Prevention Costs
Walmart has always been about providing their customers with
products that are affordable. Their motto of “Save money. Live better.” Is possible
because they take on certain costs to prevent their products from reaching
their customers with any defects. Prevention cost is very important and is why
they train their employees extensively so that they can provide the customer
with the best service. Employees are trained and go through an orientation
called “Pathway” which would teach employees what is expected of them and give
them an overview as to how Walmart operates and what will help achieve customer
satisfaction. The pathway will train employees and better their knowledge in
different categories not just in one department this can help the companies and
employees. Walmart also has product requirements in place, which means that in
order for them to sell something the manufacture of the product must meet
specific requirements and expectations, some things that are prohibited are
offensive products or restricted products.
In order to deliver the best product to its customers,
Walmart has a receiving department in place. They are responsible to receive products
and verify that what is being delivered have met specific specifications and
the quantity of the items is correct. This allows Walmart to keep track of
inventory as well. They take different measures for the products that are
already on the floor, to keep track of what they have or to detect any problems
they perform annual audits.
Internal Failure Costs
In the event that Walmart finds any defect after the product
has been received and displayed, they have departments in place to take care of
products that are defective to prevent them from reaching its customers. If anything
is found unworthy of selling to a customer then its brought to the claim
department, they then process anything that’s damaged, open, expired, etc. and
determine whether it’s going to waste or salvage for donations.
With a company as big as Walmart it is not possible to keep
track of all defected products. If such product is sold to a customer they have
a return & refund policy in which the state that they will “exchange,
refund or repair” within 90 days as long as the item purchased meets certain
guidelines. For items such as electronics Walmart offers a warranty program,
that a customer can buy to protect the life of the product and in the case that
it breaks, they can file a claim online for repair or replacement.
Walmart has faced issues with Health care and essentially
this leads to Ethical Failure costs. In 2014, Walmart decided to raise health
insurance premiums and those employees who worked less than 30 hours will now
not have access to insurance. Since the health care was rising, the raised
their prices that will affect everyone. Walmart also decided to cut employee’s hours so that they won’t
qualify for health benefits.
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