Chapter One Introduction to Operations Management 33 a often representa significant portion of total cost. Moreover, shipping ultrnatives are closely tied to production and inventory decisions. For example, using air transport means higher costs but faster detveries and tess inventory in transit than Se, ral, o tucking options, Dis- tribution decisions must als take ioto account capacity and quality issues. Operational deci- sions focus on scheduling, maintaining equipment, and meeting customer demand. Quality onto and workload balancing are also important consideratioss. imventory decisions relate to determining inventory nceds and coordinating production and stocking decisions through out the supply chain. Logistics management plays the key role in inventory decisions Enterprise Resource Planning (ERP) is being increasingly used 10 provide information sharing in eal time among organizations and their major supply chain pastuets, Ths impor. tant topic is discussed in more detail in Chapter 12. Operations Tours ‘Throughout the hock yoo wil discover operations tous that describe operations in all srs of companies. Te tour you are about to read is Wegmans Food Markel, e major regiocal supe market chein. Wegmans has been consistently ranked high on Farnuve magazine's ist ofthe Clas Cael ‘Wegmans Food Markels, inc. is one of the pramiar grocery chains in the United Stotes. Headquartered in Rochester, New York, Wegmans operates about 100 stores, mainly in Roches Buffalo, and Syracuse. There are also a handful of stores else- witere in New York State as wellas in New Jersey, Massachusetts, Noth Carolina, Pennsy\vania, and Virginia. The company employs over 45,000 people, and has annual sales of over $3 bio Wegmans has 2 sting reputation for offering its customers high product quaity and excellant service, Through a combination of market researc, al and eto, and istenng to is customers, Wegrnanshas evolved into a very successful organization Is sles pr square fot are 60 percent higher than the industy average Superstores Mary of the company’s stores ate giant 100,000-square-foot superstores, doubve or triple the size of average supermarkets. You can get an Idea about the size ofthese stores from thls: they usually have between 25 and 35 checkout lanes, and during busy periods, all ofthe checkouts are in operation. A superstore typ cally employs from 500 to 600 people Individual stores difler somewhat in terms of actusl size and ‘some special features. Aside from the features normally found in supermarkets, they generally have a fullservice deli @ypically @ 40-foot cisplay case}, a S00-seuare-foot fisherman's wharf that has perhaps 10 diferent fresh sh offerings mest days, a large bakery section (each store bakes its own breed, ols, cakes, pies, ‘and pastries), and extralarge produce sections, They also offer ALCAN eke) UE t ed 100 Best Companies to Work For since the inception of the survey a decade ago, film processing, @ complete pharmacy, a card shop, video rentals, ‘and an Olee World Cheese section. In-store floral shops range In size up to 800 square feet of floor space and offer a wilde varlety of fresh-cut flowers, lower arrangements, vases, and plants. In- store card shops cover over 1,000 square feet of floor space. The bulk foods department provides customers with the opportunity ta select the quantities they desire from a vast array of feodstuts, ‘and some nonfood Items such as birdseed and pet food, Each store Is a litle different. Among the special featuras in some stores are @ dry cleaning department, a wokery, and a salad bar. Some stores feature a Market Café that has diferent food sto tions, each devoted to preparing and serving a certaln type of foc, For example, one station will have pizza andl otter Italian special ties, and another oriental food, anc sti enather chicken or fish ‘There also willbe a sancwich bar, a salad bar, and a dessart sta- tion. Customers often wander among stations as they decide what to order, In some Market Cafés, diners can have wire with their meals and have brunch on Sundays. In several affluat locations, ‘ustomers can stop in on thelr way home from work and choose {rom a selection of freshly prepared dinner entrees such as medal lions of beef with herb butter, chicken Marsala, stuffed flank steak with mushrooms, Cajun tuna, crab cakes, and accompaniments such as roasted red potatoes, grilled vegetables, and Caesar salad, Many Wegmans stores offer ready-made sandwicies as well as made-to-order sandwiches, Some stores have a coffee-shop section with tables and chalts where shoppers can enjy regular ot specialty coffees and a variety of tempting pastries, (continued)34 Chapter One Introduction to Operations Management Produce Department ‘The company prides Itseif on fresh produce, Produce Is replen~ {shed as often as 12 times a day, The larger slores have produce sections that are four to five times the size of a produce sec- tion in an average supermarket. Wegmans offers locally grown produce in season, Wegmans uses a “faim to market” system ‘whereby some focal growers deliver thelr produce directly to indl- vidual stores, bypassing tne main warehouse. That reduces the company's inventory holding costs and gets the produce into the stores as quickly