“Wal-Mart and Their Management Information System”
April 20, 2012
Sam Walton, the founder and former CEO of Wal-Mart, was a stubborn, driven, hardworking, frugal man. After launching over 2,000 stores nationwide in 1993 (Wal-Mart Stores INC), a few investors realized the need for Walton to be able to communicate with all of Wal-Mart stores in a timely manner. These investors suggested that Walton invested twenty-four million dollars in a satellite system that would enable him to communicate easily with his fast growing Wal-Mart chain. Walton insisted that he would be able to visit every single store personally, yet he reluctantly agreed to the offer (Satellite Adds Speed To Wal-Mart). From this point forward Wal-Mart’s management information systems expanded. As of today, Wal-Mart is praised as having one of the best, if not the best, management information systems. Within this essay, I will analyze a few management information system technologies and techniques of Wal-Mart INC and explain how the basics of MIS have supported the growth of Wal-Mart’s competitive advantage by creating value. Wal-Mart and Collaboration Information Systems
With Wal-Mart having over 10,000 stores worldwide, an important component of their management information system is their collaboration information system. The collaboration information system is the key to how the company communicates with their investors, retail stores, manufacturers, warehouses, and suppliers. As noted by Kroenke, the components of all collaboration information systems are: the computer side - hardware and software; the bridge -data; and the human side - procedures, and people. How does Wal-Mart apply the collaboration information system into their daily use? Let’s begin with analyzing the computer side of the collaboration information system: Wal-Mart’s server hardware and software system. The basic hardware that is used by Wal-Mart employees daily are computers and handheld devices (both come equipped with scanners) that were built by Wal-Mart’s information technology department. One specific function of these computers and handheld devices is to help employees better locate and correctly place an item in the store. Another specific function this hardware has is the ability for the scanner to read the RFID (radio-frequency identification) tags of products. An RFID tag helps keep track of the inventory inside and outside the store. By using this technique, managers know when and how much inventory needs to be ordered. This helps Wal-Mart companies to cut costs by not ordering too much inventory. Next, we will discuss a component of Wal-Mart’s software system. Wal-Mart uses SAP AG as their ERP software system. SAP AG, a vertical-market application, serves the specific needs of Wal-Mart’s growing global business. This quote from Sap.com describes how Wal-Mart uses the software daily: “SAP software helps enterprises of all sizes around the world improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations” After choosing SAP AG as their primary ERP software system, they were able to cut costs of the company significantly. Data is used to bridge the computer side and the human side. NCR Corporation controls Wal-Mart’s data. In other terms, NCR is Wal-Mart’s database management system. Even though NCR controls the data, Wal-Mart makes the final decisions of what information the database will contain and how the information will be related to another (Using MIS). After the contractual agreement of Wal-Mart and NCR in 1996, the two companies share over 7.5 terabytes of data storage (Wal-Mart Selects NCR). This, in turn, prompted Wal-Mart for their data warehouse, owned by Teradata. Wal-Mart uses their data warehouse daily, which is currently 4 petabytes, to study the way their consumers shop and make critical decisions about their business. Now, let us analyze the human side of the...
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