Solved: Shrinkage at Walmart In 2015

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C1. Shrinkage at Walmart In 2015,

the world’s largest retailer, Walmart, announced a quarterly increase in sales that was accompanied by an increase in expenses that reduced its hoped-for profit. In discussing the higher expenses, the company mentioned “shrinkage” three times in its written press release and 13 times in its conference call with financial analysts.

The company attributed a significant part of its increased shrinkage to shoplifting and outright theft, including one instance in which a team of thieves pushed a shopping cart full of electronics out a back door and loaded them into a waiting car. To combat these problems, which are unfortunately common in retailing, the company announced it was restarting a training program for employees that helps them learn how to spot shoplifters and fellow employees who are pilfering, along with adding staff to areas of the store that contain high-value or easy-to-steal items. They also plan to start checking customers’ receipts at store exits.

In addition to these measures, however, the company also reported that a sizable portion of the shrinkage results from difficulties encountered in managing inventory flow throughout the company’s distribution network and its stores. When warehouses and store backrooms become overstocked with inventory, it can be difficult to determine which items should be discounted and moved to the store’s shelves. In recent years, Walmart has increased its sales of grocery and food items, which can be damaged more easily than its other inventory and for which failure to monitor expiration dates can be costly. To deal with these backroom inventory management issues, the company has added employees to staff those areas.

Walmart’s U. S. supply chain includes more than 100 distribution centers from which the company makes deliveries to its more than 5000 stores and Sam’s Club locations using its fleet of more than 6000 trucks. Managing the flow of inventory from the company’s suppliers through its distribution centers and into its retail outlets is a mammoth task and, as discussed in this chapter, the company has made attempts to use technology in new and creative ways to address these challenges in the past.


Become familiar with RFID technology and its potential uses in Walmart’s supply chain using the information presented in this chapter and information you obtain through the Web Links, your favorite search engine, and your library. In about 200 words, outline the advantages Walmart might gain by using RFID in its retail stores. As you draft your answer, be sure to consider the nature of the stores’ backroom environments, which include metal shelving. Also consider Walmart’s possible use of RFID and other technologies as an alternative or addition to the increased staffing levels the company has announced for its backroom inventory storage areas.

Due to the accuracy and ease of RFID inventory, some retailers have applied this technology to the management system to track inventory details across stores or chains. its supply. When information about the quantity of goods and inventory is counted quickly, continuously, and accurately, that information becomes very important in retail. Another important thing when applying RFID to retail systems, having the ability to display accurate and continuous inventory will go along with benefits for omnichannel retail systems. With the ability to fully view and update inventory information across all different channels, Walmart retailers can open stock tracking systems for all retail channels or store networks, enhancing the experience. customers and especially increase revenue. Ensuring stock availability is critical to maintaining retail sales. Always out of stock is an alarming problem in the retail industry, in fact this has been solved by RFID by continuously and accurately tracked inventory information up to 99 %, from which we will have a plan and plan to replenish our goods in the most timely manner. The use of RFID brings a lot of benefits to the system of retail stores, but in the supply chain system, or the general warehouse also brings many benefits when using RFID. When items are displayed in detail in the supply chain, shipping mistakes and errors are also significantly reduced when they are detected by RFID card readers and corrected by warehouse staff in a timely manner. The difference in workflow efficiency from using RFID in retail is huge. An RFID card reader, whether stationary or handheld, can read hundreds of individual line items at once. It is important that each item has a unique ID, never being read over and over again, or having to look directly at it to read, which is what happens when using barcodes.

In about 100 words, discuss the technologies that Walmart’s trucking fleet might use to better manage their operations. Include a discussion of tracking technologies, GPS devices, and/or apps for use by truck drivers on their smartphones or tablet devices.


In about 100 words, discuss the advantages Walmart might gain if it were to use RFID tracking technologies in all of its retail stores to manage every single item as opposed to using either case-level RFID or tracking only part of each store’s inventory at the item level.