Management Information Systems 13ekenneth C Laudon And Jane P Laudo ✓ Solved

Management Information Systems 13e KENNETH C. LAUDON AND JANE P. LAUDON continued Systems CHAPTER 2 GLOBAL E-BUSINESS: HOW BUSINESSES USE INFORMATION SYSTEMS CASE 1 Walmart’s Retail Link Supply Chain SUMMARY An introduction to Walmart’s Retail Link system, one of the largest B2B supply-chain systems in the world. Retail Link connects consumer purchase data to the Walmart purchasing system and to vendor supply systems. Retail Link plays a key role in Walmart’s corporate strategy to become the dominant low-cost provider of retail goods.

L=7:13. URL CASE Walmart is a well-known leader in the application of network technology to coordinate its supply chain. Walmart’s supply chain is the secret sauce behind its claim of offering the lowest prices everyday. It’s able to make this promise because it has possibly the most efficient B2B supply chain in the world. It doesn’t hurt to also be the largest purchaser of consumer goods in the world.

With sales of more than 3 billion for the fiscal year ending January 31, 2012, Walmart has been able to use information technology to achieve a decisive cost advantage over competitors. As you might imagine, the world’s largest retailer also has the world’s largest supply chain, with more than 60,000 suppliers worldwide. In the next five years, the company plans to expand from around 5,000 retail stores in the United States (including Sam’s Clubs) to over 5,500 and increase its selection of goods. Internationally, VIDEO CASE Chapter 2, Case 1 Walmart’s retail link supply Chain 2 continued Walmart has over 5,200 additional stores in 26 countries outside the United States, giving it a total of over 10,000 retail units.

The rapid expansion in Walmart’s international operations will require an even more capable private industrial network than what is now in place. In the late 1980s, Walmart developed the beginnings of collaborative commerce using an Electronic Data Interchange (EDI)-based supply chain management system that required its large suppliers to use Walmart’s proprietary EDI network to respond to orders from Walmart purchasing managers. In 1991, Walmart expanded the capabilities of its EDI-based network by introducing Retail Link. This system connected Walmart’s largest suppliers to Walmart’s own inventory management system, and it required large suppliers to track actual sales by stores and to replenish supplies as dictated by demand and following rules imposed by Walmart.

Walmart also introduced financial payment systems that ensure that Walmart does not own the goods until they arrive and are shelved. In 1997, Walmart moved Retail Link to an extranet that allowed suppliers to directly link over the Internet into Walmart’s inventory management system. In 2000, Walmart hired an outside firm to upgrade Retail Link from being a supply chain management tool toward a more collaborative forecasting, planning, and replenishment system. Using demand aggre- gation software provided by Atlas Metaprise Software, Walmart purchasing agents can now aggregate demand from Walmart’s 5,000 separate stores in the United States into a single RFQ from suppliers. This gives Walmart tremendous clout with even the largest suppliers.

In addition, suppliers can now immediately access information on inventories, purchase orders, invoice status, and sales forecasts, based on 104 weeks of online, real-time, item- level data. The system does not require smaller supplier firms to adopt expensive EDI soft- ware solutions. Instead, they can use standard browsers and PCs loaded with free software from Walmart. There are now over 20,000 suppliers—small and large—participating in Walmart’s Retail Link network. By 2012, Walmart’s B2B supply chain management system had mastered on a global scale the following capabilities: cross docking, demand planning, forecasting, inventory manage- ment, strategic sourcing, and distribution management.

The future of Walmart’s SCM lies in business analytics—working smarter—rather than simply making the movement and tracking of goods more efficient. For instance, in 2012 Walmart purhased Quintiq Inc., a supply chain management tool for improving load assignment and dispatch of trucks for large retailers. Quintiq’s software will enable Walmart’s managers to optimize the loading of its trucks and to reduce the time required to supply its retail stores. Despite the economic slowdown in 2011–2012, Walmart’s sales grew. In 2011, Walmart’s reve- nues of 3 billion were up 6.4 percent from 2010, and its net income was .77 billion, up from .36 billion.

In the first half of 2012, sales continued to grow by over 4 percent. Chapter 2, Case 1 Walmart’s retail link supply Chain 3 continued 1. Where does Walmart’s supply chain start? What triggers Walmart’s Retail Link system to ship goods to local Walmart Stores? 2.

