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Case of Wegmans

In: Business and Management

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C. Capacity planning.

Capacity planning is critical for an organization because it can affect an organization’s decisions on inventory as well as forecasting and thereby influence customers’ satisfaction. What’s more, Capacity planning involves long-term commitment of resources so that once implemented it is difficult or impossible to make any changes considering the major costs.

In the case of Wegmans Food Markets, the capacity means the upper limit on the load that this market can sell during a certain period. Since Wegmans Food Market prides itself on fresh produce, predicting the capacity inaccurately such as overestimating the capacity will lead to a high volume of inventory. Some food such as eggs, milk and meat cannot be stored for a long while. If the market fails to sell out all of the food it purchased, it will afford high costs, reducing the competitiveness of the market. On the other hand, if Wegmans Food Markets underestimates its capacity, stock out will happen. Customers cannot find out what they want and as a result, they will seek another supermarket. Losing existing customers or a low customer satisfaction, both of them will cause a bad influence on an organization.
Reference: Textbook, Chapter 5

e. Inventory management

Although inventory can meet anticipated customer demand and smooth production requirements, inventory is a liability to an organization considering the decrease in value as well as the costs of carrying inventories. Therefore, every organization attempts to remain the Economic Order Quantity (EOQ) of inventory, which can both satisfy the level of customer service and control the costs of ordering and carrying inventories. In addition, the volume of inventory will influence managers’ decisions on ordering.

In the case of Wegmans Food Markets, this market uses a “ farm to market” system whereby local growers deliver their production directly to individual stores, bypassing the main warehouse. That reduces the company’s inventory carrying costs and gets the produces into the stores as quickly as possible. What’s more, managers can have an appropriate amount on hand through the companywide inventory system, which can help them make an adjustment as soon as possible.
Reference: Textbook, Chapter 12

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