Team Five Presentation

Conclusion

“Sam Walton didn't care much for technology. The legendary patriarch of Wal-Mart Stores was well-known for his lack of excitement about ‘computers,’ as he called the company's IT systems. ‘Truthfully, I never viewed computers as anything more than necessary overhead,’ he wrote in his 1992 memoir, Made in America. ‘A computer is not—and will never be—a substitute for getting out in your stores and learning what's going on.’ Many still consider Wal-Mart's pioneering, IT-driven supply chain to be the world's most efficient, and the company's technology standards still command respectful attention from its thousands of suppliers.” – (Thomas Wailgum, cio.com)


The leading innovative progression of technology through Wal-Mart has been a key issue to its success. The technology aspect of the retail giant has kept Wal-Mart’s prices lower than its competition. Wal-Mart’s networks are cutting edge, communicating to every employee in the company from the cashier to the CIO. Strategically outsourcing their technical communication has allowed Wal-Mart to focus on the business itself with efficient mobility and low prices. The biggest move Wal-Mart has made to improve their system intelligence is outsourcing their databases to NCR Corporation bringing their total disk storage to over 7.5 terabyte make it the largest commercial database system in the world. The Neo Vista Company, providing Wal-Mart with software which was tailored to match the requirements of the database environment makes a great collaboration with their NCR databases. The software provided by Neo Vista, ERP, has helped management effectively communicate with other departments such has accounting and human resources which is called Data-Mining. Data mining enables any employee in Wal-Mart to access key information about any particular item sold in real time. To help the communication, Wal-Mart has pioneered satellite system linking stores and headquarters, but has switched to the frame relay method of transmitting data over shared, publicly owned phone lines which is used on its DS3 network that runs at 44.736 Mbps which virtual circuits connects multiple offices. Although from the Blog one can see how a Data-Ware house is the foundation of Data-Mining, the incredible idea of reaching the information from any location has been so innovative that it had brought Supply Chain Management a basis for any retailer.




What my team has found the most interesting about Wal-Mart is the simplistic idea which had created supply chain management. The interesting aspect of the whole idea is how it all comes together. There has been so much though and innovation developed to create the success of supply chain management. The company who controls the database, the company who provides a particular software, the LAN connections, interface and the devices and components such as the network hubs which all collaborate to enable employees to access make sense of the information. Wal-Mart has been the pioneer of Supply Chain Management and it would not exist without the network planning and configuration of the Data-Warehouse, Data-Mart and Data-Mining.


“Wal-Mart Trumps Moore's Law” This article expresses the true importance and impact that Wal-Mart has made on the retail industry; stating “Microsoft and Cisco may set technical standards; Wal-Mart sets business process standards”. The article states more about how simple economics takes place but implementing instead of inventing. Wal-Mart being highly productive has forced other industries to follow in its footsteps, setting a standard of business productivity and efficiency. The article states that Wal-Mart has grown so large due to it’s innovation that it could actually effect the software companies fate. For example, if Wal-Mart switched to open source programs, it would effect the whole software industry due to their size and because other companies would follow their lead.

Networking

The type of network Wal-Mart uses

A quick definition explains wireless networks, particularly a local area network (LAN) as, the linking of two or more computers without using wires. It is the same as LAN, but has a wireless interface. WLAN utilizes spread-spectrum technology based on radio waves to enable communication between devices in a limited area, also known as the basic service set. This gives users the mobility to move around within a broad coverage area and still be connected to the network. Proponents of wireless networks have given the benefits an acronym. CAMP means convenience, affordability, mobility and productivity. At a comparatively small cost, Wal-Mart stores are be able to utilize connections between neighboring stores and between employees on the ground floor.


The Type of interface Wal-Mart uses

There are two types of network interfaces that can be used for both personal and commercial computers. For personal uses the interface would be an expansion card. However, for commercial uses like Wal-Mart they would use an Ethernet card the most common type of network interface card. The Ethernet card runs to a hub or switch, which allows you to use cables with different wiring. E-Health article for the health interface using Dossia software.
Businessweek

The type of media Wal-Mart uses

There must be communications media like cables or radio waves connecting network hardware devices. The communications media transport information around the network between computers and the connecting device(s). Communications media are the paths, or physical channels, in a network over which information travels. All communications are either wired or wireless. Wired communications media transmit information over a closed, connected path. Wireless communications media transmit information through the air.



