wal-mart and rfid

8/10/2019 Wal-Mart and RFID

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INSTITUT SINARAN

MKT 233- E-COMMERCE

Task : Group Assignment

Students Name : Amanda Lim Pui Sze (13DM244)

Nabeela Binti Zainal (13DM239)

Ng Jing En (13DM233)

Tahnee Tsen Tze Ting (13DM256)

Program : Diploma in Commerce

Lecturers Name : Mr Sam Yet Huat

Due Date : 13 October 2014


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Q1: Why Wal-Mart is concentrating on Supply Chain Projects?

This is because Wal-Mart feels that this is an area of strength and being efficiency in this

area can lead to greater profit. Wal-Mart is investing heavily to improve their supply chain

management constantly as it will allow them to lower their overall costs and to increase

profit margin. To illustrate this, prior to the efforts on supply chain management in 2002,

they generated a return of 3% on the sales of $218B. In 2011, their revenue doubled and

their profit margin increased to 6.1%. By constantly upgrading the management of product

through the various distribution channels and the process in which consumers receive

products, time and money can be saved by Wal-Mart which in turn benefits the consumer.

In order for Wal-Mart to remain successful on a global level, being competitive is the key.

In order to maintain Wal-Mart value proposition, it must always be aware of bigger and

better ways to get things done.

RFID technology has risen to become a revolutionary element in supply chain

management. ( RFID Arena Guest, 2013) It is not just a replacement for barcodes. RFID

ensures that the right goods are available in the right place with no discrepancies and zero

errors. ( RFID Arena Guest, 2013) It makes the supply chain considerably more precise

and improves the efficiency and reliability of the entire chain. As real-time information is

made available also administration and planning processes can be significantly improved.

( RFID Arena Guest, 2013)

Wal-Mart installing RFID technology in its stores because it allows the retailer to better

collaborate with suppliers that need to monitor the flow of inventory and respond to

problems or spikes in demand. (Songini, 2007) Store personnel can better use the

technology to keep the shelves full of merchandise and reduce the number of products out

of stock at each store. When we set out on this journey, we really focused on the

collaborative benefits; we wanted what was going to drive sales for our suppliers and to

get product on the shelf, where it needs to be for our customers to buy. (Songini, 2007)


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sight of an RFID scanner and multiple tags can be scanned simultaneously. (Blogger,

2013 ) For manufacturers this translates directly into cost reductions as labor intensive

tasks can be carried out faster and more accurately. (Blogger, 2013 )

In addition to faster authentication of produced goods, manufacturers can also benefit

from increased information gathered with the help of RFID technology. RFID tags can

store far more information than conventional barcode labels. (Blogger, 2013 ) This

information can be used to optimize production processes. Accurate knowledge of the

real-time movements of raw materials and the time needed for specific production steps

can be integrated into efficient production planning. (Blogger, 2013 )

With the help of RFID, manufacturers can also benefit from increased information in

regards to repair and maintenance of their machines and equipment. (Blogger, 2013 ) This

allows manufacturers to have visibility into valuable data such as: which machine has

been repaired or undergone maintenance and when has this been done? This information

helps to plan maintenance schedules. Hence, maintenance can become part of production

planning and help to prevent costly production breaks. RFID in manufacturing processes

means less manual work, less costs, improved visibility, improved planning. (Blogger,

2013 )

Implementation of RFID technology can also add advantages to distribution processes.

Usage of RFID will greatly accelerate the speed of delivery management, improve

efficiency, and increase accuracy in selection and distribution processes. It will also

reduce distribution costs. (Blogger, 2013 ) When products embedded with RFID tags enter

a distribution center, the RFID read-write equipment at the entry gate can register the

RFID tags, and send the information to the distribution centers' backend system. This

information can be used to put the cartons in proper places, sort them quickly and

efficiently, and dispatch the cartons to the retailing centers in less time with improved

accuracy. Usage of RFID also ensures accurate inventory control. (Blogger, 2013 )


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RFID in distribution processes able to accelerate the speed of delivery improves

efficiency, increases accuracy, and reduces distribution costs. (Blogger, 2013 )

Over the last few years, more and more companies are integrating RFID technology into

their strategic planning, since it provides significant advantages to supply chain

performance. There are far more benefits gained by RFID implementation into supply

chain and logistics operations than just improving identification of products, shipments,

and assets. Nevertheless already the most common benefits prove that RFID is worth the

investment. (Blogger, 2013 )

One of the larger benefits why Wal-Mart is concentrating on RFID (and the EPC network)

is associated with a couple of issues that have been plaguing the retail and consumer

goods industries for decades. That is, theft and product counterfeiting. Theft, in the form of

shoplifting as well as larger scale theft occurring during transport and storage, is costing

retailers and suppliers billions of dollars each year. On top of that, product counterfeiting is

costing suppliers billions more. (Piasecki, 2012)

