Wal-Mart’s Management Information System

By definition, MIS encompasses all aspects of information technology that work towards the effective running of a given organization (Fenz, Heurix, Neubauer, & Pechstein, 2014). Information systems in this case involve numerous aspects of the organizational operations ranging from inventory management, supply chain management to HR management, and many other aspects. It is suggested that among others, the MIS system used by a company has the capacity to make or break the company in question. The MIS can make the organization more effective just as much as it can hamper their optimal operations if it is not aligned with the organizational goals, objectives, and strategies. Wal-Mart Inc. is an international retail chain with a presence in numerous markets. With such global operations, it means that Wal-Mart has to deal with numerous suppliers as well as customers and employees. To manage such a large enterprise, there is a need for a comprehensive information system that would enable the company to organize all their operations effectively to ensure better performance. The current MIS system at Wal-Mart can be considered effective based on how productive the company’s operations have been so far. The main objective of an MIS system is to inform the decision-making process undertaken by the management. Therefore, the MIS system is mainly a source of information about various departments and activities within the organization. The management is thus able to use the system to gain insight into what is going on within the organization, making the right decisions to ensure that the organization continues to run smoothly, efficiently, and effectively according to the set goals and objectives. It can be suggested that Wal-Mart’s MIS gravitates towards hierarchical, with each department having its own specialized system. The management uses all the systems collectively to make informed choices on strategies and other operational decisions as needed. The aim of the current paper is to evaluate the information management system that Wal-Mart has deployed. The review examines the retail giants, namely TPS, DSS, and ESS systems, with respect to their characteristics, as well as their relevance to the organization’s operational strategy, and the ways of their improvement to ensure better performance within the organization’s present or future contexts.

Characteristics of the Wal-Mart MIS System

Generally, an MIS system is designed to cater for the information needs of the management with respect to the running of the organization in question. Therefore, some of the most basic characteristics that the system would have include being management oriented and inclined towards the centralization of decision making within the given organization (Kushwaha, Kumar, Sinhal, Gupt,a & Basal, 2012). Each management level within the organization in this case would need to have an MIS system that is tailored to their position with respect to the relevant information. This explains the dynamic nature of the MIS, with variations from one manager to the other one within the organization. The systems essentially represent a set of relevant components depending on the level of the management for which it is designed. In addition, the system needs to be integrated in order to provide a seamless flow of information on relevant issues within the organization. Limitations in the access to information undermine the significance of the MIS system within the organization since it will not be able to fully inform management decisions.

An organization like Wal-Mart is highly hierarchical, having numerous management positions that are categorized according to the focus of the operations (Basker, 2007). The department heads need information regarding all aspects of their specific departments in order to make the right decisions while managing them. Similarly, their superiors also need all the relevant information just like mid-level managers, while the top tier management also demands the same from the mid-level management. As such, the management structure in the organization creates functional tiers that determine what kind of information the manager in question would need in order to be effective in decision-making according to their specific position. It can be suggested at this point that the MIS only provides information to the management instead of actively guiding the management towards making a decision. The MIS generally only gathers relevant information from all the necessary sources and avails it to the management.

Transaction Processing System (TPS)

The TPS system uses raw data to make repetitive activities easier within the organization. Primarily, this system processes the regular transactions to create an automated system to generate reports on these transactions over a given period of time. It can be suggested that one of Wal-Mart’s TPS systems is the Point of Sale (POS) system, which enables the cashiers to scan items, print receipts, and at the same time provide information on the sales trends within the organization and also update the company’s inventory. The POS system at Wal-Mart relies on product barcodes as a way of identifying given products to compile a report on what has been sold during a given timeframe. The TPS in this case is therefore responsible for providing various kinds of information that could be used in various departments within the organization. Considering that Wal-Mart is an international retail chain with one of the most effective supply chain management systems in the business world, it can be stated that some of the main characteristics of the TPS include management directed, common data flows and heavy element. Integration is also another important characteristic of the TPS at Wal-Mart Inc.

