The Wal-Mart Way

Wal-Mart. Practically every town has one, and practically everybody has shopped there. Wal-Mart is known for its low prices. In fact it's built an empire on low prices. From the beginning, Wal-Mart knew it could only compete as a discounter by buying direct from manufacturers, not from wholesalers like its competitors. And how Wal-Mart learned to compete is a lesson in efficiency.

No matter what you may think of Wal-Mart’s employment practices or other aspects of the way the business is run, there’s no denying the company gets an A+ in efficiency. Buying direct is the key to Wal-Mart's ability to undercut its competition. However, buying direct also meant having its own supply chain and distribution system. And that supply chain and distribution system had to be the model of efficiency, or there would be no cost savings to pass on to the customers.

In order to maintain efficiency, there has to be a constant flow of communication in all directions of the supply chain. In fact, Wal-Mart was one of the first companies to introduce computers to track individual store inventory and share it with suppliers and across its entire distribution channel. When the cashier scans an item indicating a depletion in inventory, a message is sent to the supplier of that item to send more.

From the beginning, the company understood that data gets stale, so it was also one of the first organizations to incorporate real-time data into its communication channels. Stale data meant a disruption to the flow of goods between the distribution centers and individual stores. Stale data meant that stores were not receiving the products they needed when they needed them. Stale data meant the company could not be profitable.

Real-time data allows Wal-Mart to reduce its costs and improve its efficiency, and savings can be passed along to its customers. But there's more to Wal-Mart's efficiency than real-time data. It's interesting to note that in its distribution centers lift truck drivers wear headsets. The headsets aren't designed to offer noise protection, nor are the drivers listening to music. Instead the drivers are listening to a status report on their performance. They are receiving real-time information on how many pallets they have moved and how that number compares to their peers or to their own previous performance.

This ongoing update on their performance gives them the information they need in order to improve. Their improved performances lead to greater efficiency, and greater efficiency, of course, leads to cost containment, improved profitability, and savings passed on to customers. And Wal-Mart built its empire based on savings passed on to its customers.

If it works for Wal-Mart, it can work in your plant as well. If your workers got continuous feedback on their performance and could see how they compared to their own past performances and their peers, they would know exactly what they needed to do in order to improve. If you're shipping department received ongoing information about how many widgets they shipped today, they would have the benchmark they needed to improve and ship more widgets tomorrow.

This sort of data feedback can impact more than your shop floor. Your sales department and order entry staff can also benefit from knowing how they are performing now compared to how they performed yesterday, last week, or last month. Imagine the benefit of having a constant reminder of actual performance against budgeted performance or actual cost against sales.


This sort of data collection is not limited to the likes of Wal-Mart. MPower's data tracking and video systems can easily provide you with this type of information. Contact us to learn how we can help you embrace the Wal-Mart way and begin improving your efficiency and your bottom line.