The costs of theft are not limited to the product loss alone. When theft is an ongoing

problem (as with shoplifting), planning systems are crippled because the inventory

numbers are always suspected. In addition, shortages created by theft often result in lost

sales because consumers cant buy what is not on the shelf. The obvious use of RFID

would be to have readers at the exits (as is currently used for higher priced products) to

catch shoplifters. But, even if you dont do that (or shoplifters find a way to disable the

chips) the ability to utilize a smart shelf or other in -store RFID reading technology to tell

you that the product is no longer on the shelf allows you to plan correctly and avoid the out

of stock condition (as well as the frequent physical inventory counts currently necessary).

(Piasecki, 2012)

The ability to quickly perform detailed reads of cargo as it moves through the supply chain

is another way RFID could help to prevent theft. This would allow you to more easily

narrow down the source of the theft (to a physical location). In addition, it would make it


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much more difficult to sell the stolen product since it could be more easily identified (since

each product would have a unique ID). (Piasecki, 2012)

Similarly, counterfeit products would be easier to identify. If counterfeit products make

their way into a legitimate retailers inventory (as is sometimes the case) the EPC network

database would be able to identify them. In addition, all you would need is a portable

computer and an RFID reader, and you could walk down the aisles of a suspect retailer

and ID counterfeit or stolen merchandise. (Piasecki, 2012)


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Q2: Wal-Mart mandates RFID tags from all its large suppliers. Why are some

suppliers not in compliance?

Radio Frequency Identification (RFID) refers to devices attached to objects that store data

and are able to transmit that data to an RFID receiver. (Piasecki, RFID Update: The

Basics, The Wal-Mart Mandate, EPC, Privacy Concerns, and More., 2012) These devices

can be large pieces of hardware the size of a small book, such as those attached to ocean

containers, or they can be very small devices inserted into a label on a package which is

commonly known as smart labels. (Piasecki, RFID Update: The Basics, The Wal-Mart

Mandate, EPC, Privacy Concerns, and More., 2012)

Some suppliers had difficulty modernizing their own operation to accommodate this. There

are several reasons why some suppliers are not in compliance with Wal-Marts RFID

policy. The first being that the use of RFID tags can raise privacy issues. If a product is

tagged with a RFID, consumers feel they can be traced after they purchase a product.

According to Gillette Vice President Dick Cantwell, at this pointin time, the tag is useless

beyond the store shelf. There is no value and no harm in the tag outside the distribution

channel. There is no way it can be read or that (the) data would be at all meaningful to

anyone". (McCullagh, 2003)

At the time of this statement, it was believed that RFID tags were no threat unless the

process becomes widespread. RFID tags are now common in payment cards, retail stores,

transportation services and many retailers, Wal-Mart included. As well, there is a risk that

the consumers personal information can be compromised by combining RFID enhanced

drivers licenses with credit card data at the check-out. (Bustillo, 2010) In order to avoid

conflict with privacy issues, some of Wal-Martssuppliers opt out of installing RFID tags,


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which results in a penalty imposed by Wal-Mart of $2 per pallet or case for untagged

merchandise.

One of the reasons why some suppliers are not in compliance with the mandate is due

solely to the cost of implementing RFID into their business. The cost depends on the

application, the size of the installation, the type of system and many other factors. Active

tags are at least $25 each and passive tags cost from 7 to 15 cents and can be more if the

tag is embedded with a thermal transfer label on which a bar code can be printed. In

addition to tag and reader costs, companies might need to purchase middleware to filter

RFID data. (Violino, 2014) They will likely need to hire a systems integrator and upgrade

enterprise applications, such as warehouse management systems. (Violino, 2014) They

might also need to upgrade networks within facilities. (Violino, 2014) And they will need to

pay for the installation of the readers. Not only do the readers need to be mounted, they

need electrical power and to be connected to a corporate network. All of these factors are

different for each deployment, depending on the application, the environment and so on.

Companies implementing RFID to comply with Wal-Mart's mandate spent approximately

$500,000 each. This amount is costly especially for small companies.

Based on the behavior of customers, the history or record of the production including thedelivering is not the most important thing. Most consumers care about the price, expiration

date, or packing of the goods. In other words, although the RFID can enhance the

management of logistic, to embed the RFID technology into current system also cost a lot.

(Millsap, 2012) For example, one RFID tag for paste once (non-reusable) may cost $0.8.