The type of communications software which is used

Wal-Mart uses communications media like cables in their stores to transmit communication and radio waves to connect network hardware devices. The communications media transport information around the network between computers and the connecting device(s). Each computer must have software that supports the movement of information in and out of the computer. This could be modem software and/ or a network operating system.

CNet.com



The type of connecting devices or components that are used

A network usually has at least one connecting device (like a hub, switch, or home/ broadband router) that ties the computers on the network together and acts as a switchboard for passing information. Wal-Mart’s systems are connected by Novell LAN and they also provide productivity service for Wal-Mart. Wal-Mart is also taking advantage of interoperability between Microsoft Windows and Linux.


How does Wal-Mart connect to the internet and at what speeds?

Walmart was famed for its pioneering satellite system linking stores and headquarters, but has switched to the frame relay method of transmitting data over shared, publicly owned phone lines. WalMart uses frame relay on their DS3 network that runs at 44.736 Mbps. Frame Relay is a service that can be set up over high speed lines such a DS3 to create virtual circuits connecting multiple offices. The virtual circuits can provide network connections from each office to every other one without having to run physical lines directly between each pair. One project Wal-Mart has called the Vendor Frame Network, connects about 20 of Wal-Mart’s largest suppliers to its frame relays back bone via PVC connection.

Does Wal-mart use Voice over IP?

Voice over IP allows you to send voice communications over the Internet and avoid the toll charges that you would normally receive from your long distance carrier. It is a means of transmitting a voice telephone call over a computer data network. Wal-Mart integrated wireless VoIP systems that use an IP network backbone. They use wireless technology throughout their stores.



How does Wal-Mart apply the four principles of network security?

The four principles of network security are confidentiality, authenticity, integrity, and availability. Confidentiality means that information can be obtained only by those authorized to access it. Wal-Mart uses a technology called Secure Sockets Layer (SSL), which encrypts sensitive information before it is sent over the Internet.Authenticity means that information really comes from the source it claims to come from. Integrity means that information has not been altered. Wal-Mart has fire walls set up to help protect threats against authenticity and integrity. Availability means simply that a service or resource is available when its supposed to be. In order for Wal-Mart to get orders to its customers on time they have an IDS which watches network traffic for intrusion attempts and reports them. Intrusion detection and prevention systems work by having information about many different types of network attacks and matching an attack in progress.



Wal-Mart's domain name?
walmart.com

Hardware, Software and systems

Hardware categories sold by Wal-Mart; Brands and types of computers

When you enter a Wal-Mart store you can visibly see the types of computer hardware being used, the computerized registers, keyboard, monitor and printer. Wal-mart sells, PC’s, Laptops, keyboards, mouse, flash drives and printers. Wal-mart sells a variety of different computer brands from HP, Dell, Acer to Toshiba. Both the Desk top and laptop computers can be found at every Wal-Mart.

What companies provide the hardware and software for Wal-Mart

In 1996, NCR Corporation announced a multi-million dollar contract with Wal-Mart to expand its data warehouse. This redefined Very Large Database (VLDB) in the industry by growing the largest commercial database system in the world. This includes a 32-node WorldMark 5100 Massively Parallel Processor (MPP) system, Teradata Database for UNIX and professional services which adds 384 processors and four terabytes (trillion bytes) of disk storage to Wal-Mart's existing decision-support system, bringing total disk storage to over 7.5 terabytes. This is the equivalent of nearly two billion pages of text. Using NCR's Teradata database, this decision-support system provides information on customer buying trends, merchandise volume and movement in each of its 2945 stores and clubs in six countries. The timely availability of this detailed data to merchandising professionals ensures that stores have the right items in stock when and where customers want to buy making the foundation of Wal-marts success.

NeoVista provides Wal-mart with the Software. Neo Vista delivers its data mining needs. The Neo Vista “decision series” was tailored to match the requirements of the database environment of Wal-Mart. One important advantage of the implementing the data-mining tool was that the company was able to optimize the inventory management. Their investment in data mining is part of Wal-Mart's drive to deliver what its customers want; the right item, at the right store, at the right time and at the right price. The NeoVista Decision Series is enabling Wal-Mart to look at individual items for individual stores to determine seasonal sales profiles. This additional level of detailed analysis is helping us make even better informed business decisions and helps us further utilize our data Warehouse.
Wal-martstores.com


