Operations management represents the capacity to design and control business operations in accordance with the core business strategy. Typical operations management tasks include the responsibilities of making sure that all business operations consume as little resources as possible while fulfilling the needs of the clientele. As such, the general role of operations management in any business entity spans from the production to the sales phase and covers the supervision of production and service systems that convert inputs into outputs. Key accountabilities in operations management are product design, forecasting, supply chain management, and delivery management. Effective operations management relies on raw materials, human resources, equipment, and technology. Key strategic issues addressed within the operations management field include, but are not limited to, determination of manufacturing plants and stores, methods of managing projects, and implementation of customized structures of information technology adoption. Other operational subjects draw in aspects of inventory management, quality control, maintenance policies, and acquisition of goods. This report presents an assessment of operations management approaches at Walmart and Amazon, two of the biggest retailers in the world. The main difference between these retailers is that Walmart initially began by seeing up brick-and-mortar stores while Amazon launched as an online store. Hence, Walmart has a more significant number of physical stores than amazon. Even so, Amazon has a broader product inventory with over 250 million products in its catalog. Walmart, in comparison, offers its customers just over four million products. To date, Walmart holds the record of the biggest retailer worldwide while Amazon takes the second position. This report will expose the key similarities and differences between the operations management approaches of these two retail giants.
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Analysis
The theme of operations management is large and broad when one considers the numerous aspects that are involved in the transformation of resources into value. For instance, when one takes a strategic view, aspects of inventory analysis, the use of data, design of processes, and goal-setting come into view. By the same token, when one contemplates the policies and procedures of operations in a business, the principles of managing tasks and functions emerge. This report evades this ambiguity through the adoption of the transformation model of operations management, which explicitly analyzes operations in terms of inputs, transformational processes, and outputs. Thus, the analysis of operational approaches at Walmart and Amazon will be evaluated based on their perceived value in the organization’s bottom line.
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Walmart
Walmart is the largest retail store in the world, with over 10,000 stores across 24 countries. This 59-yeard-old multi-national retailer operates through a series of hypermarkets, grocery stores, departmental stores, which are headquarters in Arkansas, United States. The main business goal of Walmart is to offer quality products that satisfy its diverse clientele. Walmart’s operations management department utilizes a variety of approaches that are mainly targeted at efficient management of inventory and the supply chain. The company’s operations are primarily entrenched in the central strategy due to their immense significance on organizational success. Walmart’s managerial team is continuously concerned about all decisional areas of operations management, including the design of services and goods, quality management, capacity, and process design, geographical strategy, inventory management scheduling, and human resources design.
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Regarding the designs of services and goods, Walmart is characterized by its retail service. However, the company also owns unique brands. The retail service is designed to enhance efficiency and drive low pricing tactics. The firm uses a generic strategy and intensive growth schemes that stress minimal costs and high-quality goods. Accordingly, other areas of emphasis in the design are maximization of efficiency via mass-production systems and inexpensive production.
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Walmart embraces three levels of quality standards. The highest level deals with the uppermost requirements of quality, precisely quality levels that surpass those of the retail industry. The highest quality tier is only applied to a few products, such as goods that fall within Walmart’s own brands. The second level signified average quality and is generally applied to select products and processes. The second tier is specially applied to job performance targets of Walmart’s workforce, particularly sales personnel. The lowest quality sets minimum quality requirements. This tier of quality is aligned with the expectations of many buyers. The lowest quality tier applies to a majority of products, including those sold under the Great Value brand. By using a three-tier approach, Walmart satisfies the overall quality management objectives of the company.
Walmart builds its capacity and processes by analyzing the behavior of stakeholders, analyzing processes continuously, and forecasting future trends. The behavioral analysis applies to workers and customers across online and physical stores. The analysis of workers and customer behavior patterns acts as a foundation for the design of the company’s capacity and processes. The use of behavior analysis explains the firm’s ever-shifting approach to capacity design for employees. The capacity design and Human Resources operations shift as the business grows. Apart from behavioral analysis, Walmart guarantees a continuous monitoring process of the capacities of its stored. This helps the managerial team be informed about the need to keep or abolish current designs.
A clear-cut geographical strategy is instrumental in the success of Walmart’s operations management. by placing stores and warehouses in the right location, the firm enhances the movement of products, collaboration between human resources, and transmission of information. Walmart stores are conducive placed near urban neighborhoods to increase access and market reach. Product warehouses are also located in strategic locations where Walmart employees and target customer bases can access. To address the ease of information transmission between various departments, which may be spread across different geographical areas, Walmart uses information technology such as the internet, networks, and computing systems.
Walmart minimizes its supply chain to improve efficiency by including few supply chain links. Innovation in the company’s supply chain began with the removal of several chain links in its initial days. Today the enterprise works directly with manufacturers to eliminate unnecessary go-between suppliers who may inflate the cost of procurement. Walmart’s Vendor Managed Inventory (VMI) system is a powerful solution in the company’s warehousing plan. The system increases standardization across all Walmart’s outlets and ensures the successful fulfillment of orders. In addition, the company maintains strategic partnerships with existing vendors. This results in the potential for long-term and high-volume supplies and the highest levels of the economy.
Walmart employs cross-docking as an essential logistics practice in its operations management. Cross-docking entails the direct movement of goods from inbound to outbound trucks without the need for storage (Dulebenets, M2018). This strategy not only helps Walmart replenish its stock efficiently but also cuts down storage and transport costs which may have inflated prices at the sales phase. Hence, suppliers usually deliver products to the company’s distribution centers, where they are cross-docked and redistributed to Walmart stores.