However, a bottle of water may also cost about $1. Most consumers would not to pay

almost twice payment to obtain the information which they do not care about. Comparing

with barcode or 417-barcode, the RFID tag costs more than barcode or 417-barcode

which can be printed by a printer. In other words, to identify an object via RFID tag costs

more than using barcode. (Millsap, 2012)

In addition to the RFID card, various styles of RFID tag may be required by different

consumer. According to the environment, the RFID tag may be designed to anti-water or


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anti-wet. (Jian & Wu, 2013) Some RFID tags need to be applied to the metal environment

such as containers. Due to the characteristics of RFID, suitable frequency of RFID

corresponding to the environment should be selected carefully. In other words, the cost of

different RFID may be also different according to the applications and environment.

Furthermore, different shapes of RFID tag also costs. For example, the cost of an RFID

tag embedded into a 3D toy is much more expensive than that embedded in a plastic

card. (Jian & Wu, 2013)

Linked to costs, RFID systems require lots of time and man hours, as well as other

investments like capital. RFID is complicated and so time should be invested in initial

research, planning and the design stages. (UK RFID, 2014) This is all before sourcing a

supplier, partner or source of RFID hard, soft and middle ware. The key thing to manage

here is ROI (return on investment) which will justify investment and the allocation of

resources, to save on future resources, or to optimize these. This also, is ongoing and

hard to budget for or calculate prior to installation. (UK RFID, 2014)

Since RFID systems make use of the electromagnetic spectrum (like Wi-Fi networks or

cellphones), they are relatively easy to jam using energy at the right frequency. Hence,

RFID systems can be easily disrupted. (Technovelgy.com, 2014) Although this would only

be an inconvenience for consumers in stores (longer waits at the checkout), it could be

disastrous in other environments where RFID is increasingly used, like hospitals or in the

military in the field. Also, active RFID tags (those that use a battery to increase the range

of the system) can be repeatedly interrogated to wear the battery down, disrupting the

system. (Technovelgy.com, 2014)

Lack of demand from business customers has been one major reason. Since the

technology demands large initial investments, little incentives exist for organizations that

see no customer demand for RFID. Another challenge to RFID adoption is the lack of

worldwide tag standards. (Vijayaraman, Osyk, & Chavada, 2008) The standards for RFID

technology are still evolving. EPC global, a non-profit organization, is working with

member organizations to establish standards for tags. Retailers such as Wal-Mart are


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requiring suppliers to use the EPC standards. In the packaging industry itself, a number of

operational and technical concerns have been raised regarding the limitation of RFID

systems. (Vijayaraman, Osyk, & Chavada, 2008)

A third reason for not complying with the mandate could be due to RFID signals may have

problems with some materials. Metals and liquids can cause problems when trying to read

RFID tags. (Piasecki, RFID Update: The Basics, The Wal-Mart Mand ate, EPC, Privacy

Conc erns, and More., 2012)Tag placement is becoming a science in and of itself since

depending on the product even a case-level RFID tag may have to be placed in a

specific location on the case and cases stacked in a specific orientation to get a consistent

read. When you get back to the mixed-pallet scenario, it is unclear whether or not you can

be assured that you have read all the tags on the pallet. (Piasecki, RFID Update: The

Basic s, The Wal-Mart Mand ate, EPC, Privacy Con cerns , and Mo re., 2012)

The final reason to take into account is RFID tags can fail. The unique issue with RFID

failure is the automated nature of RFID optimized processes. (Piasecki , RFID Update:

The Basics, The Wal-Mart Mandate, EPC, Privacy Con cerns , and Mo re., 2012)If you

have a pallet of materials with RFID tags and one of the RFID tags is damaged, how will

you know that you did not read all the tags? And, what happened to your system data

when this occurred. (Piasecki , RFID Upd ate: The Basic s, The Wal-Mart Mandate, EPC,

Privacy Concern s, and More., 2012)

Q3: Investigate the options for international customers on the Wal-Mart Web site.

As of January 2014, Wal-Mart has started the international store that operates 6,337

stores and 800,000 workers outside the United States. Wal-Mart wholly owned stores inArgentina, Brazil, Canada, Japan, China and United Kingdom. (Wikipedia, 2014)


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Figure 1: A map showing locations labelled in blue colour are Wal-Marts stores

around the world.

