Operation Management Strategies, Issues, and Solutions for Wal-Mart

This report provides a detailed analysis of Wal-Mart's operation management, focusing on key issues and potential solutions. The report begins with an executive summary and table of contents, followed by an introduction to operation management principles and their application to Wal-Mart. It then discusses various problems related to Wal-Mart's strategies, inventory, quality management, location planning, and design. Specific issues in quality management, such as the three-tier quality system and vendor-managed inventory, are examined. Location planning challenges, including the focus on urban areas, are also highlighted. The report then explores alternative solutions to these problems, including Total Quality Management (TQM) and the establishment of smaller stores. The advantages and disadvantages of each alternative are discussed, leading to recommendations for the best solutions. The report concludes with a summary of findings and recommendations, offering insights into how Wal-Mart can improve its operational efficiency and address key challenges. The report also includes references to support the analysis.

Running head: OPERATION MANAGEMENT
Wal-Mart: Operation Management
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The entire report is based on the Wal-Mart business operation and various issues of the
operation management. However, it has been received that Wal-Mart has been facing issues in
location planning and quality management. Therefore, issues regarding the location planning can
be reduced by the opening of small stores in the different location while this strategy has some
drawbacks. On the other hand, TQM is useful for quality assurance in the context of Wal-Mart.
However, TQM is an expensive method that often affects the profitability. Despite this TQM is
effective in the context of Wal-Mart as it is a large retail organization. Apart from this TQM is
helpful to reduce cost and to identify the current market demand.

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Table of Contents
Introduction......................................................................................................................................4
Discussion of the problems regarding the strategy, inventory, quality management, location
planning and design of Wal-Mart....................................................................................................4
Identification of the problems of quality management and the location planning in context of
Wal-Mart..........................................................................................................................................5
Discussion of the alternatives to resolve the problems of Wal-Mart regarding the quality
management and location planning.................................................................................................7
Advantages and disadvantages of the alternatives regarding the issues of quality management
and the location planning.................................................................................................................9
Explanation of the best solution......................................................................................................9
Recommendations..........................................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
Operation management is a practice of bringing highest efficiency in a business by
utilizing the resources in a proper way. Transformation of the material and the labor into goods
and service is the basic process of business operation (Christopher 2016). It is the prime duty of
the operation management to keep a balance between the operation cost and the revenue to
achieve the highest profitability in an organization. This study deals with the operation
management of in the context of Wal-Mart. However, Wal-Mart is an American multinational
retail corporation having a chain of the hypermarket. Based on the revenue Walmart is
considered as the largest organization in the world. This organization offers the largest grocery to
the customers in USA and different countries in the world. This current study will focus the
strategic issue, quality management issue and other operational issues in Walmart (walmart.com,
2017).
Discussion of the problems regarding the strategy, inventory, quality management, location
planning and design of Wal-Mart
One of the vital business strategies of Wal-Mart is to dominate in the retail industry.
Therefore, to expand their business in U.S and the global market is another strategy of Wal-Mart.
Apart from this company recognition and development of the positive brand is other missions of
this organization. However, there are some drawbacks in such strategy one of the most important
is out of the small business from the markets as due to the dominance of Wal-Mart such small
enterprises are not able to afford low price and diversification of the goods (Businessinsider.in,
2017). On the other hand, the business system of the Wal-Mart takes a giant form and
differentiates into various departments including electronics, pharmacy, and grocery. This is hard
to operate properly for Wal-Mart. Therefore, Wal-Mart is expanding their business both locally
and internationally, which brings fear for the other organizations in the same market segment.
Quality management of Walmart includes some problems, however, this organization has
three tiers of quality standards in the operation management. The lower tier is used for its
maximum brands based on the minimum demand of a large number of customers. On the other

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hand, middle tier is applied to the employees especially for the sales executives to determine
their performance (Shabbir, 2017). This is a problem, as here the performance of the sales
personnel can be determined not all employees. Next, the upper tier is used for the minority
outputs of Walmart this creates a problem for the other brands of Walmart.
Wal-Mart follows vendor-managed inventory model and cross-docking inventory
management both are beneficial for the suppliers to use the information system of Wal-Mart to
deliver the product and to minimize the inventory size. One of the major problems of vendor
managed inventory system is it is very common in all business and the stakeholders have to give
much time for this inventory management (Fredendall & Hill, 2017). On the other hand, the
suppliers often fail to give finished product to the customers through cross docking inventory
management.
Location planning and design of the product includes some problems in the context of
Wal-Mart. Wal-Mart establishes their stores to the urban areas to expand their market and make
the product available to the target customers. They also use online information system to get
real-time information (Ji, Gunasekaran & Yang, 2014). However, such location strategy of Wal-
Mart only based on the urban areas and the target market and there is no account of the
expansion of location for the customers of rural area. On the other hand, this firm follows the
design process that allows for mass production. However, there is lack of creativity in the Wal-
Mart design process.
Identification of the problems of quality management and the location planning in context
of Wal-Mart
Primary issues
Wal-Mart has been facing from quality management and location planning issues that are
the two major areas of the operational management.
Quality management issue
There are three tires in the quality management system of the Wal-Mart. The lower tier
focuses on the minimum expectations of the customers regarding the quality of the product and

