Analysis of Purchasing Operations and Management for Walmart

This report provides a comprehensive analysis of purchasing operations and management, focusing on the retail giant Walmart. It explores critical aspects such as supplier selection criteria, emphasizing the importance of qualitative and quantitative frameworks to identify reliable and cost-effective suppliers. The report delves into the integration of Information and Communication Technology (ICT) in purchasing operations, discussing its benefits like improved record-keeping and inventory management, while also addressing challenges like infrastructure costs and the need for staff training. Furthermore, the report examines purchasing cost analysis, highlighting strategies to optimize costs, such as fostering honest supplier relationships and encouraging competition among suppliers. Recommendations include implementing ICT, using a qualitative and quantitative supplier selection framework, and establishing long-term contracts with suppliers based on performance. The report concludes with a strong recommendation for Walmart to embrace ICT fully to enhance its purchasing operations and maintain a competitive edge in the market.

Running head: PURCHASING OPERATIONS AND MANAGEMENT
Purchasing Operations and Management
Students’ Name
Affiliate Institution

PURCHASING OPERATIONS AND MANAGEMENT 2
Introduction
The retail market is very competitive and dynamic and requires quite a lot of business
muscle to stay afloat. Many retail giants are on the brink of collapse; case in point is the
Nakumatt supermarkets that were once a household name in the Kenyan and East African market
at large. Empty shelves are now a typical picture associated with this once giant retailer in the
region. This essay will focus on the aspects to increase efficiency of doing retail business. The
three main issues to be discussed will include supplier selection criteria, ICT for purchasing
operations and purchasing cost analysis. Recommendations will be made on the best practices
surrounding these three issues. This essay will focus on another giant retailer; Walmart
supermarkets that are a household name in America and a global brand in some respect. Walmart
stores deal in a variety of products including household goods for example utensils, furniture,
electrical appliances and fresh food and fruits. Almost all kind of goods will be available in these
stores.
Walmart is a global brand and hence its business implications are felt in the global
economy (Gereffi, 2009). The market is distributed from the Americas to Asia (South Korea and
Japan) and across Europe (Germany). Competitors in the market include KMart Super Centre,
Supervalu Inc, Croger among many more. Many of the competitors are also targeting the global
market. Most of the goals and strategies of Walmart are focused on sustainable profitability.
These strategies are aimed at maximizing profitability but at the same time factor in social and
environmental responsibilities (Cohen, 2017).
Supplier Selection Criteria

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Supplier selection and monitoring of their performance is key to efficient business
operation. Devising the best supplier selection method and evaluating the performance of the
supplier goes a long way to ensure benefits of the goods purchased are felt later in the chain as
cost effectiveness, quality, dynamicity and creativity (Nair, 2015). Being a retail entity, Walmart
seeks to maximize profit on their varied products while maintaining a low cost on their products
compared to its peers in the market. Maintaining competitive prices for its products will help it
have an edge on the customer base and hence boosting the sales. There has to be an
understanding between the supplier and the client to purchase products at the cheapest and most
favorable prices ever. This will enable the client to develop a competitive price structure in the
market.
In his study, Sen postulates that decisions to be made on coming up with the ideal supplier
are very challenging and include inadequate information, imperfect choices and more qualitative
methods applied (Sen, 2008). Over the last 30 years, a lot of academic research has been
undertaken to devise a consistent approach in choosing an ideal supplier. Data mining methods,
problem establishment methods, multi-criteria decision aid and mathematical programming are
some of the methods to be applied in supplier selection discussed by Sen. The following phases
are consistent with most supplier selection strategy (Sen, 2008):
 Defining the problem
 Establishing a method
 Assessing suitability of qualified suppliers
 Choosing the most preferred supplier

