A CASE STUDY OF WALMART CUSTOMER QUEUING MANAGEMENT PROCESS

“A Case Study of Walmart Customer Queuing Management Process”

Cody Carsey

Austin Chapman

Gregory Ezeani

Yves Goin

Samuel Harrison

American Public University System

Introduction to Queuing System

Walmart Customer Queuing Management Process

Queuing systems are systems that are designed to monitor and control three aspects of
business:
1. Arrivals or Inputs
2. The Queue
3. The Service Facility (Render, Stair, Hanna, Hale, 2016, p. 437).
Walmart will be the company to be examined while examining Queuing systems; which systems
are important for business because they allow the company to understand the behavior of their
customers and how efficiently their stores are able to handle this input.

Walmart In-store Customer Queuing System

Research indicates that Walmart may utilize one or both, Lavi Industries and Cognitect,
queuing systems. Regarding the former, Lavi Industries claims to control customer queuing
through “cloud-based analytics” that “take the guesswork out of your queue management,
monitoring customer footfall and operational efficiency with real-time alerts” (Lavi Industries,
2017). Cognitect claims that Walmart uses its “omni-channel data management system with real-
time transaction information and buying behaviors, integrated across in-store, e-commerce and
mobile points of sale” (Cognitect, 2017). While it is not conclusive which, if either, of the
aforementioned queuing systems is utilized by Walmart, what is certain is that its stores function
under a multichannel, single-phase system. This is characterized by Walmart stores having
multiple cash registers operating at the same time, as well as the implementation of self-service
checkout stations.

Walmart In-store Queuing Factors

Factors related to queuing in Walmart stores include holidays and other commonly
reoccurring celebrations, e.g. birthdays. These events result in an increase in arrivals when
compared to other, especially non-holiday, days. One factor is the size of the arrival. Most
Walmart stores offer in-store refreshments such as Subway restaurants. This factor often lends to
the attribute of larger arrivals, i.e. families, as opposed to single shoppers. Other factors include
pattern and behavior. These two factors incorporate what products are being sought and the
frequency at which these products are needed to be replenished by the average consumer. Many
Walmart stores offer a wide array of products and services. Included, but not exclusive:
automobile services, clothing, electronics, groceries, etc. This range of products and services
complicates queuing predictions. The key is to ensure that no matter the reason for the visit, the
customer will be able to find what is needed and be able to checkout in a timely fashion.

Walmart Waiting Line/Checkout Process Management

Walmart, like other goliath retailers, must continually assess and improve their operations
in order to remain competitive in today’s market. When competition is largely with online
companies like Amazon, speed and efficiency are key competitive factors (Aradhye et al, 2014).
To stay alive, it is essential that Walmart takes care of their customers. One way to do that, is to
constantly evaluate their waiting line and checkout management processes.
Walmart’s goal is to essentially find the sweet spot between two extremes. On one end,
Walmart could keep a large staff that would provide very high levels of checkout support. This
would likely result in excellent customer service, with rarely more than a couple of customers
waiting in line. Customers would without a doubt be happy with their shopping experience, and
appreciate the convenience. This, however, can become expensive (Render et al, 2014).
Walmart Customer Queuing Management Process

Walmart Just-In-Time Queuing Customer Checkout Strategies

Finding the appropriate level of services to provide in order to both maintain customer
satisfaction and process efficiency can be challenging in such a dynamic shopping environment.
Deciding how many cash register checkout positions should be opened can depend on many
factors to include season.
In an effort to address customer service pain points during the holidays, Walmart makes
the service-level decision to reduce long wait times in checkout lines by allocating more man-
hours to the front of their stores (Lariviere, 2014). Walmart increases their service costs
strategically during the holiday seasons as an increased customer flow is expected. This form of
just-in-time (JIT) queue management puts an appropriate level of support against a fluctuating
demand.

