performance measurement approach, and measure performance results and behavior

performance measurement approach, and measure performance results and behavior

Introduction

Measuring performance is an area of concern for many organizations in the modern business environment. An organization’s ability to measuring its vital activities at different levels of the organization is necessary in today’s fast-paced commercial world. However, there is minimal knowledge of performance management and how to turn the theoretical aspects of real-life applications. One such example is how the performance indicators are rarely associated with objectives and the organization’s overall vision. Time-critical activities are often not followed up accurately, and this tends to affect overall performance outcomes. Supply chain management in the retail industry is the primary source of growth and dominance for large retailers like Walmart. From the purchasing point of their products from wholesale dealers and suppliers to distribution to all the stores, costs, and the poi sale in the stores, these processes require an elaborate and efficient system (Borgonovi et al., 2018, p.60). Therefore, the overall performance of the organization depends on how the supply chain system works as it is at the core of the company’s business. To understand the department at the center of the company’s performance at Walmart, this paper will define the concept of performance and related terminologies, select a performance measurement approach, and measure performance results and behavior.

Definitions

Performance

In recent decades, performance has gained increasing attention as it is a pervasive concept in almost all aspects of human activity. As a subject, performance is considered a subjective insight of reality that explains the numerous reflections as a concept and through its measuring instruments. From a number of studies on a global level, performance is often related to the financial crisis, whose impact as felt globally, led to a continuous need for improvement in areas related to performance (Garvey, 2017, p.110). Due to the numerous concepts applied in the definition of performance, there is more confusion in defining this concept.

However, at an organizational level, performance looks into aspects of productivity, effectiveness, economic considerations, efficiency, earning capacities, competitiveness, and profitability in a firm (Garvey, 2017, p.110). Performance needs to be analyzed through the entities within the environmental limits in which they function. It means that the performance needs to be analyzed within the markets in which they operate and not those irrelevant to its operations. Performance is linked to the company objective as a whole in regards to the entity in which performance is being analyzed. Therefore, the company should measure performance from the targets and objectives rather than those used by external organizations (Garvey, 2017, p.107). Finally, performance is narrowed down to recognizable and relevant structures.

Performance Management

The term performance management is assessed as a process in which the organization monitors the important characteristics of its systems, processes, and programs. To achieve this, data collection plays a significant part in how processes work with this information being used to determine the decisions made over time. Typically, measuring performance is often based on the goals and objectives of the organization. The results from performance management offer information on how the current programs in the organization’s function and the resources to be allocated in the optimization of these effective and efficient programs. In the retail industry, performance measurement is established through the areas of strategic decision making, tactical decisions, and operational decisions (Schönsleben, 2018, p. 27). In Walmart’s supply chain department, all these measures play a significant part in improving and transforming the company’s performance. They are critical in distinguishing what seems to be happening and the reality of what is happening within the organization. They also establish a baseline before making any improvements. From the data collected in the organization’s current position, decisions are made to rectify the current issues in the system. Performance measurement demonstrates the changes that could lead to the overall improvement of the company’s systems. Another measure is that performance allows a comparison of the different departments within an organization to determine those that are affecting the company’s goals. Through performance measures, it is possible to measure sustainable improvements over time (Association of Chartered Certified Accountants, 2014). Additionally, performance recognizes any improvements that have been made from the previous objectives set within the company.

The Scope of Performance Management

Focus on performance management in the supply chain department at Walmart addresses several key aspects that are important in the department’s functions. The first under this is the processes that are put in place from the point of purchase from the wholesalers to when the product gets to the different department stores. The second scope is focused on the outcome measures focused on quantifying the status of each area in supply and success through the established systems (Vincent, C., & Kumar, 2014, p.235). The third scope addresses the balance as related to the changes made to ensure that the new measures in the supply chain are not affecting other departments within the company. Finally, the overall structure of the supply chain system looks into the effectiveness of the structure in terms of how relevant it is in establishing a successful process for the organization.

 

Performance Measurement Approach

The approach towards measuring performance in Walmart’s supply chain department will be focused on by analyzing the Process Map. The purpose of this map is to look into the stages that relate to the process of planning through setting performance expectations and goals (Chopra & Meindl, 2015, p. 55). It also looks into the monitoring process, which is a consistent measure of performance through employee feedback. The review role is focused on assessing the achievements made by the new recommendations in the organization. Finally, the reward section looks into the recognition and compensation process for the success of the recommended system. A detailed breakdown of the Process Map is illustrated in the table below and broken down into the following processes for the supply chain department at Walmart.