Management directed. The management at Wal-Mart has to ensure that the TPS is working effectively with the growing needs of the business. Therefore, while initially the company might have been comfortable using the POS only for inventory management and receipting purposes, in the recent past the system has been subjected to numerous reviews to enable it to provide more data that could be analyzed and applied in many other areas of management. For example, the company uses the raw data from the POS to determine market trends by looking at the patterns with which their products are being bought. Recently, it has been noticed that more people tend to buy skim milk at the beginning and at the end of the month while they are comfortable buying the ordinary milk during the rest of the month. This pattern would help the relevant management to ensure that there is more skim milk available at the right time in the stores. This kind of information has so far helped the store managers to ensure that they stock the right products at the right time to ensure effective sales within the organization. The patterns have made the company’s inventory more productive with respect to organizational performance.

Common data flows. In order to ensure that the data in the TPS is relevant to the management when generating reports, the company has had to ensure that they use the common data flow concept for effective and accurate data collection and storage. If the POS was unable to have a common data flow, there would be many incidences of repetition and discontinuity in the collection of data starting from the cashier’s position. As such, the receipts would have flaws and even the company’s customers would have issues with the billing system. The common data flows in this case enable the system to have a defined methodology for processing, reporting and storing the collected data. This ensures that the cashier does not bill the same product twice and eliminates any chances of collected data overlap, but rather all the information that is fed into the system is accounted for in the report. The common data flow concept in this case does not only ensure that the system operates seamlessly but also guarantees that the collected information is accurately presented in the report. Without the common data flow concept, a company that has to work with such vast volumes of data would have no way of ensuring accuracy in the reporting systems that rely on the TPS. The cashiers would simply have to collect the receipts manually for the accounting and stock management teams to work with.

Heavy element. With tens of thousands of customers and even greater amount of products that one Wal-Mart store has, it can be suggested that the TPS system would have a considerably heavier task so that it cannot be developed overnight. The company has had to invest time and money in order to create a perfect TPS for their operations and currently they continue to review it in order to make any necessary improvements that will make the organization more successful. A good TPS system takes time to be created, especially within a dynamic market context where the needs of the organization continue to change. The company has to keep expanding their inventory, increasing their stock and catering for the needs of more customers. Consequently, the management also needs more reports on various perspectives of the company’s performance in order to effectively take advantage of the trends in the market. All these considerations make it ideal for the TPS system to be crafted on the background of heavy element with room and funding for improvements as needed.

Integration. Like many other retail chains, Wal-Mart Inc. has a very wide assortment of products, suppliers and customers. In order to collect enough information that will enable the company to serve the needs of all the customers and work effectively with the suppliers, the company needs a system that will collect all the necessary information with accuracy and efficacy. The TPS allows the company to collect information on what the customers are buying at what time of the month and year, thus informing the management on what the suppliers should bring in during the selected periods of time. In addition, the information enables the management to focus on exact quantities that are needed without having to rely on external market research. The ability of the TPS to integrate all the required information in the generated reports makes it much easier for the management to draw the right conclusions and thus make the necessary adjustments in the company’s operations. This especially concerns how the company has so far been able to provide all the right products to their customers without failure regardless of the time and location. The integration is in this case plays a pivotal role in Wal-Mart’s philosophy in terms of the TPS.

Decision Support System (DSS)

DSS has been in use within Wal-Mart for over a decade now and it can be stated that the company heavily relies on this component of their MIS to make accurate decisions that determine their survival within a highly competitive market. A decision support system is based on the principle of effective data storage and retrieval so that the individual making the decisions has all the relevant information that they need to back their decisions or to disprove them before they are finalized. Having relevant information at hand ensures that the management is able to consider all possible options with background information that could provide ideas on any potential outcomes that can be expected. This limits the possibility of making an error since there is already enough backing evidence from organizational experience, thus limiting cases of gambling with the company’s future. In terms of the DSS characteristics within the organization, the main factors to be considered include relevance, reliability, accessibility and completeness.

