Information Systems in Supply Chain Management

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Information Systems in Supply Chain Management


Innovated Information Systems in

Supply Chain Management


A Case Study of Walmart Stores, Inc.

and Lessons for Vietnam Retail Industry

Instructor: Dr. Le Thai Phong

Prepared by: Doan Thi Thu Trang [1113340189]


Table of Contents

INTRODUCTION .............................................................................................................................. 4

I. LITERATURE REVIEW ................................................................................................................. 5

1. Supply Chain Management .................................................................................................... 5

2. Computer-Based Information System ................................................................................... 6

3. Information System in the Strategic Context ........................................................................ 8

II. CASE STUDY: Information Systems in Walmart's Supply Chain Management ....................... 9

1. Brief Overview of Wal-Mart Store, Inc. ................................................................................. 9

2. SWOT Analysis ...................................................................................................................... 10

3. Three Basic Philosophies for Walmart's Information Systems ............................................ 13

4. Innovation in Walmart Information Systems ...................................................................... 15

III. ANASYSIS & RECOMMENDATIONS ........................................................................................ 20

1. Analysis of Information Technological Adoption in Vietnam Retail Industry ...................... 20

2. Recommendations ............................................................................................................... 21

REFERENCES ................................................................................................................................. 23



In this 21st century, a worldwide system of commerce is evolving, in much the same way as

national markets evolved from local and regional networks. The modern economic environment,

which is dominated by globalization, hyper-competition and the knowledge and information

revolution, has revolutionized the way business is conducted. This new technological epoch is

apparent through intensified investment in computer-processing and data preparation

appliances in the manufacturing and service industries and telecommunications infrastructure,

and also to its widespread usage in government agencies, educational organizations, and, more

recently, in the household. Because of this technological progress, the implementation and

application of information technology is a significant driving force behind many socioeconomic

changes. As the utilization and commercialization of information technology becomes more

widespread throughout the world, the adoption of novel information technology can generate

new business opportunities and various benefits.

In such that way, information technology adoption is an important field of study in a number of

areas, which includes wholesale and retail industry. Due to the numerous advantages of

information technology, wholesale and retail firms all over the world are trying to adopt

information technology applications to support their businesses, especially in their supply chain

management. However, information technology adoption differs by scale of organizations, by

geographical locations, by customer preferences, or simply by their specific characteristics, such

as resource constraints. Despite that fact, this paper aims to research the success of information

technology adoption in Walmart Stores, Inc. to answer the question of any lessons can be drawn

and learnt by Vietnamese wholesale/retail companies.



1. Supply Chain Management

The term "supply chain management" entered the public domain when Keith Oliver, a consultant

at Booz Allen Hamilton (now Booz & Company), used it in an interview for the Financial Times in

1982. The term was slow to take hold. It gained currency in the mid-1990s, when a flurry of articles

and books came out on the subject. In the late 1990s, it rose to prominence as a management

buzzword, and operations managers began to use it in their titles with increasing regularity

(Jacoby, 2009).

A management construct cannot be used effectively by practitioners and researchers if a common

agreement on its definition is lacking. Such is the case with the term "supply chain

management"-so many definitions are used that there is little consensus on what it means.

Practitioners and educators have variously addressed the concept of supply chain management

(SCM) as an extension of logistics, the same as logistics, or as an all-encompassing approach to

business integration.

Supply chain management is a cross-functional approach that includes managing the movement

of raw materials into an organization, certain aspects of the internal processing of materials into

finished goods, and the movement of finished goods out of the organization and toward the end

consumer. As organizations strive to focus on core competencies and becoming more flexible,

they reduce their ownership of raw materials sources and distribution channels. These functions

are increasingly being outsourced to other firms that can perform the activities better or more

cost effectively. The effect is to increase the number of organizations involved in satisfying

customer demand, while reducing managerial control of daily logistics operations. Less control

and more supply chain partners led to the creation of the concept of supply chain management.

