The Evolution of Information Systems
Firms of all sizes have been taking advantage of information system management to reduce the occurrence of errors or to fix problems in their operational processes in the past few years. In the recent past, the Walmart Corporation has been experiencing problems related to competition, poor reputation, and inefficient inventory management. This paper will analyze the scope of these problems and suggest three organizational information systems that the company can adopt to solve each of the problems.
Walmart is the world’s largest retailer. The company was founded in 1962, by brothers Bud and Sam Walton. Walmart grew up from a single store to a multinational company. Within two years of establishment, Walmart has opened 24 stores and made 12 million sales. In 1969, the company started its journey to internationalization by opening a store in Oklahoma and Missouri. In terms of its revenue, Walmart is the largest company in the world. The company employs over 2.3 million people in its stores in various parts of the world. In the United States only, Walmart has 1.5 million employees. The company is notable to many for a wide variety of goods and discounts. It operates under the idea of selling more stock for less. An estimated number of 260 million clients visit Walmart stores every week. The company operates over 11, 500 stores in 28 countries. Walmart also owns an E-Commerce site, accessible in 11 countries (Wal-Mart Stores Inc., 2016).
An information system (IS) is an organized system comprising of people, information technology, and processes for the strategic collection, storage, data processing and the production of information. An IS enables organizations to improve performance, manage information, run its business processes, communicate well and make right decisions. Information systems have become an essential component of the business world today since they enable managers and employees to process data from different inputs to come up with useful reports or other forms of outputs that are instrumental in the management of organizations. They transform raw data into information that makes sense, giving solutions to problems. An IS combines the roles of management and technology. Information technology (IT) is a substitute of IS. IS needs the right software, hardware, operating systems and servers to function properly. When IT improves, so do IS. IS are based on three components namely the input, processing, and output. The input system collects data from different units of the organization or outside sources. The processing stage makes the raw data meaningful through functions such as sorting or filtering. The output process disseminates the processed information to the right people such as sales executives or managers.
The Information Systems History
IS systems have seen significant advancement over the years. The field has now expanded and many researchers have emerged, generating new products every day. The IS field is very dependent on the IT sector. The section below explains IS developments in each evolution period from 1950 to present day.
Throughout the period, IS had the simple role of electronic data processing (EDP). Its main uses were processing transactions, keeping records and the accounting role. EDP was the use of computers to record, form classes, manipulate data, and come up with summaries. The Transaction Processing System (TPS) collected, stored, modified and retrieved information regarding the transactions occurring in a firm on a daily basis. It was among the firsts IS systems. Outputs expected from TPS systems included payments and orders. Clerical staff members were the ones in charge of TPS. The TPS relied on systems that accumulated data over time and then computed the transactions later, through the process called the batch system. The system is still applicable today and is considered more efficient for the processing of invoices and paychecks.
1960-1970 (The First Period)
The period started following the emergence of the first computer in 1951. IS firms began to develop, signaling a new era. The first IS department was at J. Lyon and Co., where the first computer was made. The world was slowly shifting from electronic data processing to management information system (MIS). During this era, computers got one more use, which involved processing raw data into meaningful reports for business use. The objective of the research that was going on at the time was how to produce applications which would provide managers and other employees with the right kind of output for decision-making processes. During the era, the goals of organizations shifted from wanting automated basic processes to a consolidation of control. MIS produces information in the form of reports that have previously been determined. They generate three variants of information-summary, detailed and exception. Detailed reports are confirmation of the transaction-processing events. Summary combines data together into a format that a user can go through easily. The exception report filters results to obtain data for use in specified decisions.
1970-1980(The Second Period)
This era was characterized by soaring technological advancements. One significant invention was the personal computer. Businesses were able to spread their processing capabilities across the entire organization. As the number of users increased, companies were able to strengthen their scope of management from traditional technical approaches they had used in the previous years. They began to implement computer-based systems for decision-making purposes. The pre-specified management reports became obsolete, as they could not adequately meet the needs of most firms anymore. The situation necessitated the invention of Decision Support Systems (DSS). IS obtained a new role – providing managers with interactive aids of the decision-making process. DSS utilizes data from sales, production, finance or inventory departments, and other firm’s databases. External information might include interest rates, material pricing, or trends in population. Managers then manipulate the data to produce useful outcomes that aid in decision-making. DSS are of great use to the management, operations, and planning functions. An example of DSS is projected revenue for a new product using sales assumptions and risk analysis.
