Wegmans supply chain

ANALYSIS OF WEGMANS FOOD MARKETS 9

Operational Issues and Actions

Location Management

Wegmans currently operates over one hundred stores located mainly in the north-eastern part of the United States (Stevenson, 2018 p.33). Many of Wegman stores are massive, one hundred thousand square feet building that contains several unique departments for the enjoyment of the shopper (Stevenson, 2018 p.33). However, grocery stores are a competitive market and with inflation rates surging the number of groceries bought are reduced. Competitors such as Costco and Sams Club gain the loyalty of big box shoppers and have locations all over the country. Meanwhile, Wegmans currently does not have very diverse locations, and a limited number of stores. If the company plans to remain as one of the most successful grocery stores they may want to think about where to expand their brand. With the economy continuing to improve, now is the time for Wegmans to invest in new diverse locations to introduce the Wegmans brand to new customers.

Forecasting

Wegmans current forecasting method is the Retek model (“Wegmans Selects, 2003). This program allows for the company to successfully forecast consumer demand and seasonal demand. However, each manager of each department in a Wegman’s store is held accountable for maintaining inventory to prevent loss, and as a result the managers need to understand what drives demand for products and why that demand may change. Variables, such as seasonal changes and weather predictions should be accounted for when forecasting demand for products (Stevenson, 2018 p.78) . Managers should study past sales records in order to make sure that they are not over or under stocking. Managers should also familiarize themselves with strategies for “product or service lifecycles” or PLM (Stevenson, 2018 p.151). While relying on a forecasting model, such as the Retek model, is beneficial to a company models may not always be completely accurate and obtaining a deeper understanding of forecasting trends in demand is necessary for continued success.

Supply Chain Management

As Wegman’s seeks to expand its footprint on the eastern seaboard, supply chain considerations become of paramount importance. Scalability is a concern as they increase the amount of locations they have. What is the capacity of current warehouses? Is there room for further efficiency to support more locations? Are there sufficient local produce providers to meet the demand? Scalability is important because if the warehouse is near capacity on current facilities, expansion will be necessary to service more locations and adding those additional facilities command considerable outlays of financial assets. Scalability rarely keeps pace with growth, and frequently organizations are in a position where either capacity is stretched thin or there is excess capacity. In one situation, current operations are risked by lack of timely supply deliveries, and on the other extreme lack of return on assets due to excess capacity. Wegman’s already demonstrates a high degree of supply chain efficiency since they overturn their fresh inventory 100 times a year which is much higher than the 20 times of the average competitor (Teti, 2015). Wegman’s also adheres to a vertically integrated supply chain, where the corporation owns the warehouses, handles its own distribution, and even owns some of the suppliers (Teti, 2015). While this is beneficial to controlling costs, and minimizing supplier risk, it decreases the corporation’s ability to scale up their operations since they place a premium on the vertical integration. Wegman’s will need to increase the number of warehouses and distribution centers in a way that supports increased operations, without significantly harming their high efficiency. Another consideration is dual-sourcing where Wegman’s could develop relationships with suppliers so that they would have a low cost, long lead time supplier and a higher cost, low lead time supplier. This can allow the corporation to drive down costs by supplying the majority of their products at a lower cost, but still having the flexibility to obtain crucial products on a short term if needed (Tongarlak, Lee, & Ata, 2017).

Distribution

As Wegman’s seeks to increase the amount of grocery stores they operate, distribution strategies will become increasingly important. Wegman’s has focused on targeting affluent suburban communities in six states, and as they spread out distance becomes of greater concern. Distance is a prime factor in the cost of transporting refrigerated goods, so distribution networks will need to be efficient and cost effective (Teti, 2015). Beyond obtaining more warehouses and expanding number of suppliers there are things that can be done to improve the performance of distribution centers. Wegman’s has already integrated recent technological innovations to improve performance including the use of RFID tags (Stevenson, 2018, p. 676), and global data synchronization with suppliers which improved costs for supplies and labor by one million dollars, and increased productivity by 7% (Teti, 2015). Wegman’s already practices cross-docking and cross-distribution, by which incoming shipments are routed on the dock directly to outgoing traffic to decrease “picking” activities, and decreasing task times (Stevenson, 2018, p. 675). An additional distribution strategy that can be further employed is a “picking” strategy improved by statistical data through studying warehouse flows (de Koster, Le-Duc, & Roodbergen, 2007). If Wegman’s were to align the product storage in their warehouses in order to place the items more likely to be loaded on an outbound truck closer to the docks and move less common items further way from the dock this would greatly improve the loading times and therefore allow them to move more trucks in and out of the warehouses than would otherwise be possible. Also, if they could automate some of the picking with robotics they could lower labor costs, and improve efficiency. Wegman’s needs to continue to integrate the latest technologies and statistical supply chain management methods to maintain their competitive edge. The key to success in the technological age is not size, but agility (Woldt, 2015).

Resolution Technique, Application, & Evaluation

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