Why is a detailed knowledge of consumer purchases at each store important to Walmart’s success? 3. Why can’t other large retailers easily duplicate Walmart’s Retail Link? 4. Why does Walmart encourage its vendors to learn how to use Retail Link?

VIDEO CASE Q U E S T I O N S in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from this site should not be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. The Win-Win Fallacy Entrepreneurs say they’re trying to help others while also helping themselves—but that claim may be hope masquerading as description.

By Anand Giridharadas SEPTEMBER 9, 2018 SHARE About the author: Anand Giridharadas is the publisher of The.Ink newsletter and the author of, most recently, Winners Take All: The Elite Charade of Changing the World. Justin Rosenstein was largely unknown to the broader world, but he was a star in Silicon Valley. He had been instrumental in inventing several of its seminal technologies. A programming and product design phenom, he helped start Google Drive and was the co-inventor of Gmail chat. Then he moved to Facebook, where he was the co-inventor of Pages and the “like†button.

More than a billion people were regularly using tools that Rosenstein crafted. He had been rewarded with stock said to be worth tens of millions of dollars. He wasn’t yet 30. Rosenstein now faced a dilemma not uncommon among young entrepreneurs who have found early success: what to do with his money and his remaining decades on earth. He knew he wanted to improve the world, and he was guided by one of the reigning mantras of the age — that of the “win-win.†He decided that his method of bettering things would be to start a company, Asana, which sold work-collaboration software to companies like Uber, Airbnb, and Dropbox.

He believed that Asana’s software could be his most forceful way of improving the human condition. “If we really could build a universal piece of software that could make everyone in the world who’s trying to do positive things 5 percent faster, right?—I guess we’ll also make terrorists 5 percent faster—but on the whole, we think that that’s going to be really, really net-positive.†Rosenstein’s desire to improve people’s lives by making everyone a little more productive was noble. But one of the central economic challenges now facing his country is the remarkable stagnation in wages for half of Americans despite the remarkable growth in productivity. The increasingly extractive financial sector is in part responsible.

That sector could be arranged in other ways, including tighter regulations on trading, higher taxes on financiers, stronger labor protections to protect workers from layoffs and pension raiding by private equity owners, and incentives favoring job-creating investment over mere speculation. Such measures could help to solve the underlying problem by preventing the capture of the gains from growing productivity. Absent such measures, an initiative like Rosenstein’s wouldn’t bring the change it promised. It would serve to further increase an abundant thing likely to be hoarded by elites (productivity), instead of a scarce thing that millions need more of (wages). But Rosenstein had almost religious faith in the win-win.

“What’s amazing about tech is—and there’s other industries like this, but I think it’s something that is particularly common in tech—is that there are so many opportunities to have your cake and eat it, too, right?†he said. “There are a significant number of opportunities—Google search being the most massive example of all time—where we simultaneously are doing something lucrative and really good for the world. And, in fact, I think that a lot of times you can get in situations where they’re all aligned, where the bigger the reach of the good you’re doing, the more money you’ll make.†It was a vision in which social justice and the concentration of power would somehow increase in tandem, ad infinitum.

Behind Rosenstein’s Asana and countless other similarly minded initiatives, there stands a radical theory: win-win-ism. It is a new twist on an old idea about the beneficial side effects of self-interest. The long-standing idea took root in the emerging commercial societies of urban Europe a few centuries ago. Its most famous statement is Adam Smith’s declaration about the social benefits of human selfishness: It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

This idea that self-love trickles down to others is an early ancestor of win-win-ism. In his Theory of Moral Sentiments, Smith elaborates on the idea with his famous metaphor of the “invisible hand.†The rich, he writes, in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society.

The selfish pursuit of prosperity, Smith is arguing, takes care of everyone just as well as actually attempting to take care of everyone. From this general idea familiar theories derive. Trickle-down economics. A rising tide lifts all boats. Entrepreneurs expand the pie.

Smith tells the rich man to focus on running his business on the assumption that positive social consequences will occur automatically, as a happy by-product of his selfishness. Through the magic of the “free market‗an oxymoron ever since the first regulation was imposed on it—he unwittingly arranges for the common good. The kind of win-win represented by Asana—as well as the new impact investment funds pledging to combine strong returns with poverty alleviation, and the new social enterprises, and the bottom-of-the-pyramid retail plays—innovated on this tradition by turning it upside down. The winners of commerce were no longer told to ignore the social good and keep their contribution to it indirect and unintentional.

