TQM Total Quality Management Practices

¶ … Wal-Mart has implemented the principles of TQM and how well they are actually practicing them.

Assessment of TQM Practices

In today's competitive world of business the most important characteristics of any successful organization are employing people who have the right knowledge, skills, and abilities to ensure there organization stays afloat in the industry. For any organization to stay on top it must recognize the different components and behaviors that will in the long-term help the industry grow and become more competitive in the near future.

Today it is believed that the key to organizational success lies in how well the organization is able to completely change the way organizations are managed. For an organization to be competitive it requires a stable workforce that is highly skilled, and posses good knowledge about their job. One of things that have to be changed is the traditional hierarchies, which must be able to include more and more employees who know more, do more, and contribute more to the organization. This is called the management model, which is based on the belief that people, who have greater involvement, will be better trusted in situations where they are required to make more important decisions about their work. This approach puts knowledge, power, rewards and a communication network at every level of the hierarchy in an organization. This kind of approach not only motivates employees to care about their work but also to know how they can do it better too.

Walmart

Walmart was founded by a man by the name of Sam Walton, who died in 1992. The store he opened went on to become an extremely successful chain of discount retail stores 30 years later. Wal-Mart is like any other departmental store but with a non-food section too, however, it's only much bigger in size. They sell clothes, shoes, house wares, automotive accessories, garden equipment, sporting goods, toys, electronics, health and beauty aids, pharmaceuticals, stationary, and jewelry. In short, everything under the sun is available there. Wal-Mart is renowned for having revolutionized many aspects of retailing. Discount stores emerged in the 1950's; they based their strategies on reducing their prices by reducing their profit margins. To compensate, they cut their costs as much as possible.

However, it was around the 1980's, when the industry became more focused and competitive. Sam was determined for expanding Wal-Mart by opening up stores in isolated rural areas and small towns that had not been given a second thought by his competitors. One of the major drawbacks of opening up stores in those areas was that they were far from distributors, so they couldn't be serviced in the same manner as the stores in cities. So to solve this issue, Sam decided to build warehouses, which would store merchandise bought in huge quantities at attractive prices. In 1993, Walmart had 1880 stores in business in different localities. Sam Walton was the captain of the ship throughout. He continued harboring on the principle of lowered prices down. In fact, he was known amongst his employees for insisting that on business trips, they share hotel rooms. This worked out great with them because Sam was successful in telling them that Wal-Mart has its own way of doing things that is interesting, unpredictable, and fun. Most organizations concentrate on customers, but Sam chose to first take care of his employees because if he wanted the customers to be highly satisfied that meant the employees had to be satisfied first.

He was well aware of the competition and used his best ideas to have an edge above the rest. His management philosophy was give the people responsibility and trust them, and then checks up on them to see how they're doing. The corporate mission was to excel by empowering associates, maintaining technological superiority, and building loyalty among associates, customers, and suppliers.

Wal-Mart's promotional strategy of 'everyday-low-prices' means that customers are offered brand name merchandise for less than department and specialty store prices. They run few promotions and thus have very low advertising costs. Through computer data, they tailor the products to individual markets and stores. Store managers have more freedom in setting prices then in 'centrally priced' chains. Wal-Mart is known for its national brand strategy, although private label products made up about 25% of their sales, which fits into the corporate mission of providing quality products at the lowest possible prices. They also developed a 'buy American' program, and favored buying from American manufacturers.

The operating expenses, rental expense, and inventory space are far less than what is the industry average. The Walmart stores are open from 9 a.m. To 9 p.m. six days a week and for noon to 5:30 on Sundays. While some stores are open 24 hours a day.

Walmart chooses to keep abreast with technology. Electronic scanning of Uniform Product Codes (UPC) came into use at Wal-Mart stores in 1983. They also installed satellite communication system at their stores to improve communications between stores, distribution centers, and the head office. Their distribution network and shipping fleet is very efficient with the distribution centers being highly automated.

Wal-Mart is a tough negotiator when it comes to vendors. No single supplier accounts for more then 4% of its purchases. Certain companies use a vendor-managed inventory system in order to improve performance. Computer access to point-of-sale data is available to more then 2000 suppliers so that they can analyze sales trends and inventory positions.

Human Resource Management at Walmart

Wal-Mart's culture emphasizes that the employees work their best when they are motivated by responsibility and recognition. Most of the employees enjoy working at Walmart and take great pride in Wal-Mart. Various programs have been used to improve performance. Training is decentralized for assistant managers (chefs de rayon). Wal-Mart employs 520,000 people and is the largest employer after the government and General Motors.