1980-1990 (The Third Period)
During this period, many businesses started to purchase their own hardware and software systems fitted to their needs. Personal computing paved the way for department-based computer systems. New challenges of data incompatibility and integrity came up across departments. Instead of relying on centralized systems from their departments, individuals were able to use personal computers on an individual basis to meet their needs. The concepts of MIS reports and DSS were no longer relevant. Executive information Systems (EIS) replaced them. EIS is an information system for administration purposes that caters for the management and decision –making requirements of a firm (Azad, Amin & Alauddin, 2012). They allow the access of internal and external information hubs, which are relevant to the strategic goals of a firm. It is considered an evolved version of the DSS. EIS systems include access to the analysis of other companies’ financial analysis, the strategies of competitors, and developments that facilitate strategic planning. During the same period, there was a rapid evolution of the information technology sector and widespread use of the Internet.
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1990 to 2000 (The Fourth period)
There was a significant development of the IS industry and its practices in firms during this period. The commercialization of the Internet supported new methods of information transmission. It changed the way business was conducted and managed. The internet permitted communication across borders. There were breakthroughs in artificial intelligence functions. Technology reduced the need for human intervention in the sector, leaving less work to people. Knowledge workers handled complicated roles. Knowledge management systems (KMS) and Expert Systems (ES) were used together. KM relies on data from ES to produce the desired output. ES are computer systems that perform the decision-making roles of human experts. Some imitate human beings’ roles while others take up their roles entirely. KMS are knowledge-based systems that facilitate production, organization, and transfer of business knowledge within a firm. Intranet is a perfect example. In the late 1990s, enterprise resource planning (ERPs) emerged. They are organization-oriented and they integrate all the functions of business.
2000 – Present (The Fifth Period)
The IS systems have evolved rapidly due to the fast development of Internet, intranet, and global networks. Developments in the 1990s were mainly responsible for improved capabilities of the IS. Global business handling became easy due to electronic services that allow people to transact electronically. Internet-based enterprises have become a regular operation in the business world. The information systems that are currently available can still handle the basic functions they did during the first era. They include record keeping, processing of transactions and making reports in addition to other complicated functions. The Internet has brought new opportunities for firms to improve their scope of operation. E-commerce is booming, with players such as Amazon making large sales from their online retail services. IS makers are using cloud-enabled services, which allow for convenient access to networks within shared configurable devices including servers, applications, and networks. There has been an increased awareness and production of IS that solve most functions of management.
Problems that Walmart Faces
The competitive environment for Walmart has evolved significantly within the past two years. The company, which has always remained much ahead of other firms, faces increased competition from all directions. The primary competition is from general merchandisers such as Costco. Lowly priced competitors including Costco and Trader Joe’s have made shopping at Walmart less appealing to the cost-conscious consumers. Costco is a giant rival that makes more revenue than Walmart. Costco’s clients also shop more frequently compared to Walmart shoppers. They also spend more money per visit. Costco has become prominent for luxury items, gasoline, while fresh produce Target and Kmart are primary competitors in general merchandise retail trade.
Other retailers such as Beyond and Bath are also among the competitors due to rapid growth of the discount retail sector which has experienced a lot of development and transformation in the recent past. The long-standing competitive edge for the company, large assortment, and fair pricing is slowly fading due to competition from retailers that offer extreme value such as hard discounts and warehouse clubs. Extreme convenience stores have also increased the range of selection for consumers. Competition for Walmart is both on a global and local scale. Top retailers have implemented vertical integration for most of their operations such as marketing, shipping, and production. Operating on a large-scale gives them significant cost advantages, making them compete favorably with Walmart. While Walmart has been trying to improve its fresh food offering, Kroger, a grocery operator, has been doing much better. Target also poses stiff competition in the grocery segment.
