Wal-Mart’s pioneering use of technology and market power has transformed the way goods are manufactured and distributed in the global economy; allowing him to have a profound impact on workers in the United States and around the world.
The late Wal-Mart founder Sam Walton was notoriously known for his aversion to technology. According to his 1992 memoir, Made in America, he wrote: “To tell you the truth, I never saw computers [as he called the company’s Information Technology (IT) systems] as more than just necessary overhead. A computer is not and will never be a substitute for going out to your stores and learning what’s going on.”
Walton’s distrust of computers is corroborated by his handpicked successor, David Glass. According to Anthony Bianco’s book Wal-Mart: the Bully of Bentonville (2007), Mr. Glass would observe his boss comparing a computer-generated invoice to his own handwritten ledger. In addition, he would also provide a copy of the computer generated invoice. Mr. Bianco surmised that Mr. Glass opted to go “full throttle” in his IT systems unit (headquartered in the David Glass Technology Center) at or around the time of his boss’s death. .
Under the inspiration of David Glass, Wal-Mart became a technology leader. “The company was an early adopter of barcode scanning and ultimately set the gold standard for supply chain efficiency thanks to highly integrated point-of-sale systems, satellite-communicated inventories and even the RFID tracking” (Techdirt.com, Lindquist, 2007). ). As a special note,
RFID uses low-power radio transmitters to read data stored on tags, at distances ranging from 1 inch to 100 feet. Labels are used in place of barcodes and can contain much more data, allowing manufacturers, suppliers, and retailers to more efficiently track and manage assets (Vijayan & Brewin, TexasInstruments.com, 2003, paragraph 2).
With the vaunted supercomputer housed in the David Glass Technology Center, which ranks second in the world after the Pentagon’s supercomputer, Wal-Mart can transform the way products are made. For example, the company developed web-based software (Retail Link) that allows Wal-Mart and its suppliers to monitor the movement of their respective inventory from the shelves (including distribution centers) to the registers. In this way, Wal-Mart can keep inventory low which helps reduce operating costs. Thus, Wal-Mart is able to pass the savings on, in part, to consumers in the form of lower prices. In turn, suppliers are forced (correct choice of word) to accept a lower wholesale price (Wal-Mart can buy merchandise in large volumes, dwarfing demand from other retailers: competitive advantage) (Valenti, Go. com, 2002).
To compensate for the lower wholesale price, Wal-Mart’s suppliers gain (sometimes with Wal-Mart’s help) efficiencies by making their products more profitable to produce and by lowering wages for their employees.
The reduction of the salary of the employees of Wal-Mart and its suppliers, to support the reduction of their respective prices to the consumer, generates a negative impact on the workers of the United States. The reduction in wages is accompanied by a lack of health care and a poor quality of life for American employees. Resources for US employees are nonexistent due to Wal-Mart’s successful ability to avoid unionization (courtesy of our US government) and its suppliers’ ability to relocate (outsource) the manufacturing of their products to foreign countries.
The snowball effect (noted in the previous paragraph) also negatively impacts workers around the world. For example, foreign suppliers compete to satisfy Wal-Mart’s fanatical demand for low prices on its products. Thus, in some countries (with the complicity of their governments), employees are reduced to indentured servitude (including child labor) without government protection or a remedy through collective bargaining. In fact, Professor Musuraca (2007) pointed out that union leaders are sentenced to death in Colombia and unions do not exist in China.
Wal-Mart’s pioneering use of technology also transformed the way goods are distributed in the global economy. For example, “they have such an efficient system that products come in without being in the warehouse (Go.com, 2002, para 15),” said Arun Jain, professor and chair of marketing at the University at Buffalo School of Management. . Similarly, transforming how goods are distributed has the same negative impact on workers in the United States and around the world.
Consequently, Wal-Mart’s pioneering use of technology helps establish its power in the marketplace as it continues to pursue ‘the lowest price’. For example, Wal-Mart retains the number one spot on the Fortune 500, and as Professor Musuraca (2007) taught, Wal-Mart is a microcosm of the US economy. I am adding to Professor Musuraca’s point by stating: “Wal-Mart is a microcosm of the global economy complete with all its warts (the negative impact on workers everywhere).”
In conclusion, I showed how David Glass overrode the late Sam Walton’s reluctance (after he faded out of the picture) to see the importance of investing in ‘computers’ by establishing the David Glass Technology Center.
David Glass’s vision and implementation of Wal-Mart’s pioneering use of technology help secure its market power, which in turn transformed the way goods are manufactured and distributed in the global economy. Additionally, I explained Wal-Mart’s impact (through its technology and power) on working people in the United States and around the world. Did David Glass prove the late Sam Walton, whom Wal-Mart reveres as an oracle or a prophet… heck like the Moses (if not King Solomon) of Bentonville, wrong?
