Students in the Supply Chain Management class taught by Prashanth Bharadwaj analyze comprehensive and in-depth cases of many global companies such as McDonald's, Boeing, Amazon, and Nike. But the learning that takes place can be at a much higher level when seasoned professionals from Walmart and Clorox address the students about supply chain issues that they confront as well as their solutions for that.
That is exactly what happened in MGMT 437/537 on November 12. Mia Serena from the Clorox Company as well as Jason Gustafson and Howie Allen from Walmart engaged in a moderated discussion about the opportunities and challenges in their companies, especially during the pandemic, and answered questions from students. These professionals have been contributing their time twice a year in this supply chain class; in addition, Walmart has also hosted more than 400 IUP students in the last ten years in their award-winning distribution center in Clearfield, Pennsylvania.
Serena addressed the shortage of Clorox's products during this pandemic. She said that before the pandemic, Clorox typically maintained 75 days of supply at its warehouses and the retailers maintained about 15 days of supply. But that entire supply was wiped out in four days in early March when the news of COVID-19's potential havoc started spreading. Since then, they have been playing catch-up. They have experienced 900 percent increase in demand for their products during the last eight months. To put that in perspective, the highest spike in demand they had faced before was a 30 percent increase during the H1N1 crisis more than a decade back. The household penetration of Clorox products has increased from 25 percent to 75 percent, according to the company's surveys. They are able to meet only 10 percent of many retail orders that they are receiving while prioritizing the needs of hospitals. They are also trying to rationalize their SKU's by cutting them by more than half and focusing on the most important and hot-selling products.
The unconstrained increase in demand for Clorox's products has put them in a difficult situation about planning supply capacity for the short-term and the long-term. Serena explained how the demand for Clorox's products is more like that of potato chips than that of toilet paper! The demand for toilet paper evens out for obvious reasons; but when a bag of potato chips is available, people want to eat more of it and the consumption goes up. The demand for Clorox's wipes has increased dramatically since people hardly ever used them before the pandemic to clean door knobs, car door handles, cell phones, etc. The big decision in Clorox is to forecast at what level the demand will get stabilized after the pandemic since that is the capacity to which they have to build their supply base. She provided some interesting expansion plans for the company both in the US and abroad.
Gustafson addressed the changes in the Walmart Distribution Center (DC). They are proud of their worker turnover being way below the industry turnover rates. They have had challenges with social distancing and wearing masks since they have hundreds of employees checking in at the same time at the beginning of the shift, but they have been able to manage with limited cases of COVID cases in the distribution center that ships general merchandise to 102 Walmart stores in Western Pennsylvania, Eastern Ohio, and Southern New York. They are also fulfilling some online orders from their DC, although Walmart has dedicated e-commerce fulfillment centers. They have added a shift during the pandemic and have hired dozens of new associates to meet the elevated demand. They are getting ready for the real peak holiday season when they will be processing millions of dollars' worth of goods each day from the DC to the retail outlets.
Allen, the Omni-Channel store manager of Walmart Store #1769 in DuBois, Pennsylvania, exclaimed that it feels like Christmas every day because of the increase in demand. He explained how the retail aspect of the supply chain is in touch with the end user and their expectations. He said about 70 percent of the customers in his store want to use the self-check-out counters, and the biggest growth in employment has been in the online grocery pickup and delivery. Walmart is able to deliver grocery to customers' homes in 90 minutes. He said that is possible because of the company's huge brick-and-mortar store network, with an overwhelming majority of Americans living within 15 minutes from a Walmart store. Both Gustafson and Allen talked about the amazing and lucrative opportunities in Walmart that many outsiders don't realize. They believe in promoting from within, and their high-performing store managers can receive remunerations all the way up to $370K with bonuses. That should motivate some students to explore opportunities in the company!
Bharadwaj, who has been teaching in the area for more than 25 years, said, "I always learn new things when these industry colleagues come to visit my class. Supply chain management is a dynamic field, but it has been more volatile and interesting than ever before since the onset of this pandemic. But for the time constraints, they could have talked for many more hours about interesting and challenging aspects they and their companies are facing."
Turner Anthony, one of the supply chain management seniors in class, said, "It was great to learn even more about my field. I never realized how complex the shipping systems of Walmart and Clorox were. It was amazing to get insight into how companies are working during these trying times and showing how strong America is!"
Mia Serena and Howie Allen also serve on the Eberly College Business Advisory Council.