Walmart has been facing competition in E-Commerce sales, primarily from Amazon. E-commerce is a fast-growing trend that most retailers have adopted and it is a major determinant of the future of the retail sector. The E-commerce growth for Walmart has gone down steadily within the past two years, unlike that of Target, on the other hand, which increased by about 34 percent in the first quarter of 2016. While Walmart offers free shipping for orders that are above $50, Target offers the same advantage on items above $25. The sales for Target have been going up consistently lately. Amazon is the main competition in the E-commerce business. The giant online retailer has almost two million third-party retailers, who offer around 365 million products (BI Intelligence, 2016). It surpasses Walmart’s offerings by far. Amazon also offers better deals for most products. A large number of third-party retailers give consumers a greater opportunity to shop around for the cheapest products. Amazon also offers lower prices for consumers who have the Subscribe and Save plan. Another reason why Walmart is failing at E-commerce is its lengthy vetting process for third-party retailers, who have to wait for more than six weeks to receive an approval. Walmart has been making more than half of its revenue from the online sale of groceries, which has placed it ahead of the competition in the past. However, this shield is now under threat since groceries online sales are slow. Other firms are also using the same technique, bringing competition for Walmart. Many purchase apps are now available for consumers to download. While its sales in the Internet market increased to 17 percent in the first quarter of 2016, those of Amazon increased to 25 percent. While Walmart has made substantive investments in the sector, it has a price to pay for a long period of under-investment, as seen in the lagging sales and intense rivalry.
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The impact of competition has been increased costs to fight the rivals, especially opposing to pressure from Amazon. Walmart has announced plans to invest $11 billion in E-commerce during the next financial year to remodel the stores. It will not be the first time that Walmart is investing heavily in E-commerce. The company has allocated billions to the sector and other digital platforms but remains behind Amazon. The competition will cause the company an additional $3.3 billion in its plans to acquire Jet.com, an online platform that specializes in bulk buying (Gottfried, 2016). Even with increased financing, investors have warned that it does not necessarily guarantee that the company will beat Amazon in the competition. Online retailing comes with lower margins compared to physical stores due to additional costs such as shipping.
Inventory Management Problems at Wal-Mart
Since 2015, Wal-Mart has experienced several inventory-related issues that have led to reduced profits. Inventory shrinkage was the most prevalent issue. Inventory shrinkage is a loss of inventory value or items that occurs through theft or mismanagement. For Wal-Mart, the company has had to deal with theft cases on several instances. The theft is committed through shoplifting or by employee theft. While the leading retailer has implemented strategies to combat crime, more cases are still emerging. The local police departments around Wal-Mart have been overwhelmed with calls to report shoplifting. Between January and June 2016, the police department at Camden received 187 calls from Walmart, out of its total 1,372 calls received at the station. In Pinellas, Pasco, Hillsborough, and Hernando, the company made approximately 2 calls per hour (Sanburn, 2016). In Louiseville, the local police department had received 9,200 calls from Walmart between 2012 and 2016. The shoplifting events have led to harsh outcomes. In August 2016, three Walmart employees from Walmart in Florida were charged with manslaughter for injuring a shoplifter to death (Sanburn, 2016). While Wal-Mart has not reported the exact amount lost through shrinkage, Matthews estimated that the retailer could be losing approximately $3 billion in revenue every year (2015). Shoplifting crimes at Wal-mart have kept recurring even as they shrunk in other stores. The continuous theft has been linked to the large sizes of Wal-Mart stores, which are challenging to secure. The stores also attract many people. They are not only shopping centers but also gathering places for residents. Wal-mart stores are also open for 24 hours. Hence, they attract many people at night. Another reason that explains the high rate of theft at Walmart is the reduced number of workers over the years. With efforts aimed at lean staffing and cost reduction, the company has cut down the number of employees. Reduced employee coverage leaves the stores prone to theft.
The poorly managed inventory system led to lack of popular product and an excess of other products that were not sold as planned. The company has engaged in improper techniques to solve the problem, making it even worse. Walmart allegedly manipulated the prices for goods to record a lower inventory value of the financial statements, while the physical inventory remained the same. The company also has relatively high prices for some items compared to other retailers in the market. The high pricing has led to deflecting customers to other stores with lower prices. For a retailer that relies on bargains as a major attraction for customers, it needs to include stock advantages to increase its stock turnover rate. The inventory quantity and flow needs a serious fix. In several cases the company has reported the inventory in the storage rooms instead of being on the shelves. The major cause of the problem is inefficiency in the optimization of data to manage merchandise. The company has failed in stocking relevant items that consumers need most.