The purpose of supply chain management is to improve trust and collaboration among supply

chain partners, thus improving inventory visibility and the velocity of inventory movement.

Main function of supply chain management are as follows: 1) inventory management, 2)

distribution management, 3) channel management, 4) payment management, 5) financial

management, 6) supplier management in which, successful supply chain management requires


cross-functional integration and marketing must play a critical role. The challenge is to determine

how to successfully accomplish this integration (Lambert and Cooper, 2000).

2. Computer-Based Information Systems

A computer-based information system is a single set of hardware, software, databases,

telecommunications, people, and procedures that are configured to collect, manipulate, store,

and process data into information (Stair & Reynolds, 2012:p12). To be valuable to managers and

decision makers, information should have the characteristics described in the table below. These

characteristics make the information more valuable to an organization. Many shipping

companies, for example, can determine the exact location of inventory items and packages in

their systems, and this information makes them responsive to their customer. In contrast, if an

organization's information is not accurate or complete, people can make poor decision, costing

thousands or even millions of dollars. If an inaccurate forecast of future demand indicates that

sales will be very high when the opposite is true, an organization can invest millions of dollars in

a new plant that is not needed. Furthermore, if information is not relevant, not delivered to

decision maker in a timely fashion, or too complex to understand, it can be of little value to the

organization (Stair & Reynolds, 2012:p7).

Characteristics Definitions

Accessible Information should be easily accessible by authorized users so they can

obtain it in the right format and at the right time to meet their needs.


Accurate information is error free. In some cases, inaccurate information is

generated because inaccurate data is fed into the transformation process.

(This is commonly called garbage in, garbage out [GIGO].)

Complete Complete information contains all the important facts. For example, an

investment report that does not include all important costs is not complete.


Information should also be relatively economical to produce. Decision

makers must always balance the value of information with the cost of

producing it.



Flexible information can be used for a variety of purposes. For example,

information on how much inventory is on hand for a particular part can be

used by a sales representative in closing a sale, by a production manager to

determine whether more inventory is needed, and by a financial executive

to determine the total value the company has invested in inventory.


Relevant information is important to the decision makers. Information

showing that lumber prices might drop might not be relevant to a computer

chip manufacturer.


Reliable information can be trusted by users. In many cases, the reliability

of the information depends on the reliability of the data-collection method.

In other instances, reliability depends on the source of the information. A

rumor from an unknown source that oil prices might go up might not


Secure Information should be secure from access by unauthorized users.


Information should be simple, not overly complex. Sophisticated and

detailed information might not be needed. In fact, too much information

can cause information overload, where a decision maker has too much

information and is unable to determine what is really important.


Timely information is delivered when it is needed. Knowing last week's

weather conditions will not help when trying to decide what coat to wear



Information should be verifiable. This mean that you can check it to make

sure it is correct, perhaps by checking many sources for the same


Source: Stair & Reynolds, 2012:p7

As the importance of information systems to the operation any organizations, information

technology adoption and innovation become essential and urgent than ever. Nowadays, both

large organizations and small and medium-sized enterprises are seeking ways to reinforce their

competitive position and improve their productivity (Premkumar, 2003:p91). Accordingly, there


is an increasing consciousness of the necessity to derive profit through investment in information

technology. Information technology tools can significantly assist those firms by supplying the

required infrastructure, which is necessary for providing appropriate types of information at the

right time. Information technology can also provide them with competitiveness through

integration between supply chain partners and inter-organizational functions, as well as by

providing critical information.

3. Information System in the Strategic Context

A customer-focused definition is: "Supply chain strategies require a total systems view of the links

in the chain that work together efficiently to create customer satisfaction at the end point of

delivery to the consumer. Therefore, costs must be lowered throughout the chain by driving out

unnecessary expenses, movements, and handling. The main focus is turned to efficiency and

added value, or the end-user's perception of value. Efficiency must be increased, and bottlenecks

removed. The measurement of performance focuses on total system efficiency and the equitable

monetary reward distribution to those within the supply chain. The supply chain system must be

responsive to customer requirements." (Hines, 2004:p76).