They were to focus on social improvement directly and intentionally. Rosenstein shouldn’t just start a software company, but one he thought most likely to improve the condition of humankind. The new win-win-ism is arguably a far more radical theory than the “invisible hand.†That old idea merely implied that capitalists should not be excessively regulated, lest the happy by-products of their greed not reach the poor. The new idea goes further, in suggesting that capitalists are more capable than any government could ever be of solving the underdogs’ problems. An influential statement of this new creed is found in the book Philanthrocapitalism: How the Rich Can Save the World .

Published in the autumn of 2008, as millions of people watched the economies around them collapse and could have been excused for feeling that the rich were ruining the world, the book made the case for the wealthy as saviors. The authors, Matthew Bishop and Michael Green, stress that this salvation comes not in the old, happy-by-product way, but directly, when the winners assume leadership of social change: Today’s philanthrocapitalists see a world full of big problems that they, and perhaps only they, can and must put right. Surely, they say, we can save the lives of millions of children who die each year in poor countries from poverty or diseases that have been eradicated in the rich world.

And back home in the United States or Europe, it is we who must find ways to make our education systems work for every child. While Adam Smith’s ideas were based on an analysis of how markets work, this new idea is based on a view of the moneyed themselves. Bishop and Green write that the “self-made†people who built their fortunes amid “the surge in entrepreneurial wealth in the last thirty years†are different from winners past, and not just because of their willingness to help others by parting with wealth they only just acquired. “Entrepreneurs are also, by nature, problem-solvers and relish the challenge of taking on tough issues,†Bishop and Green write. Under the new theory, entrepreneurship can become synonymous with humanitarianism—a humanitarianism that greases the wheels of entrepreneurship.

A charitable interpretation of this idea is that the world deserves to benefit from flourishing business. A more sinister interpretation is that business deserves to benefit from any attempt to better the condition of the world. Nowhere is this idea of entrepreneurship-as-humanitarianism more entrenched than in Silicon Valley, where company founders regularly speak of themselves as liberators of mankind and of their technologies as intrinsically utopian. After all, even a workplace software company like Rosenstein’s Asana could claim on its website that “we’ll improve the lives of every person on the planet.†A friend of Rosenstein, Greg Ferenstein, set out years ago to chronicle these grand claims and make sense of this new mentality radiating from the Valley.

He was a reporter in the Bay Area who had written for various outlets, notably TechCrunch, the booster newsletter of Silicon Valley. He had become interested in the bigger ideas animating the people he covered—what win-win-ism imagines for the world and what, at times, it obscures. Ferenstein interviewed many technology founders and distilled their ideas into a working philosophy. He calls this philosophy Optimism, though it seems to be just a slightly tech-inflected version of standard-issue neoliberalism. The ideology’s central thrust, he said, is a belief in the possibility of the win-win and the harmony of human interests.

“The basis of old government is the notion of a zero-sum relationship between different classes—economic classes, between citizens and the government, between the United States and other countries,†Ferenstein said. “If you assume that inherent conflict, you worry about disparities in wealth. You want labor unions to protect workers from corporations. You want a smaller government to get out of the way of business. If you don’t make that assumption, and you believe that every institution needs to do well, and they all work with each other, you don’t want unions or regulation or sovereignty or any of the other things that protect people from each other.†There is no discounting the audacity of this idea.

It rejects the notion that there are different social classes with different interests who must fight for their needs and rights. Instead, we get what we deserve through marketplace arrangements—whether office software to make everyone more productive or the sale of toothpaste to the poor in ways that increase shareholder value. This win-win doctrine took on a great deal more than Adam Smith ever had, in claiming that the winners were specially qualified to look after the losers. But what do they have to show for their efforts, given that the age of the win-win is also, across much of the West, the age of historic, gaping inequality? In a country that is losing its middle class, in a wider world racked by anxiety about globalization and technology and displacement, what is the win-win theory’s response to the problem of suffering?

“It’s not an emphasis of this ideology,†Ferenstein said. Suffering can be innovated away. Let the innovators do their start-ups and suffering will be reduced. Each entrepreneurial venture could take on a different social problem. “In the case of Airbnb, the way you alleviate housing suffering is by allowing people to share their homes,†Ferenstein said.