Many of Wal-Mart customers expect to have access to Wal-Mart product with low prices

anytime and anywhere. Wal-Mart global e-commerce has leads all the online and mobile

innovation for Wal-Mart. Based in California Silicon Valleys, Wal-Mart run the e-

commerce with operations in Bangalore, India and San Paolo, Brazil. (Wal-Mart, 2014)Wal-Mart mission is to combine technology and world class retailing to provide seamless

that let their customer shop anytime using online mobile, social and stores. Wal-Mart has

united and expands their stores platform where no one else could do. (Wal-Mart, 2014)

Wal-Mart mostly focuses on promoting their stores through international outside United

States and Wal-Mart also known as largest retail stores in the world. Wal-Mart introduces

their company to other country where Wal-Mart expand their stores for other Wal-Mart

customers who want to buy products from Wal-Mart. (Wal-Mart, 2014)

One of Wal-Mart strategy to promote their stores is through online stores. Wal-Mart

introduces their company what they sell through online where customer can buy products

anytime and anywhere whether using computer or mobile. Each international Wal-Mart


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website has their own strategy how to sell their product, use their own method how to

deliver the products and payment for each of product purchases. (Wal-Mart, 2014)

Wal-Mart international sell the products where each of their products divided into several

parts according to the product department starting from grocery, clothes, automotive,

health, furniture and more. (Wal-Mart, 2014) The procedure is same as when customer

when to shop at Wal-Mart stores. Just with one click, Wal-Mart customer can buy product

they require in Wal-Mart website, proceed with the payments and the product been

purchase will be delivered to the address acquire. Picture below is one of Wal-Mart

website in Canada that shows how they arranged their product by each section and

alphabetically. (Wal-Mart, 2014)

Each Wal-Mart international product arrangement is the same as Wal-Mart U.S. except for

Wal-Mart in China where they did not show any product sold in their website. Wal-Mart

China website only shows that information about their company and promotions that

available in their stores. Thus, customers who want to buy things in Wal-Mart can only go

to their stores and Wal-Mart does not have any online product purchasing in China. (Wal-

MartChina)


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Figure 2: Red arrow shows that each product separated by department and uses.

Each international Wal-Mart website only accepts a credit card payment transaction for

each of their product purchase by customer. Credit card use for payment transaction

includes MasterCard, Visa, Solo or American Express, Maestro, PayPal, Delta and VisaElectron. (ASDA, 2014) Wal-Mart also introduces their company card called Wal-Mart

Rewards MasterCard and ASDA MasterCard. This card functions as credit card where

customer can use this card to purchase their product in the Wal-Mart website. One of the

examples is Wal-Mart in U.K., where Wal-Mart U.K. is called ASDA Direct and they

introduce ASDA MasterCard in their stores. Wal-Mart U.K. also allows customer to use

PayPal for purchasing their product. (ASDA, 2014)

A PayPal personal account is electronic commerce (e-commerce) where facilitates

payments between parties through online fund transfers. PayPal allows their customers to

establish on its website which is connected to a users credit card or checking card.

(Investopedia, 2014)


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Figure 3: PayPal as one of customer option to purchase items in Wal-Mart website.

As for shipping their product, Wal-Mart uses standard shipping such as using their own

courier vehicles to delivered customer purchase product and also uses other courier

service. Wal-Mart also has an option for their customer where customers can pick up their

own purchase item. During the checkout process to purchase the item, Wal-Mart customer

can use whether they want to ship their purchase product to their home address or if the

purchase item is qualify to pick up, they can choose to pick up their item at nearest post

location. (Wal-MartCanada, 2014)

Wal-Mart shipping mission is to get their customer satisfies with the delivery and deliver

customer purchase product quickly. Customers orders are shipped based on size, service

level selected and geographic location. Wal-Mart offer two shipping option for their

customer: standard shipping and express shipping. Standard shipping will takes 2 to 8

days business days to be delivered plus processing time and express shipping take 1 to 8


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days include processing time. As for the larger items, Wal-Mart use freight shipping that

takes 3 to 8 days includes processing time. (Wal-MartCanada, 2014)

Figure 4: Wal-Martscourier service.

Wal-Mart international only located in certain country where their product only can deliver

in certain places that nearest to their stores or nearest location that near the country that

has Wal-Mart stores. One of the examples is Wal-Mart in Canada where they ships their

product only in Canada. (Wal-MartCanada, 2014)

In conclusion, Wal-Mart has the biggest impact in their international website stores using

the Global e-commerce and it makes each of their customers easy to buy their product

using online stores anytime and anywhere. Wal-Mart also has made their company known

to the world and Wal-Mart made their customer to set Wal-Mart number one choice to

purchase product.

Q4: Compare walmart.com with target.com, costco.com, kmart.com, and other

direct competitors. Write a report.


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Wal-Mart Target Costco Kmart

Information

of Company

Availability

Easy inaccessing

Story, History,

Global

Responsibility

and Investing

are listed in

full detail.

Moderate in

accessing

Responsibility

Section,

Chairman and

CEO Personal

Infos, and Stock

infos are

available.

