CASE 5: PART 6: CONTROLLING

Question 1
Does Wal-Marts use of automation and information technology eliminate the need for
workers and managers? Explain.
Wal-Marts use of automation and information technology eliminate the need for workers and
managers because it wants to achieve its superior efficiency. Wal-Mart employs tactics ranging
from buying in bulk to optimizing the number of stores served by a single distribution center.
The path to perfect logistics requires more than teams of savvy efficiency experts. Wal-Mart
introduced computers in the 1970s like many retailers. But in the1980s, Sam Walton made an
extraordinary move by purchasing a satellite communications system and found electronics
linkages with suppliers using Retail Link, the companys sales and inventory database. Paperbased purchase orders and invoices were soon replaced by electronic data interchange (EDI), and
radio-frequency identification (RFID) tags began tracking inventory shipments from
manufacturers warehouse to Wal-Marts stores. This automated end-to-end system kept
products flowing to Wal-Marts shelves at the right time and in quantities suited to customer
demand.

Question 2
How will the creation of a Sustainability Index help Wal-Mart manage quality and
performance?
Wal-Mart R&D teams are pioneering a Sustainability Index to measure the greenness of every
item sold in stores to help customers go green. In partnership with a university backed
Sustainability Consortium, researchers are studying how individual products affect the
environment. Once objective environmental standards are set, Wal-Mart will provide a label for
every produce which allowing customers to evaluate green benefits in the same way they
evaluate nutrition benefits through food labeling .As with Wal-Marts hunger initiative, size
makes the task possible. Chairman Lee Scott explained to Green peace newsletter readers that
the environment advantages come straight from our size. To illustrate, Scott tells how managers
reduced the packaging size of one line of toys and in doing so saved more than 5,000 trees and
1,300 barrels of oil. He adds that improving fuel efficiency by just one mile per gallon enables
Wal-Marts trucking fleet to save USD 50Million of fuel annually. The popular chairman insists
that Wal-Mart approaches sustainability entirely from the standpoint of business, not altruism.
According to Scott and other executives, sustainability produces massive cost reductions, making
Wal-Mart more competitive. Big cuts in energy usage mean big savings for Wal-Mart and lower
prices for consumers because energy is Wal-Marts No. 2 operating expense. Sustainability
continues to make us a better company by reducing waste, lowering costs, driving innovation and
helping us fulfill our mission to save people money so they can live better.

Question 3
Why do Wal-Mart managers set goal such as double fleet fuel efficiency in the ten years and
cut greenhouse gas emissions by 20 percent in seven years? Explain how managers would
use the feedback control model to reach those goals.
Wal-Mart is generally recognized as a leader and the major company in supply chain
management. Because of its efficient supply chain management practices, Wal-Mart achieves a
leadership status in the retail industry (Chandran, 2003). The reason of setting the goal is to
provide beneficially decrease greenhouse gas emissions under their direct and indirect control.
Besides that, it also provide approaches on additional means for companies to reduce greenhouse
gas emissions and to set up new supply chains for renewable energy. Emission reduction is
associated with reducing cost, new sources of income and improve employee motivation. WalMart emphasizes the need to reduce its purchasing costs and offer the best price to its customers.
The company was able to offer a huge range of products at the lowest costs in the shortest time.
(Chandran, 2003). In cost reduction, the managers uses the feedback control model to attain
those goals by through energy efficiency. For instance, Wal-Mart enhanced 25% of the average
fuel efficiency which translates into annual savings of $75 million and 400,000 tons of CO2 with
moderately little investment.
Wal-Mart had appeared as the largest company in terms of revenue in the world by 2002. WalMart can produce higher income by selling more energy-efficient products by opening many
sources of new income. Most of their targeted customers shop almost exclusively at Wal-Mart
and have little disposable income. Wal-Mart was entangled in argument over employees salary,
health care profit, diversity and working conditions in suppliers factories before accepting its
sustainability strategy. The positive public image and reputation may help the company to draw
intention of more targeted customers and to grow by weakening the resistance to its opening of
new stores. Through the positive image, the company might avoid to lose their targeted
customers at the existing stores (Mohd Nasrun Firdaus Bin Azmi, n.d.).
In conclusion, the companies can diminish the impacts of climate change to reduce and decrease
greenhouse gas emissions. Nonetheless, the extent of profitable emissions reductions seems
likely to be unsatisfactory. We conclude that encourage transformative supply chain coordination
and innovation is needed by effective climate policy.
Reference
Chandran, P. M. (2003). Wal-Marts supply chain management practices. Retrieved from
http://mohanchandran.files.wordpress.com/2008/01/wal-mart.pdf
Mohd Nasrun Firdaus Azmi. (n.d.). Tugasan prinsip pengurusan ( Nasrun complete ). Retrieved
from http://www.scribd.com/doc/140285258/Tugasan-Prinsip-Pengurusan-Nasrun-Complete