How does WalMart use POS and Data Warehousing Systems

1
How does Wal-Mart use POS and Data Warehousing
Systems?
Jianfeng Wang, PhD MIS/Decision Science IUP, In
diana, Pa 15705
2
Background

• Before 1970s, manufacturers, especially brand
  name ones, control the retailing
  
• control production plan, pricing, product display
  and specify display locations
  
• Retailers follow
• Around the year 1975, retailers started to use
  POS
  

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Value of POS data

• Who control data source, who will?
• POS systems provided by IBM
• Collection of POS data
• Analysis of POS data
• POS change the power balance to the advantage of
  retailers

4
Source Data

• Source data could mean the source of power, if
  one can analyze the data and know how to use data
  strategically

5
IBM POS system

• Wal-Mart used IBM pos system since 1975
• IBM pos system today

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Collection of POS data

• A POS data table usually consists of store
  number, item number, department number, activity
  sequence number, selling unit quantity, selling
  amount, selling cost, Monday unit quantity,
  Tuesday unit quantity, Wednesday unit quantity,
  Thursday unit quantity, Friday unit quantity,
  Saturday unit quantity, and Sunday unit quantity
  (Westerman 2001)

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Analysis of POS data

• Data Warehouse and Data Mining

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Data Warehouse

• K-Mart first built a commercial database in early
  1990 using TeraData technology (now part of NCR)
  
• Wal-Mart Built a prototype system for
  Merchandising Division in later 1990 using the
  same technology provided by TeraData
  
• Wal-Mart improves its system whenever they can.

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Cost and Business Value of DW

• Cost for the prototype 20 million in 1990
• (but similar hardware and software just cost
  about 20, 000 today)
  
• Value Buyers need to analyze data. With DW, they
  run a query to the DW. Each query save 12000.
  Every week they ran bout 200 queries. Money
  saving weekly is equal to 2.4 million.

10
Expansion of DW

• Due its high ROI, DW was expanded to be
  company-wide
  
• Today, Wal-Mart DW has the storage of 101
  terabytes.
  
• One terabyte of information is equivalent of 250
  million pages of text
  
• Every week 50, 000 queries are run at DW
• Huge savings

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Better understanding of customers

• Know what customers want most and when
• Create private brands based on data mining
  results. Private brands are more profitable than
  famous brands
  
• Display products in the Wal-Mart way
• Pricing policy
• Production plan