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supply chain management. However, this tier is applicable for the maximum brands of the Wal-
Mart. Therefore, the middle tire focuses on the average quality of the low-cost retailer ().
However, the performance of the sales executives can be measured by this tier while this tier is
not applicable to measure the performance of all employees that is a big issue of such quality
management standard. On the other hand, the upper tier of Wal-Mart is only applicable for the
products of Sam's Choice brand. Hence, this is a major drawback of Wal-Mart's quality
management process as this upper tier is only used for the specific brand, not for the other
brands. On the other hand, Wal-Mart focuses on the low price and with huge production, as a
result, it often difficult for Wal-Mart to give a good quality product in low price to the
customers. However, the operation cost is high in the supply chain management that hampers the
business of the Wal-Mart. Therefore, Wal-Mart has a huge number of stores and their investment
in the operation management is too high, which also affects their quality management process as
they often fail to manage the stock in all stores. Apart from this vendor managed inventory and
cross-docking are the two inventory management process of Wal-Mart however, in the cross-
docking process often this organization fails to give ready products to the customers that affect
the quality process of this organization (Huchzermeier, 2016).
Location planning issues
Location planning is a big part of the operation management in an organization as based
on this the sales of the organization can be measured (Hill, Jones & Schilling, 2014). In the
context of Wal-Mart, their location strategy focuses on the establishment of the stores in or near
the urban area. This allows the organization to reach the target market, as goods are available to
the target market through this location strategy (Xu et al., 2014). However, the establishment of
the stores only the urban area is a major weakness of the Wal-Mart as it is necessary for them to
establish their stores in the rural areas also. Due to the development of stores in the urban
location, this organization fails to cover the customers of rural area that affects their market share
and profitability. Wal-Mart has 11,695 stores worldwide and their store volume is large that
maximizes their investment. However, only the target customers of the urban areas get facilities
by their location strategy that is the major drawback of their location planning.
Other issues of Wal-Mart in operation management

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Secondary issues
Expansion of the Wal-Mart both nationally and internationally is a big barrier to their
operation management. However, such strategy of Wal-Mart forces other small organizations to
out of the market, as it is difficult for them to afford low price and differentiation of the products.
As a result, such small organization becomes their competitors, which affects their business.
Apart from this Wal-Mart uses children for the work in the developing country that is a big
drawback of their operation process which highlights the lack of social responsibility of this
organization (Nguyen, 2017). Hence, use of the child labor in the developing country hampers
the social image of such organization. Such issues hamper the business of the Wal-Mart as well
as their social responsibility that also affects their brand image.
Discussion of the alternatives to resolve the problems of Wal-Mart regarding the quality
management and location planning
Total Quality Management
TQM or total quality management is a good process to improve the quality of the
organization (Aquilani et al., 2017). This approach enables the organization to establish a
permanent climate to produce high-quality products and the service. In the context of Wal-Mart
there, some major issues in their quality management system regarding the poor inventory
management, performance measurement and produce high-quality products with low price.
Application of TQM enables an organization to understand the customer's requirements. Hence,
it will help Wal-Mart to offer the product based on the demand of the target market. TQM will
help Wal-Mart to reduce the cost that is one of the objectives of Wal-Mart. On the other hand,
customer satisfaction is another benefit of TQM that can be achieved by the Wal-Mart. However,
customer satisfaction is associated with the customer demand (Pun & Yiu, 2017). Wal-Mart can
reduce the time to fix the error by the application of TQM. This gives the quality assurance of
the team performance in Wal-Mart. Hence, the Total quality management system is crucial for
such organization to manage the quality of the supply chain and reduce the operation cost in the
business (Huchzermeier, 2016). Hence, adoption of TQM will be beneficial for the Wal-Mart to
maintain the quality of the business operation.

