficiently and effectively due to its ability to demand lower rates from its suppliers, their integrated supply system, and the ability to charge less than nearly every brick and mortar store however, with the increased competition by online retailers that are able to charge similar prices, and in some cases less, they must find new and improved ways of increasing their efficiency and effectiveness to remain profitable and not received the same fate as so many of their past competitors.

 

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