Few industrial applications have been enveloped with so many expectations as information

technology systems have been. The implementation of information technology systems is claimed

to be the most widely used class of process innovations in the past 40 years (Tidd et al., 2001, p.

267). First, information technology is seen as a tool to redesign and sustain more efficient

processes (Davenport and Short, 1990). Such information technology applications as enterprise

resource planning systems (ERPs) are expected to increase efficiency as they ''promise the

seamless integration of all information flows flowing through a company'' (Davenport, 1998).

Second, information technology promises to improve performance in technological and product

development, through project management systems and large-scale computer simulation and

modelling. They are expected to speed up development projects and save money in the building

and testing of prototypes and pilot plants (Tidd et al., 2001, pp. 113- 114). The realm of

information technology possibilities seems boundless. In the words of Bessant and Buckingham

(1993, p. 219), ''benefits include dramatically shorter response times, better customer service,


materials savings, improved design and quality and the opportunity to introduce new products

more frequently''.

Of four building blocks of competitive advantages, which are Superior Quality, Superior Efficiency,

Superior Innovation and Superior Customer Responsiveness, perhaps the most important one is

Innovation. Apply innovated applications for information systems is a part of supply chain

management. It is hard to talk about supply chain management without mentioning Walmart. In

its relentless pursuit of low consumer prices, Walmart embraced technology to become an

innovator in the way stores track inventory and restock their shelves, cutting costs and passing

the savings along to customers. In the process, the company became synonymous with the

concept of successful supply chain management.

"I don't believe there is a university in the world that doesn't talk about Walmart and the supply

chain," said James Crowell, director of the Supply Chain Management Research Center at the

Walton College of Business. "They are just so well respected because they do it so well, and

certainly I know a lot of peer institutions around our country … will bring a Walmart guest to



Information Systems in Walmart's Supply Chain Management

1. Brief Overview of Wal-Mart Store, Inc.

Wal-Mart Stores, Inc. is an American multinational retail corporation that runs chains of large

discount department stores and warehouse stores. The company is the world's largest public

corporation, according to the Fortune Global 500 list in 2014, the biggest private employer in the

world with over two million employees, and the largest retailer in the world. Walmart remains a

family-owned business, as the company is controlled by the Walton family, who own over 50

percent of Walmart (Walmart 2013 Proxy Statement, 2013).

Wal-Mart Stores, Inc. operates retail stores in various formats under 69 banners around the world

and is committed to saving people money so they can live better. It earn the trust of customers

every day by providing a broad assortment of quality merchandise and services at everyday low


prices ("EDLP"), while fostering a culture that rewards and embraces mutual respect, integrity

and diversity. EDLP is Walmart's pricing philosophy under which it price items at a low price every

day so that customers trust that its prices will not change under frequent promotional activities.

Up to the end of fiscal year 2013, Walmart has 10,700 retail units operated in 27 countries with

approximately 245 million customers served weely. Walmart's operations consist of three

reportable business segments: Walmart U.S., Walmart International and Sam's Club. The Walmart

U.S. segment includes the Company's very merchant concept in the U.S., operating under the

"Walmart" or "Wal-Mart" brand, as well as The Walmart International segment

consists of the Company's operations outside of the U.S., including various retail websites. The

Sam's Club segment includes the warehouse membership clubs in the U.S., as well as (Walmart Annual Report, 2013).

2. SWOT Analysis

2.1. Strengths:

 Scale of operations. Walmart is the largest retailer in the world with more than $469 billion in

revenue and more than 10,700 stores (Walmart Annual Report, 2013). It makes Walmart the giant

that no other retailer can match. Due to such large scale of operations, the corporate can exercise

strong buyer power on suppliers to reduce the prices. It can also achieve higher economies of

scale than competitors because of its size. Higher economies of scale results in lower prices that

are passed to consumers.