The types of system software which is used by Wal-Mart

The software used by Wal-Mart is ERP; this software helps management and staff to combine all aspects of the business into one system, which helps with effectively using Supply Chain Management. ERP brings all the company and management functions together, these would include, accounting, human resources, and customer relationship management amongst others. Wal-Mart used to sell Linux, but because of low customer sales for the open source operating software they have discontinued its use.

http://www.thetechherald.com/article.php/200811/401/Wal-Mart-drops-PCs-with-Linux-operating-systems

The types of application software and brands sold by Wal-Mart

The different types of application software sold by Wal-Mart are, MS Operating Systems, MS Office, MS Security, Turbo Business Finance and Tax Software, Norton Antivirus and Norton Security Software, McAfee Antivirus, Bit Defender Antivirus, Trend Micro Antivirus, AVG Internet Security, Norton Ghost and Kaspersky Internet Security.

Technology

The relational database series of logically related two-dimensional tables or files to store information in the form of a database. The files that Wal-Mart will create for on-line ordering would be Order Number, Order Date, Customer Number, Delivery Address, and Amount Ordered. Employee files would also have unique data, Employee Number, Date of Hire, Employee Name, (first and last). Regular customers that place orders via Wal-Mart’s website also have customer files with their customer number, customer name and contact service person. While there may be many fields to a file each field has a unique Primary Key. The databases used at Wal-Mart are CRM system and Retail Link. CRM helps with the tracking of customers, while Retail Link is a decision support system for suppliers and retailer. The brand of database software that is used is NCR’s Teradata Software, believed to carry approximately 583 terabytes.

The company’s CIO and EVP is Rollin Lee Ford, while Dan Philips is the Vice President of Information Technology, the database administrators report to either of these two men. Managers get reports from systems that allow for a Collaborative Planning, Forecasting and Replenishment (CPFR), to help in the business initiatives. Types of reports, sales figures, quantities sold, time, sales trends, customer trends and general data related to store location and POS materials.

Data-Warehouse

Online Analytical Processing, the manipulation of information to support decision making is currently being used by Wal-Mart. A data warehouse is a logical collection of information gathered from different operational databases and used to create business intelligence that supports decision making tasks and business analysis activities. Wal-mart is known for having the biggest data warehouse used, which is larger then 4 Petabytes. Wal-mart turned its data warehouse into an operational system for managing daily store operations by refreshing the information its data warehouse holds every hour. The massive data warehouse is not just a customer of CRM systems but it also serves as the base for Wal-marts RetailLink support system. Teradata is Wal-marts data warehouse vendor.

Data-Mart

According to an article from the Journal of Business Forecasting Methods and Systems 2001, “plays a pivotal role in gaining this knowledge. It enables companies to collect data from many sources, performs analyses and makes informed decisions in real time”. A data mart is a subset of a data warehouse in which only a focused portion of the data warehouse information is kept. The CEO may need to see all of the information he can also look at each section and get individual reports. Originally Wal-mart did use data marts. They started out with many small data marts, its first being in IBM DB2 and the second in IBM VM/SQL. Eventually the Teradata system was introduced and enabled Wal-mart to manage all of the information into one database so they built a big data mart. The POS table at Wal-mart was 1.2 billion records. Within a six months of this, Wal-mart then decided to turn it into a data warehouse with several tables over 500 million rows.

Data- Mining

Data-Mining tools are the software tools you use to query information in a data ware-house. These data- mining tools support the concept of OLAP— the manipulation of information to support decision- making. OLAP is an online application processing query. Wal-mart uses a global leader in business intelligence software, Hyperion. They use Hyperion Essbase OLAP technology to build an advanced merchandise planning and reporting system. Hyperion's Essbase technology will help Wal-mart create a scalable system that will deliver budgeting, forecasting and planning tools to international operations. Analysts at Wal-mart look for increasing sales in some region.

Dan Philips is the Vice President of Information Technology Officer. In an article published in 1999, “it was stated that data mining was an effective tool used by Wal-Mart for querying data.” The soft ware for data mining is being provided by many companies, currently the largest producer of the software is SAS. However Wal-Mart uses Accrue, they purchased NeoVista who was the initial supplier of the software for Wal-Mart.

