As we read in the article
of Walmart’s empty shelves crisis [1], it seems that Walmart does not have
enough associates to move the back storage to its shelves. Meanwhile tones of
the theories we can find online about the best practices for the inventory management.
Why did Walmart fail in its inventory management mission? The media are arguing
that the failure is due to its large labor cut. However, as a leading retailer
company, Walmart certainly knows what the best theories are.
I believe Walmart did
its calculation on the consequence of cutting labor hours. I do not have any doubts
on the crossing training Walmart provided to its employees. Walmart did its analysis
on crossing training, pooling the work resources and further increasing its
bottleneck utilization rates. However, these are all theories, the most ideal case
scenarios. For example, we know we should use First in First out (FIFO) inventory
management strategies to avoid the obsolete stock. In reality, the warehouse
workers have their own ways to move inventory around and they usually use total
opposite way (LIFO) to handle the inventories.
Why? Because the prior
inventories are at the very bottom/inside of the stocks, it will be much easier
for these workers to move the latest inventory to shelves. These factors are
never built into model consideration and it is neither merely human error nor random
variation. There are a huge gap between the pure theory and the real practice.
The gap will cause severe miscalculation and profits and operating efficiency will
get hits. Company culture or philosophy may help to resolve this
problem. Furthermore, the management team should always take close look at how
people operate in the production. It is worthwhile to study not only the best practices
but also how to implement these theories into the real operation.
At the end, every company
has its own culture and management style. Will the best company culture or philosophy
ever exist?
Reference:
[1]
http://business.time.com/2013/04/09/the-trouble-lurking-on-walmarts-empty-shelves
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