Walmart Business Process Reengineering Case Study

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Business Process Reengineering 

Today, with annual revenues exceeding the budgets of dozens of countries and retail operations in 28 nations, Walmart stands apart in a retailing category by itself, but this company did not achieve this spectacular level of success by resting on its corporate laurels. Indeed, it is reasonable to suggest that the business processes that are currently in place at Walmart only resemble the original strategies used in its single Bentonville, Arkansas store in spirit. The purpose of this paper is to provide a case study of Walmart concerning how it has historically applied the tenets of business process reengineering to achieve and sustain the competitive advantage it enjoys today, followed by a summary of the research and key findings concerning these issues in the conclusion.

Review and Analysis

Facilities, location(s), and capacity

Headquartered in Bentonville, Arkansas (the city of its origin), Walmart (hereinafter alternatively “the company”) operates a chain of retail stores across the country and around the world under the Walmart discount stores, Supercenters, Neighborhood Markets, and Sam's Club warehouse membership clubs in the United States as well as more than 6,300 Walmart stores in 28 countries in 2017 (Walmart stores, 2018). As can be readily discerned from the data set forth in Table 1 below, the company’s has experienced year-to-year growth in its Sam’s Club, discount stores, and neighborhood markets during the period from 2012 through 2017 but with some modest declines noted in the year-to-date data for 2018. The company’s Supercenter format, however, enjoyed strong year-to-year growth during this same period.

Table 1

Number of Walmart stores in the United States: 2012-2018 (year-to-date)

Type

2012

2013

2014

2015

2016

2017

2018

Sam's Club

611

620

632

647

655

660

597

Discount stores

629

561

508

470

442

415

400

Neighborhood

markets

210

286

407

639

667

735

800

Supercenters

3,029

3,158

3,288

3,407

3,465

3,522

3,561

Total

4,479

4,005

4,203

4,516

4,574

4,672

5,358

Source: Walmart stores, 2018

In addition, as of 2017, the company also maintains at least 173 distribution centers in the United States alone that total nearly 130 million square feet in space with plans on the table to include another 4.2 million square feet in the near future (Walmart distribution centers, 2018). Combined with its total retail square footage in the United States of around 775 square feet, Walmart’s operations are almost 1.4 times as large as New York’s Manhattan at 661 million square feet (Walmart distribution centers, 2018).

b. Business strategy

The company’s success to date has been fueled by its overarching cost-leadership business strategy.

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In this regard, Ferguson (2017) reports that, “Walmart's generic strategy is cost leadership. In cost leadership, the firm's focus is on maintaining low prices of goods and services. Walmart is known for low prices, which is the main selling point of the business” (para. 3). Although the company achieves significant cost savings on its purchases due to its enormous purchasing clout, Walmart is also well known for its focus on keeping human resource costs low, as well as its efforts to reduce waste at every opportunity and streamline its supply chain operations to the maximum extent possible (Ferguson, 2017).

There are some other ways that Walmart achieves a competitive advantage through its cost-leadership business strategy. For instance, according to Schiff and Schiff (2009), cost leadership is also achieved by developing an organizational culture that places a high priority on cost savings as a matter of routine. Effective cost-leadership strategies such as the one used by Walmart are characterized by four main criteria as follows:

· Recognition as the lowest-cost producer in a given industry, without compromise in quality or customer focus;

· Realization of a long-term cost-centric culture where cost consciousness is a strategic and leadership preoccupation across functional lines and independent of the vagaries of financial markets;

· Dissemination of cost information with regard to customer, product, distribution channel, and the like that is timely, understandable, credible, and actionable and is made available to decision makers to fuel continuous improvement; and,

· Aggressive and balanced performance targets are established across the value chain (Schiff & Schiff, 2009).

The extent to which these criteria are satisfied should be the extent to which employees are recognized and rewarded for the efforts and these successes should be communicated organization-wide (Schiff & Schiff, 2009).

To date, Walmart has not only satisfied these criteria, the company is setting the standard for others to follow. For example, Schiff and Schiff (2009) emphasize that, “[Walmart’s] blend of cost consciousness and customer focus across their value chain, including key suppliers, is part of what's sustaining them as a leader in this challenging economy, especially for retailers” (p. 36). It is especially noteworthy that Walmart’s organizational culture has consistently placed a high priority on satisfying these four main cost leadership criteria, even during the Great Recession of 2008. In this regard, Schiff and Schiff (2009) add that, “Wal-Mart's cost leadership achievement was built, established, and embedded in their culture during the ‘good times’ that preceded the [2008] recession and not as a reaction to it” (p. 37). This success is all the more impressive given the bewildering array of products and services offered by the company in the United States and abroad and the supply chain challenges these represent as discussed further below.

c. Types of products or services offered

The company offers tens of.....

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