Table of Contents
Starting off,
Original: This paper will explore the role of media in influencing public opinion.
Paraphrased: The focus of this essay is to investigate the impact of media on public opinion.
Challenges
Service Effectiveness
Resource Utilization
Work in Processes (WIP)
Citing
An opening statement
Costco Canada is a major retailer. Sol Price’s retail concept was first introduced in San Diego, California in 1976 by its founder. In 1983, Jim Sinegal opened the first warehouse at Seattle in Washington. Costco and the largest store merged later in 1993 forming the most talented and gifted leadership group. Costco is now the world’s leading and largest club. Costco’s stock is 4,000 items, while supermarkets carry 30,000. Costco retails electronic, computer, furniture, outdoor, appliances, jewelry and other items. Many of the overseas subsidiaries are located in China. Costco has opened stores in Shanghai, Wuhan and T Mall China in the past. Costco’s China operations have seen some significant developments. China is one of their most challenging markets.
Costco has a code that governs its business practices. This has allowed it to be one of the world’s leading retailers. Costco’s code of conduct includes abiding by the law in all cases, treating its employees and customers with respect, and rewarding shareholders. In all the decisions the company makes, its corporate social duty is a priority.
This report is a summary of Costco’s processes and performance. In order to understand all of these aspects, our team visited the King George Branch in Surrey Costco between May 4 and 6, 2019. Costco is a large retailer that has many different strategies and methods. Our team was able to learn more about these by visiting the King George, Surrey branch of Costco on May 4 and 6, 2019.
Costco faces a number of challenges, despite its successes. To remain one the top retailers in Canada and around the world, Costco must overcome them. Costco hasn’t been able solve all the challenges and problems it faces since 1996.
Costco’s worst nightmare is that online shopping has become so popular. Amazon and other online retailers are likely to accelerate the death of traditional retailers. Costco has to change its habits because of the shift in consumers’ shopping habits to online.
Its business model also has a few problems. One of its biggest challenges is the membership, which is where it relies heavily on its customers’ bulk purchases. However, this could change in the future as more and more people are moving to competitors like Walmart’s Sam’s Club. The discounts and costs are similar. However, the consumer-tailored selection is what makes the difference. A change in consumer tastes is likely, and this could be detrimental to the company because it relies on a warehouse approach. Omni channel, a retail experience adopted by a lot of retailers, is challenging the model. Costco’s online presence is less than other retailers.
The company is sandwiched by competitors that have been emerging on the marketplace for a while now. Amazon, Walmart’s Sam’s Clubs Home Depot and Kmart to name a few, all offer the same service, at the same or similar price. Costco has many challenges to overcome in order to regain market control.
The process that an organization follows is crucial to its operations. It outlines each task, including what to do, when and who should do it. It has a direct link to the performance of the business. Operation management is based on the Four Vs – volume, variety, variation, and visibility. These are all important and integral to any business. The four V’s of operation management are the same for most businesses, but vary according to the type. The Four V’s can be interpreted in two different ways. One is by the type of product sold in the store and the second is by the number of people in the business or store.
We conducted this analysis at the Surrey Branch Costco. Here are the results of our analysis and findings:
Costco has a reputation for wholesale sales and the key to their success is volume. Costco is known for selling in bulk and packs. This helps the company to sell more products at lower prices. Costco’s potential buyers are large families and small businesses. In essence, high volume is synonymous with satisfying more customers. Costco’s volume is defined by the average of 9 to 10 customers entering the store every minute. This shows that the company has a large volume.
Variety refers to the variety of products available, giving customers more options. Costco, for example, offers several products of the same genre. A greater range of products will result in a higher cost per unit, but this may be different for retail. It is different from the customer’s perspective. Costco is known for its wide range of products. This is also true for other departments like bakery, clothing, dairy etc. Costco’s own brand (Kirkland Signature), which offers high-quality products at low prices, is responsible for the limited variety. Costco, with the exception of Kirkland products, is a store that offers many options and a variety. Customers are more satisfied.