Walmart’s Negative Publicity
Walmart has been the spotlight for the wrong reasons at an unprecedented rate in the recent past, leading to the deterioration of its public image. Most of the time, the allegations were about the retailer’s unethical employee practices. The company has a history of abusing its employees and suppressing demonstrations for their rights. Walmart has been using forced labor in foreign countries, where it gets most of its supplies. Some of the complaints were related to abusive managers, harsh working conditions, and threats. The company evaded accountability of the accusations due to the lack of a transparent supply chain system. Women workers a complained of unfair treatment by the company. Their salaries were lower in comparison to those of male employees. Besides, they have less opportunities for career growth. Despite the fact that women comprise the majority of Walmart employees, very few of them hold high-rank positions. Only a few hold management roles. Additionally, there were complaints regarding mistreatment or unfair termination of pregnant employees. In one instance, an expectant woman was fired for missing her shifts, even after she presented medical reports citing a complicated pregnancy.
In 2015, Walmart was making headlines for an anti-union stunt. It closed five of its stores at once in an alleged retaliation of ongoing labor activism in one of the locations. The closure led to a layoff of a large number of employees. Walmart cited plumbing problems at stores. Suspicions surrounded the announcements as one of the stores, located in Pico Rivera, California, was the first location where worker’s strike occurred. The employees believed that the management was targeting workers who had spoken actively out about the company’s harmful labor practices. In a similar instance, Walmart closed a Quebec store after the successful unionization of workers at the store. It announced that the closure was caused by economic problems. Later, the labor relations board found that the firings were illegal. Walmart requires new employees to watch a video that discourages them from engaging in any employee unions or activist groups of any kind. In 2012, when the store learned that there was an impending strike, the executives mobilized to ensure that it would not happen. A group of workers was asking for full time jobs and better wages. The group was called the Organization United for Respect at Walmart (Berfield, 2015). Walmart made a public announcement that there was no such group and that the announcement was just a publicity stunt. However, internally, the company treated the group as a potential threat. It hired intelligence professionals and monitored the employees vigilantly. It also ranked its outlets based on labor activity.
Publication of the discussed problems has led to a poor reputation for Walmart, which has been difficult to fix. The media has escalated the matter further by writing damaging articles to highlight the problems. Walmart has tried to come up with social media campaigns to highlight the positive side of the firm, but those have not been successful. Employees have gone ahead to write their negative experiences about the company on Twitter, Facebook and the comment section under the related online articles. The company has lost many potential customers who disapprove of the practices.
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Walmart Problem Solutions
Salesforce for Competition Control
Salesforce is a Customer Relations Management online software that allows businesses to use information to manage various functions such as sales, customer relations and monitoring competitors.
Salesforce grants a firm an opportunity to track the activities of its competitors. It allows users to create a custom list of all its rivals. The sales representatives can keep adding competitors that prospects might mention when negotiating a deal or when giving feedback. Once the company is aware of the firms that it is losing to, it pivots its strategies to compete with the rivals. One question that a Salesforce user should always have in mind is why his or her company is losing sales or deals to the competitors. For every lost opportunity, it is important to find out why the company did not get it. The company should also monitor the competitor that takes most deals or sales. It should then analyze why the competing company is always ahead. It could be its price, quality or another feature. The company should also track the competitors that it beats. Access to information provides a chance for more opportunities. For example, if Walmart finds that it is beating a certain store often, the sales representatives can search for consumer complaints in its social media pages and find out the causes of dissatisfaction. Walmart can then convert the gaps into opportunities.
Salesforce also allows users to retain its clients, preventing them from going to the competition. Sales employees can integrate customer data into Salesforce and then use the application to build beneficial relationships. For example, when sending a promotion email to a consumer they interacted with before, Walmart should mention the name of the recipient to make them feel important. They should also envision the types of products that the potential buyer could be likely to buy. Being aware of what they bought during the previous purchase might be useful. For the E-Commerce segment, Walmart can come up with highly targeted email campaigns using various Salesforce tools such as the eCommerce360 together with the MailChimp toolbar. It allows marketing executives to focus on a particular class of customers by filtering their average spending in the store in the past. The company can also review the impact of campaign strategies on the revenues.
Windward Software Inventory Control
Windward Software offers real-time inventory control capabilities that enable a firm to manage its inventory levels efficiently. The program can produce useful reports and track the movement of inventory. It integrates the point of sale, accounting function and inventory control to prevent inventory shrinkage, out-of-stock items and an excess of inventory in the warehouse (Windward Software, 2016).
