By Kevin Meyer
I've written a lot about Walmart, in particular their supposedly glorious supply chain. To be honest, they execute a traditional supply chain exceptionally well. They source from cheap labor countries, put it on big ships, and distribute it to thousands of stores incredibly efficiently. For a traditional supply chain. They still run into issues with too much inventory floating on slow-moving ships, arriving after that particular style has lost favor. And they beat the crap out of their suppliers to get every last penny of margin out of them, and then claim they deliver that to their customers.
If they actually get the product to their customers. Something Walmart is apparently forgetting is that the supply chain is not complete until the product is in the hands of their customers. That last hundred feet from the store's big back room to the shelves has become an issue.
During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics. The cosmetics section “looked like someone raided it,” said Hancock, 63. “If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go."
As I mentioned, it's only a hundred feet away. If that.
It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers.A thinly spread workforce has other consequences: Longer check-out lines, less help with electronics and jewelry and more disorganized stores, according to Hancock, other shoppers and store workers.
At the Kenosha, Wisconsin, Wal-Mart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room -- an area so full that “no passable aisles” remain, she said. Meanwhile, the front of the store is increasingly barren, Tifft said. That landscape has worsened over the past several years as workers who leave aren’t replaced, she said.
Of course Walmart has a different perspective...
“Our in stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country,” Brooke Buchanan, a Wal-Mart spokeswoman, said in an e-mailed statement.
A lot of good that does you if you can't get it onto the shelves. Perhaps that spokeswoman should talk to some Walmart execs.
Last month, Bloomberg News reported that Wal-Mart was “getting worse” at stocking shelves, according to minutes of an officers’ meeting. An executive vice president had been appointed to work on the restocking issue, according to the document.
“When times were good and people were still shopping, the lack of excellence was OK,” said Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management in Cambridge, Massachusetts. “Their view has been that they have the lowest prices so customers keep coming anyway. You don’t see that so much anymore.”
Shoppers are “so sick of this,” said Ton, whose research, published in Harvard Business Review, examines how retailers benefit from offering good wages and benefits to all employees. “They’re mad about the way they were treated or how much time they wasted looking for items that aren’t there.”
In Walmart's eyes it's apparently those pesky workers again. What a "cost"...
Retailers consider labor -- usually their largest controllable expense -- an easy cost-cutting target, Ton said. That’s what happened at Home Depot in the early 2000s, when Robert Nardelli, then chief executive officer, cut staffing levels and increased the percentage of part-time workers to trim expenses and boost profit. Eventually, customer service and customer satisfaction deteriorated and same-store sales growth dropped, Ton said. “When you tell retailers they have to invest in people, the typical response is: ‘It’s just too expensive,’” Ton said.
Wal-Mart is entangled in what Ton calls the “vicious cycle” of under-staffing. Too few workers leads to operational problems. Those problems lead to poor store sales, which lead to lower labor budgets. “It requires a wake-up call at a higher level,” she said of the decision to hire more workers.
As opposed to the cost - and not just in sales - of empty shelves.
Like the rest of us, even Walmart is only as good as the last 100 feet of its supply chain. Sometimes all it takes is the "cost" of another human or two.