 Competence in information systems. The corporate achieves significant cost savings because of

its extensive information systems that tracks orders, inventory levels, sales and other related

information in real time. All this information can be instantly accessed, analyzed and decisions

made at each store. Effective management of supply chain and logistics is one of the most

important factors for Walmart success.

 Wide range of products. Walmart can offer wider range of products than any other retailer. It

sells grocery, entertainment, health and wellness, apparel and home related products among


many other categories and offers both branded and own label goods. Wide range of products

attracts more customers to Walmart stores.

 Cost leadership strategy. This strategy has helped Walmart to become the low cost leader in

the retail market. This strategy requires selling products ant the lowest price possible and

providing a no frill services to achieve higher economies of scale and attract masses of consumers

and that is exactly what the company is doing. It sells products at much lower prices than

competitors do, builds warehouse style superstores that contain extensive range of products but

does not offer much additional benefits or services. All of this result in cost reductions and lower

prices for consumers.

 International operations. Walmart does not rely on sales from US stores only as its competitors

do. It has earned $135 billion in sales in 2013 from its international operations, which grew at a

much faster rate (7.4%) than sales in the home market (3.9%) (Walmart Annual Report, 2013).

Foreign markets open up new opportunities for Walmart's growth and provide new experience

for the company as it operates quite differently abroad than in the home market.

2.2. Weaknesses

 Labor related lawsuits. Walmart faces labor related lawsuits every year, which costs millions of

dollars for the company. It is criticized for poor work conditions, low wages, unpaid overtime work

and female discrimination. In addition to litigation costs, corporate's reputation has been

damaged and fewer skilled workers are willing to work for it.

 High employee turnover. The business suffers from high employee turnover that increases

firm's costs, as it has to train new employees more often. The main reason for high employee

turnover is low skilled, poorly paid jobs.

 Little differentiation. Walmart has no differentiation compared to its competitors, which might

hurt the company in the future if commodity prices or average consumer income would increase.

In this case, low cost leadership strategy would not be as effective as it currently is and Walmart's

main competitive advantage would erode.


 Negative publicity. The company is often criticized for its questionable practices such as bribery

of authorities or poor work conditions. Negative publicity damages corporate's reputation.

2.3. Opportunities

 Retail market growth in emerging markets. Retail markets grew by 3.7% on average in emerging

markets in the last year, opening huge opportunities for Walmart's revenue growth (KPMG,

2013). The business currently operates in Brazil, Mexico, China and India markets. Walmart should

increase its presence in these markets to sustain future growth.

 Rising acceptance of own label products. The sales of private label products have increased by

more than 40% over the last 10 years (KPMG, 2013). This reveals increasing consumer acceptance

of supermarket chain products compared to national brand products. Walmart has an

opportunity to increase the number of private label products sold at its stores and earn higher

profit margins.

 Trend toward healthy eating. The current trend of eating healthier food has resulted in higher

demand for grocery products. Walmart has an opportunity to expand its grocery stores to earn

more income from this trend.

 Online shopping growth. It is projected that in the five years to 2016, revenue in the Online

Retail Sales & e-commerce industry in the US will increase at an average annual rate of 9.4% to

total $291.9 billion (IBIS World, 2014). Walmart being the biggest offline retailer has huge

opportunities to expand its presence in online retail market. The company can offer convenience

to pick up the goods ordered online in its more than 10,700 stores and can offer even lower prices

online than at the store. As a result, Walmart can reach more customers and increase its revenue.

2.4. Threats

 Increasing competition from brick and mortar and online competitors. Competitors like Target,

Costco, Amazon and Tesco (in UK) are putting huge efforts to eliminate price differences that


Walmart enjoys. Except the lower prices, Walmart does not differ from other low cost retailers

and will experience increased competition from them in the future.

