The Value of Information Systems – Wal-Mart
Introduction
Currently, the world of business is facing different problems and challenges that have changed their ways of handling the entire business and organizational process. Factors such as the expansion or the geographic factor, the increasing demands of the customers and other important entities in supply chain and value chain have a huge impact on the operation and performance of the business. Aside from that, the business industry is moving to the information-based management. Thus, more and more companies focuses on applying information system and computerized system in order to process data and facts and produce information that can be used in the process of decision-making (Shim, 2000). In connection, most of the businesses, particularly those international businesses have come to realized the vitality of Management Information System or MIS, which is considered as a system or process that produce information that are significant in effectively management the company. It also help to advance communication between employees, distribute vital material throughout the organization, supply an objective system for the process of recording, aggregate information, lessen expenses that are associated to labor-intensive manual activities, at the same time support the strategic goals of the organization (Currency). Thus, information system help to support the decision making function inside the organization, thus computerized business processing system help to generate information for the people in the organization which help to meet their needs for information, thus the decision-making process which will enable them to meet the objectives and goals of the entire organization (Kumar).
Background of the Company
Wal-Mart was established by Samuel Walton and his brother J. L. “Bud” Walton in Rogers, Arkansas. It is not only considered as the largest retailer in the world but also ranked as the largest corporation in the world. The retail giant dwarfs its nearest competition, generating three times the revenues of the world’s number 2 retailer, France’s Carrefour SA. Nationally, Wal-Mart, Inc has more than 1.2 million workers, which makes Wal-Mart as the largest nongovernmental employer in the US. Furthermore, in the country, the entire operation of Wal-Mart include 1,478 stores that are located in all 50 states; 1,471 Wal-Mart Supercenters, which are combined discounts outlets and grocery stores; 538 Sam’s Clubs, considered as the number 2 U.S. warehouse membership club chain, together with 64 Wal-Mart Neighborhood Markets, smaller food and drug outlets which also offer a selection of general merchandise (Universe).
In 1991, international operations of Wal-Mart started. It included discount stores in Canada and Puerto Rico, Wal-Mart Supercenters in Argentina, Brazil, China, Germany, Mexico, Puerto Rico, South Korea and the United Kingdom. In addition, the corporation also operated its Sam’s Club in Brazil, China, Mexico and Puerto Rico. The company operates its Suburbias in Mexico; it is a specialty department store, together with the Superamas supermarkets and VIPs restaurants. Aside from that, the company is also operating its Todo Dias supermarkets in Brazil; Neighborhood Markets supermarkets in China, ASDA combined grocery and apparel stores in the UK, and Amigo supermarkets in Puerto Rico (Universe).
Furthermore, Wal-Mart also holds a 36 percent stake in The Seiyu, Ltd., considered as a leading Japanese retailer. In all, more than one-quarter of Wal-Mart’s stores are located outside the United States, and international operations produce about 18.5 percent of entire revenues. The heirs of founder Samuel Walton continue to own about a 38% interest in the company (Universe).
Information System in Business
A system is defined as a group of interrelated components that are working toward the attainment of a common goal by the process of accepting the inputs and producing outputs inside the organized transformation process. Feedback is considered as the data regarding the performance of a system, while control is considered as the component which monitors and evaluates feedback and makes any necessary adjustments to the input and processing components in order to ensure that proper output is produced (Sachenko).
Thus, due to the current changes in the internal and external environment, it is important to consider that information system plays a vital role in decision-making process. Therefore, an understanding of the effective and responsible use and management of information systems and technologies is vital for managers, business professionals and other knowledge workers in the current interconnected and internet worked organization is vital. Furthermore, the information systems play a significant role in the e-business and e-commerce operations, enterprise collaboration and management as well as strategic success of business that must operate in an internet worked global environment. For these reasons, the field of information system is considered as a major functional area of business administration (Sachenko).
In addition, information systems perform three important roles in the business firms. In formation systems can help to support the business processes and operations, business decision-making and strategic competitive advantage of the company. On the other hand, the major application categories of information systems include the operation support systems including the transaction processing systems, process control systems and enterprise collaboration systems, together with the management support systems such as management information systems, decision-support systems, strategic information systems and functional systems. However, it is important to consider that in the real world, most application categories are combined into cross-functional information systems which offer information and support for decision-making and also perform operational processing activities (Sachenko).