 

Performance Measures Table

Evaluation of Organization Priorities

The purpose of this step is to ensure that Walmart’s resources are dedicated to the measurement and management of performance through the organization’s strategic mission and goal. The main objective of this measure and management is to promote quality improvement within the department. Through dialogue on the organization’s current supply chain process, the company focuses on establishing the current strategic plan and the plan on quality management. To achieve this, the organization seeks regular feedback from its suppliers, employees, consumers, and other stakeholders. From the company’s supply chain process, the main goals, include a high level of customer services, technology enablement, a concept of providing Everyday Low Prices (EDLP), logistics, and the idea of cross-docking. Walmart’s focus is aimed at regulating and maintaining the supply chain in an efficient manner that delivers the best customer service to their clients. An EDLP policy is also aimed at delivering goods at very low costs without a compromise on quality (Capgemini Consulting, 2015, p.9). Technology remains a key focus of the company’s goal, especially within the supply chain process, so as to speed up delivery processes. Cross-docking is another goal where Walmart developed the Just in Time inventory where goods are transferred to distribution centers without being kept in a warehouse. Logistics is another plan in the supply chain process where the company aims at establishing an independent system by increasing its transport vehicles to serve the distribution centers.

Performance Measures

A high level of customer service is often measured using several indicators. The first indicator is the feedback that customers offer in regards to the following processes: the time taken to make home deliveries, the availability of products from both the online and physical stores, and the availability of distribution points within customer’s regions. Another indicator reflects on the feedback that the employees give in regards to how they feel while interacting with their customers. Employees are a close link to the customers, and the best way to understand what the customers think is by involving employees. The number of customers is also another indicator which a measure of customer loyalty to the brand and the service it offers.

Enabling technology within the supply chain system is measured by making some critical assessments within the system. The company needs to assess efficiency by measuring how much time is saved from the previous methods (Bayarçelik & Bumin, 2020, p. 45). The second measure is in terms of efficiency through delivery systems, which is focuses on the use of tags for identifying radio frequency, a collaborative system for planning, replenishment and planning, and interchange of electronic data. These measures are aimed at testing whether the technological system is serving the efficiency that it is expected to serve in the supply chain.

Providing low prices is a key objective of the supply chain goals at Walmart. To measure the success of this, a comparison of other competing retailers will be conducted, and an assessment of the profits to ensure that these low prices do not affect the profit margins. In addition to this, the costs incurred by the suppliers also need to be assessed as well to maintain the concept of the low price.

The measure of logistics at Walmart takes into consideration two important aspects. The first is the transport system, which is used to deliver the products to the department stores and to online customers (Chopra, 2019). Secondly, the efficiency of combining transport and technology for deliveries. The main goal is for communication purposes from the department stores to the clients and between the clients and the delivery team. An assessment of efficiency is a critical measure to ensure that it meets customer demands.

Cross-docking was a measure taken up to limit warehouse storages and promote the

Just in Time inventory system. This will be measured by looking into the amount of stock that is in the warehouse at a given period of time, which for Walmart is 48 hours. It will also be measured by the number of dispatches being made and how the time being taken with the loading process (Bank, 2017). Measuring the coordination process is also an important aspect that should be considered in this process. It this stage, measuring the efficiency of technology also comes in as it is a critical part of enabling technology in the supply chain system. In addition to this, the big-box format has also been added to the supply chain process at Walmart.

Determining a Baseline

To establish the baseline, this section will use the indicators that have been included in Appendix 2. Using these indicators, a standard goal will be set against these indicators to measure performance in the supply chain department at Walmart. These will be achieved through both quantitative and qualitative data.

High-Level Customer Service

1. What do customers say about the quantity and quality of available products in the stores? What do customers think about the time it takes to stock a product store after it runs out?
2. Is the information given to customers about a product accurate?
3. Do the products stocked represent the brand’s image?
4. Are the number of stores available accessible to clients?
5. What complaints or compliments to employees receive about the products in the stores?
6. How many customers are subscribed to yearly or monthly delivery plans?
7. Is there an increase in the number of sales as per the annual financial records?

Enabling Technology

1. Is there a reduction in the time take to process and deliver products from the supplier to the department stores or online clients?
2. Are products being sorted out efficiently, in terms of time and organization, with the Radio Frequency Identification tags?
3. Is there a faster communication on any plans from the department or other departments?
4. Does the system in place offer an accurate forecast on what needs to be replenished in the warehouse and the stores?
5. Does the system eliminate manual data transfers in the department?
6. From the previously available demand data, can the system forecast demand?
7. Does the system align and coordinate with the company’s business plan?

Everyday Low Prices

1. When compared to other competing retailers, does Walmart offer the lowest prices?
2. In regards to profits, does the low pricing affect Walmart’s profits?
3. Does this low pricing policy affect the suppliers’ prices? That is, do suppliers get fair compensation?

Logistics

1. How many vehicles has the company deployed for product dispatches?
2. How fast and effective is communication between suppliers, warehouse managers, the delivery team, and the department stores on product dispatch?

Cross Docking

1. Has there been a decline in the amount of stock available in the warehouse in 48 hours?
2. How many dispatchers are being made daily? Have they increased or decreased?
3. Is the inventory coordination effective on the available stock, stock in demand, and stock within the warehouses?
4. Does the Just in Time inventory offer a coordinated communication system at Walmart?

