AI Team Core Project

Walmart

City University of Seattle

Dr. Deanne Larson, PhD

Alán Saúl Silva Nájera

Carlos Iván González Cuellar

Diego Garza Saucedo

Karen Montserrat Torres Vite

Leia Monserrat Fernández Maldonado

Pedro Fernando Tovar Rojas

BUS420_03_ON: AI Business Applications

March 12th, 2022

 Introduction of the Organization

“It is the science and engineering of making intelligent machines, especially

intelligent computer programs. It is related to the similar task of using computers to
understand human intelligence, but AI does not have to confine itself to methods that are
biologically observable.” (John McCarthy, n.d.).

According to IBM, Artificial Intelligence could also be described at is simplest form

as “a field, which combines computer science and robust datasets, to enable problem-solving.
It also encompasses sub-fields of machine learning and deep learning, which are frequently
mentioned in conjunction with artificial intelligence. These disciplines are comprised of AI
algorithms which seek to create expert systems which make predictions or classifications
based on input data.” (IBM Cloud Education, 2020).

“Walmart is the second-largest retailer in the world (outside of China), an enormous

international chain of discount-priced goods and services as of 2022. Walmart has over
10,500 stores and 2.2 million employees in 24 different countries. Items sold include
groceries, general merchandise, auto, salon, and banking services, on-site restaurants, and
more.” (M. Thomas, 2021). Walmart has a variety of stores depending on the need to be met
at a certain location, with the Walmart Supercenter being the most symbolic store from
Walmart, they construct them immensely and vastly, and they also make them on purpose as
a maze with the objective of leading people into navigating through much part of the store to
find what they are looking for and in the meantime walking to find what they need, seeing
something else that attracts them thus making customers want to buy more things.

“Sam Walton was a man with visionary leadership, and our business is a result of that.
Since the first Walmart opened in 1962 in Rogers, Arkansas, we've been dedicated to making
a difference in the lives of our customers. Today, we're helping communities save money and
live better all over the world.” (Walmart Corporate, n.d.).

Walmart, with over 60 years of opening, its founder Sam Walton always cared about
the people and the products being offered at their stores and helping people outside their
business, which is why in 2005, “Walmart takes a leading role in disaster relief, contributing
$18 million and 2,450 truckloads of supplies to victims of hurricanes Katrina and Rita.”
(Walmart Corporate, n.d.) or in 2013 when “Walmart U.S. announces it will hire any
honorably discharged veteran within their first year off active duty. Walmart projects hiring
over 100,000 veterans in the next five years.” And with their commitment to have the best
products, and best people, in 2016, “Walmart opens its Culinary & Innovation Center in
Bentonville, Arkansas to develop and test new and innovative products. Walmart opens its
first training Academy in South Carolina, with 200 total locations planned at stores across the
U.S.” and in 2018 looking out for their employees, “More than 1 million associates benefit
from wage rate increases and expanded maternity and parental leave benefits.” (Walmart
Corporate, n.d.)

Walmart Statistics
 On a global scale, Walmart has a total number of 11,501 stores.
 During the pandemic, Walmart’s e-commerce went up by 74%.
 Texas has the highest number of stores 516.  
 Weekly, Walmart stores have around 265 million customers around the world.
 55% of the company’s employees are women, Walmart statistics indicate
 Walmart managed to surpass eBay in retail e-commerce sales by 0.6%.
 Over 40% of the company’s employees work part-time.
 Walmart’s average full-time hourly wage is $14.26.
 Over 2.2 million people are currently working for Walmart worldwide.
 By 2020, Walmart managed to hire 265,000 US veterans.