Walmart Service Facility Queuing Configuration

Service systems are usually classified in terms of their number of channels, or number of
servers, and number of phases, or number of service stops, that must be made (Render et al,
2014). Walmart is an example of a multichannel, single-phase system at work. Meaning there
are multiple checkout stations, and customers will generally wait for the next available station.
The customer also receives complete service from only one station before exiting the store.
With the aid of technology, Walmart’s current service facility configuration is a reflection
of the company’s resilience in a changing world. The company attempts to keep their customers
happy by enabling them to personalize their checkout experience. In an effort to deliver speed,
choice, and convenience in the customer’s experience, Walmart has employed the use of self-
checkout lanes. The use of this innovate technology gives Walmart a unique advantage by
providing their customers with a quick, easy, and convenient checkout experience.

Walmart Instore Summer Season Queuing Model

In this case study, our team scope of investigation focus on a typical Walmart store
queuing study observations of customer during checkout and service request during market peak
period in one of the Walmart store in Orlando, Florida. This study aims at solving problem of
queuing cost that result from waiting line cost. In addition, this study also focuses on creating
minimum possible cost with minimum possible number of checkout which helps to keeps the
service cost lower and competitive. In addition, in this study, we will be using single- channel
model queuing model which involves seven conditions that must be fulfilled before we will be
able to use this queuing model. Firstly, arrival is served on a first in first out (FIFO) basis.
Secondly, every arrival waits to be served regardless of the length that is there is no balking or
reneging.
Thirdly, arrivals are independent of preceding arrivals but the average number of arrivals
does not change overtime. Fourthly, arrivals are described by a Poisson probability distribution
and come from an infinite or large population. Fifthly, service times also vary from one
customer to the next and are independent of one another but their average rate is known. In
addition, service times occur according to the negative exponential probability distribution and
the average service rate is greater than the average arrival rate. In this evaluation, we used
average value of mean number of arrivals per time and mean number of items served per time for
30 days observation in peak months of 2011.
Walmart Customer Queuing Management Process

Single- channel Queuing model with Poisson arrivals & Exponential service times (M/M/1)

Data
Arrival rate () 6.8
Service rate () 12.5
Number of servers 6
Server cost $/time) 8.5
Waiting cost ($/time) 2.8

Results
Average server utilization(r) 0.544
Average number of customers in the queue(Lq) 0.648982456
Average number of customers in the system(L) 1.192982456
Average waiting time in the queue(Wq) 0.095438596
Average time in the system(W) 0.175438596
Probability (% of time) system is empty (P0) 0.456
Cost - based on waiting 10.31715088
Cost - based on system 11.84035088

Probabilities
Number Probability Cumulative Probability
0 0.456000 0.456000
1 0.248064 0.704064
2 0.134947 0.839011
3 0.073411 0.912422
4 0.039936 0.952358
5 0.021725 0.974082
6 0.011818 0.985901
7 0.006429 0.992330
8 0.003497 0.995828
9 0.001903 0.997730
10 0.001035 0.998765
11 0.000563 0.999328
12 0.000306 0.999635
13 0.000167 0.999801
14 0.000091 0.999892
15 0.000049 0.999941
Walmart Customer Queuing Management Process

16 0.000027 0.999968
17 0.000015 0.999983
18 0.000008 0.999991
19 0.000004 0.999995
20 0.000002 0.999997

Walmart queuing decision making process

Consistently, Walmart strategic decision-making process place much emphasis on
average number of utilization of the server, average number of customer queue and average wait
time from the table. The above data reveals that the system capacity is not fully utilized. This
situation has likelihood in creating emerging environment for a strategic competitor with
proximity to exploit market share that might result from reneging customer behavior. This
situation leads Walmart to introduce self-check machines in 2012 to reduce the wait time and
support full system capacity utilization.
In the same vein, the cost based on waiting & system usage reveals that substantial
amount of the profit is lost due to incompetent full use of system capacity which leads to
increasing wait time. Walmart’s strategy after the investigation shows a focus on reduction of
idle time in any check point. During idle time in return department it automatically switches to
checkout registrar so that they can be fully utilized. This will help to reduce reneging customer
behavior during checkout. Probability table reveals likelihood of occurrence of possible
reneging customer behavior during wait time.