as possible, Growers may use specially designed containers that go right onto the store flea instead of large bins. ‘Tis avolds the bruising tat often occurs when fruits and vegete- bles are transferred from bins to display shelves and the need to dovote labor to transfer the produce ta shelves. Meat Department In elton to large csplay oases ofboth fresh and frozen meat products, many stores havea full-service butcher shop that offers verity of fresh meat products and where butchers are avellable to provide customized cuts of meat fr customers Mest department employees attend Wegmans’ “Meat Uni versity? where thay learn about ciferent cuts of meat and how to best prepere them. They also learn about other items to pa with varus meats, and sugges site cishes, bread, and wine. Tis heips insti a “sling culture” among employees, who often spend 75 percent of thelr time talking wih customers. Weomans continualy analyzes slore operations to improve processes. n the meat department, e change fom in-store cutting and tradivonet packaging to using a centzazed mest processing focity and vacuum packaging extended the shelf Ke of meats enh iio sewer eyo ‘and reduced staffing requirements in meat depertments, reducing costs and providing customers with an improved product. Ordering ach department hale its own ordering, Although sales records ‘are avalabe ftom records ofitems scanned atthe checkouts, they ‘are not used directly for replenishing stock. Other fectors—such as pricing, special promotions, end local eicumstances (2.3. festivals, weather concitlons)—must all be taken into account. However, for seesonel periods, such as holidays, managers often check scanner records to learn what past demand was curing & comparable periog The superstores typicelly receive one truckload of goods per day from the main warehouse, Dering peak periods, a store may receive two truckloads fam the main warehouse. The shor lead time greatly secuces the length of time an iter might be out of stock, unless the main warehouse is also out of stock. ‘The company exercises strict contol aver supplies, on product quay an on-time deliveries, insisting Inventory Management Some stores carry as many as 70,000 indlvidwal units, Wegmans uses @ companywide system to keep track of Inventory. Depar ‘ments take a monthly inventory count to verify the amount shown in the companywide system. Departments receive a periodic report indicating how many days of inventory the department has ‘on hand, Having an appropriate araount on hand is important to ‘department managers: If they ave too much Inventory on hand, that will ede to thelr department’ costs, whereas having too litte inventory wil result in stortages and thus lost sales end dissatis- fied customers. {continued} \Wegmane’ Pasar isan authentic French pasty sop.Chapter One Employees ‘The company recognizes the value of good employees. lt typically invests an average of $7000 to train each new employee. In adcl- tian to learning about store operations, new employees learn the importance of good customer service and how to provide it. The ‘employees are helpful, cheerfully answering customer questions ‘or handling complaints. Employees are motivated through a com bination of compensation, profit sharing, and benefits. Employee tumover for fulltime workers Is about 6 percent, compared to the industry average of about 20 percent. Quality ‘Quality and customer satsfaction ae utmost in the minds of Weg- ‘mans’ management and Its employees. Private label food items as well as name brands are regularly evaluated in test kitchens, along with potential new products. Managers are responsible for checking ard maintaining product and service quality tn their departments. Moreover, emmployees are encouraged to report prcblems to thelr managers. If-a customer is dissatisied with an item, and returns It, or event @ portion of the item, the customer Is offered @ choice of a replacement or a refund. Ifthe iter is @ Wegmans brand foot item, itis then sont to the test kitchen to determine the cause of the problem, ifthe cause can be determined, corrective action Is taken, Lis err. tye Frosh seafocd is dlvered dally, often direc from boat to store the samo day twas cauatt Introduction to Operations Management 35 Technology Womans continues to edopt new technologies to maintain ts competiive edge, including new approaches to tracking inventory and managing its supoly chain, and new ways to maintain fresh ‘ess inthe teat and produce departments Sustainability Wegmans began replacing incanciescent light hulbs with compact ‘uorescent bulbs back in 2007, generating 3,000 fewer tons ofcar- bon dioxide each year. Als the campany installed sensors ints dairy cases that reduced the time the cooling systems run by 50 percent. ‘Questions 1. How do customers judge the cual of supermarket? 2. Ingicate how and why each ofthese factors is Important tothe successful operation ofa supermarket: 4. Customer satisfaction b. Forecasting ©. Capacity planning 4, Location . Inventory management f. Layout ofthe store 9. Scheduling 3. What are some ofthe ways Wegmans uses technology to gain an edge ever its competition? av aan ew ey es ‘Wagmans’ chefs prepare read to cat ontroos, sido dishes, salads, sandwiches nd ready-to-eat ene.