Running head: WEGMANS FOOD MARKETS
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Wegmans Food Markets Operations Tour
BUSI 411- Operations Management
Liberty University
Allison Crawford
Eric Rivera
Lissette Quinones-Colon
PaTesha Jones
10/16/2017
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Introduction
All businesses are different and unique in their own special way. With every business, they
have certain strategies and plans that works for them. Wegmans was founded in 1916 by John
and Walter Wegman. Wegmans is a grocery store that is located in the northeast part of the
United States. Wegmans uses three important business topics that helps crate the success for their
business. Those three topics are customer service, inventory management and supply chain. It is
crucial in each and every business to find a plan that works for them. What companies put their
money into shows what they value in their company. Wegmans likes to put forth money and time
into customer service. Wegmans likes to have the best customer service in their industry.
Throughout the business aspect we think all businesses are the same which they are not.
Businesses are like humans they are not the same. Businesses in the same industry might have a
similar business plan or strategy, but it is not all the same. All businesses need to find and
explore how they can make their business have more value and more success.
Inventory Management
Inventory Management is an important part of operations management. It is the process
of making sure a business has the products needed available on hand. Without inventory a
business cannot make profits. Stevenson (2018) explains in the textbook that inventory
management plays an important role in marketing, finance and operations. A poor inventory
management can cause customer dissatisfaction and an increase in operating costs (Stevenson,
2018, p.550). Businesses should always try not to overstock or understock, as it has its
drawbacks. Excessive amounts of inventory add warehousing costs, since the inventory needs to
be stored somewhere. To preserve the quality of inventories some may need to be kept in
temperature control locations, adding more expenses to the business. But too little inventory can
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result in lost sales, and dissatisfied customers that may not return to the business if the product
they want is constantly understocked. To determine the amount of inventory on hand, Wegmans
Food Markets Inc. uses a companywide system. The system helps each department have enough
inventory to be sold.
Forecasting
Forecasting is “a basic input in the decision processes of operations management because
they provide information on future demand” (Stevenson, 2018, p.76). Forecasting is based on
past sales data, economic trends, market research, etc. (Trackmaven, 2017). It is important for
businesses to know future demands in order to have the necessary amount of supplies and/or
capacity. Forecasting helps a business plan accordingly for the future, so each department can
allocate resources. Wegmans Food Markets Inc. uses past sales records from seasonal periods for
forecasting purposes. Managers compare sales records from previous years to see what was on
demand by the customers and prepare for demands.
Capacity Planning
Capacity planning is all about how to find an equivalent amongst “long-term supply
capabilities of an organization and the predicted level of long-term demand” (Stevenson, 2018,
p.189). It is “the process used to determine how much capacity is needed (and when) in order to
manufacture greater product or begin production of a new product” (Inman, 2017). Several
factors can affect capacity such as productivity, the number of workers, the number of machines,
errors, etc. A business should know at what capacity they are operating and what they can do to
increase capacity, in order to meet demand. In some superstores Wegmans has about 25 to 35
checkout lanes and over 500 employees. This allows Wegmans to operate at full capacity by
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having a good number of employees in each department that can help customers with any of their
queries.
Scheduling
Scheduling is “establishing the timing of the use of equipment, facilities, and human activities in
an organization” (Stevenson, 2018, p.691). In any business scheduling plays an important role. To
keep up with the forecast demand and to keep a business running, workers, production, maintenance,
and equipment all need to be scheduled, in order to produce goods and services. If scheduling is
done in an efficient manner, it could increase productivity, as a result production would increase as
well. Wegmans superstores rely on scheduling to receive truckloads of goods from the main
warehouse. This allows its supermarkets to meet the demand of customers and continue making
sales. Employees are the face of a business, and without them a business would not be able to
operate. Most stores schedule their employees based on forecast store traffic, such as peak times,
holidays and weekends.
Customer satisfaction
Customer satisfaction (p.551) is “the degree of satisfaction provided by the goods or
services of a company as measured by the number of repeat customers” (Business dictionary,
n.d). Providing good quality service can make customers feel valued and satisfied, thus
increasing customer satisfaction and customer loyalty (Pacelli, 2012). Wegmans has a return
policy that if a customer is not satisfied with the quality of an item, they can return it without any
problem for an exchange or refund. Then, the returned item is sent back to test kitchens where
the item is examined, and if there is a problem with the item, corrective action is taken
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(Stevenson, 2018, p.33). To improve customer satisfaction many businesses have surveys, where
customers can fill it out and give the business feedback based on their experience. Taking
customer feedback into account, businesses can make the necessary changes to provide
customers a pleasant experience where they feel their opinions are being heard. Satisfied
customers are more likely to return to a business than go to the competitors (Kierczak, 2017).