 Increasing resistance from local communities. Walmart superstores have a negative impact on

local retailers and communities. Some of the local retailers are usually forced to close off when

Walmart superstore opens in the area. This affects not only the retailers but also their families

and the community as a whole.

 Rising commodity product prices. Rising commodity prices squeeze Walmart's profit margins

and erode its competitive advantage. As prices go up, the cost difference between the retailers

decreases and competition shifts from price to product and service differentiation.

3. Three Basic Philosophies for Walmart's Information Systems

Three principles for information technology at Walmart reflect its strategic "Information

Technology Maxims", which guide development and deployment of all information technology

systems and capabilities.

 The first principle is to run a centralized information system.

Walmart runs all worldwide information systems out of its headquarters in Arkansas, with a

second data center providing backup and failover. For example, a point-of-sale transaction

entered in China comes back to Arkansas for credit card authorization and then returns to China

to complete the sale. The whole process takes place in less than half a second.

One benefit of this approach is that most of Walmart's developers are in one place, allowing them

to more easily collaborate. The second benefit is that the developers are located in the heart of

the business, eating lunch with buyers and talking about issues in retailing. This keeps the

developers tuned in with the real concerns and needs of the business.

 The second is to have common systems and common platforms.

Walmart runs a single system with a single set of code worldwide. The first thing Walmart does

when beginning operations in a new country is to migrate store operations to its code. The cost


advantages are huge: Walmart's information technology budget is well less than one-half a

percent of sales. It can do this because it does not have to invest in multiple systems.

In addition to the cost benefits, the single-system approach allows Walmart to leverage best

practices, which are embedded in the system, across regions. When up-and-coming executives

transfer to a different part of the world, they have the same system and processes that they have

been used to in their old job. This supports Walmart's leveraging of human resources worldwide.

 The third is to be merchants first and technologists second.

Information Technology personnel at Walmart should be merchants first, and technologists

second. Information technology talks to customers (users) not in terms of technology but in terms

of the business. Walmart's users do not know much about the company's technology platforms

or tools. They should not care whether it is running mainframes or UNIX.

Regarding best practices, Walmart takes a middle ground. On the one hand, it does not force all

regions worldwide to do things exactly the same way. Nor does it let each region do its own thing.

The middle ground is to define the best practices specifically for each region.

Walmart believes that some core functions apply to all regions. For example, "every day low

price" can and should be applied in all markets, regardless of what the local managers think from

their past experience. They do not need to do special price promotions. When local managers

change over to every day low pricing, they find that it does work and they never look back. This

is non-negotiable.

Other practices can vary by market, and when Walmart finds a new best practice in a local market,

the developers program it into the core system. "Localization is handled by turning things on or

off. In some cases, we turn off large blocks of functionality for small markets, because it would

just hurt their productivity," said Walmart's CIO Linda Dillman at the Forrester IF Forum 2006.


4. Innovation in Walmart Information Systems

On the way to achieve customers' satisfaction, Walmart goals are simple to define but hard to

execute: to provided customer access to quality goods, to make these goods available when and

where customer want them, to develop a cost structure that enables competitive pricing, and to

build and maintain a reputation for absolute trustworthiness. Most explanations about Walmart

remarkable success focus on a few familiar and highly visible factors: the genius of founder Sam

Walton who inspires his employees and has molded a culture of service excellence, the "greeters"

who welcome customers at the doors, the motivational power of allowing employees to own part

of the business, the strategy of "everyday low price" that offers the customer a better deal an

saves on merchandising and advertising costs. Economists also point to Walmart's big stores,

which offer economies of scale and a wider choice of merchandise.

However, that is not all, the real secret of Walmart's success lies deeper, in a set of strategic

business decisions that transformed the company into a capabilities-based competitor (Stalk,

Evans & Shulman, 2004). By bringing together best-in-class online, mobile and social capabilities

and its over 10,700 stores, Walmart is building what no other retailer - online or otherwise - can.

