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The Role of Information Systems in Modern Day Organisations: Analysis of Wal-mart

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Summary

This report explains how Wal-Mart responds to data management requirements using ICT as an enabler to meet its organisation requirements. I will discuss how Wal-Mart uses a Data Management Warehouse to store data and aid them in making management decisions. Wal-Mart introduced this data warehouse as it wasn’t efficient enough in gathering the feedback of customers and adapting to their wants and needs. As a result, they were missing out on millions of dollars of sales. Wal-Mart uses ICT to help gather this data such as their point of sale systems and an app that customers download on their phones to improve their shopping experience. You will see the benefits from this warehouse such as analysing consumer reaction to products and making decisions based off those reactions. However, you will also see the downfalls of this huge warehouse such as the sheer cost of the project and lengthy maintenance times. I will also discuss recommendations for this warehouse to make Wal-Mart a more efficient company moving forward. Introduction

Wal-Mart is an American retail organisation that operates a chain of department and grocery stores. ‘As of August 2019, Wal-Mart has 11,389 stores in 27 different countries. It’s the worlds largest company by revenue with $514 billion in 2019 according to Fortune Global 500’. Wal-Mart took a huge step in improving the efficiency of the organisation when it replaced their cash registers with Point of Sale (POS) systems. ‘A point of sale system is the place where your customer makes a payment for products or services at your store. Every time a customer makes a purchase at your store, they’re completing a point of sale transaction’. The data collected from the POS system is stored in Wal-Mart’s data warehouse. Wal-Mart also has data management processes in place in its stores to help gather valuable information on its customers. They have barcodes to keep track of stock and self-checkout desks to improve efficiency in store. All information gathered from these data processes is then sent to Wal-Mart’s data warehouse. A data warehouse is a large store of data accumulated from a wide range of sources within a company and used to guide management decisions. It is vital that Wal-Mart has this data collected on its customers as it will keep them in check with consumers purchasing patterns. Without this information on hand, Wal-Mart would miss out on millions of dollars of sales and fall behind its competitors such as Target as a store and Amazon online. Wal-Mart has indeed the world’s largest non-military database with a size of one-half a petabyte. It is the world’s largest data warehouse. ‘Wal-Mart keeps track of 100 million customers buying billions of products every week. Using this data allows Wal-Mart to achieve its “Always Low Prices”’. Wal-Mart has become one of the 15 most profitable companies thanks to its data warehouse. However, to collect this large volume of data, Wal-Mart must have effective ICT systems in place. Main Body

Wal-Mart can look at the sales of a given item, store by store, and determine whether something didn’t sell well because it wasn’t on the floor on the best day of the week or timed with an advertising campaign. ‘Wal-Mart’s data warehouse really is a Decision Support System (DSS). Providing the data to support business decisions is whole point of a data warehouse’. Before the data warehouse was opened in 2004, Wal-Mart would spend weeks and months trying to gather information on its customers and their spending habits. The process just wasn’t fast enough, and as a result, Wal-Mart would miss out on millions of dollars of sales. A successful implementation of the warehouse is only possible if the entire organisation understands the value and need of a data warehouse. If data is not, or only partly, provided because departments are unwilling to share their results with other departments, the data warehouse quickly becomes outdated. Everyone must understand why the entire data is important for the success of the company. The data warehouse should be in complete alignment with your Wal-Mart’s objectives. Wal-Mart’s data warehouse allows them to see the spending patterns of their consumers and allows them to make management decisions from this data. The main ICT system I will speak of in this report that Wal-Mart uses to gather information for their warehouse is their Point of Sale (POS) systems that they have in place for its customers. These POS systems collect valuable information on the consumers and their purchasing patterns. The data is then sent to Wal-Mart’s data warehouse, processed and stored for analysing. The analysis of the data will determine what decisions management will make for the future of the company. Wal-Mart’s POS system is completely custom built. ‘Everyone knows that Wal-Mart isn’t just a grocery store. It branches out into Express Stores, Supercentres and Neighbourhood Markets to name just a few. In their goal to improve their customer experience, they developed their own mobile POS system, specifically for their Garden Centres’. Conclusion

Advantages of Wal-Mart’s Point of Sale Systems: When going to Wal-Mart’s garden centre, you used to have to find a way to carry around the heavy products and materials you will be purchasing. However, with Wal-Mart’s new mobile POS system, this worry is no longer. It’s a portable checkout. The new checkout system is fast and efficient. The checkout is portable, and employees scan the items. ‘The payment is quick and easy with a quick swipe of a credit card. All of this then links up to their central POS system’. Point of sale systems make the accounts process of Wal-Mart so much simpler and gives them fast access to their accounting records. The POS systems also provide a much faster service then the old cash registers. This means the queuing times in stores is much faster and Wal-Mart doesn’t lose out on sales. repairs and maintenance costs are usually much lower o n a POS device then they are on a cash register. POS systems can all reduce the number of human errors. With the new systems, there is less chance of error as opposed to their old cash registers. This ensures that Wal-Mart’s stock and accounting records are more precise and accurate. Reduced paperwork that saves you space, manpower and time. All of these are reasons that show how Wal-Mart are saving millions of dollars in the long term by switching to their POS systems rather than sticking with their old cash registers.