“Variation changes demand” (Dharmasiri, 2011). Costco is affected by many factors. Winter is the main cause of this, since winter’s demand is different from summer. This variation is also referred to as the arrival of different customers during different days of the week. On May 6th the number was higher. In the morning hours (9am-12pm), there were around 6 customers per minute. This number started to rise after 12pm. Surrey Costco’s busiest hours are 4 pm to 6:30 pm, when the arrivals are usually higher. Location is another factor that influences demand. Local communities and their surroundings also have an effect. Local festivals and culture can affect the product demand and cause variations. Costco Surrey is heavily influenced and shaped by Indian culture. Therefore, some items and products are exclusive to Surrey Costco.
The customers’ experience of the service is what determines the level of visibility. Visibility is the ability to get clear information about a product. Costco has a large space for products, despite its old infrastructure. People can clearly see the product even from a distance. Each department is numbered to make it easier for customers. Costco’s website allows customers to buy products, view new offers and browse the latest offerings. Costco stores provide information and support about their products. Costco offers customization options in certain departments, such as electronics and bakery. At any point in the buying process, customers can decide not to buy a particular product. Customers can return products at any time, as long as the receipt is present. This includes if they are broken or already used. Costco stands out for both its product quality and customer service.
Costco’s volume and visibility are high, while the variation of the demand is moderate and the variety is relatively low. This helps with inventory management as well as ordering to minimize storage costs. .
Layout is crucial to the performance of an organization’s operations and service. The layout of an organisation is its structure, the look and feel and how well the space available is utilized. We can describe it as a floor plan of an organization. According to the Operations Management department, the layouts are: Fixed Position, Product, Functional and Cell. Costco King George in Surrey, as we observed and spoke to the manager, has the cell-layout for all departments.
The Assistant Manager, who was present at the meeting, also mentioned that Costco Surrey Branch has 4 fire escape doors, one on each corner, to increase safety. This is an excellent feature in the layout. Aside from that, they have also installed fire extinguishers in various locations to be prepared for any unforeseen circumstance.
Surrey Costco does a fantastic job of maximizing the space available. There are many departments, including electronics, jewelry and bakery. Other departments include the optical center, seafood, photo center, daily use items, membership, and returns. In addition to all these departments, there is also an internal food court, where you can order fries, pizza, icecream, and poutine. Self-Service is the model. It is called the Tyre Installation Department and is located right next to the entrance gate.
As shown in the layout plan for Surrey Costco above, the store has only one main exit and entrance. The loading dock is located towards the back. Costco sells wholesale, so the products have been organized to make them easily visible for customers. Costco has a target market of small businesses, large families and even individuals. This does not mean that anyone else cannot buy Costco products. Costco is a membership-based business. Anyone can join and purchase products.
The electronics department is located right at the entrance. The manager informed us that after paying for the products we chose to purchase from the electronic department, they can be collected only from Merchandise Pickup located near the cash registers. After the Frozen Food department, the next department is Bakery, Deli and Dairy. We can see that the items which customers need every day, like dairy and Produce, are located at the back of the store. They have to reach the end to pick up these products. Costco uses this strategy to increase sales for all products. It has a special department that sells discounted products. Customers can also visit this department to take advantage of daily specials. A self-service food hall is also available, with 1 different cashier.
All 15 of the cash registers in Surrey Costco are not open all the time. Around 7 or 8 are opened in the morning because it is less busy. They usually open a lot of cash registers during the weekend and evenings when the crowds are higher. Costco’s cashier is assisted by an assistant in each register. This helps to pack products and put them into the bags, saving both Costco’s and customers time. This reduces the time taken to process the orders and allows more customers to be served in an hour.
Costco’s process is hampered by the lack of Self Checkouts. The customer may have to purchase fewer items but still wait in line, increasing the time for throughput. Costco, by installing five to eight self checkouts, can help reduce the bottleneck of the cashier and reduce the throughput. Surrey Costco’s layout is very efficient and improves service.