It can offer customers a truly seamless experience that empowers them to shop in the way most

convenient for them - anytime and anywhere. Over the past year, it has made significant

investments in talent and technology to accelerate progress toward this vision.

Through its Everyday Low Cost (EDLC) focus, Walmart is constantly fueling the productivity loop

by leveraging expenses so that it can lower prices. The company work closely with suppliers to

obtain the best price for the merchandise customers want. It also drive innovation across its

supply chain and store operations to reduce cost. Below I will describe how Walmart apply

technological innovation in its information systems to improve its supply chain management and


4.1. Transaction Process System

Walmart use an invisible logistics technique known as "cross-docking". In this system, goods are

continuously delivered to Walmart's warehouses, where they are selected, repacked, and then


dispatched to stores, often without ever sitting in inventory. Instead of spending valuable time in

the warehouse, goods just cross from one loading dock to another in 48 hours or less. Cross-

docking enables Walmart to achieve the economies that come with purchasing full truckloads of

goods while avoiding the usual inventory and handling costs. However, to make cross-docking

work, Walmart has the make strategic investments in a variety of interlocking support systems

far beyond what could be justified by conventional Return on Investment criteria.

Cross-docking requires continuous contact among Walmart's distribution centers, suppliers, and

every point of sale in every store to ensure that orders can flow in and be consolidated and

executed within a matter of hours. Therefore, Walmart implemented the first company wide use

of Universal Product Code bar codes, in which store level information was immediately collected

and analyzed. Walmart operates a private satellite-communication system, the Retail Link, which

daily sends point-of-sale data directly to Walmart's 4,000 vendors. Retail Link is connected to

analysts who forecast supplier demands to the supplier network, which displays real-time sales

data from cash registers and to Walmart's distribution centers. The result of Retail Link has been

reduced inventory in stores, more inventory of the right products at the right time and place,

improved revenues for both supplier and retailer, and better partner relationships with suppliers

"The big piece of supply chain management is Walmart has the Retail Link," said James Crowell,

director of the Supply Chain Management Research Center at the Walton College of Business,

"the information from point-of-sale data, the cash register, which they put into their system and

share with all their partners." "What makes that so innovative is at one time a lot of companies

weren't sharing that. In fact, they were using third parties where they had to pay for that


To gain the full benefits of cross-docking, Walmart has also had to make fundamental changes in

its approach to managerial control. Traditionally in the retail industry, decisions about

merchandising, pricing, and promotions have been highly centralized and made at the corporate

level. Cross-docking, however, turns this command-and-control logic on its head. Instead of the

retailer pushing products into the system, customers "pull" products when and where they need

them. This approach places a premium on frequent, informal cooperation among stores,

distribution centers, and suppliers - with far less centralized control. With the help of Retail Link,

this process can be easily conducted.


The typical example of Walmart's use of Retail Link is its just-in-time ordering and delivery system

with one of its major suppliers, Procter & Gamble (P&G). When the stock of a P&G product

reaches a reorder point, a computer automatically sends an electronic purchase order by satellite

to the nearest P&G factory. P&G's information system checks its inventory, notifies its distribution

system of the order, and then automatically ships the product directly to the store. The purchase

and payment procedures are all done electronically. This system saves days or even weeks over

the time it would otherwise take to order and receive products. The system is a win-win situation

because it provides both Walmart and P&G with lower costs.

For products that are not shipped directly to the stores, Walmart uses a centralized distribution

system. Boxes of merchandise, placed on a conveyor system, travel to a central location where a

computer sorts them. A laser scanner reads a bar code on the box and tells the automatic sorter

where they should go. The boxes are diverted to the appropriate shipping doors. Because an

information system controls the distribution system, more products can be shipped and

distribution costs are lower. Walmart's distribution system provides a significant cost advantage

over its competitors.