Dissatisfied customers are more likely to share their negative experience through social media,
thus influencing others to not shop at a business, affecting that business’ sales. Customer
satisfaction is very important, without customers there is no business.
Issues and Solutions
Wegmans Food Markets, Inc. is a game changer in the grocery supermarket industry. The
majority of Wegmans stores are gigantic 100,000-square-foot super stores which are double or
triple the size of the average grocery store. Operating over 100 stores in 4 states, Wegmans is
known as one of the leading grocery chains in America. According to our textbook, Wegmans
has a strong reputation for offering its customer high product quality and excellent service by
using the combination of market research, trial and error, and listening to its customer
(Stevenson, 2018, pg.33). While Wegmans is well establish within the marketplace, there are still
issues that Wegmans Food Markets, Inc. continues to address to improve their operations. The
issues that will be covered in this paper are customer service, inventory management, and supply
chain.
Customer Service
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Wegmans Food Markets employs the largest amount of employees per store compared to
its competitors within the industry. In average, 500 to 600 employees work in a store overseeing
productivity and customer services. One of the issues that can surface with having this many
employees is inconsistency in customer service practice. To make sure that all employees are
offering excellent customer service, Wegmans human resource department invests around $7000
to train new hired employees. Training consists of basic store operation functions, the important
of customer service and how to provide it. In addition to new hire training, Wegmans provides
productivity training to those front line employees that are trying to increase their IPM (items per
minute scanned through their cash registers). According to Human Resource Management
International Digest, Getting customers through the line and out of the store satisfied is an
important aspect of the job. The on‐the‐job training is, therefore, designed and delivered with
that in mind. Experienced staffs are also involved in getting inexperienced cashiers up to speed.
Top management knows what it wants from the training and ensures it gets it. Tracking the
performance of cashiers who have attended training classes has demonstrated an increase in their
IPM. (HRMID, 2008)
Inventory Management
Inventory management is crucial to the success of all Wegmans Food Markets Stores. A
typical store could carry up to 70,000 units. One of the issues that can occur is trying to meet the
demand while managing the cost of holding inventory. According to Stevenson ( 2018), having
the appropriate amount on hand is important to department managers if they have too much
inventory on hand, that will add to their department costs, whereas having too little inventory
will result in shortages and thus lost sales and dissatisfied customers. (Stevenson, 2018)
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To make sure that inventory is managed correctly, department managers must take end of the
month inventory and make sure that the company inventory management system is fully
functional and up to date. The company should also continue to invest in their systems
implementing new cutting-edge technology.
Supply Chain
Wegmans supply chain plays an essential role in providing incredible customer service
which the privately family owned company values and appreciates. One of the issues that
Wegman is trying to resolve is the high cost associated with supply chain and to improve
communication among vendors. The relationship between Wegmans and vendors is vital to their
growth and success of the company. To minimize supply chain cost, Wegmans strategies a plan
to simplify new item setup, transportation, receiving, and store replenishment. To improve
communication with vendors, Wegmans encourages suppliers to utilize EDI transactions in order
to better facilitate communications between the vendor and Wegmans. According to Borden,
Electronic data interchange (EDI) mechanisms reduce transaction times, increase operational
efficiency, and forge supply-chain links that tie customers and suppliers together. EDI is part of a
business strategy that affects return on assets by concentrating on reductions in working capital
investments. (Borden, 2004) One element of EDI is the ability to negotiate and share the benefits
of transaction and float cost efficiencies resulting from the implementation of automated
payment systems (Borden, 2004).
Wegmans Food Market Inc. continues to set a high standard for customer service,
inventory management, and supply chain applications. Currently, Wegmans is rank 2nd in the
2017 Fortune 100 best companies to work for and is also 1 of 12 companies that have appeared
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on the list for all 20 years. This recognition is proof that their training programs and company
culture of putting people first is a winning formula for Wegmans. Their inventory management
systems assist department managers with keeping holding cost down and having the right
amount of inventory to satisfy their customers. Supply chain process continues to create great
relationship with their vendors and local farmers to make sure that high quality products are
being delivered on time to their stores.
Implementing SERVQUAL
Basic quality refers to customer requirements that have only a limited effect on customer
satisfaction if it is present, but can lead to dissatisfaction if not present. Product and service
design is a fertile area for achieving competitive advantage and increasing customer satisfaction
(Stevenson pg. 169, 2018). Customer satisfaction is important but so is customer service. When
customers are describing the type of service they expect they often use words such as friendly
considerate, and professional. But a challenge that occurs is the reality that the customer
expectations often change over time and that different customers tend to have different
expectations, so what one customer might view s good customer service, another customer might
not be satisfied with it at all (Stevenson pg. 379, 2018). Discrepancies can include actual
customer expectations and management perceptions of those expectations, service quality and
service actually delivered, customers’ expectations of the service provider and their perceptions
of provider delivery.