An Airbnb ad campaign along these lines featured older black women thriving now that the entrepreneurs had helped them to rent out rooms and make extra money. Of course, many poor people don’t own homes or have a surplus of space to rent out. And many African Americans find it difficult to rent on the platform—hotels can no longer easily discriminate by race, but spare-room hoteliers often do. But what was even more striking than these blind spots was the notion, implied in Ferenstein’s idea, that the winners should receive a kickback from social change. Indeed, in the case of Airbnb and other so-called win-wins, the claim of a harmony of interests is hope masquerading as description.

There are still winners and losers, the powerful and the powerless, and the claim that everyone is in it together is an eraser of the inconvenient realities of others. “This ideology radically overestimates who will benefit from change,†Ferenstein admitted. Then what will happen as believers in win-win change amass ever more power—and not only economic power but also the power to guide the pursuit of societal betterment, one start-up at a time? “People will be left behind,†Ferenstein said. This seemed to contradict the whole premise of Optimism—that we are all invested in each other’s success and will prosper together.

In fact, Ferenstein now seemed to be saying that the better the Optimists did, the more people would be beached. This claim jibed with what actually was going on in the world—the benefits of progress flowing primarily to the already fortunate; the widespread cutting loose of those on the wrong side of change. It is fine for winners to see their own success as inextricable from that of others. But there will always be situations in which people’s preferences and needs do not overlap, and in fact conflict. And what happens to the losers then?

Who is to protect their interests? What if the elites simply need to part with more of their money in order for every American to have, say, a semi-decent public school? The win-win vision reflects a bitter truth: Often, when people set out to do the thing they are already doing and love to do and know how to do, and they promise grand civilizational benefits as a spillover effect, the solution is oriented around the solver’s needs more than the world’s—the win-wins, purporting to be about others, are really about you.

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Walmart’s Retail Link Supply Chain: A Key to Competitive Advantage

Walmart, the world's largest retailer, is renowned for its operational efficiency and low prices, factors that have played a pivotal role in its market positioning. Central to Walmart's success is its innovative supply chain management system dubbed Retail Link. Developed in the late 1980s and evolved through the years, Retail Link leverages technology to streamline operations, maintain low costs, and ultimately enhance consumer satisfaction (Laudon & Laudon, 2023). This essay explores the significant components of Walmart’s Retail Link system, discusses its competitive advantages, and assesses the challenges it presents for other retail organizations attempting to replicate its success.

Overview of Retail Link

Retail Link operates as a sophisticated Business-to-Business (B2B) supply chain management system. It integrates consumer purchase data across Walmart's extensive network of retail stores with the purchasing systems of suppliers, ensuring that products are readily available when consumers demand them (Laudon & Laudon, 2023). The system is triggered by real-time sales data collected from point-of-sale terminals at Walmart locations. When inventory levels fall below a predefined threshold, Retail Link automatically communicates with suppliers to reorder products. Thus, efficiency and speed are maximized, ensuring that goods are replenished just in time, thereby minimizing carrying costs and maximizing shelf availability (Bowers, 2018).

Importance of Consumer Purchase Data

Walmart's detailed knowledge of consumer purchasing patterns is one of its most significant competitive advantages. By analyzing the sales data at each location, Walmart can identify trends unique to different geographical regions. For instance, certain products may sell better in specific areas due to cultural or seasonal factors, thereby allowing Walmart to tailor its inventory to meet local demands (Cruz, 2020). This not only enhances customer satisfaction by providing the products they want when they need them but also reduces waste by minimizing the risk of overstocking less popular items (Fleming, 2019). Consequently, this enables Walmart to uphold its promise of "Everyday Low Prices," as it can pass savings onto consumers due to efficient inventory management (Morley, 2021).

Challenges for Competitors

While Walmart's Retail Link system serves as a model for operational efficiency, it is challenging for other large retailers to replicate due to several reasons. First, Walmart's sheer scale provides it with unparalleled bargaining power over suppliers, allowing it to negotiate lower prices that most competitors cannot match (Harrison & van Hoek, 2018). The vast supplier network and data capabilities that Walmart has developed over decades are not easily achievable for newcomers or smaller retailers.
Additionally, Walmart's commitment to integrating technology into its supply chain management fosters significant capital investments and expertise that many competitors may lack. For example, the transition of the Retail Link system from a basic EDI network to a more advanced extranet involved substantial investment in technology and training for vendors (Bowers, 2018). Without the financial resources or expertise, replicating such a system can be daunting for smaller companies.