Walmart Queuing System Across Global Supply Chain

Walmart is one of the most popular and profitable retail stores in the world and its
success is due partly to a well-organized queuing system across its global supply chain.
A queue management system is usually utilized to monitor lines or queues. Those queues
could either be made by people waiting to be served or products waiting to be processed. In
general the process of forming a queue or a line is referred to as a queuing theory which is
technique of quantitative analysis. In the formation of line or queuing process, there are three
basic elements that have to be considered. First we have the arrival stage where people or goods
reach the point of being organized in lines waiting to be processed, then there are the service
facilities and finally we have the actual waiting line.
There are many queuing system configurations and Walmart has used almost all of them
to either efficiently monitor its extremely large inventory or to better serve and increase its
customers’ satisfaction around the globe. In some stores Walmart has established the single-
channel, single-phase system where customers are set in one line waiting to be attained by one
clerk or casher. Some other stores, usually the bigger ones, use the multichannel, single-phase
system which is an arrangement with one line and multiple cashers. Walmart also uses two other
queueing systems especially in the flows of the numerous types of large quantity of goods into its
inventories. Some stores warehouse use the single-channel, multiple system and some others use
the multi-channel, multi-phase systems.
Regardless of the type of queue discipline or the queueing system configuration Walmart
uses, its primary objective is to minimize waiting and service costs and to keep the queues short
enough in order to increase customers’ satisfaction and generate more revenue in the process. A
great queueing system in Walmart supply chain is also beneficial to the institution because it
helps in a smooth flow of products and eliminates spoilage and thieves.
Walmart Customer Queuing Management Process

Impact of Jockeying and Balking in Walmart Queuing Management

Generally speaking, humans are very impatient especially when it comes to waiting to
obtain a service. So, customers are usually not patient and most of the time are looking to avoid
long queues or switch from one line to another. Those types of customers are often referred to as
jockeying customers. They enter a line then switch to a different one with the hope or thinking
that they will get served faster or the line they switch to will move at a faster pace. Another
customer behavior to look into is the balking concept when customers may choose not to be part
of a waiting line. They do not join the queue because they believe it is too long or moving too
slow for their own good. In their point of view, cutting the line is the best option.
Jockeying and balking customers are always unhappy and may not decide to come back
to a particular store if they judge that the waiting in line is too tough to handle or deal with.
Therefore, both customer behaviors are causes of negative impact on the operation of a Walmart
store. The company has, in consequence, initiated many strategies to provide satisfactory
services to all its customers. The goal is not only to have customers coming back but also to
have them share their positive experience with others and bring them back with them.
As part of its strategy to provide customers satisfaction, Walmart has use one of the new
technology tools to initiate faster service. In most of the Walmart stores these days, it is normal
to find self-services checkout stations where customers can actually scan their selected products
and utilize their credit card to make their purchase. This system is fast and customers with fewer
items don’t have to wait in long lines. Additionally, another important aspect of the self-service
station is that Walmart benefits a lot from it economically because since there is no clerk or
teller, the services cost has been reduced, leaving only maintenance costs.

Walmart Reneging Queuing Pattern Management Strategies

Another unfortunate customers’ behavior is reneging customers. They are those who
actually make the line or enter a queue, then later on become impatient and take off without
completed their purchase or getting served.
By definition to renege is to go back on, or deny, an agreement or promise and this
practice comes with some sort of cost on Walmart. Surely Walmart has paid some expenses on
time and labor to put and arrange its products on the shelves. Imagine a shopper who collected a
cart full of products then go the counter to make the queue and a few minutes later realized that
he has spent too much time and decided to leave without completing his transactions. Now
Walmart will have to invest time and labor to restock those items.
To avoid these expensive phenomenon, Walmart had made some important service level
decisions. For instance, at almost all of the stores we have specific stations for customers with
fewer items than twelve. There also exists VIP lines for the frequent customers holding a
Walmart issued credit cards. And of course, with the help of the new technology, there are self-
service stations where customers have to make their transactions without the help of a teller. In
addition to all of that, Walmart is one of the few stores that has initiated a special return policy on
all nonperishable items. Being aware of the guarantee that an item can be returned for a full
refund between a certain specific periods of time, customers are willing to spend a few more
minutes waiting in lines until they are served.
It can be summed up that analytical models of waiting lines or queueing theory, are tools
that managers use to evaluate the cost and effectiveness of service systems.
Walmart Customer Queuing Management Process

