story by Kim Souza
ksouza@thecitywire.com
Wal-Mart has made several new changes to its in-store supply chain operations over recent weeks as the retailer gears up to rollout its grocery pickup option in more cities across the country.
The retailer announced Tuesday (Sept. 29) that it is adding Atlanta, Charlotte and Fayetteville, N.C.; Salt Lake City and Ogden, Utah; Nashville, Tucson, and Colorado Springs to its online grocery pickup test markets.
“Even more markets will be added in the coming weeks,” said Ravi Jariwala, corporate spokesman for Walmart.com.
Mark Ibbotson, senior vice president for the Walmart U.S. Central Division, also spoke to a group of suppliers in Bentonville in Tuesday at the Bentonville/Bella Vista Chamber’s WalStreet Breakfast, held at Sam’s Club corporate offices. Ibbotson said the retailer has tweaked in-store operations in an effort to simplify processes on everything from rotating fresh produce to increasing the check out speeds.
He said the retailer reduced the steps in its in-store supply chain which involve moving product from the back room to the shelf. Ibbotson said the retailer scaled the processes down from 9 steps to just 4. Also, the retailer began to move away from the Telxon which is used in-store to check inventory levels and adopted the MC40, which is more like a smart phone and much faster technology.
“Anyone who can operate an iPhone or Samsung smartphone can easily operate the MC40,” he said.
The adoption of this faster technology has slashed the time in gathering the products from the backroom by 51% and the shelf scanning process time has been slashed by 89% over the time it takes to do the same jobs using a Telxon, Ibbotson said. Getting the product out of the backroom was just part of the problem that has led to out-of-stock issues for months and months at the retailer.
Ibbotson said Wal-Mart has recently worked closely with two of its service suppliers to address its out-of-stock issues. Wal-Mart’s out-of-stocks were seen as a $2 billion opportunity in lost sales, according to company execs in 2013. It’s something Walmart U.S. CEO Greg Foran has put on his urgent action list and it’s being addressed in part by two new processes at Wal-Mart: a top shelf approach to inventory overflow and more attention to the 24-hour work flow of store employees and management.
TOP SHELF
The retailer has recently began adding a top shelf to its store modulars so that products can be moved out of the backroom, unpacked and placed on to the top shelf by the restocking crew. This is a move away from the retailer’s efforts in recent years to have lower shelves and more clear overhead space.
Ibbotson said the “top shelf” approach ensure that merchandisers on the floor have all the products they need to restock the shelves during the day. He said it’s also a way to visibly see when there is too much inventory or when a particular product needs have its sales forecast reconfigured upward.
“This should also help stores keep better tabs of the inventory needs of every item in the store. It also ensures a cleaner backroom which is absolutely critical for those stores providing online grocery pickup,” he said.
The City Wire asked a store employee in Bentonville Tuesday how he liked the “top shelf” approach. He said it was new but appears to be working well. This top shelf inventory approach also lets shoppers know that the store does have a product that appears to be out of stock below. The employee said customers can ask any store worker to get product off the top shelf at any time.
Ibbotson said the new model ensures there are more workers in the store all the time, because they have everything they need to reset their shelves right in front of them.
24-HOUR DAY
Another change underway at Walmart’s U.S. stores is the way store management looks at the 24-hour day. Ibbotson said the idea came from a store manager in Fort Smith. He said the way this store manager looked at the 24-hour day was simple but also different from what had become the norm.He said the day is split up into three-shifts — 7 a.m. to 4 p.m., 4 p.m. to 11 p.m. and then 11 p.m. to 7 a.m.
Ibbotson said too many times store management came in at 7 a.m. and began to work on the problems from the night before. Under the new system, everyday the clock resets at 7 a.m. He said this mindset has helped store managers reallocate talent around the clock so each shift can accomplish its tasks within their time frame so issues are not carried over for days at a time.
The first shift plans the day and week ahead looking for ways to optimize any process they see. He said the retailer has installed cameras above the checkout stations in several stores and they are recording the wait times and speed through the checkout process. He said the several stores including the Pleasant Grove Road supercenter in Rogers, which is under renovation, are getting some high velocity scanners which are being tested. They are also testing hybrid checkout stations that the ones used at Sam’s Club. The check out can be manned or reversed for self checkout if needed.
He said with the hybrid checkout option and the new high velocity scanners, the supercenter at Pleasant Grove Road will have 95% of its checkouts open at all times.
Ibbotson explained that the second shift will focus on replenishing the product stocks and helping customers. While the third shift’s main job is to reset the modulars and make sure the store is clean and ready to start the next day with fully-stocked shelves, clean bathrooms and floors and fresh produce displayed.
He said this division of labor with simple but focused processes from each time shift what the retailer expects operationally.
“We want the processes so simple that they are easy to get right and hard to wrong. The simplified processes also free up more time for management to focus on store sales,” Ibbotson said.
SUPPLIER TAKEAWAY
Ibbotson said suppliers can help Wal-Mart with easier identification of product on the packaging. He said the wine and spirits companies do a good job because there is a picture of the product on the box. He said anything that can help merchandisers quickly see what a product is another way to gain efficiencies.
He also said Wal-Mart is happy to talk with suppliers about its in-store goals and is willing to listen to ideas that help further the process the along.
“We never stop learning. ... The legacy of Wal-Mart and how many people depend on this retailer is always on the mind. It doesn’t keep me up at night, but it gets me a little earlier than normal every day.” Ibbotson concluded.