Service PerformanceTo evaluate the performance of an organisation’s operations, we use four elements: cycle time, throughput time, work in progress (WIP), and resource utilization. We collected data on the Surrey Costco by visiting the store and taking notes. Results are listed below:
According to Heizer et.al. (2017), throughput times are “the amount of time that is required to move an object through the process”. This is a system that is essential to the Management of Operations. It is the best way to measure the efficiency of an organization’s operations. It’s used to measure the speed of service provided by a company. Costco is one example where they can serve 28 customers per hour.
“Cycle is the average amount of time it takes to complete an item”. Cycle time can be used to measure the efficiency and performance a company. Costco Surrey takes an average of 2. One customer is dealt with in 1 minute. They served 28 customers in an hour.
The store has 15 cashiers. In the normal times, only eight of them are open. But during the busier hours, all the counters will be opened. The number of people in line at any given time will determine the cash counters that are open. The customer wait time is 5-6 minutes. They serve 28 clients in an hour. Six customers in line will be served within 2 minutes. 1 minutes.
Costco Cycle and Throughput times can be calculated using the information provided.
Cycle Time = 2. Cycle time = 2. 1 minute and the bill is out.
Number of persons served=28
Time taken = 60 minutes
Cycle time = Numbers produced / Time Available
Cycle Time = 60 minutes / 2 = 2. One minute
WIP=6 because 6 people are in line.
The cycle time is the product of WIP and the Throughput Time.
= 6 x 2. 1 = 12. Approximately 6 minutes.
As a result, cycle time equals 2. This is a cycle time of 2 minutes. 6 minutes
Resource UtilizationThe actual capacity or resource utilization of a particular process is known as the utilization. In this example, the cashier’s capacity is to serve 20 people an hour. He only serves 15 in an entire hour. The Utilization Rate is therefore 75 percent. This means that the cashier spends 25 percent of his time idle.
Utilization rate = Throughput Rate (Capacity used) / Capacity
Why is it important that you calculate your utilization rate?
Kenton (2019), a leading expert in the field, states that to assess the efficiency of a company’s operations, the utilization rate must be calculated. This is also important to determine the cost structure of the company for both the short and long term. Performance improves with a higher rate of utilization. Low utilization rates are a cause for concern because they affect costs and the company may need to update its policies.
In this case, the work in progress is called Work in Process. It is also the number that needs to serve customers or the number waiting in line at a given point in time. In the retail industry, it is the number customers who are waiting to be billed for their orders.
Our team has calculated the WIP based on their observations.
Costco King George in Surrey has a total of fifteen cash desks. Of these, eight are always working. One customer can be served in 5-6 minutes. There are 50+ items to bill. Six customers were in line. Because the number of customers in the line was 6, the total work in progress is 6.
Since cashiers are constantly busy, their utilization rate is 100%. However, the total utilization rate is 8/15 or 53. 33%. Thus, the rate of utilization is 53. 33%.
Surrey Costco finally has an effective and very well designed layout. The performance and efficiency are affected by a variety of factors. Surrey Costco’s process layout has its drawbacks, like the fact that there aren’t any self-checkouts. Nevertheless, the layout is impressive and the design of it in terms of the four v’s has led to an increase in service.
References
Butler, R. A. (2019, March 12). Costco’s business model (COST): 4 issues. Retrieved at https://www. investopedia. com/articles/markets/011216/4-problems-costcos-business-model-cost. Active Server Pages
Dharmasiri A. (2011). Pondering Processes: The Case of Four Vs. Daily FT. Retrieved at http://www. ft. lk/columns/pondering-on-processes-a-case-of-four-vs/4-39555
Heizer, J. , Render, B. , Munson, C. , & Sachan, A. (2017). Operations Management: Sustainability and Supply chain Management, 12/e. Pearson Education offers educational resources.
Kenton, W. (March 27, 2019). Capacity Utilization Rate. Investopedia. Retrieved at https://www. investopedia. com/terms/c/capacityutilizationrate. Active Server Pages