According to Marques Thomas, Walmart has presence as of 2022 in over 24 different

countries, with over 10,500 stores and around 2.2 million employees, with a wide variety of
merchandise and items that are sold by Walmart. Walmart long ago entered the Artificial
Intelligence field to ease their problems at that time and to have a state of the art technology
in 1983 when “Walmart replaces cash registers with computerized point-of-sale systems,
enabling fast and accurate checkout.” and in 1987 that “The company installs the largest
private satellite communication system in the U.S., linking the company's operations through
voice, data and video communication.” The 2000´s were very important to Walmart as well
because with the new millennium Walmart offered an unparalleled experience for their
customer whether they were online or in a store through their mobile devices. In the year
2000, “Walmart.com was founded, allowing U.S. customers to shop online.” and in 2007
“Walmart.com launches its Site to Store service, enabling customers to make a purchase
online and pick up merchandise in stores.” In 2016 & 2017, Walmart looking to take a step
forward being a sustainable and recognized leader, and being pioneers in developing and
emerging technologies, “With goals focused on sustainability, Walmart makes a commitment
to become the most trusted retailer by 2025.” and “Walmart launches Store No 8, a tech
incubator, with a focus to drive commerce forward and transform the future of retail.”
(Walmart Corporate, n.d.)

As mentioned above, Walmart is currently making use of Artificial Intelligence to

help at certain steps of the process and help customers. As Walmart´s Executive Vice
President Srini Venkatesan mentioned, due to the pandemic, online purchasing hugely
increased, and the shopping behavior drastically changed too. This surge in online demand
meant that a product could run out of stock faster than before, which is why it needed a
solution, to which Walmart faced with the implementation and help from AI to help
customers and personal shoppers choose the best substitute to the product that was at the
moment out of stock. “The decision on how to substitute is complex and highly personal to
each customer. If the wrong choice is made, it can negatively impact customer satisfaction
and increase costs.” (para. 3). “The tech we built uses deep learning AI to consider hundreds
of variables size, type, brand, price, aggregate shopper data, individual customer preference,
current inventory and more in real time to determine the best next available item. It then
preemptively asks the customer to approve the substituted item or let us know they don’t
want it, an important signal that’s fed back into our learning algorithms to improve the
accuracy of future recommendations.” (para. 5). “Following the deployment of this tech,
customer acceptance of substitutions has increased to over 95%.” (S. Venkatesan, 2021, para.
7).

Strategic Goals of the Organization

Walmart is an organization that aims to provide safe, affordable food and a variety of
products to people around the world where there is a store. These in a way that enhances
economic opportunity, environmental and social sustainability, and local communities that
creates value for the business and for society. They provide nearly 270 million customers
served every week with convenient access to affordable food, health and wellness products,
and general merchandise to create more than $500+ billion total revenue with more than
11,700 stores under 65 banners in 28 countries and e-commerce websites.

