Walmart’s Lean Manufacturing Tools Report

Walmart’s Description for Operations Manager

“Wal-Mart Stores, Inc. helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices” (Walmart unveils holiday strategy: easier shopping every day 2015, para. 17). Being a goods retailer and a service provider, the company offers a wide range of products and services. Customers can buy not only groceries but also electronic products, books, office supplies, jewellery, baby, household and sports products.

Walmart as well is a service provider offering pharmacological treatment (medication prescriptions), photo laboratory (online and in the stores), financial (credit and debit cards, money remittance, check printing and cashing, etc.) and wireless phone (unlimited calls and text messages) services (Washington, n.d., para. 1-5). Company’s main customers are regular people of different social and economic status.

Walmart started as a retailer, so its main product is retail goods. Operation processes differ in volume, variety, variation and visibility that together form a 4v product’s or service’s profile. Walmart’s volume is high because of a large number of employees (loaders, cashiers, sales consultants, etc.) each carrying out certain functions, therefore, the level of repeatability of the same process is high. Variety is undoubtedly high because of a broad assortment of products and services that the company provides. Variation is low and quite constant throughout the year because the demand for the products is permanent and predictable due to seasonal preferences and needs. Visibility is low because the customers cannot track the goods’ way to the stores’ shelves and the process of production (Slack et al. 2014, p. 22). So, Walmart’s product 4V profile is the following: volume – high; variety – high; variation – low; visibility – low.

Walmart’s Operations Process Maps

To be able to provide goods and services to their customers, companies change inputs to outputs by “input-transformation-output process model” (Slack et al. 2014, p. 11). A company transforms inputs, usually materials, knowledge or information and customers, into outputs that are the desirable results of a business activity, products and services, that satisfy the needs of its customers. When it comes to transformations, it is usually achieved by using facilities (buildings or plants where the process of transformation takes place) and staff (people who work with the inputs and change them by carrying out certain operations). It should be said that transformation activities are a number of various processes done by different people to change input into output. Describing the input-transformation-output process is referred to as process mapping (Slack et al. 2014, p. 97).

Being a goods retailer and service provider, Walmart’s primary inputs are finished products when it comes to retail merchandise and customers when speaking of providing services and outputs are products and services sales. The description of Walmart’s input-transformation-output model (process mapping of operational processes that are needed to deliver products and services to the customer) is described in Table 1 given below.

Table 1: Process mapping of operational processes of Walmart

Inputs Transformation activities Outputs
Selling retail products in the Walmart Stores
Finished products First of all, the company analyses the market and the customers’ demand for certain goods, so that it finds out what products should be sold in the Walmart stores.
Second, the company finds the supplier of goods having the lowest prices due to the Walmart’s philosophy of selling more goods to their customers at lower prices. Lower and competitive prices are achieved by finding wholesale suppliers and buying large amounts of different products.
Third, the company transfers the goods from the supplier to the Walmart stores using own carriers, so that they save money on transporting and establish a lower price for the products sold in the stores.
Fourth, the transferred products are unloaded and set up and organized in the storage buildings.
Fourth, the Walmart stores’ retail space workers organize the goods in the sales area displaying and setting them up on shelves and controlling that there is always enough products in the display area. In cases there is not enough of some goods, they call warehousemen so that they bring some additional goods. Retail space workers also help the customers find where the needed goods are located in the display area and consult them in case of any other questions.
Fifth, the cashiers sell the chosen goods to the customers and help them pack their purchases.
Sixth, the Walmart’s delivery service can transfer the bought goods to the customers’ house or any other place if needed.
There can be additional processes in the case of buying goods in the Walmart internet store. In that case, the order is processed by the manager, the goods are packed by the warehousemen and transferred to a needed place by the delivery service.
Customers buy the needed goods in the Walmart stores at lower and competitive prices
Providing photo laboratory services
Information Knowledge
Materials
First of all, the photo laboratory was built and equipped with all the necessary electronics and materials, namely printing and copying stations, paper, ink, etc.
Now, the customer is ready to make an order either online or in one of the Walmart stores.
Having received the customer’s order, photo laboratory workers process it and define the time for fulfilling it using the customer’s information.
When photo laboratory workers fulfil the order using their knowledge and materials such as paper, film, printing devices, ink, etc., they notify the customer of its completion.
Fourth, the customer after receiving a notification of completion either comes to take his photos or whatever he ordered from the photo laboratory or the delivery service carries it right to the customer’s house or any other place needed.
Photo laboratory services (printing photographs and documents, copying, scanning, etc.)

So, Walmart’s operational processes that are needed to deliver products and services are quite massive and consist of a whole range of smaller processes and tasks carried out by different people. Nevertheless, they all are necessary to change inputs into outputs and satisfy the customers’ needs in products and services of certain quality and price.