Walmart Queuing Management Strategies Against Competitor

Retail queuing usually relies on single-serve and multi-server systems. Single
server/single queue system is similar to a gas station with only one attendant, where a single line
will be created behind and must pass through the server. Most retail grocery stores have multi-
server, multi-queue systems where several lines are formed and addressed at multiple checkout
stations. Walmart has been employing multiple self-serve checkout stations to help relieve queue
formation and add to customer satisfaction. The self-serve stations have a single queue/multi-
serve system, giving the customers equal wait times as opposed to a multi-queue/multi-serve
system where customers can be frustrated that one line is moving fast than the one they are
currently in. Since it is a self-service checkout, the customer doesn’t feel that is the store’s fault
if the process is slow either, giving more customer control and adding to their satisfaction.
Walmart has also added Grocery Pick-up, where customers can place their orders online,
pick a time to retrieve their order, and skip the line completely when the associate brings the
order directly to their car. Not only does Walmart use this dispense method, but several self-
serve lockers and robots. The customer will place an order online and select a time to pick it up,
an associate will gather the items in the order and store it in the robot, then the customer can use
the robot to dispense the order whenever they are ready (Springer, 2017).
On top of Walmart's competitive stance on reducing queues and improving the customer
experience, the company is currently testing associate delivery, a program where Walmart’s
associates can earn extra money to deliver orders while they are driving home. This plan
increases the welfare of the employees, as well as, enabling Walmart’s vast infrastructure, which
has a store within 10 miles of 90% of the population in the United States, to rapidly deliver
products to the customers’ doorsteps (Springer, 2017).

Walmart performance queuing measurement pattern

Walmart uses performance measurement to make decisions like adding these new
dispense and delivery methods to their system. They do this by taking 7 factors into
consideration: the average wait time in the queue, average queue length, average wait time and
service time, average number of customers in the queue, likelihood that a service facility will be
idle, total utilization at the system, and the probable number of customers in the system. From
the information gathered from these factors, Walmart is able to make decisions on which system
to implement next (Render et al, 2014).

Conclusion
With long queue times having the ability to create such a large negative impact on
businesses, addressing these issues is a major concern. Walmart continues to strive for customer
satisfaction; first through price, then availability, and now convenience as they move forward
and begin testing multiple fast and efficient dispense methods for customers’ orders.
Walmart Customer Queuing Management Process

References

Aradhye, A.S, Kallurkar, S.P. 2014. A Case Study of Just-in-Time System in Service Industry, 12th

Global Congress on Manufacturing and Management.

Cognitect. 2017. Walmart. Retrieved from https://cognitect.com/walmart-case-study.html.

Walmart Customer Queuing Management Process

Lariviere, Marty. (2014, August 19). Will extra cashiers work for Wal-Mart? Retrieved from

https://operationsroom.wordpress.com/2014/08/19/5306/

Lavi Industries. 2017. Queue Management Technology. Retrieved from

http://www.lavi.com/en/queue-management.

Springer, Jon Jun 01, 2017, J. (2017, June 01). Walmart testing associate home delivery.

Retrieved June 04, 2017, from http://www.supermarketnews.com/online-retail/walmart-

testing-associate-home-delivery

Springer, Jon Jun 02, 2017, J. (2017, June 02). Wal-Mart debuts automated grocery pickup.

Retrieved June 04, 2017, from http://www.supermarketnews.com/consumer-trends/wal-

mart-debuts-automated-grocery-pickup

Render, B.; Stair, R. M. Jr.; Hanna, M.; Hale, T. 2016. Quantitative Analysis for Management,

12th Edition. Pearson Learning Solutions.