The Windward inventory software keeps track of the movement of items during the sales process and provides suggestions which products need replenishing and the ones that are not moving. The recommendations are based on the frequency of shipping, volume of sales and the trends of purchase (Windward Software, 2016). Windward creates a list of items that have a high consumer demand automatically in the active inventory category to ensure that the company has enough stock at all times in order to enhance customer satisfaction. By monitoring the levels of stock with the help of the software, Walmart would prevent its empty shelves situation.
Windward also prevents employee theft by curbing theft at the point of sale. Employees may steal the item by scanning it and then deleting them from the invoice before they can print it. They use the CTRL+DELETE keystroke. Windward prevents such practices by requiring a supervisor to confirm the deletion of any item from the list before the sales clerk can do it. The increased sale security would reduce the high rates of theft at Walmart by minimizing manipulations with figures.
Windward Software can record manufacturers’ serial numbers and to generate barcodes for each item. Barcodes enhance the accurate control of inventory. They can be used at the point of reception of the inventory, during stocktaking and at the selling point to ensure a smooth flow of stocks. They also save time at the various points of inventory management. Barcodes significantly reduce errors during data entry. The scanners are very accurate; making them a valuable tool (Windward Software, 2016).The Windward Software allows attaching multiple barcodes to a single item. This aspect is useful when manufacturers change their codes. It is also possible to remove an old barcode and enter a new one. Barcodes also increase security and prevent theft as soon as the goods enter the company. Immediate recording of the items as they arrive gives the store management the exact quantity of items in the store or a warehouse, preventing theft from employees.
WebiMax for Improving Walmart’s Reputation
WebiMax is an information management system that offers managers a comprehensive strategy for controlling the reputation of their companies. It manages information that is available online. One of the managing methods is Search Engine Optimization (SEO). First, it conducts a review and produces a report of the current complexion ranking. It then analyzes the report and comes up with a suitable strategy that will solve the problems (WebiMax.com, 2016). The company offers each client a customized approach depending on its needs.
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It pushes off any negative information about a company and makes sure that it does not pop up on the first pages of search engines. WebiMax also removes links that contain negative information about a company and handles online marketing campaigns. In Walmart’s case, it would narrow the chances of coming across its inappropriate worker practices in the Internet that are currently appearing at the top of Google searches.
In addition, WebiMax promotes favorable content, boosting company’s reputation on the Internet. It increases the chances of prospective consumers’ likelihood of coming across the company’s achievements. For Walmart, WebiMax would promote articles such as massive job creation, many years of leadership in retail and its great product selection. While other reputation management systems also offer a similar service, WebiMax comes with an additional feature where it provides users with close guidance and links them with dedicated agents who make sure that they understand all the steps and tips needed for proper tool exploration. WebiMax also has regular Think Tank sessions that take place every month or every week to brainstorm business-specific strategies and to tackle different needs.
Another service offered by the company includes the provision of social media services, which span across all social media platforms. If the social media presence is inadequate, it sets up profiles for the company. It also helps in ensuring that the social media presence remains professional. It also boosts the social media rankings in various search engines.
WebiMax keeps a continuous track of the company’s reputation. It uses several methods to monitor any fluctuations of the company’s online reputation. Every time something awful occurs, it spots the fact and counteracts the content. The service prevents potential threats and gives insight on strategies to prevent further attacks on the firm’s image.
Walmart has been experiencing several problems in the recent past, which have taken a toll on its performance and reputation. The company has been encountering stiff competition from major industry players and a new class of firms, the extreme convenience stores, which offer large discounts. Inventory management has also been a problem at Walmart in the past year with shrinkage being its main problem. In addition, Walmart had a bad reputation due to media reports of its exploitative terms of work and practices for employees. Information systems have evolved over the years to provide firms with comprehensive solutions to different functionality problems. Walmart can take advantage of various types of organizational information systems such as WebiMax, Windward Software, and Salesforce CRM to solve its problems. These IS systems are relevant to the firm’s current problems. Apart from the listed difficulties, the solutions also solve other problems. For instance, in addition to improving reputation, WebiMax will enable the company to conduct effective marketing campaigns. Implementation of the IS systems will improve Walmart’s positioning in the market and increase its revenues.
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