Concepts of Lean Management

‘Lean’ is a generalised concept used when speaking of a company becoming more productive and responsive to demand by turning out products of better quality through using minimum resources and eliminating different kinds of waste occurring in the working and production process. The term is used to speak about managing existing resources to maximise the output that is why it is often referred to as lean manufacturing, lean production or lean management. Initially, it was invented by Toyota before the Japanese economic wonder when the only way to save the automobile industry was to produce spending minimum resources and eliminating any source of waste. Waste is understood as any spending of resources without adding value to the product and “it may be found hidden in policies, procedures, process and product designs, and in operations” (Singh & Sharma 2009, p. 58). There are different kinds of waste (mudas) having place in the working or production process:

  1. Overproduction: manufacturing excessive amounts of products that cannot be sold because there is no demand on the market
  2. Motion: unnecessary motions of employees and machines that do not add value but drains resources
  3. Waiting; time spent to wait for the market analyses or an answer from partners or a company’s department, delay in delivery of resources or equipment, etc.
  4. Conveyance (or the waste of transport): that is spending money on using delivery services or smaller trucks, i.e. more time and resources to carry cargos
  5. Inventory: not using, storing or transporting inventory in appropriate way so that it causes excessive wear and spending money on fixing old equipment or buying new
  6. Correction: eliminating defects in the products or services that leads to resource draining and time wasting
  7. Over-processing: using equipment or techniques or workers that are not necessary to produce the required amount of products, i.e. excessive waste of resources (Ng et al. 2010, p. 51).

The process of eliminating the wastes mentioned above to become more effective, productive, and responsive to demand as well as improving company’s performance is what is known as lean management or lean production. In general, there are many ways to eliminate waste. For example, increasing transparency of the manufacturing process, reducing the time of one working cycle, simplification (using existing control procedures and tools and simplifying the process of production control) as well as benchmarking, i.e. setting achievable goals corresponding to company’s strategic aim (Lantelme & Formoso 2014, p. 10).

More specifically, there are different specific tools and concepts used within the lean management regime aimed at improving performance and becoming lean, namely value stream mapping, “visual control, kaizen, one-piece flow, visual control, kaizen, cellular manufacturing, inventory management, Poka yoke, standardized work, workplace organisation and scrap reduction” (Singh & Sharma 2009, p. 59). Value stream mapping, kaizen and one-piece flow will be described in more details.

Value Stream Mapping

Value stream mapping is one of the concepts used within lean management regime. It is a perfect tool for improving company’s performance by finding out inefficiencies and mismatches in the working or production process. The essence of the concept is “the simple process of directly observing the flows of information and materials as they now occur, summarising them visually, and then envisioning a future state with much better performance” (Jones & Womack 2003, p. 1). What is more, value stream mapping is a combination of different activities and operations aimed at providing a visual representation of stages of the production process that can be added to product’s value from the customer’s point of view (Tapping & Shuker 2003, p. 9). The goal of using this concept lies in finding out what the customer thinks of the company and its products and services and defining the processes that can and cannot add to the value (Voelkel & Chapman 2003, p. 69).

The primary benefit that value stream mapping delivers to its user is that it helps define value from the customer’s point of view and identify what the customer is ready to pay for. Moreover, it is an effective tool for improving company’s performance. It should be used by managers of every organisation desiring to be successful, receiving more revenues and understanding its customer better. One of the examples of success due to using value stream mapping is Central Industrial Supply Inc. specialising in “linear motion products and electro-mechanically integrated solutions” (CIS 2015, para. 1)

Kaizen

One more effective concept within lean management regime is the philosophy of kaizen that initially was used by Toyota and other Japanese companies after World War II to repair industry and economy and experience economic miracle (Bwemelo 2014, p. 79). It means a continuous improvement by taking one small step at a time to improve productivity and eliminate wastes:

For incremental change of productivity and addition of value, Kaizen uses a gradual approach using existing technology, training work teams, humanizing the workplace, and liberating the thinking of top management and employees at all levels (Desta 2014, p. 212).

Moreover, kaizen is the philosophy of motivation for continuous improvement aimed at driving the company to carry out only productive processes and eliminate ineffective ones to achieve strategic goals and improve performance (Rees & Protheroe 2009, p.135). The primary benefit of using this concept is that it is motivational and changes every constituent element of the company and its performance to the better. Aimed at improving work ties between every single employee, it helps a company to eliminate wastes and become productive.

The most significant example of success due to using kaizen is Toyota was on the verge of bankruptcy right after World War II but turned into the world leader in the automobile manufacture industry and the Japanese economy as the whole.