Relevance. The DSS at Wal-Mart is fed automatically by the company’s activities within their information systems. The MIS ensures that all the major decisions within the organization are registered and stored along with their short-term and long-term outcomes. All the data within these databases is stored in such a way that if the individual knows what to look for, they can easily find it by means of the search bar. Literally, the DSS is like having a large room with piles of files containing details about the company’s operational history. Therefore, in such a case, if a manager wants to make a decision, they would have to dig into the archives to establish how such a decision was made some time ago. With all the data that a manager is exposed to under Wal-Mart’s DSS, relevance can only be determined by how well they can use the system. The ability to refine a search and find only information that is related to one’s specific interests makes it more effective as a support system compared to the one that would not consider this important factor.

Reliability. The DSS at Wal-Mart is known for its accuracy and reliability. The company ensures that only accurate information is fed into the system, meaning that whatever the management encounters in the system is real data. The company continues to work towards ensuring that all the information being fed into the database is relevant, with the meeting minutes, press releases and briefings all being uploaded upon release. This information works towards making the database more reliable especially considering that in most cases the manager looking for some information may be new being not aware of what really transpired in the organization’s past. The fact that the management insists on accuracy of the information that is fed into the database makes it fully reliable as a place for finding facts to back up a decision. It can also be suggested that among others, Wal-Mart’s DSS does not fail as much as one would expect from a technology-based system. The company has significant protective measures that are meant to keep their databases functional and effective at all times. The reliability here thus ensures that the management will always have a source of information when making decisions within the organization.

Accessibility. The entire management staff at Wal-Mart has access to the DSS from their mobile devices. This means that they can access the information from wherever they are and whenever they need to. Initially, access was limited to individuals within the company premises but with advances in technology and the need for flexibility in terms of one’s working area, the company allowed the management to access the DSS from registered mobile devices. The ease of access thus means that the management can ponder on their decisions from any location both on and off campus. It takes considerable amount of time to make a crucial decision, and there are situations in which the individual would need an in-depth research to come to a decision depending on the issue at hand. Having the ability to access the relevant information at any time and from any location ensures that the individual does not have to spend all the time in the office focused on the problem at hand. They can keep on working on other projects and thus focus on the problem at their own convenience. This accessibility enables the company’s management to make timely decisions without bringing the rest of the organization to a standstill. Timely decisions also improve the performance of the organization by fostering seamless operations even in the event of a hurdle.

Completeness. Information that is accurate has to be complete. This is because having only a few of the facts may be just as misleading as having no facts at all. The DSS at Wal-Mart is often checked and updated to ensure that the information is complete for any case in question. The company specifically warns against feeding incomplete information into the system in order to ensure that the management has everything they need on any given case. The aim in this front is to create a clear picture of the situation in question rather than having to rely on speculation. In this case, it can be noted that missing information could lead to misguided assumptions that would then result in wrong conclusions. Considering that the whole point of having a DSS is to avoid the wrong conclusions, the company has had to ensure that there is no room for speculation. Complete information in this case works effectively to provide only the right conclusions to the management. By emphasizing the completeness of the DSS, the company is able to eliminate any incidents in which the managers have to piece together bits of the information from various sources when trying to make a decision. The DSS thus becomes the only source that they need, resulting in seamless research and reliable decisions that lead to impressive outcomes in most cases.

Executive Support System (ESS)

The ESS is mainly a reporting tool that is used to generate summarized information from various departments within the organization. At Wal-Mart, these summaries are particularly important for the top-tier management where some of the most critical decisions are made. The summarized reports inform the management about the organizational performance in terms of sales volume and customer satisfaction among other things. It can be suggested that these reports can then be used to inform about interactions with suppliers and the employees within the organization. For example, if one report states that one of the cashiers always has a low sales volume compared to others with all other factors kept constant, the HR team would then seek to find out why the customers prefer to queue and wait for other cashiers. This could be an issue of customer relations as applicable to the cashier in question. This company mainly uses the ESS in the top tier management as a source of information when it comes to making major decisions and thus the main notable characteristics of the system include efficiency, cost effectiveness and timeliness.

