I. Title of the Case: WEGMANS FOOD MARKETS

II. Point of View: Head of Operations

III. Time Context: Present

IV. Statement of the Problem: How can Wegmans Food Markets further improve its results of operations?

V. Objectives:

1. To increase working capital by at least 10% every year 2. To reduce workforce by at least 1% every year 3. To increase customer satisfaction made through surveys by at least 10% a year VI. Areas of consideration:

Strengths

1. It is one of the premier grocery chains in the United States, operates with 70 stores and employs 37,000 people 2. Leading since 1979, Wegmans dominates the US grocery market offering basic commodities and food products at a very low price. 3. Has been ranked as the best grocery store and is among the 100 best companies to work for, creating huge brand value. 4. Wegmans Food Market is located in many states which are situated in highly urbanized and economically stable places. 5. Strong reputation of high product quality and excellent service 6. Quality and customer satisfaction are utmost in the minds of Wegmans management and employees. 7. Recognizes value of employees and motivates employees through compensation, profit-sharing and benefits which results to a low turnover rate, which is about 6% compared to the industry rate of 20% 8. Employees are extremely knowledgeable about store operations and are always there for customer assistance and guidance. 9. It offers variety of products and services which are divided into different sections. It caters to all the basic needs of customers and there are plenty of choices to choose for. 10. The company prides itself on fresh produce. 11. The company exercises strict control over supplies, product quality and on time deliveries. 12. There is an excellent inventory management and a companywide system to keep track of inventory. Departments take monthly physical count of inventory which is essential to account for discrepancy. 13. Wegmans application of Farm to Market delivery of supplies is a good way to cut the inventory holding cost expenses e.g. storage costs and its supplies are delivered as quickly as possible particularly perishable and fungible goods. 14. Practices environment-friendly measures 15. Launched line of healthy products “Food you feel good about”, imported and canned products and line of organic products called “six dollar meals”. 16. Offers additional attractive services to the customers like florist, catering, gift ideas, recipes and shopping lists etc. 17. Adopts new technologies to maintain its competitive edge

Weaknesses

1. Since Wegmans superstore is double or triples the size of average supermarkets, the customers may find the supermarket very big and it will be time consuming to look for particular goods or products when they are shopping in a rush. 2. Its name brands are of great quality, however, shoppers looking for cheaper brand names are more inclined to go to a competing superstore such as Wal-Mart. 3. High cost of its utility, maintenance and other operating expense. 4. Store distribution could also be seen as a negative since the stores are concentrated mainly in Rochester, Buffalo and Syracuse and a handful of stores in New York State, New Jersey, Pennsylvania and Virginia, rather than having numerous locations throughout the country. 5. It is a small-scale chain compared to other national competitors which makes hard for the company to deal with price increases.

Opportunities

1. The fact that Wegmans is concentrated solely in the northeast offers great opportunity to the already successful company since it has the possibility to expand its borders to other parts of the country. 2. Another plus to expanding its horizons would be that it would increase the number of workers it employs by catering to a greater geographical region. 3. The small scale chain would face massive growth in terms of geographical range, and could expand its services to those beyond just that of an everyday superstore. 4. Increase target groups: Working class professionals who want to buy everyday items like groceries, toiletries, drinks even during a weekend and also late at night as per their convenient time. 5. Increasing purchasing power parity leading to improved lifestyles e.g – more ready to eat foods 6. Expand network, wider product range and reach to people by opening up more flagship stores offering more wide variety of products. Threats 1. Wegmans faces competition from 2 types of companies. High end grocers are more favorable compared to a smaller chain such as Wegmans, as is a superstore such as Wal-Mart with more reasonable prices. 2. Through Farm to Market system, the growers will supply directly the products to the superstore not undergoing the product with further quality control inspections which might affect the quality of the products which will result to dissatisfied customers. 3. Shoppers looking for cheaper brand names are more inclined to go to a competing superstore. 4. Robbery attempts and other threats lead to concerns for property loss. 5. Intense competition from corner stores, supermarkets, grocery stores and host of other convenience stores. 6. Lack of large scale space leading to merger of many convenience stores and increase in competition due to merger of many convenience stores.