The organization to develop strategies uses some values to create a structure of

growth, respect for the individual, service to the customer, strive for excellence, act with
integrity to win and make every day easier for busy families, change how they work, operate
with discipline and be the most trusted retailer.
The key tenets of Walmart’s business strategy is known as Walmart’s guarantee to the
customer that whatever they need will be at Walmart, and they will get it for less than at the
competition. Aside from the sheer size, Walmart portrays the idea of combining an entire
grocery store with what is, in effect, a department store. Moreover, to be able to pick up not
just the birthday cake and snacks, but the gifts, favors, decorations, and even an extra
crockpot, all in one trip, is a game-changer.
As many know, that is something Walmart is known for; its unbelievably vast
inventory, the convenience of only having to make one trip for everything on your list.
(McMillion, 2018). With actions combining the stores and clubs with e-commerce to make
every day easier for busy families. At the same time, it is known that the transformation is
about more than the shopping experience. Technology has created a new level of
transparency and, increasingly, customers want to do business with companies they trust.
They use alongside the suppliers, NGOs, thought-leaders and elected officials to change
entire systems. They want to lead on the environmental, social and governance issues that
matter most to the customers, associates, shareholders and communities. An ambitious
strategy is to be powered by 100 percent renewable energy, to create zero waste and to sell
products that sustain people and the environment. Since then, they have deepened and
broadened the aspirations to focus even more on the planet and on people they associate who
work at Walmart and the people who make the products we sell. Also, the set of long-term
aspirations in three broad areas: creating economic opportunity for associates and the people
in the supply chain, further enhancing the sustainability of the operations and the supply
chain and strengthening the communities where they operate.
As collaborating with suppliers and others, including nonprofit organizations, to help
combat forced labor in the global supply chain. They are proud of this progress, but they
know that they can do more to create shared value and earn the trust of all of their
stakeholders. The principal approach to environmental, social and governance (ESG) issues
goes beyond environmental, social and economic sustainability. Aim not only to help people
enter the workforce with competitive wages, but also to help them build skills needed to
advance, whether at Walmart or beyond. They want to build a skills-based employment
system with ladders of opportunity, at scale, that include everyone in numbers representative
of their communities and when it comes to human rights in supply chains, they aim not only
to source responsibly but also to work with others to rewire chains for social sustainability.
Another area where Walmart separated itself early is its liberal return policy. In any
case, it would be possible to return anything with a receipt and get the cash back. Still, as the
return a parcel of things without a receipt, as well, and get the cash back or get store credit.
Clients adore that the company does not place obstacles to return any kind of item is
much easier and simple for them. As people like concise actions and less problems to be
solved.
Be that as it may, whereas Walmart has been making cash moves into the online
circle, the brick-and-mortar areas keep them competitive. So, as much as shoppers adore the
comfort of online shopping, shopping as a five-senses-engaged involvement is not going
anywhere.
Business Problem To Be Solved
Greg Foran, the CEO of Wal-Mart US, started making short visits to the company’s
stores around the country, as the company was facing some struggles with their sales. It is
always important and needed to identify the problem before attempting to find a solution.
Many companies usually detect a complication and try to fix processes that, although might
need to be improved, are not the main reason of the problem. By analyzing the struggle and
identifying the main issue, it will be easier to identify a specific solution.
After the short visits to the Wal-Mart US stores made by the CEO, he, in fact, found
some problems that needed to be solved, one of the main ones was that the stores were not
restocking shelves fast enough. According to Hayley Peterson (2015), most of their stores
had too much inventory of certain products in the backrooms, and due to a lack of
management in their processes, these stores were not being able to shrink the inventory and
some other ran out of stock.
Wal-Mart is a company that is involved in the process of receiving and selling
products and it is daily dealing with a lot of customers that are willing to acquire goods, so
they need to manage their supply chain and inventory the best way possible, as it is a crucial
part of their business. Therefore, the main aspect about the problem that they should solve is
the amount of inventory that they have. Even though human work is essential, many
organizations have concluded that there is also a need for digital transformation for these
kinds of processes.
 As Greg Foran found out, Wal-Mart was experiencing some manufacturing problems
in the management of their inventory. The company has suffered from holding too much
inventory for some products. However, if there is no process to have a well-done
management of their inventory, they could also experience shortage in products. This
problem tends to affect their company directly at their costs and profits as when there is too
little inventory, some clients are not able to find what they are looking for and they will be
unsatisfied, and when there is too much inventory, most of it could be wasted because it will
not be used. Besides this problem, relationships with customers could be damaged, as the
company would now be seen as an organization that does not meet their client’s expectations.
These damaged relationships affect the allegiance from the customers towards the company,
and this might lead to them not going back to the stores, as they will think that Wal-Mart
cannot supply the needs they have. That being the case, it is important to find a solution of
this struggle.
Now that the problem has been identified and its origin, it is easier to find a specific
solution that can solve the lack of inventory management. Artificial Intelligence has a lot of
branches and applications, and by knowing more about the problem that has been identified,
it will be easier to choose the best A.I. as a solution.
AI Capability
Computer Vision is a set of technologies for acquiring, managing and analyzing
visual information. Computer vision is a technology that allows machines to "see" and
process this information to make decisions. According to IBM (n.d) "Computer vision is a
field of artificial intelligence (AI) that enables computers and systems to derive meaningful
information from digital images, videos and other visual inputs and take actions or make
recommendations based on that information." (para 1.)

