WAS SAM RIGHT ABOUT COMPUTERS…?
Late last week I wrote about how Wal-Mart’s love affair with Radio Frequency Identification had turned sour. Now it appears that wider cracks are appearing in Wal-Mart’s much vaunted information technology systems. From CIO:
Sam Walton didn’t care much for technology. The legendary patriarch of Wal-Mart Stores was well-known for his lack of excitement about “computers,” as he called the company’s IT systems. “Truthfully, I never viewed computers as anything more than necessary overhead,” he wrote in his 1992 memoir, Made in America. “A computer is not—and will never be—a substitute for getting out in your stores and learning what’s going on.”
If Walton were alive today (he died the year his book was published), he might be saying, I told you so.
Many still consider Wal-Mart’s pioneering, IT-driven supply chain to be the world’s most efficient, and the company’s technology standards still command respectful attention from its thousands of suppliers. But the $349 billion retailer is stumbling, and IT has played a role in its woes.
So what’s going wrong?
“Wal-Mart was making their margins on sourcing and great technology systems, but everyone has got that now,” says Patricia Edwards, a portfolio manager and managing director at Wentworth, Hauser and Violich who focuses on retail.
The question for Wal-Mart CIO Ford is how much the legendary IT infrastructure and supply chain systems that turned Wal-Mart into a juggernaut (it has nearly 2 million employees and 6,775 stores worldwide) can help right a listing ship. The command-and-control, technology-enabled culture that allowed Wal-Mart to flourish may not help it to maintain its market dominance. Greg Buzek, president of IHL Consulting Group, which advises retailers, says that store managers say in key areas where Wal-Mart has tried to grow, such as in apparel sales, the company has relied too much on centralized decision making—for example, letting corporate systems override local input about what items to stock.
I find it fascinating that two of the factors that eventually brought down the Soviet Union — central control and a planned economy — are also central to Wal-Mart’s problems.
And here we all thought that Capitalism was the opposite of Communism.
[...] WAS SAM RIGHT ABOUT COMPUTERS…? Late last week I wrote about how Wal-Mart’s love affair with Radio Frequency Identification had turned sour. Now it appears that wider cracks are appearing in Wal-Mart’s much vaunted information technology systems. From CIO: Keep reading… [...]