VII. Alternative Courses of Actions (ACAs)

1. Expand operations through franchise 2. Integration of Inventory Planning to the Sales and Operating Planning Process 3. Intensify promotion

Analysis of ACAs ACA 1 | Expand operations through franchise | | Advantages | Disadvantages | | * Access to better talent. Franchising is a great way to find talented people to manage your locations. The most qualified and hardest working people generally prefer to invest in running a business in return for profits rather than taking a salary as an employee. So by franchising you get a better talent that will work harder to build the business than you would by hiring someone to work for you. * Easy expansion capital. Franchising is a good way to obtain expansion capital. Because your franchisees pay to buy outlets in your chain, you can grow the number of locations without tapping much of your own capital. * Minimize growth risk. Franchising can generate high financial returns for relatively little risk. Unlike adding company-owned outlets, when you franchise, you put relatively little money into adding each location. If you have a good business model, you can earn high royalties from sales of these outlets. | * Less control over managers. You cannot tell franchisees what to do the way you can with your employees. Franchisees are independent businesses. Moreover, they have different goals with yours, which can easily conflict and may even lead to legal trouble. * A weaker core community. It is much more difficult to get franchisees as opposed to employees. * Innovation challenges. It is much more difficult to innovate with franchisees than if you own your own outlets. | ACA 2 | Integration of Inventory Planning to the Sales and Operating Planning Process | | Advantages | Disadvantages | | * This will lead to a leaner operations * It reduces operating costsIncreases customer service levels | * Requires periodic review and monitoring * Lead to reduced manpower

| ACA 3 | Intensify promotion. | | * Developing a promotional strategy helps the business identify its target markets and to set measurable goals. * Assists the business in understanding and connecting with clients and customers. * Guides the business into the development of financial goals related to the sales targets and also to the expenses budget | * Entails cost * Failure: long-term benefits might not offset the costs of promotion because one disadvantage of promotional strategy is its potential for failure * Decreased value: the longer a sales promotion lasts, the more likely it will decrease the perceived value of the product or service |

Criteria 1. Ease in implementation – 15% 2. Cost efficiency – 15% 3. Satisfies customers – 40% 4. Eases operations – 30%

Decision Matrix:

Criteria | Weight | ACA1. | ACA2 | ACA3 | 1. Ease in implementation | 15% | 1 | .15 | 2 | .30 | 3 | .45 | 2. Cost Efficiency | 15% | 2 | .30 | 1 | .15 | 3 | .45 | 3. Satisfies customers | 40% | 1 | .40 | 3 | 1.20 | 1 | .40 | 4. Eases operations | 30% | 2 | .60 | 3 | .90 | 1 | .30 | | 100% | | 1.45 | | 2.55 | | 1.60 |

Legend:
3-best
2-better
1-good

VIII. Conclusion:

* Based on the foregoing analysis, ACA No. 2 is chosen.

IX. Plan of action:

Plan of Action | Time Frame | Person/Group Responsible | 1. Collect sales and market inputs | July 4, 2015 | Head of Operations | 2. Develop a demand plan-Using management input, build a multi-period forecast plan. Key elements to focus on in the definition of requirements are the forecasting of new products, product lifecycle forecasting, seasonality profile, causal factors, promotion and rebate forecasting. | July 5 – 19, 2015 | Head of Operations | 3. Compare the multi-period output of the generated forecast against the various sales to identify and understand exceptions. Use the outcome of this collaborative forecast for demand shaping in Step 4. | July 20 – 27, 2015 | Head of Operations | 4. Shape demand based on “what if” analysis of demand and supply. Develop plans and analyze opportunities for demand-shaping actions such as promotion planning, price management and the timing of new product introduction. Package these key scenarios with the base-level forecast for operating planning in step 5. | July 28 – August 10, 2015 | Head of Operations | 5. Develop a constrained plan. Using the forecasting output generated in Step 3, analyze the best alternative for the business based on profitability, revenue, customer service and targeted inventory levels. Identify constraints, demand shortfall and capacity opportunities. | August 11 to 18, 2015 | Head of Operations | 6. Determine trade-offs on the measurements and identify demand-shaping opportunities. Evaluate the “what if” demand-shaping scenarios in Step 4 based on profitability. | August 19 to 25, 2015 | Head of Operations | 7. Set target inventory levels to support the plan and make decisions about when buffer inventories are needed. | August 26, 2015 | Head of Operations | 8. Develop a consensus plan. | August 27 to 30, 2015 | Head of Operations | 9. Communicate the constrained plan to the operational teams for execution. | August 31, 2015 | Head of Operations | 10. During the month measure the success of the plan and ue this information as the starting point for the next cycle. | September 30, 2015 | Head of Operations | 11. Monitor plan success based on forecast, expected versus actual profitability. | September, October, December 2015 | Head of Finance | 12. Evaluate the plan | January 2015 | Head of Audit | 13. Make recommendations | February 2015 | Head of Audit |