Evaluate Performance

High Customer Service

After an assessment of the company’s indicators on customer service, it is evident that the company has improved the supply chain system to deliver high-quality services. In research by Chatterjee (2017, p.82) on customer service satisfaction at Walmart, respondents indicated that they were satisfied with the quality and quantity of goods being provided by the giant retailer. Further, the study suggested that the department stores are well stocked with overnight replenishing of products. The goods sold at the company are also considered to be as indicated, and they represent the brand’s image of quality. In regards to customer complaints, there were complaints about the lack of stock on the online store. This was disappointing to clients who used the service often.

Further, in some department stores, employees shared negative opinions on available products as there was an increase in the number of store returns. As established by (Bank 2017, p. 93), Walmart has been notorious for frequent employee transfers, and therefore employees are unable to offer accurate feedback on the available products. Sales have steadily increased, indicating that the business model employed by the supply chain system is working effectively.

Enabling Technology

Walmart relies on radio frequency identification (RFID) technology as a way to improve inventory management and to track individual items in an efficient manner using barcodes. The company uses RFID to create smart shelves that are aimed at giving automatic alerts whenever there is low stock. It has been estimated that Walmart has reduced its out-of-stock inventory by 16% through the introduction of RFID (Capgemini Consulting, 2015, p.22). The company has been using analytics to make better decisions in managing inventory. By applying visualization techniques to analyze social activities, they can capture the insights on changes in demand for a product (Capgemini Consulting, 2015, p.23). This technique has been successful in giving ideas on extra inventory stock in areas that might expect high demand and reduce from locations that have a lower demand.

The company has established an Electronic Data Exchange (EDI) with all its suppliers. This system has been effective in cutting costs that relate to ordering products and payment of bills (Marin et al., 2014). It gives the vendors direct insight into the levels of inventory for each of the products within the store. The information has also been made available to the Walmart vendors who are allowed to use it to reduce the cost of inventory, improve efficiency in operations, and test the potential of newly launched products. Using this system has helped Walmart gain control over its schedules in receiving products, which has resulted in accurate product flow among the stores. As an advantage to the company, Walmart has been able to refill stores twice a week while other companies refill at the rate of twice a month. It is a strategy that has made it easier for people working in the department to forecast and analyze the expected demand.

Everyday Low Prices

The approach taken to achieve these low prices is through offering high volumes for the standardized products, offering the essential products, and through limiting service customization. Costs at the production level have been reduced through the use of fewer and standard components, all while limiting the number of models that are being produced. Expenses are kept low in the company by paying low wages and locating facilities that are cheap to rent. This has, however, affected the suppliers significantly as the company focuses on squeezing prices to get the products at the lowest rates. Suppliers are often disadvantaged in this process as they have to review their prices to accommodate Walmart’s changing pricing continually. In as much as Walmart has been able to offer these low prices, other competitors are also targeting the same and have become a challenge for Walmart’s strategy. From this strategy, the company profits continue to grow at a steady pace (Brea-Solis, 2017).

Logistics

Walmart currently has over 7,000 trucks that are used to transport products to the stores. To minimize costs than its competitors, the company logistics is based on a very efficient operational model (Capgemini Consulting, 2015, p.26). To achieve this goal, when Walmart ventures into a new region, the company builds a new distribution center, which is in a central location. After the opening of these new stores around the distribution center, the cut can cut on delivery costs. Although there is no record of the number of vehicles that are deployed in a day to dispatch products, this system has effectively simplified the delivery process by minimizing cases of stock delay. In addition to efficiency, the technology used in the logistics process has made it easier for supply chain communication and efficiency.

Cross-Docking

This is the company’s inventory system, which is aimed at improving the overall efficiency of supply chain management at Walmart. It is a system that works when a truck from specific suppliers arrive at a center of distribution and unload all the products. The contents are then split into smaller lots, which are further divided into many other trucks and are carried by smaller trucks for distribution to other stores. This strategy has been effective in decreasing storage costs, and hence there are lower final prices. In addition to this, Walmart has its transport system that helps ship merchandise from the warehouses to the stores. This has made it more efficient and fast within the store and in the warehouses (Birudavolu & Nag, 2019, p.34). Coupled with a well-developed data program, this allows the company to receive instant demand reports.

Recommendation and Conclusion

The performance of Walmart’s supply chain management departments appears to be satisfactory but with a few recommendations. One measure that Walmart should consider is the need to develop smart strategies that are practically applicable to the supply chain department’s performance. Delivery of quality products is necessary to ensure that the customers get value for their products. In addition to this, the company needs to also focus on a pricing model that does not compromise the supplier’s profits. When suppliers are constantly sabotaged through poor pricing, the quality of goods delivered is greatly affected. Customer complaints on the supply chain system should prompt the company to take on a different cause on their staffing approach since their employees are the direct link to their customers. In as much as the company has cost-cutting measures such as low wages, this might negatively impact the employees and how they participate in supporting the supply chain activities.