Building business strategy and intellegence

E-Commerce

E-commerce is short for electronic commerce. Electronic commerce is commerce that is accelerated and enhanced by information technology, in particular the Internet. The types of e-Commerce being used are B2B, suppliers supply Wal-Mart the goods they need in order to service their B2C. Businesses such as Wal-Mart use B2B e-marketplaces that are virtual and provide a way for businesses to buy and sell their products to one another. They also are able to share information and perform other important activities. They started Walmart.com in 1996 and it was deemed a failure. It was difficult to use and studies showed Wal-Mart customers were not key internet users. Wal-Mart insists that any company that wants to be a supplier use the Wal-Mart EDI so Wal-Mart can replenish their stock straight from the wholesalers and keep prices low. This also reduces inventory space which increases shelf space for display. Consumers go to Wal-Mart, either online or in the stores for products that are needed. Business to business occurs when a business sells products and services to customers who are primarily other businesses. However, customers like that online and offline channels become integrated. For example, you can order your prescription online then go into the store and pick it up.

Internet Model

Wal-Mart uses ani

nternet accessed retail system called Linka. With Internet technology and the Cisco network, Wal-Mart has elevated Retail Linka to a new level of efficiency and usefulness. Now that Retail Linka is an Internet application, Wal-Mart doesn’t need the modems, they can update the software on the Web, and vendors are able to use their own browsers. Another advantage is that data transmission is no longer limited to the speed of dial-up modems. If vendors have a high-speed connection to the Internet, they can get Wal-Mart’s data at those speeds. If vendors are all accessin

g the same database,Wal-Mart uses password protection to designate what they can see. Users in different locations within a vendor company get different passwords, depending on their need to know. With Retail Linka, vendors see how their products are selling, use it to do different scenarios, and then work with Wal-Mart on selling. This is a functional tool. Automated replenishment and the smooth functioning of the Wal-Mart supply chain depend on reliable connectivity between the stores, the centralized database, and the distribution centers. Speed is important, and so is the optimum functioning of Wal-Mart’s logistics system. With the Cisco network, they have dramatically increased speed and alsosubstantially cut outages. Every time Wal-Mart does that, it makes the supply chain more efficient.

Marketing Mix

The marketing mix of a company is the tools that the organization uses to pursue its marketing objectives in reaching and attracting customers. In a B2B e-commerce such as Wal-Mart, marketing mixes do not usually include broad and generic strategies that reach all potential businesses. Instead, marketing often occurs in the context of an e-marketplace. Once a contact has been made, the relationship is formal and often includes negotiations for pricing, quality, specifications, and delivery timing. Wal-Mart uses online ads which are small advertisements that appear on other sites. Yahoo is an ad networks partner of Walmart.com. To improve customers ad experience on Wal-Mart.com and elsewhere on the internet, they may send anonymous information to Yahoo based on your browser activity. Wal-Mart also offers an affiliate program that is listed on their website. Membership is free and you earn commission for referring customers to Wal-Mart.com.

Payment Systems

The payment system used in Wall-Marts Business to Business e-commerce model is one in which customers tend to make very large purchases and will not pay using a credit card or an option such as a PayPal. Businesses rather pay through Electronic Data Interchange (EDI) and in large amounts. EDI is the direct computer to computer transfer of transaction contained in standard business documents. Financial EDI is a process used within business to business e-commerce for the payment of a purchase. There must be a level of system integration between the businesses involved. Costs for order processing are minimized as orders can be handled electronically, without paper or much human intervening. For Wal-Mart’s B2C approach, the payment systems they use are PayPal which is an internet based company that makes it easy for one person to pay another person securely over the internet. PayPal also gives you the option of transferring money to your bank accounts. Another payment system Wal-Mart uses is the option of paying by credit card, debit card, or gift card. The last payment system Wal-Mart offers is Bill Me Later. Bill Me Later is the quick easy way to shop without using your credit card on websites. Bill Me Later also offers payment plans.

Wal-mart's initiative moves have seemed to never fail them

Business Strategy

- The Business strategies Wal-Mart uses and how they differentiate their services/products

There are 3 generic business strategies and they consist of the Focus strategy, the Differentiation strategy, and Overall Cost leadership. The Focus strategy is usually defined as focusing on offering products and services to a particular market segment or buyer group, within a segment of a product line, and/ or to a specific geographic market. The Differentiation strategy is defined as offering a product or service that is perceived as unique in the marketplace. Wal-Mart‘s business strategy is Overall Cost Leadership, offering their customers great quality service and products at a lower price than their competition. Overall Cost Leadership is defined as offering the same or better quality product or service at a price that is less than what any of the competition is able to do. In achieving this goal it relies on a Supply Chain Management, that ensures products are available to the customers when they it. The items offered are broken down into products and services, products would be privately labeled brands such as, “George, Metro 7, Mainstays and other licensed brands from Disney and Mary-Kate and Ashley”. Services would be that they offer home goods, beauty supplies and seasonal items.