The term Computer Vision is a field of Artificial Intelligence and Computer Science
that teaches computers to 'see' and understand the content of digital images. In other words, it
aims to give computers a visual understanding of the world and is at the heart of powerful
algorithms. In general terms, computer vision technology is carried out in three stages:

● Acquisition. Computers have a daily bank of more than 3 billion images and videos
that we capture with our electronic devices, in addition to those obtained from
surveillance cameras, quality control processes and artificial satellites.
 ● Processing. Artificial intelligence called deep learning creates analytical models with
defined parameters for computers to learn data, identify patterns and based on this,
make decisions with minimal human intervention.
● Interpretation. Based on the information they have processed, computers can identify
and classify the objects they have already seen, and then even react in different ways
to each of them.

It is important to remember that one of the main objectives of supermarkets is

customer satisfaction in order to cover a need in an immediate and safe way, providing a
good user experience during the purchase. Walmart is having trouble covering customer
satisfaction due to its lack of restocking in its stores. Product demand may be one of the
biggest problems facing the company and this affects the restocking process, but Walmart
must always improve the customer's shopping experience by making products available at
any time.

The use of computer vision within these types of organizations can bring great
benefits. Walmart could improve the shopping experience and generate greater satisfaction
using computer vision. Walmart using computer vision would be focused on identifying the
actual location of products and identifying when they are out of stock or out of order. By
acquiring an image of the shelves, processing the images and being notified when products
are running low or out of stock at a precise time. This would save human employees a lot of
time and effort, thereby focusing on things such as catering to customer needs to improve the
service quality.

Detailed Explanation of AI Capability & Applications

Computer Vision as explained above, is a capability and field of Artificial Intelligence
and Computer Science. It all began in the 1950´s with simple tasks using neural networks,
such as sorting objects into categories and detecting objects and their edges. Then, in the
1970´s was its first commercial use and its task was to interpret typed and handwritten text by
using optical recognition. In the 1990´s programs such as facial recognition flourished since
large sets of images were available, which made it possible to identify specific people in
videos and photos.
Nowadays in the modern technology era computer vision has suffered but a
renaissance, such as built-in cameras in phones, more affordable computing power, easy
access to hardware’s designed especially for computer vision, and convolutional neural
networks which are new algorithms which take advantage of the hardware’s and software’s
capabilities powered by Computer Vision.
Computer Vision works by acquiring an image, from anywhere such as real-time
videos and photos, then it processes these images, to then understand the image to classify or
segment the image, to recognize shapes or objects in those images.
Computer Vision applications are wider and more versatile compared to years ago,
some of this are:

● Deep Learning. Deep learning teaches and trains computers to see and
recognize by using neural networks powered by Computer Vision.
● Image Segmentation. Parts images into several pieces to be examined
separately.
● Facial Recognition. This application of Computer Vision can recognize and
identify human faces and even specific individuals in images.
● Defect Detection. Defect detection is just as its name mentions, helps workers
mostly in industrial areas to detect certain defects which are difficult to
perceive to the human eye.
● Metrology. Computer Vision has taken over the job of metrology of measuring
with acute precision.
● Edge Detection. This application of Computer Vision is used to identify the
outside edges of an object in an image.
● Intruder Detection. Computer Vision has contributed to intruder detection
through hyper spectral cameras that allow people to differentiate things from
plastic or metal or differentiate combinations of materials in the industrial
area.
● Pattern Detection. Is used to recognize shapes, colors and visuals that are
repeated in images.
● Image Classification. This application is used to group images in different
segments.
● Assembly Verification. Computer Vision makes a great contribution to the
industrial area because this allows the user to identify piece by piece and step
by step, verifying that the assembly is correct.
● Feature Matching. Detects patterns that match the similarities in images to
classify them.
 ● Object Detection. This application of Computer Vision helps the user identify
specific objects in an image. Several models use an X, Y and create a box
where X, Y create a boundary and it's within that boundary that the AI
identifies anything.

These are just some of the several applications that Computer Vision can have,
although these are just some of the most basic applications, in more advanced software’s and
hardware’s the applications of this AI can be more complex.