Wegmans seems to be doing a great job with customer service and spending $7,000 on
training per employee for training should yield some very impressive results. There are different
dimensions in the service quality section that should assessed as a whole to determine or measure
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customer service. Convenience, reliability, responsiveness, time, assurance, courtesy, tangibles,
consistency, and expectations. To assess this Wegmans can use a widely used tool for assessing
service quality called SERVQUAL which is an instrument designed to obtain feedback on an
organization’s ability to provide quality service to customers. This focuses on five of the
previously mentioned dimensions that influence customers tangibles, reliability, responsiveness,
assurance, and empathy (Stevenson pg. 381, 2018). (This method is also known as RATER).
Responsiveness relates to the ability to respond to changing demands and differentiation can
relate to product or service features, quality, reputation, or customer service (Stevenson pg. 44,
2018). Implementing this customer service satisfaction metric across an organization requires a
well-planned execution, importance must be placed on areas related to completeness and
accuracy of data during the survey process (Bhardwaj, n.d.). The SERVQUAL results help
management identify service strengths and weaknesses.
This can be implemented by developing a questionnaire for customers with each
dimension assigned with an importance weight for the survey. The importance weight combined
with the customer rating, helps the organization identify areas for improvement. Even though a
variety of tools and techniques are available, success truly depends on consistency and accuracy
in measurement across an organization (Bhardwaj, n.d.).
Using A-B-C approach
Inventory management is a core operations management activity and effective inventory
management is important for the successful operation of most businesses and their supply chains
(Stevenson pg.551, 2018). An issue that Wegmans may come across is trying to meet the demand
while managing the cost of holding inventory. Holding costs relate to physically having items in
storage, these costs include interest, insurance, taxes, depreciation, obsolescence, deterioration,
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spoilage, pilferage, breakage, tracking, picking, and warehousing costs (this including heat, light,
rent, workers, equipment, and security) (Stevenson pg. 557, 2018).
Many manufacturers have embraced Lean concepts, they have built KanBan (just-in-
time, just-in-sequence) warehouses close to their factories (Banker, 2016). But if the materials or
components cannot be delivered for any reason this can cost them revenue. To better handle
holding costs, Wegmans can implement the A-B-C approach system that classifies inventory
items according to some measure of importance, usually annual dollar value. The three classes
typically used to classify items are A (very important), B (moderately important), and C (least
important). But actual number of classes may vary from organization to organization, which
depends on the extent an organization wants to differentiate control efforts (Stevenson pg. 558,
2018).
To conduct an A-B-C approach the steps are:
1. Determine annual usage and/or sales for each item.
2. Determine the percentage of the total usage and/or sales by item.
3. Rank the items from highest to lowest percentage.
4. Classify the items into groups.
This ranking system is important for determining order policies (Sanders, 2014). A items receive
more attention and could possibly be overseen by managers, and C items can be left for
automated ordering but this does not mean C items are unimportant they just do not require as
much attention at the time.
Conclusion
Wegmans Food Market, Inc. is a grocery supermarket that was founded in 1916 by John
Wegman and Walter Wegman. This grocery store has changed the industry in many ways. There
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are three specific topics that have contributed to Wegmans success. They are called customer
service, inventory management and supply chain. They have always worked on their customer
service and improve it in any way that they can. Wegmans uses on-the-job training which is a
very smart decision because it helps new employees get out on the floor and learn this new
industry. Spending money in their human resources department is how they improve their
customer service and their employees. With inventory management Wegmans needs success
depends on the amount of inventory. Having too much or too little inventory can affect the
company in different ways. Lastly with their supply chain having a great relationship with their
vendors as well as their employees helps keep everyone happy. Wegmans ranks 2nd in the 2017
fortune 100 best companies to work. It goes to show if you put money and time into your
customers, employees and vendors it will pay off. Wegmans strategy will not work for every
company, but it is what works best for them. Each company should try and utilize and learn from
Wegmans and find the best strategy that works for their individual company. All companies are
different just like all people are different. No company is the same that is why what works for
Wegmans might not work for Walmart. People are the same way we are not all the same we have
different personalities, hair color, background, etc. We should not treat companies all the same
even if they are in the same industry like Walmart and Wegmans they are both different in their
own ways.
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