Efficiency. The ESS is supposed to provide summarized information in relation to the company’s performance on various fronts. This means that the management mainly relies on the system to provide them with the data that they need at any given time. For example, if there has been a reduction in profit margins, the company is likely to look at the performance of suppliers with respect to their pricing strategies compared to the company’s pricing strategies. The ability of the ESS to provide the right information regarding the company’s activities and business transactions is one of the most pivotal characteristics that make the system relevant. It should be noted that without the ESS, the company’s executives would have to look through several documents from their suppliers in order to obtain pricing information and compare it with the past so as to explain the reduction in the profit margins. With an efficient ESS, however, all the management has to do is to find the said information in a report format and thus use it to understand the difference, making it easier to come up with a right decision on the same issue.

Cost-effectiveness. Many companies are looking for a technological solution that would be cheaper than the problem that they try to solve and in this case, the value is not considered in monetary terms. The ESS is considered a cheaper solution for the management compared to the labor force that it would take to compile a report and come up with explanations on the discrepancies that may have been noticed in the performance of the organization. For example, in the event that an order is delayed and the organization is left without important products for a given period of time, the ESS can be used to easily identify the point at which the order has been messed up. Manually, the organization would have to conduct in-depth inquiries amongst the staff and even call several meetings just to ascertain where the mistake has been made. The ESS however can simply provide a report of the procurement process without wasting too much time or requiring too many explanations. Such efficiency makes the ESS a very reliable tool in the overall management of Wal-Mart Inc. as the management can always find all the information that they want in a summarized format. The ESS mainly tracks the company’s activities and reports on them in a summarized format for them to be used by the relevant management teams.

Timeliness. The reports from an ESS are not limited by time although the management often has to understand that the reports are only generated based on the available information at the time of the generation. The management in this case is thus able to get reports about the subject of interest quickly and at any time that they need to, without having to wait for specified intervals during which the company could be experiencing significant losses based on ineffective operations. The timeliness component in this case ensures that the management is able to intervene on time in case there is an issue with some operations. By delivering information at the right time and to the right personnel, the ESS is able to ensure that any desired remedial action within the organization is taken in good time for ample recovery.

Do the Characteristics of Wal-Mart MIS System Have a Strategic Fit?

Each one of the MIS systems applied by Wal-Mart Inc. seems to have a place in the company’s overall strategy especially considering how expensive it is to set them up in the context of a company as large as this one. Initially, Wal-Mart was a simple convenience store with a few regular customers and limited inventory. As the company grew, however, the management noticed numerous operational difficulties they were having in sustaining the convenience component in the stores (Rosenblum, 2014). The inventories had to be managed more effectively to reduce the shortages and the cases of overbuying when they ended up with more stock than they could sell within a convenient time frame. With the introduction of MIS, the company has been able to effectively run a very productive supply chain system with many automated processes that make it especially effective. The company aims to satisfy the needs of their customers without pushing up the prices and so far, each of the MIS components is contributing towards these goals and objectives. It can thus be stated that from a general perspective, each of these components has an accurate fit in the company’s business strategy.

Transaction Processing System (TPS)

Wal-Mart’s TPS is probably the company’s most important MIS component in the sense that it collects most of the data that the management finds useful when formulating critical decisions. Other than producing receipts for the customers, the POS system enables the company to collect information on the sales volumes, the sales trends, and the patterns of customer needs (Kuang & Sun, 2013). The information in this case is used in numerous ways especially when designing strategies to meet customer needs and keep operational costs acceptably low to avoid charging extra fees for the products. Understanding the sales trends in this case is important for creating the right assortment of products for the benefit of the customers. For example, if the customers prefer one brand over another, the company is likely to find this in the data from the POS. This information would ensure that the company focuses more on providing the desired brand rather than stocking the unwanted brand and taking up shelf space that could be used for other desired products. Similarly, understanding the patterns in customer needs enables the company to meet these needs fully and satisfactorily as was earlier discussed in the skim milk example. Availing the right product when customers want and can afford it simplifies the process not just for the customers but also for the company in question. If there is more skim milk when the customers are willing to buy it and more ordinary milk when they are willing to indulge it as well, the company should make the most out of the trend and at the same time keep the customers satisfied within the dynamic market. The TPS at Wal-Mart is currently the most relevant part of the MIS in relation to the company’s organizational strategy.