Unable to be

found

Unable to be

found

Payment

Type

Wal-Mart

Credit Card,

PayPal,

Payment

Debit Card

The RED Card,

PayPal,

Payment Debit

Card

Costco Cash

Card, PayPal,

Payment Debit

Card

MoneyHub,

PayPal, Sears

Credit Card,

Payment Debit

Card, WU Pay

Membership

Card

Wal-Mart

Credit CardThe RED Card

Costco Cash

CardMyKmart Card

Logistics

Service

Free delivery

and pick up

services

Pick up for free.

Free delivery for

orders $50+

Depending on

products. Free

pick up service

is available

Depending on

products. Free

pick up service

is available

SocialNetworking

Access

Icons to

access

Facebook,Google+,

Pinterest,

Twitter,

YouTube

Icons to access

Facebook,

Twitter,

Instagram,

Pinterest,

YouTube,

Google+

Icon to access

FacebookNone


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Customer

Help

Services

- Help Centre

- Order

Tracker

- Associate

Discount

- Privacy &

Security

- California

Privacy Rights

- Contact via

email or

phone call

- Accessibility

- Track an order

- Store pickup- Shipping

information

- Size charts

- Contact via

email or phone

call

- Membership

Orders

- Information- Product

- Information

- Shipping

- Contact via

website or

phone call

- Order Status- Availability to

contact via main

website or by

phone call

After Sales

Services

- Returns

Policy

- Item Return

- Product

Recalls

- Feedback

-Return an item

- Product recalls

- Returns

- Refunds

- Replacements

- Returns &

Exchanges

- Feedback

Supply

Chain

Management

RFID, with

concept of

cross

docking, fast

turnover

RFID, NTE,

Transportation

management

system (TMS),

Less-than-

truckload (LTL)

Disintermediatio

n, Vendor

managed

inventory, cross

docking,

RFID, Late

recognition of

cross docking,

slow turnover

Career

Availability

Available Available

Available Available

Order Return

Policy

Easy in

Accessing

Returned

within 90 days

Easy in

AccessingAs

stated in receipt,

online return is

Easy in

Accessing

Either to return

to nearest store

Easy in

Accessing

Different

product with


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available. or via online different

conditions

Privacy and

Security

YesNorton

Secured

Verification

YesNorton

Secured

Verification

YesNorton

Secured

Verification

YesNorton

Secured

Verification

Table 1: A comparison table of Wal-Mart website, walmart.com and its major

competitors, target.com, costco.com, and kmart.com.

Wal-Mart is the main dominator among the retailing industry in terms of its sales revenue,

its customer base, and its ability to drive down the costs and delivering good values to

their customers. Inventory management is most known at Wal-Mart with its just-in-time

techniques that made the firm to known as one of the best supply chains in the world.

Wal-Mart not only transformed its own supply chain, it has also influenced other vendors

now throughout the world because the company has the economic clout to request

changes from its vendor partners and to receive them. Recognized for its ability to obtain

merchandises from global sources, Wal-Mart is also known as a pioneer at the strategy ofachieving high levels of growth and profitability through its precision control of

manufacturing, inventory, and distribution. Invalid source specified.

Its information systems is so efficient that is can analyse more than 10 million daily

transactions from point-of-sale data on a massive scale and distribute their analysis in real

time both internally to its managers and externally to Wal-Marts suppliers. Wal-Mart has

pioneered many innovations in the purchase and distribution processes of the products it

sells. Over 20 years ago, Wal-Mart has implemented UPC bar codes throughout the retail

industries and also implemented the use of electronic data interchange (EDI) for

computerized ordering from vendors. Invalid source specified.


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Wal-Mart developed the concept of cross docking, which direct transfers from inbound or

outbound truck trailers without having overload or extra storage in real time. The

companys truck fleet and corps of non-unionized drivers continuously deliver goods to

distribution centers, where they are stored, repackaged and distributed without needing to

worry rotting in inventory. Through the use of cross-docking, which is one of its best-

known innovations, half the goods trucked to a distribution centre from suppliers ship to

stores only needed within 24 hours. The other half, called pull stock, is stored at the

distribution centre until needed at stores. Invalid source specified.

The differences between these websites are similar, what differentiates them are the

supply chain system that they are using. For Wal-Mart, it increases the speed of

merchandise from its distribution centres to its warehouses. Today the retail giant

continues to push the supply chain toward the greater and greater efficiency, prioritizing

customer needs while employing new technologies and greener way practices. One of the

early adopters of RFID technology to increase efficiency in its supply chain, Wal-Mart

discovered the value of balancing vision with technology maturity levels after mandating

its suppliers apply RFID tags to crates and pallets bound for its stores. Invalid source

specified.

Some companies thrived using the new technology of RFID. Others, including Wal-Mart

itself, ran into trouble. At the time of the mandate, RFID technology was in its infancy, and

costs for planning, hardware, software, and training were prohibitive for most suppliers.