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Apart from TQM providing training to the employees is another effective process to
reduce the issue of quality management (Winterhalter, Zeschky & Gassmann, 2016). However,
proper training to the employees will help them to manage the inventory by utilizing the
technology, which ensures the quality of the operation management.
Establishment of the small stores to get a big win
Wal-Mart has established many stores in the urban areas and their stores are large as a
result they have to invest more for such stores. On the other hand, an opening of the large store
in the urban areas resists the people of the rural area to get access to the Wal-Mart business.
However, it is important to a business organization to develop more and small stores in every
location to enhance their business (Linder & Williander, 2017). In the recent years, Wal-Mart
has started to open the neighborhood smaller market. This will be an effective alternative way to
minimize the issues regarding the location planning. This alternative way gives a bright spot to
such retail organization to earn more form their investment. According to the statistical data, the
sales revenue generation of Wal-Mart is increased by 7.9% after the implementation of this
location planning (Cnbc.com, 2017). 15 neighborhood market stores have established by Wal-
Mart to reduce the issues regarding their location strategy. However, this alternative also reduces
the investment cost of Wal-Mart that is expanded during the establishment of a large store. On
the other hand, development of small stores in the different location will maximize the accessing
power of the customers.
Apart from this establishment of the stores in the rural areas will be effective for Wal-
Mart to enhance their business by minimizing issues regarding location planning. This will
enable the customers of the rural areas to purchase the products from Wal-Mart and it also
increases the sale (Ramanathan, U., Subramanian, Yu & Vijaygopal, 2017).

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Advantages and disadvantages of the alternatives regarding the issues of quality
management and the location planning
TQM or total quality management strategy is effective for Wal-Mart to resolve the issue
of their quality management. This approach has both advantages and the disadvantages.
However, TQM provides assurance of the better quality performance and it reduces the operation
cost of the business (Hossain, Tasnim & Hasan, 2016). This approach enables Wal-Mart to gain
competitive advantages, as by the application of such strategy Wal-Mart is able to understand the
current demand of the customers in the market. However, by restoring the method of TQM Wal-
Mart will be able to reduce the competition in the market.
One of the major drawbacks of TQM is the high cost. However, this technique is
expensive to implement (Wrigley & Wood, 2017). Therefore, it is a long-term process and takes
more time to show outcomes. On the other hand, the organizational culture of Wal-Mart needs to
be changed for the implementation of TQM as it focuses on the continuous improvement.
Training process is good for Wal-Mart to improve the technical skills of their employees
and it will help them to manage the quality of the supply chain management. However, training
program is costly, which increases the operation cost and this is the major drawback of such
alternative.
Establishment of the small stores will help Wal-Mart to increase the sales revenue
generation and to reduce the investment. However, often the small stores become crowded and it
is difficult to manage a large inventory in the small stores (Fiorino & Bhan, 2016). On the other
hand, opening of stores in the rural areas will increase the number of customers for Wal-Mart
however, it is difficult to transport the product to the rural areas and shipping of goods is also
critical.
Explanation of the best solution
TQM is the best solution between the two solutions of reducing the issues regarding
quality management (Aquilani et al., 2017). However, TQM reduces the operation cost and
enables Wal-Mart to identify the current demand of the market while training only improves the
employee skill. On the other hand, the establishment of small stores in urban areas is beneficial

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than establishment of stores in rural areas. However, purchasing power of the people is greater in
urban areas rather than rural areas. Thus, launching of more small stores in the different locations
of urban areas will be effective for Wal-Mart
Recommendations
 Performance measurement is a good process to manage the quality of Wal-Mart as it will
make the employees more effective.
 Use of modern technology will be helpful for Wal-Mart to improve the quality
management process as it enables the employees to manage the inventory properly.
 Establishment of the stores in high traffic areas can be effective for Wal-Mart to improve
the location planning process.
 Increasing the availability of the stores in each location will reduce the problem of
location planning in the context of Wal-Mart.
Conclusion
This entire study focuses on the operation management of Wal-Mart and problems
regarding the location planning and the quality management. However, TQM and establishment
of the small stores are beneficial for this organization to minimize such operational issues. The
product's design of such organization includes a unique way that is beneficial for the mass
production. On the other hand, quality of the product of Walmart is high that easily gain the
customer attention. TQM will enable such organization to maintain their service quality.
Application of TQM enables the organization to identify the needs of their target customers that
allows them to increase their market share. In order to improve the quality of any process of the
operation management, TQM is required.

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