Walmart KPIs

This article elaborates on Walmart KPIs which include productivity measures and performance metrics.

Productivity measures

Walmart’s operations management aims to boost productivity to support the minimisation of costs under the cost leadership generic strategy. There are different quantitative and qualitative measures of productivity that apply to human resources and related business processes in Walmart. Some of these productivity measures include revenues per sales unit, stockout rate, and duration of order filling.

Revenues per sales unit

The revenues per sales unit refers to the sales revenue per store, the sales revenue per sales team, and average sales revenues per store. Walmart’s operation managers seek to increase revenue per sales unit.

Stockout rate

The stockout rate refers to the frequency of stockout, which is the circumstances where inventories for some products are empty and deficient although there is positive demand. Walmart’s operations management aims to reduce stockout rates.

Duration of order filling

The duration order filling refers to the amount of time consumed to fill inventory demands at Walmart’s stores. In this case, Walmart’s operation management aims to foster its business performance.

Performance metrics

Walmart defines its financial framework as strong, efficient growth; consistent operating discipline; and strategic capital allocation.

Strong efficient growth

Walmart prioritises on strong, efficient growth and this means it will focus on the most productive growth opportunities, augmenting comparable store and club sales, advancing eCommerce sales growth and bolstering multi-channel initiatives. Sometimes, the company invests strategically on its log run growth. Walmart uses comparable sales which indicates the performance of its existing stores and clubs, as well as eCommerce sales, for a specific period over the matching period in the preceding year. The company generates comparable sales using the retail calendar in its quarterly earnings releases. The retail calendar is used in the retail industry to report comparable sales.

Its comparable sales surged 2.9% and 3.7% in fiscal 2020 and 2019, respectively, due to ticket and transaction growth. Its eCommerce sales contributed around 1.7% and 13% to comparable sales for fiscal 2020 and 2019, respectively, as the company kept focusing on a smooth omni-channel presence for its customers. Sam’s club comparable sales surged 1.6% and 5.4% in fiscal 2020 and 2019, respectively. Sam’s club comparable sales for both fiscal 2020 and 2019 took advantage of a rise in transactions and higher fuel sales.

Consistent operating discipline

Walmart operates with discipline by handling expenses, maximising the ability of how it works and establishing an environment whereby it has sustainable lowest cost to serve. It invests in technology and process advancement to boost productivity, handle inventory and lower costs. It measures operating discipline through expense leverage, which it defines as net sales growing at a swifter rate than selling, general, administrative, and operating expenses. For fiscal 2020, selling, operating, administrative, and general expenses as a percentage of net sales reduced eight basis points, when compared to the preceding fiscal year because the company focuses on expense management amalgamated with its rise in comparable store sales.

Strategic capital allocation

Walmart’s strategy incorporates enhancing its customer-facing initiatives in stores and clubs and creating a smooth omni-channel experience for its customers. The company is allocating more capital to eCommerce, supply chain, store remodels, technology and less to new store and club openings, when compared to the previous years. Its total fiscal capital expenditures amounted to $10,344 in 2019, and $10,705 in 2020.

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