The technology was so new that the industry lacked best practices for implementation.

Indeed, it lacked any examples that might help newcomers avoid pitfalls. Wal-Mart

repealed its edict, but continues to probe the usefulness of the technology of RFID.

Invalid source specified.

Costco on the other hand uses vender managed inventory. They use "ConnectionHub's

Drop-Ship Master application suite", which allows them to rapidly integrate new suppliers

into their existing system. This enables rapid orders based on Costco requirements. This

allows Costco to maintain efficient supply chain management without taking on any new


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inventory or risk through orders. ConnectionHub provides Costco with a single point of

integration in which it can contact and interact with its suppliers directly and with ease.

Invalid source specified.

While Wal-Mart very early on focused on controlling costs by mastering its supply chain in

innovative ways that included sophisticated, pioneering use of product, consumer

behaviour, and sales performance tracking technology, Kmart was late to recognize that

such technology could be useful, and never really bought totally into the concept. As a

consequence, Kmart in the old days and today too often stocks higher-margin, but

higher-priced and slower-moving goods than either Wal-Mart or its other big rival, Target.

Thus, its inventories dont turn over nearly as fast and it produces significantly less

revenue per square-foot of store space. That, in turn, leads to weaker cash flows, less

growth, less investment in existing facilities and technology, higher operating costs, steady

erosion of brand value and, ultimately weak, or no profits. Invalid source specified.

Target Corporations manufactures, suppliers and vendors all abide by strict rules and

regulations set forth by Target. If Target were to lift some of the unnecessary policies and

regulations they could potentially gain more clients. Although Targets supp ly chain is very

efficient opening new doors to new prospects is always a step in the right direction. This

negative aspect of being too strict could be withholding Target from reaching its true

potential. Target Corporation is huge, from the first level of the supply chain down to the

third level. The supply chain at Target consists of numerous distribution centers and

import warehouses. It may be too complex. Invalid source specified.

Wal-Mart is consolidating its global sourcing. The new model focuses on increasing the

percentage of products purchased directly from suppliers and buying from global

merchandising centres rather than through individual countries. Third-party procurement

providers, who previously enjoyed a substantial business from the retail giant, will find

themselves increasingly bypassed in the supply chain. In addition to eliminating the cost of

a middleman, this effort may give Wal-Mart increased control over inbound freight. Better

control, in turn, can lower inventory costs. Thus Wal-Marts continuous use of innovations


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leads to lower inventory and operating costs, which enables Wal-Mart to keep its lean

costs. Invalid source specified.

Other than its supply chain management system, its customer help services, privacy and

security, logistics services, payment type and after sales services are all closely similar.

For logistics, pick up is free for all, delivery is however different as only Wal-Mart provides

free delivery without taking prices or products into account. However, Wal-Mart offers

more information about themselves in their website more than the following competitors,

which are mainly the history behind Wal-Mart over the years. In overall, most of the

services of customer help and after-sales are mostly similar between the markets. Wal-

Marts main competitor can be confirmed to be Target, as Costco and Kmart is however

not as advanced as the level of Wal-Mart just yet.

Q5: Envision how transaction processing systems (TPSs) are used in Wal-Mart

stores. Go to Wal-Mart and pay with a check. How has EC improved the old way of

paying with checks?

Transaction processing systems are important example of operations support systems that

record and process data resulting from business transactions. (University of Nairobi, 2013)

They process transactions in two basic ways. In batch processing, transactions data are accu-

mulated over a period of time and processed periodically. (University of Nairobi, 2013) In

real-time (or online) processing, data are processed immediately after a transaction occurs.

Examples: sales and inventory processing and accounting systems. (University of Nairobi,

2013)

Every organization has many transaction processing systems (TPS). These systems

include order processing, inventory control, payroll, accounts payable, accounts

receivable, and the general ledger, to name just a few. (University of Nairobi, 2013) The

input to these systems includes basic business transactions, such as a customer placing

an order, an employee purchasing supplies, a customer payment, an employee signing on


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and off at the start and end of a day. (University of Nairobi, 2013) The processing activities

include data collection, data editing, data correction, data manipulation, data storage, and

document production. (University of Nairobi, 2013) The result of processing business

transactions is that the organization's records are updated to reflect the status of the

operation at the time of the last processed transaction. (University of Nairobi, 2013) A TPS

also collects data which is input to other essential information systems - management

information systems, decision support systems, and other special-purpose information

system. (University of Nairobi, 2013) A transaction processing system serves as the

foundation for these other systems. (University of Nairobi, 2013) These higher-level

systems require the basic business transaction data captured by the TPS. (University of

Nairobi, 2013) Transaction processing systems support routine operations in the business.