Encouragement of Vendor Participation

To maximize the effectiveness of Retail Link, Walmart actively encourages its vendors to adopt the system. This is essential for ensuring seamless collaboration and real-time information exchange (Woods, 2022). By providing free software and tools that can easily connect to Retail Link, Walmart lowers the barriers for smaller suppliers to join the network, thereby creating a more efficient and responsive supply chain (Keller, 2019). This relationship fosters mutual benefits; suppliers gain access to data and forecasts that help them align production with demand, while Walmart ensures continuous product availability to its customers.
Moreover, Walmart’s ability to aggregate demand across its vast network of stores enhances its negotiating power with suppliers, ensuring that it can secure favorable prices on bulk purchases. This dynamic exemplifies how collaboration within the Retail Link framework not only streamlines operations but also fortifies Walmart's competitive advantage (Fleming, 2019).

Future Directions and Business Analytics

The future of Walmart's supply chain management appears to be evolving towards the incorporation of business analytics. As illustrated by Walmart’s acquisition of Quintiq Inc., the company aims to further enhance operational efficiency through advanced analytics that optimize logistics and inventory management (Bowers, 2018). The integration of these analytics enables Walmart to make data-driven decisions that influence everything from stock levels to store layouts, resulting in even greater efficiencies and cost savings (Morley, 2021).
Moreover, as consumer demands continue to evolve, leveraging business analytics will allow Walmart to adapt quickly to changing market trends. By harnessing big data analytical tools, Walmart can predict shifts in consumer preferences, optimize its supply chain accordingly, and maintain its market leadership despite the competitive landscape (Keller, 2019).

Conclusion

Walmart’s Retail Link supply chain system is central to the organization's strategy of providing the lowest prices while maintaining high product availability. By effectively utilizing consumer purchase data, Walmart can anticipate customer needs and manage inventory efficiently. Although rivals may aim to replicate Walmart's success, the limitations posed by its scale, technology, and collaborative approach create significant barriers. As Walmart continues to invest in advanced analytics, it strengthens its position at the forefront of retail innovation, ensuring that it remains a leader in efficiency and customer satisfaction.

References

1. Bowers, A. (2018). Walmart Supply Chain: 45 Years of Supply Chain Optimization. Logistics Management, Retrieved from https://www.logisticsmgmt.com/article/walmart_suppliers_45_years_of_supply_chain_optimization
2. Cruz, D. (2020). Understanding Walmart’s Efficient Consumer Response. Supply Chain Quarterly, Retrieved from https://www.supplychainquarterly.com/articles/1111-understanding-walmarts-efficient-consumer-response
3. Fleming, D. (2019). Inventory Management Techniques: How Walmart Takes the Lead. Journal of Supply Chain Management, 55(3), 203-215.
4. Harrison, A., & van Hoek, R. (2018). Logistics Management and Strategy: Competing through the Supply Chain. Pearson.
5. Keller, S. (2019). The Role of Retail Data Analytics in Effective Supply Chain Management. Journal of Retailing and Consumer Services, 47, 1-10.
6. Laudon, K. C., & Laudon, J. P. (2023). Management Information Systems: Managing the Digital Firm. Pearson.
7. Morley, S. (2021). How Walmart Remains at the Top of the Retail Supply Chain. Retail Dive, Retrieved from https://www.retaildive.com/news/how-walmart-remains-at-the-top-of-the-retail-supply-chain/596177/
8. Woods, K. (2022). Effective Vendor Management through Collaboration: A Case Study of Walmart. International Journal of Retail & Distribution Management, 50(9), 163-179.
9. Zhu, K. (2023). Retail 4.0: Understanding the Future of Digital Supply Chains. McKinsey & Company, Retrieved from https://www.mckinsey.com/industries/retail/our-insights/understanding-the-future-of-digital-supply-chains
10. Zhang, R., & Chen, Z. (2020). Big Data Analytics and Supply Chain Management: Challenges and Opportunities. International Journal of Production Economics, 223, 107526.
This comprehensive examination highlights the key factors that have shaped Walmart's success and demonstrates how effective supply chain management can influence organizational achievement in today’s competitive retail landscape.