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Measuring endurance of a supplier in most cases is dependent on quality of the products,
price, service and delivery. From an analysis of the literature by academicians in this field,
qualitative and quantitative supplier selection framework will be preferred here. In this
method, two algorithms are applied to select the supplier. As discussed in detail by Sen, the
following pointers are key according to Sen (2008);
 Establishment of a cross-functional group. This is because the supplier selection affects
many other activities and decision makers in the team. It includes production strategy
teams, cash flow controllers, and inventory managers, among others. Therefore a
consensus should be sought.
 Data mining to come up with varied supplier selection methods. This will help to come
up with new and more efficient strategies.
 Arrange the selection methods into a preferred flow
 Calculation of percentage and relative importance degrees for the main and subclasses
 Importance is then sought for buyer-supplier integration steps
 The first algorithm is applied to establish total rating of transformation to higher
integration level
 The buyer-supplier integration is then calculated using the second algorithm
These listed steps can be practically applied to search for an ideal supplier among competing
supplier candidates. The level of integration is key in this method to establish both qualitative
and quantitative selection of ideal suppliers. Qualitative and quantitative attributes to be selected
on include reliability, technology, cost effectiveness, high quality, and quality service among
others. This method has been shown to work in the retail market and recommendation is hereby
made to apply it in the Walmart case to gauge its feasibility and tolerance (Sen, 2008).

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ICT for Purchasing Operations
With the dramatic shift of the global patterns towards embracing ICT over the past few
decades, discussing ICT integration in purchasing operations becomes vital. ICT has become an
important function of our lives and many people world over are computer literate. Emergence of
online shopping platforms adds concrete to this course (Grillitsch, 2013). People can now access
preferred goods and services of debatably the same best quality from the comfort of their homes
and from the click of a button. These developments are worth marveling to and their implications
to the market are strongly felt. The competitive bar has been raised much higher and the earlier
retailers incorporate ICT in their services, the better for their competitive muscle.
For a retail giant like Walmart, it is arguably almost compulsory to embrace ICT in its
purchasing operations and even retail operations. Looking at the immensely large number of
suppliers handled by this retailer necessitates ICT incorporation (Grillitsch, 2013). For better
record keeping and inventory management, paper work is not even an option. However,
incorporation of ICT in purchasing operations is a diametric factor. This is because it cuts across
the supplier and the buyer. Therefore the operations have to be on both sides. This would not
easily prove a challenge also because most of the Walmart suppliers are big brands that you
expect have integrated ICT in their operations.
This section will however discuss selected factors in implementing ICT in purchasing operations.
Some of these factors include cost of ICT infrastructure and ICT implementation, retailer vision
and goals and staff ICT skills (Francis, 2017). The cost of ICT infrastructure is a hindering factor
towards full incorporation of ICT in purchasing. Incorporation of ICT has been shown to cut
costs on manpower as one individual can operate the computer and do a number of transactions

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at the same time. The same way the suppliers can be found on the internet much easily compared
to the past where websites were not available. However the entire cost of acquisition of the tools
to ensure full operationalization are quite expensive (Francis, 2017). These costs include
hardware appliances, software, upgrades and maintenance and development costs. Investing in
ICT can also be viewed as not a primary objective of a retailer thus making the decision makers
hesitant in going full out on this venture. It is imperative that a balance be struck between the
business goals of a retailer and the economic realities.
Retailer vision and goals are also vital to the implementation of ICT in purchasing.
Studies have shown that many institutions had actually purchased the necessary equipment and
facilities to enable ICT operations but have not yet implemented them effectively because of a
lack of a proper plan and vision (Francis 2017). This scenario can be avoided by striking a
balance between the business goals and economic realities as stated above. To also realize the
actuality of integrating ICT in purchase will also need the decision makers to own the policy
individually. A foundation has to be lain first to ensure smooth transition into the purchasing
operations using ICT. Such will include ensuring that the staffs have the necessary training and
qualifications to enable successful operations.
Adopting ICT for purchasing operations will also enable employment of persons with
disability that is not usually a norm in this sector (Giannoumis, 2015). This is because
automation of the sector operations makes it easier for people with such limitations. This will
contribute to trying to achieve striking a balance between the social and business responsibilities
of Walmart. The implications towards achieving an all equal society will go a long way in
building the reputation of the Walmart brand. As a result, its competitiveness in the market will
be enhanced.