The amount of support for decision making that a TPS directly provides managers and

workers is low. (University of Nairobi, 2013)

This information system ordinarily automates routine and repetitive tasks that are very

important to the operation of the Wal-Mart such as Point-of-Sale, preparing a

payroll, billing customers. (MISgroup, 2012) The input of TPS is raw data, the processing

involves with the summarizing, recording, and merging the data and the output is in the

form of report. (MISgroup, 2012) One example of TPS is Point-of-Sale when you check-

out the product at the supermarket, the cashier has to scan the product with the bar

code that the input of system; The idea of bar code scanning required that industry

develop a universal product code (UPC) system, a could be a standard method for

identifying products with numbers and coding those numbers as the type of bar code

shown in the photo. (MISgroup, 2012) Point-of-sale terminals record the bar code of each

item passing the checkout counter and send a purchase transaction directly to a central

computer at Wal-Mart headquarters. (MISgroup, 2012) And it had many benefits found out

by Wal-Mart, and they are ensuring accurate pricing, improving efficiency, reducing

Shrinkage and improving communications. (MISgroup, 2012)

The use of bar code scanners made it easier were its unnecessary to put a price on

every item (but still important for consumer protection).This reduced costs so much.


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The process involve with the calculating number of product multiple with the price

of product and the output is in the form of receipt. (MISgroup, 2012)

As technology advanced so did the transaction processing speed, reliability, and security.

With the introduction of debit cards, money could be transferred instantly to Wal-Marts

account and this creates instant cash flow and decreased losses. To decrease the

transaction processing time, Wal-Mart recently introduced self-serve checkout stations.

These stations allow the consumer to process their own transaction by electronically

scanning the bar code on their products and after completing the scanning they would

select their form of payment and pay. This eliminates the need for additional staff thus

reducing costs.

Wal-Mart accepts personal checks as long as its check verification machine accepts the

check and valid identification is presented. (Ask.com, 2014) The check verification

process makes sure there are sufficient funds in the account to cover the amount of the

check. The machine prints the name of the store as the payee and the amount, you sign

the check, and in seconds the check is validated, your bank account is debited, and you

are out of the store with your merchandise. Besides that, Photo identification, such as a

driver's license, is required to pay with a personal check. (Ask.com, 2014)

The machine that Wal-Mart uses is The TeleCheck Electronic Check Acceptance

(ECA). It provides service to convert a paper check into an electronic item at the point of

sale. (TeleCheck, 2014) The ECA service allows retailers to accept checks as quickly,

safely and easily as they accept credit cards. Think of it as a check without the paper. Its

process will be explained as below. (TeleCheck, 2014)

When you present your check to the sales clerk, your check is authorized through a

specially-designed, secure TeleCheck system that captures banking information and theamount of the check. (TeleCheck, 2014) Once the check is approved, you'll receive a

receipt of the electronic transaction to sign. (TeleCheck, 2014) When you sign the receipt,

you will receive a copy for your records along with your check to keep. It's that simple.

(TeleCheck, 2014)


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TeleCheck sees a lot of checks, and the data TeleCheck derives from these checks

provides tremendous analytical opportunity to fight fraud. One of the methods is Debt

verification. (TeleCheck, 2014) TeleCheck maintains a live database comprised of check

and bank account debt records reported by hundreds of thousands of merchants.

(TeleCheck, 2014) TeleCheck can verify the presence or lack of unpaid debt related to a

check writer in response to subscribing merchants queries and provide check acceptance

decisions based on what it finds. (TeleCheck, 2014)

Another method is Risk-based decisioning. TeleCheck has also examined historical check

data and identified patterns by analyzing and comparing the characteristics of valid check

transactions vs. invalid (fraudulent) check transactions. (TeleCheck, 2014) From the

knowledge it has gathered, TeleCheck has built statistical profiles of what a solid checktransaction looks likeand what a fraudulent one may look like, too. (TeleCheck, 2014)

Using these analytical profiles as backdrops, TeleCheck can also provide predictive risk

decisioning to its merchants to augment its base line debt verification services.

(TeleCheck, 2014)

Together, check verification and risk-based decisioning work as invaluable weapons to

combat commercial losses associated with check fraud. (TeleCheck, 2014) For merchants,

risk decisioning helps control and reduce financial loss. (TeleCheck, 2014) Merchants can

accept checks with greater confidence that the checks are reliable. (TeleCheck, 2014)

TeleCheck alerts consumers as well as merchants to fraud -- a TeleCheck acceptance

decision is often the first warning a consumer receives of their accounts compromise.