Expected business outcomes of AI capability adoption

With the application of these technologies in the installations of the Walmart shelves,
they will allow employees to more easily locate the products that are about to run out on the
shelves and to be able to streamline the supply chain process in that sense so that consumers
can find all of the products that Walmart offers. This will eliminate the loss or waste in the
products since having the shelves full will allow consumers to be able to acquire them with
ease and avoid having a lot of loss as Walmart currently has.
Artificial intelligence and machine learning (ML) are already beginning to change the
face of the supply chain industry, which will further exacerbate the divide between winners
and losers. By removing deep-seated inefficiencies and uncertainties, AI and machine
learning drive enterprise-wide visibility across all aspects of the supply chain, and with
granularity and methodologies that humans simply can't mimic at scale. Artificial intelligence
in supply chains is helping to deliver the powerful optimization capabilities needed for more
accurate capacity planning, improved productivity, high quality, lower costs, and increased
output, all while fostering safer working conditions. (Pakmail, 2021)
Some potential benefits from Pakmail 2021 adapted to Walmart about the adaption of
AI capabilities are:
1. Accurate inventory management. This management will ensure the correct flow
of products in and out of a warehouse. Currently, there are many variables related to
inventory, such as the processing of orders and the preparation for their transfers, which can
take a high amount of waiting time to correctly carry out these movements and that also
carries a high amount of time. error tendency. Accurate inventory management will help
prevent such error trends as overstocking, understocking, and unexpected stockouts.
 Thanks to the tools provided by artificial intelligence and its ability to handle massive
data, these can be very effective for inventory management since these intelligent systems
have the ability to analyze and interpret large sets quickly and also provide timely guidance.
on forecasting supply and demand. These artificial intelligence systems can also predict and
discover new consumer habits and forecast seasonal demand, this application will help
anticipate future trends in customer demand while minimizing the costs of overstocking
unwanted inventory.

2. Warehouse efficiency. Having an efficient warehouse is a crucial part of the

supply chain and automation can help in timely retrieval of an item from a warehouse and
ensure a smooth journey to retail stores or even customers' homes. Artificial intelligence
systems can also solve various warehouse problems more quickly, precisely and effectively
than with a human being, since this area is automated, complex procedures can be simplified
and work accelerated, in addition to saving valuable time than a person It can take time while
the automation of these does it quickly and without errors. AI-driven automation efforts can
significantly reduce the need for and cost of warehouse staff.

3. Enhanced security. AI-powered automated tools can ensure smarter planning and
more efficient warehouse management, leading to improved worker safety and improved
Walmart product safety. This artificial intelligence can also analyze safety data and inform
manufacturers of potential risks in the warehouse, helping them to react quickly and
decisively to keep warehouses safe while also complying with safety standards.

4. Reduced operating costs. This is a great benefit for the organization regarding the
automation and implementation of artificial intelligence in the supply chain. From customer
service to warehousing, intelligent automated operations can run error-free for longer than a
human could. This will achieve the reduction of the number of errors and incidents in the
workplace since artificial intelligence tools provide greater speed and precision, achieving
higher levels of productivity.

5. Delivery on time. The advantages offered by the artificial intelligence tools that
will be implemented in Walmart will help reduce the dependence on manual efforts, which
makes the entire process faster, safer and smarter, which makes it an improvement in
productivity very significant for the organization. This will help facilitate the timely delivery
of products from warehouses to the store in a smarter and more efficient way. Automated
systems speed up traditional warehousing procedures, thus eliminating running inventory
gluts throughout the value chain with minimal effort to achieve delivery targets.

All these advantages mentioned above will bring with them a great commercial
impact for Walmart, since they will practically allow to speed up and improve the systems
that are currently in the warehouses to have the correct number of products in the commercial
stores and that there is no shortage of some products. in stores, which will allow consumers to
find everything they are looking for and even see more products that can be bought, likewise
it will allow low-consumption products not to stagnate their stored merchandise since with
these systems it will be possible to carry out studies of the products that are sold the most and
which ones are not so as not to have loss expenses for products that expired and were not
sold. In the same way that automating these processes will give the company benefits of time
and organization, it will also allow it to have lower expenses in labor since much help from
human personnel will not be needed to carry out these processes, only some personnel in
charge. to monitor these artificial intelligence tools to ensure that everything is working
correctly.
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