4.2. E-Commerce Operations

One of Walmart's successes is its new search engine for, which delivers more results

that are relevant to online shoppers and led to increased sales conversions. It is also testing some

great innovations, such as same-day delivery of purchases from our U.S. website. The company

just expanded mobile self-checkout through its Scan and Go™ application. Perhaps most

important to its growth plans, Walmart has launched a multi-year process to build the next

generation global technology platform. By having the ability to connect every product in the world

with every customer in the world, it will be able to accelerate its expansion of e-commerce

operations. Right now, Walmart have growing online businesses in 10 countries and are well

positioned in markets that offer the greatest growth potential - the U.S., the U.K., Brazil and


At Sam's Club, Walmart invests in technology to help members shop smarter. It is strengthening

in-club efficiency by expanding self-checkouts to all clubs by year-end and by introducing


convertible cash registers that make registers available for members at all times. In addition, it is

leveraging the Wi-Fi capabilities in the clubs to provide new mobile options. Site visits to strengthen its integration of e-commerce and the club, while enhancing the

experience overall.

4.3. Managerial Communications

The job of senior management at Walmart is not to tell individual store managers what to do but

to create an environment where they can learn from the market and from each other. The

company's information systems provide store managers with detailed information about

customer behavior, while a fleet of airplanes regularly ferries store managers to Bentonville,

Arkansas headquarters for meetings on market trends and merchandising.

As the company has grown and its stores have multiplied, even Walmart's own private air force

has not been enough to maintain the necessary contacts among store managers. Therefore,

Walmart has installed a video link connecting all its stores to corporate headquarters and to each

other. Store managers frequently hold videoconferences to exchange information on what's

happening in the field, like which products are selling and which ones are not, which promotions

work and which do not.

4.4. Environmental Adoption

Walmart also uses its information system to control the climate in every store. The lighting,

heating, and air-conditioning controls in all Walmart stores are connected via computer to

Walmart's headquarters. This system reduces costs by centrally managing the use of energy and

freeing store management from having to control the utility costs.

Environmental concerns are important to Walmart. A prototype store was opened in Lawrence,

Kansas, which was designed to be environmentally friendly. The store contains environmental

education and recycling centers (Slezak, 1993). Walmart has also adopted the low cost theme for

its facilities. All offices, including the corporate headquarters, are built economically and


furnished simply. To conserve energy, temperature controls are connected via computer to

headquarters. Through these programs, Walmart shows its concern for the community.

4.5. Radio Frequencies Identification

Radio-frequency identification (RFID) is the wireless non-contact use of radio-frequency

electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking

tags attached to objects. The tags contain electronically stored information. Some tags are

powered by and read at short ranges (a few meters) via magnetic fields (electromagnetic

induction). Others use a local power source such as a battery, or else have no battery but collect

energy from the interrogating Electromagnetic field, and then act as a passive transponder to

emit microwaves or Ultra High Frequency radio waves (i.e., electromagnetic radiation at high

frequencies). Battery powered tags may operate at hundreds of meters. Unlike a barcode, the tag

does not necessarily need to be within line of sight of the reader, and may be embedded in the

tracked object.

RFID can be viewed as the latest technology to receive considerable attention in the trade press

and among practitioners as a way to more accurately, efficiently manage inventory, and exchange

operation. The ability of RFID to improve the efficiency of data collection and information

exchange makes RFID a significant technological innovation (Matta & Moberg, 2006).

Up to now, Walmart has been using RFID technology for about a decade and cites numerous

benefits, including more efficient inventory management. The company initially introduced RFID

to track pallets of merchandise traveling along its supply chain, including at warehouses. In 2007,

executives credited the technology with, among other things, cutting the volume of excess

inventory in Walmart's massive supply chain and slashing out-of-stock occurrences by almost

one-third (University Alliance, 2014).

In 2010, the retailer announced the next phase of its RFID strategy: placing tags on individual

garments. RFID tags offer a broader array of advantages compared with traditional barcodes.

They store more data, provide real-time information, and can be scanned from a distance and

without a clear line of sight.