Information Systems in Wal-Mart
Sales and Inventory
Currently, Wal-Mart is considered as one of the most advanced companies in using information system and other technologies in their operation. It can be seen that there were great development in the process of applying information system inside the company.
The use of retailing technology of Wal-Mart can be tracked during 1969, when the company installed a computer in order to keep track of inventory in its new 70,000 square feet warehouse in Bentonville Ark (BNET, 1992). The main factors which influence the said movement is because of the expansion or the growing size of the business, which pushes the company to apply technology. Aside from that, the company is also focusing on the impact of manual system regarding inventory. Thus, the company had been able to realize the importance of information system in decreasing the production costs. Wal-Mart’s use of technology is considered as proactive, which is considered as an important way to hold down costs and make diversified retailer a more productive company, rather than being just a means to replace people. The company’s approach in implementing technology is considered as simple, and that is the determine a reason for using or applying equipment or technique, cost justify the said move and then take advantage of all the ancillary benefits which can accrue from using the technology (BNET, 1992).
As time goes by, and as new important factors in the field of business emerge, including the growing size of Wal-Mart and the changing demands and needs of the customers, the suppliers and the business itself, Wal-Mart had been able to sustain its performance with the help of different information system. In 1971, Wal-Mart added the classification code to the information captured during one pass at the point of sale. Then the company added a double pass system in order to obtain more detailed information, including specific styles or colors for apparel or model numbers of higher-priced hard good items starting at about (BNET, 1992). The main factors which influence the said change are the fact that, as the company grows in terms of size of stores, so as the line of products and services that the company is offering. Therefore, there is a great need to update the POS. Aside from that, the company also came to realize that the demand of employees towards computerized system is also changing, together with the size of the business and the line and amount of products that they are selling.
During 1970s, Wal-Mart had been able to sustain its outstanding performance. The company began to continuously increase the number of stores while booting up net income by tremendous amount of ratio. The company starts the decade by 4 primary strategies. First the company proposed that the company expand steadily by placing full-sized discount department stores in different towns and small towns within the expanded radius of 300 miles of the Bentonville headquarters. Second, the company focused to maintain the genuine discount prices and one of the lowest gross margins of any chain in the US. Third, the company maintained that the firm must make every effort in order to cut costs in the different areas of inventory and operations. Forth and the most important is the continuation maintenance of loyalty, morale and enthusiasm in the workforce (Lee). Thus, the company focused on the different aspect of their stores including the designs and structures, which enables them to attract more customers. On the other hand, the company also focused on application of different electronic technology. This is because of the growing number of the customers, which is considered as one of the most important factors which pushes technology. The more customers to be served, the most electronic workstations and gadgets are needed in order to serve them in efficient and timely manner. Aside from that, because of the fact that the company is already expanding, the primary problem that the company are facing is the communication between the different stores and the headquarters. This is vital because of the fact that communication between the stores is important in order to analyze the overall performance of the company. Aside from that, the company itself believes that the computer was vital to the success of the entire company. This can be seen on the side of the employees, which are directly connected with the customers and the system itself. Because of the said factor, the company decided to continually applied their computerized pinpoint tracking of merchandise in all stores by capturing sales information on print punch tape and using magnetic bar code split tickets, where in part of the it were sent to the headquarters of the company for daily tallying. As a result, the installation of the said computer terminal network in chain wide manner had been able to offer faster, more direct communication between the headquarters, the stores as well as the growing number of distribution centers (Lee).
Another important factor which influences the technological movement of the company is because of the different technologies that are becoming available in the market by different vendors. Aside from that, the fast development of technology pushes the company to be updated because using outdated technology will affect not only the operation of the company but also its image towards the company. As a result, the company began to use its network in order to transmit information to a dozen of manufacturers or called electronic data interchange. By 1985, the company had been able to use VICS ANSI X. 12 as its format, which electronically link up with its more than 2,000 vendors (Lee).
Thus, during 1980s the application of Universal Product Code or UPC is considered as one of the most important technological movement of the company. This is one of the movements of the company as an answer to the growing size of the business, together with the increasing number of products and services. The company had been able to realize the manual effort of the staffs of the company in the process of tagging of price, thus the error in the cashier and inventory, because these units are interconnected. Because of the growing number of products, it will be hard for the employees to manually punch the tag price, and it will be hard for the cashiers to input the details about the products and customer transactions in manual manner. Thus, it also created chaos in the internal operation, because there are some errors and mismatch of product code in different branches or stores which made the inventory process difficult.