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To be on the right side of history also calls for Walmart to fully appreciate the 21st
century developments which include the robust ICT sector. History will judge the retailer on the
basis of such actions as this (Grillitsch, 2013). A lot of innovations currently also emanate from
the ICT sector and to be placed in a better position to enjoy such benefits, Walmart has to
embrace ICT in its purchasing. Innovative minds could also rise through the ranks within the
employees that can be able to provide breakthroughs in the difficulties of implementing this
venture. The most important thing is for the decision makers to embrace this initiative.
Rice suggests that reputable retailers such as Walmart in the European market needs to
keep its goals in tandem with the goals of the European commission that seek to improve the
level of accessibility in mainstream ICT services using the public procurement laws and
performance standards ( Rice, 2015). Such legislation will require a full operational shift in the
use of ICT for purchasing. This will also go a long way in enabling access to procurement ICT
services to people with disabilities. In a nutshell, it has been shown in this section that the
hurdles faced in achieving full operationalization of purchasing using ICT are not supposed to
derail implementation of the same. This is because the benefits of this achievement outweigh the
costs. Efficiency that comes with implementing ICT for purchasing is so real and cost effective
(Mukhopadhyay, 2016). ICT for purchasing operations is thus fully recommended.
Purchasing Cost Analysis
Purchasing costs for any business entity keen on making profit like Walmart need to be
optimized. The optimization aims at enabling purchases to be made at the most affordable or
lowest prices. When goods are purchased from the suppliers at the lowest possible prices, they
will be retailed at competitive prices in the retail shelves (Anderson, 2016). This will go a long

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way in ensuring that Walmart is competitive enough to outmuscle its peers in the market. Such
an arrangement is in tandem with the goal of Walmart of achieving an all-day low price for its
products. However this task is not easy to accomplish due to its multifactorial nature.
To achieve the above goals, the purchasers and suppliers need to develop and
understanding that is honest and would allow both parties to make profit from the business
without aggrieving either of the parties. Another important aspect of this discussion would be
create a competition between the suppliers of a purchaser such that the suppliers strive to offer
the best deal to the purchaser (Anderson, 2016). The best deal would be in terms of the lowest
prices from the same goods offered by the different suppliers. When this is achieved, the
purchaser would go with the best deal and establish a partnership with the supplier.
The supplier also needs to be assured of their job security (Gupta, 2011). Assuring the
suppliers long term contracts based on performance is a motivation to them and will go a long
way in creating a rapport between the parties. This can be accomplished through structured and
consistent discussions between the parties to achieve the best business goals while keeping a
close eye on the market trends.
Also an evaluation needs to be consistently done of the suppliers of the purchaser to
ensure that the trends in the market are catered for. It is important that the business incorporates
creativity and dynamism in this current competitive market. Consistent consultations with the
supplier on these issues will anyhow be key in achieving this goal. PCM Inc that is a marketer of
technological products in its report emphasizes the need for retailers not to allow themselves to
be left behind in the market trends (PCM, 2015). Having robust data mining departments can
also help keep tabs on the market needs and trends. Evaluation of the supplier also need to be

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done to establish if the supplier will be able to meet the needs of the retailer effectively and
especially in the high seasons. A balance must also be struck in the high and low seasons. Once
the above discussed factors are implemented, it becomes easy to achieve the ultimate goal of
lowering the purchasing costs (Mehlawat, 2013). This will of course increase competitiveness of
the retailer’s products. Its competitive muscle will also be enhanced in the market.
Conclusion
Decision makers in such reputable retailers as Walmart are faced with multiple hard
decisions to make on a daily basis. Most of these decisions are strategic and very key to the
business objectives of these entities. In a nutshell supplier selection has been discussed and
recommended basing on the qualitative and quantitative model details to which have been
availed. ICT for purchasing operations has also been strongly recommended to increase
efficiency and cost effectiveness. Finally the purchasing cost analysis factors have been
discussed with the aim of achieving the lowest prices for purchased good. This will go a long
way in establishing lowest all day prices for Walmart products in the market.

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