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Retailing’s Vicious Cycles Operation Management links Employee Turnover and Poor Training to Poor Performance

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Retailing’s Vicious Cycles

Operation Management links Employee Turnover and Poor Training to Poor Performance

Headquarter : Ann Arbor, Michigan, U.S

Former Chairman : Bennett S. LeBow

Business Nature : International Book and Music retailer

Employees : ± 19,500 employeesStores : 511 stores in U.S and 175 stores separated in Australia, New Zealand and Singapore

Founded : 1971

Zeynep Ton Ananth Raman

The best store was a whopping 43 times better than the worst store

There was huge variation in operation performance

LABOR PRACTICES

Less Training Greater Workloads

Higher Turnover

Operational Execution Requires People

GAPfew

unmotivatedincapable

Store People

Phantom Stock-OutStok sebenarnya sudah habis, tetapi tidak dilakukan Reorder karena di sistem, stok tersebut masih tercatat

Borders had 60 % of phantom stock-outs

Customer Customer Customer Customer Customer Customer

Experiencing a Phantom Stock-Outs

25 % PROFITPHANTOM STOCK-

OUT

Misplaced Products also Frustrate Customers and reduce Employees’

Productivity

Underinvestment in employees also helps explain retail stores’ Poor Compliance on agreements with Manufactures about Promotion

Study in 2008 said, “Only half of Promotions are executed either late or not at all”

Distort Point-of Sale data results Poor Inventory and Promotion Planning

Phantom Stock-Out

Inventory Records

+

Point-of Sales Data+

Even Walmart, the poster child of big-box retailing and supply chain management, has struggled with “These” problems

Such Technologies are often an Expensive Way to solve People and Process problems

Labor Budgets at many retail chains are set as a percentage of sales, they take a hit when sales drop

LABOR BUDGETLOW

STAFFING LEVELSLOW

PROFITABLELOW