Decision Support System (DSS)

Wal-Mart Inc. is a multinational enterprise so that serious decisions that would ensure the smooth flow of the business have to be made regularly. The various ranks of management deal with many contexts that require their input as leaders within the organization and for the most part, their leadership is considered critical for the sustainability of the retail business. The DSS at Wal-Mart was created in a manner that allows continuous improvements based on this understanding, meaning that it is given all the consideration that it requires based on its significance for the success of the organization (Fenz et al., 2014). With this in mind, it should be noted that the company has so far been able to capitalize on the system to avoid potential mistakes that could cost them their legacy and market share. For example, the company may have a laid-out policy on how to handle customer complaints but basically, the store manager is expected to handle a customer complaint based on the prevailing contexts. In such a situation, the manager would have to base their decisions on the given circumstances while also looking into how previous cases were handled by other managers in the organization. The manager in this case can simply make a quick search on their mobile device and find a backing for various options while addressing the customer in question. The flexibility and accessibility as well as reliability of the DSS make it one of the company’s most effective MIS tools in relation to the company’s strategy. The company expects the management to take responsibility for their actions, while also encouraging them to do things in the Wal-Mart way. The DSS guides them on what this Wal-Mart way would be within various contexts without having to take a gamble that could cost the company its reputation.

Executive Support System (ESS)

The management at Wal-Mart may not always have time to look through the heaps of reports on the company’s operations; thus the ESS becomes a strategic component in the company’s MIS. Generating summaries that provide all the right information as needed means that the management is still in a position to have an accurate overview on the operations of the organization without having to spend too much time looking into the details unless required (Rosenblum, 2014). This generally means that the ESS simplifies the work of the management by offering summary reports with just as much insight into various departments in the organization as needed to fully understand the situation on the ground. This reflects the organizational strategy because the company is rather large and the top tier management has many aspects to focus on, thus making it better for them because they can use summaries instead of looking through piles of data.

Recommendations

Wal-Mart has created a great organizational knowledge database that so far enables the management to work seamlessly and efficiently. The company is an example of what technology can achieve when operated correctly. It should however be noted that this organization has invested its technology in the management only. The store attendants and other staff members generally have to gamble, or rely on their supervisors when making decisions on the floor. Considering that they are the ones in direct contact with the customers, the company needs to consider empowering these employees with a lower level DSS system that would be relevant to the contexts of the store floor. The MIS is currently effective but it lacks the backing of an effective knowledge management system on the ground. With effective KM, the DSS will not be heavily tasked by managers who often have to instruct the store attendants on what to do even on the matters that are considerably trivial and yet these matters place the company’s future on the line. It can be suggested that in this case the company already has a working database and the only challenge lies in compartmentalizing it for access by the lower ranking store attendants who also need to manage their own responsibilities with respect to customer engagement.

Conclusion

Currently, the MIS system at Wal-Mart Inc. can be considered an impressive and thus highly effective tool relevant to the company’s goals and objectives as well as business strategy. The company has been able to use their MIS components to improve their product and service delivery to the customers thus boosting customer satisfaction, which in turn boosts sales volumes by increasing customer loyalty. The company has also used the MIS system to make the work of its employees and managers more effective based on the unlimited access to organization knowledge. As the managers are able to perform better, the company also thrives in the market with larger sales volumes and better customer reviews based on the impressive growth within the internal environment. Relying on technology makes work much easier within the large organization as the management has better access to information and is able to use it for the benefit of the organization as a whole. In the future, the company may consider incorporating effective knowledge management in order to extend the technology support to the rest of the staff. The management is currently very effective but the rest of the employees rely heavily on consultations with their supervisors even when they could make a decision on their own as guided by the company’s operating philosophy and previous experience in the same situations.