Internal Communication
One of the important impacts of expansion in Wal-Mart is the communication process between the different stores in different places. Thus, it had been hard for the managers to communicate with other stores regarding the different aspects that must be considered in the decision-making process. Aside from that, the costs that the company is spending for their communication process is increasing because the upper managers in the main headquarters have to meet physically or via phone in order to be connected, thus, it add up to transaction costs. Thus, as an answer to the said problem, the company focuses on applying information system and technology that will focus on the internal communication within the company.
In 1987, the company had been able to deploy a communication system from Hughes Network Systems. As a result, the company had been able to view the immediate benefits of the systems including the speed up credit authorization by 25%, at the same time improve the faster data communication between headquarters, the stores and other important facilities. Aside from that, the company also benefited from the said system by making the real-time TV broadcasting possible, which was applied and used in the training programs, corporate news and updated, programs where in the executives discuss about the different information about the products and displays, together with confidential manners which focus on the R&D or innovation process of the company. As a matter of fact, the said technology had enabled the company to broadcast the memorial service of Samuel Walton in all of the stores (BNET, 1992).
Another factor which affected the technological change of the company is the Internet, although the satellite communication project of the company is effective, it will not always be available to be used by the employees. Thus, with the use of the Internet, particularly the Intranet, all of the upper and middle level management will be able to communicate anytime. The Intranet also enables the employees to post all of their suggestions on how to improve the service and operations of the organization. By doing this, the upper management will be able to produce plans and programs that will motivate the employees and will make them more productive.
Customer Relationship
One of the external factors which affect the buying behavior of the customers is the geographic factor and the economic aspects. Thus, it results the company to launch its online stores which enables the company to be connected with the customers. Just like the employees, as of now, customers are also changing in demands, particularly in the ways of buying and availing products and services. E-commerce or the process of buying and selling goods and services over the internet had opened a new way of connection between the buyers and the sellers. Thus, by applying the said way, it had enabled the company to be connected with the customers 24/7. Aside from that, it also enables the company to offer cheaper products, because, the said system enables the company to save costs in terms of human resource and other important costs.
Aside from that, the said service of the company which is the Wal-Mart online enables the business to be connected with the different customers around the globe, therefore, it also serve as one of the most important marketing strategies of the company. By using the said service, the company will be able to serve their customers in fast an easy manner, thus making the customers avail of their products within the vicinity of their homes and with just a click of the mouse.
Conclusion
Thus, it can be said that the important factors which pushes or motivates the said strategy is because of the employees and the customers. At the side of the employees, because of the growing size of the business, it will be somewhat hard to serve all of the customers in manual manner or in the traditional way, thus, with the help of the Internet, the employees will no longer have directly communicated with the customers, what they have to do is to monitor their service towards the customers by using the system. On the other hand, in the side of the customers, the system had enabled them to have another way of availing the company’s product, and that is by ordering online. It will also help them to save costs and efforts by visiting to the nearest stores of Wal-Mart in order to buy products from the company.
Above all, the said system enables the company to focus on the current demand and behaviors of the customers and employees and then provide them with the data that they are needed in the process of decision-making.
References
BNET. (1992, June 15). Taking the Lead in Technology – Wal-Mart Stores Inc – Special Section: The World of Wal-Mart-Company Profile . Retrieved May 18, 2009, from BNET: http://findarticles.com/p/articles/mi_m3092/is_n12_v31/ai_12398577/
Currency, C. o. (n.d.). Management Information System. Retrieved May 18, 2009, from Administration of National Bank: http://www.occ.treas.gov/handbook/mis.pdf
Kumar, N. V. Management Information System. Anmol Publications PVT Limited.
Lee, J. (n.d.). Continuous Improvement in Wal-Mart. Retrieved May 18, 2009, from Academic Emporia: http://academic.emporia.edu/smithwil/s99mg423/eja/lee.html
Sachenko, A. (n.d.). Foundations of Information Systems in Business. Retrieved May 18, 2009, from Scribd: http://www.scribd.com/doc/396076/Foundations-of-Information-Systems-in-Business
Shim, J. (2000). nformation Systems and Technology for the Noninformation Systems Executive: An Integrated Resource Management Guide for the 21st Century. CRC Press.
Universe, F. (n.d.). Wal-Mart Stores Inc. Retrieved May 18, 2009, from Funding Universe: http://www.fundinguniverse.com/company-histories/WalMart-Stores-Inc-Company-History.html
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