C1. Shrinkage at Walmart In 2015, the world’s largest retailer, Walmart, announc

Question

C1. Shrinkage at Walmart In 2015, the world’s largest retailer, Walmart, announced a quarterly increase in sales that was accompanied by an increase in expenses that reduced its hoped-for profit. In discussing the higher expenses, the company mentioned “shrinkage” three times in its written press release and 13 times in its conference call with financial analysts. The company attributed a significant part of its increased shrinkage to shoplifting and outright theft, including one instance in which a team of thieves pushed a shopping cart full of electronics out a back door and loaded them into a waiting car. To combat these problems, which are unfortunately common in retailing, the company announced it was restarting a training program for employees that helps them learn how to spot shoplifters and fellow employees who are pilfering, along with adding staff to areas of the store that contain high-value or easy-to-steal items. They also plan to start checking customers’ receipts at store exits. In addition to these measures, however, the company also reported that a sizable portion of the shrinkage results from difficulties encountered in managing inventory flow throughout the company’s distribution network and its stores. When warehouses and store backrooms become overstocked with inventory, it can be difficult to determine which items should be discounted and moved to the store’s shelves. In recent years, Walmart has increased its sales of grocery and food items, which can be damaged more easily than its other inventory and for which failure to monitor expiration dates can be costly. To deal with these backroom inventory management issues, the company has added employees to staff those areas. Walmart’s U.S. supply chain includes more than 100 distribution centers from which the company makes deliveries to its more than 5000 stores and Sam’s Club locations using its fleet of more than 6000 trucks. Managing the flow of inventory from the company’s suppliers through its distribution centers and into its retail outlets is a mammoth task and, as discussed in this chapter, the company has made attempts to use technology in new and creative ways to address these challenges in the past. REQUIRED Q1) Become familiar with RFID technology and its potential uses in Walmart’s supply chain using the information presented in this chapter and information you obtain through the Web Links, your favorite search engine, and your library. In about 200 words, outline the advantages Walmart might gain by using RFID in its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its backroom inventory storage areas. Q3) In about 100 words, discuss the advantages Walmart might gain if it were to use RFID tracking technologies in all of its retail stores to manage every single item as opposed to using either case-level RFID or tracking only part of each store’s inventory at the item level.

Explanation / Answer

RFID HAS BEEN THERE FOR LONG PERIOD OF TIME AND HAS NOW BECOME QUITE POPULAR WITH RETAILERS. WAL MART STATED USING THE TECHNOLOGY WAY BACK IN 2003. HOWEVER THE MAIN AIM OF COMPLETELY MATERIALIZING THE ENTIRE RETAIL CHAIN ON RFID HAS COME TO THE POINT. RFID TECHNOLOGY HAS MANY ADVANTAGES THAT CAN BE USEFUL FOR THE WAL MART. THE MOST IMPORTANT THING IS THAT THE INVENTORY CAN BE TRACED WITH EASE WITH THE HELP OF RFID TAGS. A WORKER CAN COLLECT DETAILS ABOUT ALL THE INVENTORY ITEMS FROM AS AFAR 20 FEET AWAY FROM THE AISLE. GAIN SHOPLIFTING IS A MAJOR ISSUE FOR MOST OF THE RETAILERS, THIS THING CAN BE EASILY HANDLED WITH RFID. HOWEVER IT REQUIRES THE INSTALLATION OF SCANNERS ON ALL EXIT POINTS. AGAIN THE SPEED OF CHECKOUT OF A CUSTOMER CAN BE INCREASED WITH RFID TECHNOLOGY. THE DEMAND FOR INVENTORY REPLENISHMENT CAN BE EASILY MET WITH THE HELP OF RFID TECHNOLOGY IN THE STORE WITH THE HELP OF AN EMPLOYEE OR A SOFTWARE IN PLACE. HOWEVER THE BACK ROOM ENVIRONMENT OF THE STORE HOUSE CREATES SOME ISSUES. SOMETIMES THE TAGS ARE NOT ABLE TO CONVEY DATA PROPERLY OR THEY ARE NOT READ BY THE SCANNER. THE USE OF FLORESCENT LIGHTS, METAL SHELVES AND ELECTROMAGNETIC DISTURBANCE OFTEN MAKES IT DIFFICULT FOR THE TAGS TO BE READ. AGAIN THE DISTANCE BETWEEN THE TAGS POSES AN ISSUE WHERE THE ENTIRE FREQUENCY IS ABSORBED BY THE FIRST TAG OFTEN CALLED SHADOWING, LEAVING OTHER TAGS UNREADABLE. NOW UNDER SUCH SITUATIONS WE NEED SOME STAFF TO HANDLE THIS FAILURE RATE OF THE TAGS. THE WAL MART WILL HAVE TO HIRE SOME STAFF AT LEAST IN THE PRESENT DAY TECHNOLOGY OF RFID. IN THE FUTURE WE CAN EXPECT BETTERMENT OF THE RFID TECHNOLOGY TO OVERCOME THIS ISSUE.

3. THE USE OF RFID CAN DEFINITELY HELP THE WAL MART TO GAIN SOME ADVANTAGES IN THE BETTER MANAGEMENT OF ITS STORES. THE PRESENT RFID TECHNOLOGY IS HELPING THE RETAILERS TO GAIN MORE COMPETITIVENESS FROM ONLINE RETAILERS THROUGH THE OMNICAHNNEL SALES BY MEETING THE CUSTOMER NEEDS WHETHER IN THE STORE OR ONLINE. RFID ALSO HELPS IN MATCHING THE ONLINE STOCK DETAILS WITH THE ACTUAL STOCK IN THE STORE. THE WALMART CAN SAVE LOTS OF TIME SPENT BY THE STAFF IN SCANNING THE STOCKS MANUALLY AND THE SAME STAFF CAN BE USED FOR BETTER MANAGEMENT OF THE STORE. ALSO IT IS CLEAR TODAY THAT THE RFID CAN HELP THE TORE MORE IN SALES THEN ON THE SUPPLY CHAIN MANAGEMENT ARENA. AGAIN THE DEVELOPMENT OF RFID FRIENDLY DEVICES PARTICULARLY IN THEIR HANDSETS; WITH THE CUSTOMERS MAKES THE USE OF THIS TECHNOLOGY A WIN WIN SITUATION FOR THE WAL MART STORES.

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