The Walmart Model
The Wal*Mart Model
Abstract (summary)
Translate Abstract With Wal-Mart Stores Inc petitioning the Federal Deposit Insurance Corporation to get into the banking business, it is only fair that banks take a few lessons from the world's largest retailer as they seek to manage costs and attract business in today's mortgage lending marketplace. In the lending industry, scale allows for more sales channels and a greater variety of product offerings. Yet most struggle to realize their potential economies of scale because of the inherent limitations of legacy processes and technological infrastructures (or lack thereof). When Wal-Mart gets into lending, it will know how much it costs to do initial underwriting of cash-out refis in Orange County, California, and, more important, it will know that it will cost 3.5% less next year. A business' willingness to be flexible and adapt quickly to shifts in business conditions is ineffectual unless its infrastructure can allow change to be implemented quickly and with minimal cost. Wal-Mart invests in process technology with this in mind, and lenders should, too.
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Headnote Mortgage lenders could learn a lot from the king of retail efficiency-Wal-Mart. "We view Wal-Mart as the best supply-chain operator of all time. Efficiency is a key factor in maintaining Wal-Mart's low-price leadership among retailers. Their margins can be far lower than other retailers' because they have such an efficient supply chain. The company's cost of goods is 5 percent to 10 percent less than that of most of its competitors," says Pete Abell, retail research director for AMR Research Inc., Boston. * Turnabout is fair play. With Bentonville, Arkansas-based Wal-Mart Stores Inc. petitioning the Federal Deposit Insurance Corporation (FDIC) to get into the banking business, it's only fair that banks take a few lessons from the world's largest retailer as they seek to manage costs and attract business in today's
Abstract (summary)
Translate Abstract With Wal-Mart Stores Inc petitioning the Federal Deposit Insurance Corporation to get into the banking business, it is only fair that banks take a few lessons from the world's largest retailer as they seek to manage costs and attract business in today's mortgage lending marketplace. In the lending industry, scale allows for more sales channels and a greater variety of product offerings. Yet most struggle to realize their potential economies of scale because of the inherent limitations of legacy processes and technological infrastructures (or lack thereof). When Wal-Mart gets into lending, it will know how much it costs to do initial underwriting of cash-out refis in Orange County, California, and, more important, it will know that it will cost 3.5% less next year. A business' willingness to be flexible and adapt quickly to shifts in business conditions is ineffectual unless its infrastructure can allow change to be implemented quickly and with minimal cost. Wal-Mart invests in process technology with this in mind, and lenders should, too.
Full text
• •
Translate Full text
Headnote Mortgage lenders could learn a lot from the king of retail efficiency-Wal-Mart. "We view Wal-Mart as the best supply-chain operator of all time. Efficiency is a key factor in maintaining Wal-Mart's low-price leadership among retailers. Their margins can be far lower than other retailers' because they have such an efficient supply chain. The company's cost of goods is 5 percent to 10 percent less than that of most of its competitors," says Pete Abell, retail research director for AMR Research Inc., Boston. * Turnabout is fair play. With Bentonville, Arkansas-based Wal-Mart Stores Inc. petitioning the Federal Deposit Insurance Corporation (FDIC) to get into the banking business, it's only fair that banks take a few lessons from the world's largest retailer as they seek to manage costs and attract business in today's