Paid Advertisement | Hello and welcome back. Wal-Mart has one of the most sophisticated logistics and distribution systems in the world. Scan data is taken from the registers and sent not only to company headquarters, but also to vendors who can produce and ship the products to the Wal-Mart distribution center as the product is needed. Sort of a “Just-In-Time”-type system. The idea behind this system is that it provides everyone one in the chain the information they need to ensure that the stores have the product they need when they need it. Data is sent to the vendor who manufactures and ships the products to the Wal-Mart distribution center. The distribution center has a highly sophisticated conveyor system that takes products from the trucks or train cars that are bringing merchandise to the warehouse “across the dock*” to waiting trucks which will take the product to the stores and be placed immediately on the shelves. |
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02 February 2012
Could Someone Beat Wal-Mart (Part 2) ?
The idea is perfect. It is the ultimate in inventory control. In theory, there is no excess inventory anywhere in the system. The vendors make the product as needed. The distribution center takes the product from one truck and puts it in another. There is very little that sits in the distribution center in inventory. The store gets the item and puts it directly on the shelf the same day it gets the product. That’s the way it is supposed to work.
In reality, the stores, almost all of them, are the failure points. When the items arrive at the store they are placed in the back room. Later in the day, about 10 PM at most Wal-Marts, the night crew rolls the merchandise onto the sales floor. Since their job is to put the merchandise on the shelves, that is what they do. Someone goes through the store and places pallets of merchandise in the area called “Action Alley”. This, in effect, divides the store into three or more parts. During the stocking time of the day, customers have to either go all the way to the back of the store or to the front of the store to cross from one section to another.
The aisles are blocked with boxes of merchandise. The empty boxes are left in the floor until all boxes are empty. This basically means that customers can’t shop most aisles in the store during that time.
When Joe-Bob gets a can of Campbell’s Chicken Noodle Soup, he knows he has to place that can on a shelf. It gets placed on a shelf somewhere in the soup section. If he has more chicken noodle soup than will fit in the spot for chicken noodle soup, he just puts it anywhere on the shelf. If there is only a little broccoli and cheese soup on the shelf, Joe-Bob sticks the chicken noodle in front of it. Later, when someone comes to scan shelf tags to see what needs to be placed on the shelf, that person sees that the section marked broccoli and cheese soup is full, so they don’t scan that tag. Meanwhile, back in the storeroom, there is a case of broccoli and cheese soup waiting patiently to be placed on the shelf.
The managers tell the stockers “We don’t pay you to think. We pay you to place items on the shelf. The computer knows what needs to be on the shelf, you don’t.” The poor minimum wage worker, who would do a good job if trained to do so, does their job and puts the soup somewhere on a shelf. Meanwhile, if I want broccoli and cheese soup, I have to go elsewhere to get it.
The scenario is repeated throughout the store. Wal-Mart has sophisticated handheld scanners called Telzon units that can tell Wal-Mart how many of the scanned item they have on hand and where, in theory, it is all located.
This would work fine if the product was put where it was supposed to be. Often times, the bin where the product is supposed to be is full of items that are not supposed to be there because there was no room for those products in their rightful bin.
In short, for all of Wal-Mart’s efforts and investment in technology, the system fails. The system fails because Wal-Mart fails to realize that you must have properly trained workers to make the system work. When it gets down to the final stages poorly trained people, who are poorly managed, “do their job.” It is not the fault of the line-level people.
There is another extreme of Wal-Mart worker. Every Wal-Mart I have ever been in seems to have at least one. There always seems to be a super employee at every Wal-Mart. These employees are the glue that holds the whole thing together. This person is the locomotive that pulls the freight train. Without them, Wal-Mart would fall completely apart. As of yet, I have not seen Wal-Mart recognize these employees.
In every Wal-Mart you will hear over the intercom “Billy-Bob in Toys” or “Charlene” over and over. It isn’t that these two people aren’t answering their pages; it is that they are the only ones who do. These are the people in the Wal-Mart who take the problem and solve it.
Billy-Bob and Charlene are the ones who look so very tired when you see them. They are the ones that the boss screams at when thing go wrong because the boss has no clue how to fix the problem, but he/she knows it must be fixed.
I will deal with the issue of Wal-Mart employees in future posts.Disclaimer
The opinions or advice listed in this blog or website should be used as a place to start only. It is not a substitute for the use of a professional.
Please be sure to consult your attorney and/or accountant with any specific questions.
There is no one right answer to any business question that will cover all circumstances.
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