- The estimated power each of the 5 forces has (suppliers include their employees and suppliers of technology). How Wal-Mart reduces the buyer and supplier power and how Wal-Mart creates switching costs and entry barriers.

The five forces are buyer power, supplier power, threat of substitute products and services, threat of new entrants, and rivalry among existing competitors. Wal-mart follows the five forces business strategy.





Buyer Power is affected by how big your customers are and how much revenue they constitute as well as other things. For instance Wal-Mart has a lot of power with suppliers because it buys so much of their inventory and is thus a large percent of those companies revenues. It is no surprise then that these companies have lived and died with Wal-Mart's orders and would do anything to protect their business with them. Buyer power has about 55% of the five forces model that Wal-Mart uses, since the Company’s sole purpose is to ensure that its customers are, “Saving Money, Living Better”. Buyer power would also include their employees, in treating them with the respect, giving them support and having an open door policy, you create happy employees which transfers to happy customers.
Supplier power as there is a high amount of choices to be taken in and they do bring in a lot a supplies. As for a threat of a substitute product, it is high because there are alternative products for sale that can replace another item. As for a threat of a new entrant, Walmart seems to be the Leader in low cost sales so it will not be easy for a new business to come in and challenge Walmarts' ways. Supplier Power estimated percentage would be about 35, while, this percentage appears to be low, in the grand scheme of things is allows Wal-Mart to ensure that their suppliers come from a diverse group that achieves and maintains their high standards of delivering great quality services and products.
Threats of Substitute products and threats of new entrants average around 3%, simply because with Wal-Mart focusing on ensuring that their customers are happy and that their suppliers are delivering quality products at a low cost, they would ensure that they remain ahead of their competitors and in doing so, it would make it difficult for new entrants and the competition to match their prices.
In order to reduce buyer and supplier power, they would have to put a greater emphasis on the threat of substitute products. They would have to look at what are the better and cheaper alternatives on the market and tap into that resource.
Threats of new entry To create entry barriers, they would have to increase market research on what customers are actually purchasing and ensure that they are able to deliver, and become the only person offering that product at a price the customers and afford. Switching costs are easy, once customers realize they are no longer getting value for their money, they would go seek products elsewhere.
Rivalry is how competitive an industry is. For instance, if there are lots of companies selling essentially the same products there will always end up being a price war which will severely hurt the company' profits. Wal-mart has such low prices which has created a problem for years and fierce competition has made it tough for competitors to make a profit.




-The major business initiatives are used in Wal-Mart and what software is used.

For Walmart, the major business initiative being used is Supply Chain Management. A supply chain management system is an IT system that supports activities by automating the tracking of inventory and information among business processes and across companies. Wal-Mart is to ensure that all their suppliers are using Electronic Product Codes and for those who do not have the capability they work with them to find packages that are within their price range. This allows for a successful ensuring that customers get what they order in a timely manner. It allows for logistics, fulfillment, production, revenue and profit, cost and price efficiency, Another initiative is the, Go Green Concept, according to Wal-Mart’s press release as
of February 2nd 2009, “two new types of heavy-duty commercial hybrid trucks and two different alternatively fueled heavy duty trucks”, has become, “part of the company’s efforts to build on its progress in developing a more sustainable trucking fleet”. As an Overall Cost Leadership company, their strategy is that of a bottom-line company. A bottom-line strategy optimizes manufacturing processes, decrease transportation costs, and reduces cost of human capital, and minimizes errors in a process.

-IT organization and the philosophical approach Wal-Mart uses


They rely on IT enabled tight supply chain management systems to squeeze every penny possible out of the procurement, distribution, and warehousing of its products. They use business intelligence systems to predict what customers will want and when they will want it. Wal-Mart is currently using ERP, which incorporates, Customer Relationship Management system; they are also in the process of implementing SAP to strengthen their business skills. Philosophical Approach could be the Matrix, where there is collaboration across the board to ensure customers’ needs are satisfied. They have in-out flows, which is from computers to suppliers.