Advanced inventory technology plays a significant role in inventory management. In reality, technology is one of the biggest enablers in Walmart’s supply chain success. Walmart has one of the most effective information technology systems across the world. It employs a cutting-edge network and technology design that allows the company to accurately forecast, track, and predict levels of inventory, enhance its transport, manage links with customers, and supervise response logistics with minor hitches. Implementation of technology at Walmart began as early as the 1980s when the firm adopted universal product codes to improve its store-level information management. Since then, the company has continued to espouse new innovations that help it manage its supply chain more effectively. Examples of the most recent adoptions are the Retail Link database, which facilitates instant data-sharing and analytics, and the Radio Frequency Identification system, which expedites the tracking of products as they move through the supply chain. Data is fundamental in inventory management and the prediction of future trends (Anitha & Patil, 2018). Walmart’s supply chain design has helped the company to maintain a competitive edge over other retailers through lower pricing strategies, reduced inventory costs, and improved product variety.
Amazon
Amazon is known for disrupting the retail industry through the adoption of technologies in the sale of products. The company began as an online marketplace for publications but eventually expanded to include other products such as video games, software, electronics, toys, food, furniture, and jewelry. Today, the company has grown to become the most valuable retailer in North America by market capitalization (Collis et al., 2018). With regard to operations management, Amazon utilizes a mix of strategies, including outstanding transportation, multi-tier inventory management, and efficient information technology systems, along with a vast network of warehouses to align strategy with operations.
With reference to the design of goods and services, amazon relies heavily on technology to ensure that its online retail services are aligned with its competitive strategy. The company employs an extensive range of technologies to support maximum efficiency and operations as well as to fulfill the needs of its target customers. With regard to quality, the general aim of Amazon’s operations management is to satisfy its clients. The general quality strategy is continuous improvement efforts. The company utilizes its dynamic organizational culture to cultivate innovation and creativity in its workforce. For instance, the company inspires its employees to play the role of pioneers in the creation of ideas and problem-solving strategies.
The capacity and process design at Amazon is implemented to guarantee optimization of production and process management. A key strategy that amazon uses to streamline its capacity and processes is extensive automation (Correll et al., 2016). For instance, the company automates the ordering processes to increase the number of sales at any given time. By eliminating human limitations, Amazon is able to create the opportunity for processing sales with minimal labor costs. The use of automation particularly stresses the value of computing in the enhancement of amazon’s capacity. While Amazon can reach any potential customer across the world with its eCommerce strategy, it also depends on the accessibility of resources and markets. The firm has strategically placed its warehouses and fulfillment centers in areas with large consumer populations, such as North America and Europe.
The main goal of supply chain management at Amazon is to streamline the supply chain with organizational goals. Amazon’s information technology infrastructure plays a significant role in the transformation of inputs into outputs. Through the internet and networked computing system, the online retailer addresses supply and demand through accumulated data that the company amasses from the website. The website is designed to collect critical customer behavior data that can help amazon predict and recommend products.
Information technology is also a critical aspect of inventory management scheduling. Amazon seeks to maintain optimal ordering and holding to facilitate effective order fulfillment and reduce costs to the minimum. The main line of attack for inventory management is just-in-time management, where goods arrive at fulfillment centers and are shipped immediately without delay. A just-in-time strategy helps amazon reduce storage costs and maximize the speed of order fulfillment. Data is an essential factor in Amazon’s operations management. The company uses a database and a network of computing systems to track, process, and deliver orders to the customer.
Comparing Walmart’s and Amazon’s Approaches to Operations Management
The main difference between Walmart and Amazon when it comes to inventory management is the basis of their retail business. On the one hand, Walmart relies on the traditional brick-and-mortar model of retail to sell goods. Conventional brick-and-mortar stores can be beneficial to a business and its customers in that the business is able to provide personalized shopping experiences and help customers have a realistic visualization of products in the store. They also provide customers with the privilege of carrying the goods home immediately. However, brick-and-mortar stores necessitate the retailer to carry goods to the store. Hence, Walmart must invest in transport costs and extra inventory management practices. On the other hand, amazon uses an e-commerce strategy. Therefore, it eliminates the costs of store maintenance and costs involved in transporting goods to the point of sale.
Despite the differences in the approaches of the two retail giants, both have implemented dynamic operation management techniques that align with their core strategies. For example, Walmart uses technology to improve efficiency, track demand and supply, and facilitate the transmission of information across departments. Walmart’s high investment in technology has allowed it to track products and enhance quality according to its three-tier quality policies. Despite being a brick-and-mortar store, Walmart has also capitalized on cost-cutting technologies such as cross-docking, a unique transport system, and mass production.
Amazon also uses cost-minimization strategies in order to offer customers the lowest prices possible. Three decisive factors in Amazon’s success are convenience to customers, boundless inventory, and low pricing schemes. The ability to hold large inventory is one of the greatest strengths of Amazon as a retailer. Hence it offers the company a competitive edge. Amazon manages to provide unique customization via its website, which enables the firm to communicate directly with customers, offer third-party services, and track data in real-time.
Conclusion
In conclusion, Walmart and Amazon adopt different, albeit moderately similar, operations management strategies. The divergence in strategies is mainly based on the differences in the retail models of the two companies. Walmart uses a traditional brick-and-mortar model that necessitates more processes in inventory management, while Amazon employs an e-commerce model that eliminates processes that are involved in setting up and maintaining brick-and-mortar stores. Nevertheless, both retailers adopt innovative technologies and techniques of minimizing costs at every stage of operations.
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