As Walmart has moved toward extensive incorporation of RFID technology, they have faced a

number of issues. First, inventory must be managed not just by the retailer but also by its

suppliers. That means retailers may mandate specific RFID technology and implementation

methods, which can prove costly to some suppliers. Another ongoing issue with RFID involves

privacy concerns. Some public interest groups worry that retailers like Walmart will use the data

to profile customers, linking purchases with other identifiers, such as credit cards and driver's

licenses. Walmart has worked to address such concerns by requiring its suppliers to place RFID

tags on packaging or removable labels, rather than embedding them in the clothing itself.


1. Analysis of Information Technological Adoption in Vietnam Retail Industry

Nowadays in Vietnam, many supermarkets, shopping malls apply information technologies in

supply chain management. However, the budget they spend on information systems is not

sufficient to make significant changes. Almost supermarkets has been using domestically

produced applications, which are developed by professional software companies. Besides, a small

number of supermarkets build their own customized software, some use cost-efficient

application developed by information technology students.

A typical example of information technological adoption by Vietnamese retail firm is Co.op Mart.

From the very first day of its operation, Co.op Mart has used FoxPro for DOS running on Netware

Operating System to scan good's codes and print out invoices. As the rising requirements for

management software, for example high level of security, distance access, supportive extensions

for decision-making process, Co.op Mart invested nearly USD 1.5 billion in overseas produced

software from two big professional suppliers. Those information systems can analyzing,

designing, checking, projecting the market share of each product line in the super market to well

arrange them onto the shelves, at the same time, helps supermarkets to connect directly to its

vendors. Vendors can still be at their place knowing the status of their product in the

supermarket. These software can correct the previous information systems' disadvantages. (Minh

Dan, 2006)


Cost can be seen as the biggest problem in the adoption process. Mr. Nguyen Manh Ha, Fivimart's

CEO indicates "Information Systems software on the market is too expensive for us. Thus our

solution is self-develop a software within our limited budget".

Except Co.op Mart, some supermarket has established its own information technology

department such as Fivimart, Maximark, and Intimex. The purpose is to manage the operation of

computerized information systems, track the information generated by the software to

punctually solve problems raised, if any.

Especially, many supermarket are facilitated with modern computerized system and ATM to

attract customers who prefer convenient payment settlement. For example, Fivimart cooperate

with ACB to issue domestic credit card Citimart Visa Election that permit the owner to payment

for their purchase in Fivimart by card leaving their cash at home. This is imitated by Maximark,

Mien Dong supermarket, Co.op Mart as a way to increase customer responsiveness.

To sum up, I would like to point out the two problems in the adoption of Information Technology

in Vietnam Retail Industry. First is Limited budget and second is Lack of diversified adoptions. The

second problems can be understand that Vietnam retail firms still do not exploit all the

advantages of information technological innovation in all six functions of supply chain

management. It seems to over focus on payment management while ignoring inventory

management and distribution management.

2. Recommendations

To improve the efficiency and effectiveness in Vietnam retail industry, some solution should be

considered as followed:

 Complete the popularization of barcode for all retail firms and encourage them to use

barcode scanning system to enhance the speed of storing, monitoring information.

 Take the advantages of the development of e-commerce to expand the geographical


 Partially upgrade the information systems until sufficient budget is available for big

information technological changes.


 Information technological innovation must go along with Human Resource Management

Training practices to get employees' capability of using new, sophisticated, customized

software to serve the needs of the organization.

 Cooperate with information technology companies in designing a well-functioned

application. A long-term relationship and mutual understanding can help retail firm to

describe their exact requirement to the developers and even reduce the cost of the

software or applications. Developers can save the cost of idea creating, software bug


 Mobile application is more and more popular. Dramatically increase in the number of

smart-phone-users is a positive sign for retail firms to develop cost-effective mobile

applications to get closer to customers.

 Retailers and suppliers can cooperate more closely by building agreements on inventory

management software. What they can shared is not only cost of application development

but also the excessive returns gained from the reduction of inventory cost.



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