(TeleCheck, 2014) TeleCheck provides consumer convenience, as risk decisioning lets

merchants continue to offer check writing as a payment option. And, above all, risk

decisioning results in lower prices for consumers because the merchant has been able to

reduce losses areas associated with check fraud. (TeleCheck, 2014)

When a consumer writes a check to a TeleCheck subscribing merchant, the merchant first

submits the check to TeleCheck for analysis before accepting it. (TeleCheck, 2014) The

merchant does this by either manually or electronically feeding the checks MICR

information and often the check writers ID number to TeleCheck. (TeleCheck, 2014)


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When TeleCheck receives these pieces of identifying data, it first looks for matches of

the identifying data within its database of transactions, reviewing for evidence of unpaid

check or account debt on checking accounts known to be held or used by that check

writer. (TeleCheck, 2014) Then, TeleCheck analyzes the transaction against one of its

many risk models. The model looks for fraudulent characteristics and good

characteristics and provides risk decisioning accordingly If the transaction is above the

applicable threshold of acceptable risk, TeleCheck will flag it and issue a single-digit code

a 3 -- back to the merchant. (TeleCheck, 2014) This Code does not tell the merchant

the check is not good or that the customer does not have enough money in their account

to cover the check. This Code 3 is telling the merchant that the transaction contains a

significant level of risk markers. (TeleCheck, 2014)

These models are very effective in reducing fraud-- but they are only predictive, based on

information obtained at the point-of-sale and historical data. (TeleCheck, 2014) They

cannot predict with 100% accuracy which check transactions will complete or return.

However, through this predictive risk decisioning, TeleCheck aids retailers in saving

billions of dollars that might otherwise be lost to fraudulent activity -- the kind of financial

loss that is rarely recouped. Signing the ECA receipt is similar to signing a credit card slip.

(TeleCheck, 2014) Signature on the receipt authorizes TeleCheck to present the check to

the bank electronically and deposit the funds into the business account. (TeleCheck, 2014)

An ECA transaction takes the same amount of time to be presented to the bank as a

paper check, usually within one to two business days. (TeleCheck, 2014) The ECA

transaction appears on the bank statement in the same area as ATM transactions and

direct deposit payroll checks. (TeleCheck, 2014) The transaction will reflect the date the

check cleared the account, the check number, the amount and the place where the check

was presented. (TeleCheck, 2014)

Not only does Wal-Mart accept personal checks to pay for purchases, it also provides

cash back. (Ask.com, 2014) If a check is written for an amount higher than the amount of

the purchase, the cashier gives the customer cash back after verifying the validity of the


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check. Wal-Mart also accepts cash, all major credit cards and the Wal-Mart line of credit.

(Ask.com, 2014)

Electronic commerce (EC) has improved the transaction process at Wal-Mart in many

different ways. The traditional transaction process for many years included cash, check,

credit card, or money order. Up to approximately 8 years ago in Canada it was common

for customers to pay by check. The process of paying by check was time consuming as

each check had to have management authorization. This process was streamlined in later

years inputting a few commands through the computer a store clerk is able to approve

checks directly at the till. Keep in mind that a drivers license and credit card information is

still needed in order to authenticate the check which still required time. It was also

customary for a business to wait for up to a week for personal checks to clear processing

and there was always a risk of the customer's checks being returned for insufficient funds.

If only 0.005% of the $400 billion revenue were paid with dishonored checks this would

equate to a $20 million dollar loss for Wal-Mart.

Therefore, Electronic commerce (EC) has improved the way of paying check. It gives the

opportunity for increased efficiency, reduced risk and higher productivity, all of which

eventually benefit youthe consumer.

The level of transaction speed becomes higher. The transaction speed of a payment can

be very fast using DCPS. (Wiki, 2014) The main reason is that there is no need to go

physically the bank or saving bank to initiate a payment transaction. (Wiki, 2014) Only an

electronical device with an accordant software or app is needed. In the case of Wal-Mart,

only ID and photo identification and a machine is needed to process the check. (Wiki,

2014)

Besides that, EC also improve the processing efficiency to a higher level. There is a high

level of processing efficiency due to a high level of automatication. (Wiki, 2014) A high

level of automatication caused higher speed and lower cost in comparison to mature non

electronical payment systems. (Wiki, 2014)


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Other improvements made are it has the ability to conduct bank transactions, yet are safe

enough to use on the Internet, and fraud losses for all parties are reduced.

As a conclusion, with Wal-Martsheavy investment into their supply chain RFID system

they are able to track their large quantities of inventory in a timelier basis and this in turn

gave suppliers a real-time update on stock levels required. By streamlining their e-

commerce payment system, by using debit, credit, cash or check gives Wal-Mart instant

access to cash flow and reduces wait times and errors at the check-out. With Wal-Mart

being pioneers and leaders in the industry it will be exciting to see what new and

innovative ideas they will come up with next.


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