One-piece Flow

Another efficient concept within a lean management regime is one-piece flow. Generally speaking, it refers to producing one item at a time (Cudney et al. 2015, p. 218) and “focus is on the product or on the transactional process, rather than on the waiting, transporting, and storage of either” (Marton & Paulová, n.d., p.30). Sticking to this concept does not mean that a company has to produce only one item at a time, it means that the focus should be made on carrying one task at a time. When speaking of large batches of same products it means turning out one batch at a time. Or it also refers to one person carrying out one certain function.

The primary benefit this concept delivers to its user is that it helps focus attention on carrying out only one process at a time thus doing it with the best quality possible and improving an overall company’s performance. Having brought success, one-piece flow concept is still one of Toyota’s key principles in its policy (System of one piece flow 2009, para. 1).

Implementation of Lean Management Concepts in Walmart’s Performance

Lean management is a perfect tool for improving an overall performance of the company. Its concepts can and should be used by every organisation that wants to be successful, increase revenues and customer base. What is more, they can be applied not only to manufacturing products but also providing services.

Speaking about Walmart, it can also implement the concepts of lean management mentioned above into its operational strategy thus improve performance. For example, being a products retailer and service provider, it would be beneficial for Walmart to keep to value stream mapping concept. First of all, it would help understand the customers’ needs better and, as a result, find out what the customers are ready to pay for and what processes are more profitable in terms of adding value. For example, if Walmart wanted to start providing some new services, it would be advantageous to find out whether the customers want some special kind of service that they are willing to pay for. What is more, it might be a good tool to improve the level of existing services.

Speaking about kaizen, it is an efficient instrument for improving performance by motivating the employees and strengthening work ties in the team. In the case of Walmart with its numerous stores and a great number of workers, there should be overall kaizen strategy with local peculiarities in every store to provide the best team environment and the highest employee productivity possible. It would also improve the level of service thus the level of satisfying the customers’ needs because the workers of every process will carry out their functions to the best of their abilities.

As of one-piece flow concept, it might benefit Walmart from the perspective of further division of functions carried out by its workers so that one employee is responsible for doing one task but doing it perfectly. What is more, implementing it might be a good instrument for the further improvement of working process. For example, collecting one order at a time for clients that made them online by one person responsible for fulfilling orders might enhance quality and increase employees’ level of responsibility and professional skills.

So, lean management is a tool that should be used by the company if its strategic objective is becoming a leader in its area of business activity as well as achieve the maximum level of productivity with minimum resources and partial or complete elimination of wastes occurring in the working and production processes.

References

Bwemelo, G 2014, ‘Kaizen as a strategy for improving SSMEs’ performance: assessing its acceptability and feasibility in Tanzania’, European Journal of Business and Management, vol. 6, no. 35, pp. 79-90.

CIS 2015, Web.

Cudney, EA, Pai, P & Murray, SL 2015, ‘Relationship between Lean and Safety’, Journal of Safety Health and Environmental Research, vol. 1, no.3, pp. 217-231.

Desta, A 2014, ‘The art of the kaizen approach for sugar production in Ethiopia: lessons from the Methara Sugar Factory’, International Journal of Operations and Logistics Management, vol. 3, no. 3, pp. 212-221.

Jones, D & Womack, J 2003, Seeing the whole: mapping the extended value stream, Lean Enterprise Institute, Cambridge, MA.

Lantelme, E & Formoso CT 2014, Improving performance through measurement: the application of lean production and organizational learning principles, Web.

Marton, M & Paulová, I n.d., One-piece flow – another view on production flow in the next continuous process improvement. Web.

Ng, D, Vail, G, Thomas S & Schmidt N 2010 ‘Applying the lean principles of the Toyota production system to reduce wait times in the emergency department’, Canadian Journal of Emergency Medicine, vol. 12, no. 1, pp. 50-57.

Rees, SJ & Protheroe H 2009, ‘Value, kaizen and knowledge management: developing a knowledge management strategy for Southampton Solent University’, The Electronic Journal of Knowledge Management, vol. 7, no. 1, pp. 135-144, Web.

Singh, B & Sharma SK 2009, ‘Value stream mapping as a versatile tool for lean implementation: an Indian case study of a manufacturing firm’, Measuring Business Excellence, vol. 13, no. 3, pp. 58-68, 2015, via Emerald Green database.

Slack, N, Chambers, S & Johnston, R 2014, Operations management, 7th edn, Pearson Education, Upper Saddle River, NJ.

System of one piece flow 2009, Web.

Tapping, D and Shuker, T 2003, Value Stream Management for the Lean Office, Productivity Press, New York, NY.

Voelkel, JG & Chaoman, C 2003, ‘Value stream mapping’, Quality Progress, vol. 25, no. 5, pp. 65-68.

Walmart unveils holiday strategy: easier shopping every day 2015, Web.

Washington, T n.d., What kind of service does Wal-mart provide? Web.

This report on Walmart’s Lean Manufacturing Tools

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