Disadvantages of Wal-Mart’s Point of Sale Systems: The initial costs of setting up Wal-Mart’s new POS systems was huge. Wal-Mart has 11,389 stores around the world and as you can imagine, setting up new systems in each store was a massive expense. The training and retraining of staff on how to use the new POS systems was also very large. Wal-Mart has over 2.2 million employees around the world. They also had to get people into their stores to help train the 2.2 million employees. The initial cost of setting up these POS systems was huge. Another factor of these new POS systems is that malfunctions may occur. This will disrupt sales and Wal-Mart could potentially miss out on sales. It will also reduce the quality of the consumers shopping experience by them getting delayed due to malfunctions. If there is a power outage in the area, their POS systems may shut down and prevent consumers being able to buy their products. This again would mean Wal-Mart would miss out on a large amount of sales. POS systems have basic pre-defined rules that forced Wal-Mart to adapt their whole business structure the way a POS system works. However, this really is a good thing as it is the way it should be in functional, structured organisations. Improvements of Wal-Mart’s Data Management Processes: The scanning of items at checkout is now done in a much more accurate manner and there is much less error than the old cash register system. It also allows employees check the price of an item with accuracy and efficiency. POS systems allow the customer to get a much more briefed item receipt. Wal-Mart mow maintains the much-needed accuracy of a successful organisation as items are scanned with a barcode reader instead of manual entry. This also helps with accurate stock control as stock levels are measured on the system. The improvements of Wal-Mart’s data management processes have made them a much more profitable and structured organisation. Disadvantages for Wal-Mart’s Data Management Processes: Unfortunately, Wal-Mart’s POS system can’t be used for their employee payroll, record keeping, worker data and other normal business operations. Reliable internet connection is also required to maintain Wal-Mart’s POS system. Without an internet connection, Wal-Mart’s data management processes will fail to function, and Wal-Mart will miss out on a large volume of sales. Recommendations

As you can tell, the advantages heavily outweigh the disadvantages when it comes to Wal-Mart’s POS systems. Although they have huge initial costs when setting up the systems, POS allows Wal-Mart to become a much more efficient company. It hugely improves the customers shopping experience as paying for items requires very little effort. Queue times are heavily reduced and overall Wal-Mart becomes a much more methodical and structured company. However, from studying these systems I can offer some recommendations to Wal-Mart to further boost efficiency and reduce costs in the organisation. First off, Wal-Mart must ensure that they have emergency plans in place in each store around the world should their POS system fails. POS systems require a power source and an internet connection. Should there be a power outage, they must ensure they have a backup generator in store to ensure there is no loss of sales. Just a small amount of time without their POS systems could result in Wal-Mart losing millions of dollars in sales. An emergency plan is crucial to have in place for each store. Wal-Mart should also look to see if they can introduce their employee payroll on their POS systems. It would reduce the paperwork and hassle of trying to manually keep employee records. It would also make it easy and efficient to bring up a background check on an employee when looking to give them a promotion in work. All in all, Wal-Mart’s POS systems have been a huge success since they replaced the old cash registers. As long as they are kept up to date with the latest software’s, Wal-Mart should continue with their POS systems as it has made them a much more profitable and structured organisation. They are extremely efficient in collecting customer data for Wal-Mart’s ever-growing data warehouse. Wal-Mart should continue to be one of the globes most successful organisations due to their organised POS systems and hugely impressive Data Warehouse that allows them to make vital management decisions.

Bibliography

  1. En.wikipedia.org. (2019). Wal-Mart. [online] Available at: https://en.wikipedia.org/wiki/Wal-Mart [Accessed 10 Oct. 2019]. Derbaum.com. (2019).
  2. The key to always low prices. [online] Available at: http://derbaum.com/tu/Wal-Marts%20DWH.pdf [Accessed 21 Oct. 2019]. Derbaum.com. (2019).
  3. Focus on the business. [online] Available at: http://derbaum.com/tu/Wal-Marts%20DWH.pdf [Accessed 21 Oct. 2019].
  4. Expert Market US. (2019). What Point Of Sale System Does Wal-Mart Use? (September 2019).[online] Available at: https://www.expertmarket.com/pos/Wal-Mart-pos-system [Accessed 26 Oct. 2019].

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The Role of Information Systems in Modern Day Organisations: Analysis Of Wal-Mart. (2020, December 10). GradesFixer. Retrieved June 27, 2022, from https://gradesfixer.com/free-essay-examples/the-role-of-information-systems-in-modern-day-organisations-analysis-of-wal-mart/
“The Role of Information Systems in Modern Day Organisations: Analysis Of Wal-Mart.” GradesFixer, 10 Dec. 2020, gradesfixer.com/free-essay-examples/the-role-of-information-systems-in-modern-day-organisations-analysis-of-wal-mart/
The Role of Information Systems in Modern Day Organisations: Analysis Of Wal-Mart. [online]. Available at: <https://gradesfixer.com/free-essay-examples/the-role-of-information-systems-in-modern-day-organisations-analysis-of-wal-mart/> [Accessed 27 Jun. 2022].
The Role of Information Systems in Modern Day Organisations: Analysis Of Wal-Mart [Internet]. GradesFixer. 2020 Dec 10 [cited 2022 Jun 27]. Available from: https://gradesfixer.com/free-essay-examples/the-role-of-information-systems-in-modern-day-organisations-analysis-of-wal-mart/
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