The challenge with Walmart's IT intensive supply chain

The theme for this week is understanding how information technology helps optimize supply chain processes by collecting and analyzing information to make good supply chain decisions.  Since the 1990s, IT has played an ever increasing role in supply chains and helps minimize shipping costs, inventory costs, and lead times.  Walmart is a company that has been at the forefront of using IT for SCM.  As stated in the "Managing Cross-Functional Drivers in Supply Chain" article, information technology is used by Walmart to manage facility, inventory, transportation, sourcing, and pricing and revenue management.  Over the past 20 year, IT has been seen as a solution to many supply chain challenges. 

However, a Time.com article titled "The Trouble Lurking on Walmart's Empty Shelves" states that not all of Walmart's problems can be solved using information technology.  Walmart has cut back on employee hours over the past year causing occasional stock outs at some of it's 4,500 stores.  IT helps Walmart become more efficient. The article states, "As goods are purchased nationwide, the computers in Bentonville automatically spew resupply orders. Tons of programming muscle has gone into making sure everything from Pampers to potatoes are delivered to stores with incredible efficiency. Even the trucks are programmed  to take the most efficient routes, so as to waste neither time nor fuel." 

Once, the product arrives at the warehouse, Walmart needs bodies to organize the goods and stock the shelves.  No matter how efficient Walmart is at getting the right product to the right store, it means nothing if they do not have the means to get the product the last 100 yards.  As labor becomes increasingly expensive, Walmart and other companies face challenges to increase inventory turnover and lower costs.

One way for Walmart to increase inventory turnover is to rely on ecommerce.  However, they still incur costs for shipping goods to their customers.  This is changing though as Walmart and other companies are offering customers the option to pickup the goods at their store, which reduces the number of shipping endpoints.  According to Rueters, "Instead of a vehicle owned and operated by Walmart or a contracted third party service delivering an ordered item, a customer is offered a discount to pick up and drop off the purchase."

As ecommerce becomes increasingly popular, the advantage of Walmart's physical infrastructure becomes smaller and smaller.  This new strategy leverages this physical infrastructure while also capitalizing on ecommerce profits.

ARE WALMART AND OTHER COMPANIES REACHING A POINT WHERE EFFICIENCIES ACHIEVED THROUGH INFORMATION TECHNOLOGY ARE BEING OFFSET BY INEFFICIENCES BUT NECESSARY, LABOR INTENSIVE ACTIVITIES?  IF SO, ANY SUGGESTIONS ON HOW THIS MAY BE SOLVED?

http://business.time.com/2013/04/09/the-trouble-lurking-on-walmarts-empty-shelves/#ixzz2gLRnkIxo

http://www.rfgen.com/blog/bid/280810/Walmart-Considers-Radically-New-Supply-Chain-Optimization-Strategies