COMPANY BACKGROUND & OVERVIEW
Macon Brock Jr., H. Ray Compton, and Douglas Perry were the founders of Dollar Tree Stores, Inc. (Dollar Tree) in 1986. Dollar Tree’s mission statement states,
“Logistics is committed to provide exceptional service to our stores through continual improvements in operating costs, quality, and safety. By providing solid leadership, superior execution of processes, acting with integrity, and demonstrating teamwork in all that we do, our mission will be accomplished through our most valued asset, our associate.”
Ever since the company went public on the NASDAQ under the symbol DLTR in 1995, Dollar Tree had become a highly successful business in the retail industry. In order to remain competitive in their industry, Dollar Tree continued to price all merchandises in their store at exactly $1.00 which gave them a distinctive positioning against competitors like Dollar General and Family Dollar Stores. This distinctive positioning gave Dollar Tree a competitive advantage which allowed the company to expand in number and size across the United States. By 2004, Dollar Tree had an annual revenue of $3.2 billion, and over 2,600 stores across 48 states. Over the years, Dollar Tree has expanded its stores ranging from 1,500-2,500 square feet of selling space to currently 10,000-15,000 square feet of selling space. In order to maximize sales, their stores are now located in strip shopping mall centers to capture customer traffic. Dollar Tree stores offered three categories of merchandise which included, consumable merchandise, variety merchandise, and seasonal goods.
For Dollar Tree to achieve a high inventory turn at a low cost, the company was geared towards having a well-managed logistics system that was strat...
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...fset qualitative and quantitative aspects associated with building a new distribution center. These factors include the time and money devoted into finding & purchasing land, construction costs, recruiting costs, training costs, and insurance costs. With the expansion of an existing distribution center, Dollar Tree will avoid incurring additional costs affiliated with building a new Hartford distribution center. Considering the time frame of three years for planning network capacity, the savings in transportation costs is not enough to counterbalance the additional cost that comes along with building a new distribution center in Hartford. Hence, it is not worthwhile for Dollar Tree to undertake option 2. Thus, Dollar Tree should expand Briar Creek distribution center to take advantage of high inventory turns at a low cost, which aligns with its’ business model.
Increasing revenue is the main focus of business in a capitalistic venture. The most profitable items for AWG are their fresh produce line which carries an approximate 5% profit margin, but requires an inventory turn time of three days to guarantee freshness and overall customer satisfaction. The application of a SWOT analysis demonstrates that AWG’s attributes far outweigh its limitations. At the end of 2012, AWG amassed sales reaching approximately $8 Billion (AWG, 2014). Walmart leads the retail grocery market, but as AWG erodes that ranking it will emerge as a logistics leviathan in the future.
“Founded in 1978, in Atlanta, Georgia, The Home Depot is the world's largest home improvement retailer currently operating 1,800 stores, including 1,649 Home Depot stores, 50 EXPO Design Centers, one Floor Store and three HD Landscape Supply stores in the United States, 84 Home Depot stores in seven Canadian provinces, seven Home Depot stores in Puerto Rico and ten in Mexico.” The company reported employees approximately 280,000 people.
With a growth strategy based on increasing sales, expanding operating profit margins and growing store base Dollar General has seen the desired growth success. Throughout this growth, Dollar General has been committed to their relatively simple business model: providing a broad base of customers with their basic everyday and household needs, supplemented with a variety of general merchandise items, at everyday low prices in conveniently located small-box stores. This commitment has proven growth but there are many risks associated with investing, as stated in the
As seen in Exhibit F, Best Buy has 1,055 main locations that consist of their standard large format stores, and 406 Best Buy Mobile locations that focus on mobile device sales. To supply these locations, Best Buy has 23 distribution centers located throughout the country. Comparatively, Wal-Mart has 4,625 stores stocked by 158 strategically located distribution centers. This puts Wal-Mart at a huge advantage in a couple of ways. Not only is Wal-Mart much more likely to have a store nearby any given customer, they are also better equipped to keep its products in stock at all times. This means more customers visit, and due to stocking, more customers can make the purchase they want. On an international level, Wal-Mart also exceeds Best Buy’s few hundred stores with 6,308 stores in over 11 countries. This furthers Wal-Mart’s availability to customers and puts them at an advantage over Best Buy. Additionally, the increased scale of Wal-Mart’s retail and distributive operations make them extremely competitive on pricing, a major aspect of purchase decisions for high-ticket items like consumer electronics.
The purpose of this paper is to analyze and discuss the effectiveness of the Target Stores supply chain. Target was founded in 1902 by George Draper Dayton who after partnering with the owner of Goodfellow Dry Goods Company for a year decided he wanted to have more involvement, so he purchased Goodfellows renaming it Dayton Dry Goods Company. After purchasing the store Mr. Dayton remained in management until the time of his death in 1938. By this time the store had seen many changes including a name change in 1911 changing from Dayton Dry Goods Company to The Dayton Company, as well as an addition of the Dayton Foundation in 1918. After Mr. Dayton’s death the family continued managing the business until 1983 in which the last two managing Dayton’s retired, ending 80 years of the Dayton’s family management (Target Corporation, 2014).
Analysis: With one of their main issues being sustained profitability, Wal*Mart is at a critical time in their life. They are no longer the hero, a place commonly reserved for competitors striving to be number one, because Wal*Mart is number one. No one can debate how effective they have been in getting here. Through their focus on superior technology and low cost leadership, Wal*Mart reigned supreme. They are redefining Porter’s five forces model in the discount retailing industry, and are in the enviable position of having first mover’s advantage. Yet this blessing is also a curse. By virtue of their efficient, effective system and its proven success, companies like Kmart and Target are watching closely and both emulating and improving upon this system. An analysis of the five forces model will show Wal*Mart’s main competitive advantages in supplier power and barriers to entry. A look into their distribution centers and how they have been instrumental in reducing supplier power will be followed by an analysis of how effective first mover advantage has been and where they must take it next.
Their nine retail distribution centers are located in St. Grain Valley, MO, Macon, GA, and Corsicana, TX. The distribution centers supply products to over 100 stores each delivering
The two stores target middle and low-income households and both were behind other retailers in terms of technology and logistics. The name brands of both stores would have familiarity, but one brand that Sears Holding was very popular and known for is the trademark Craftsman and their lifetime warranty, and had spokesmen like, Bob Villa where K-Mart had the Martha Stewart brand ware. The trademark, “blue light special,” was unique and special that caught peoples attention and never forget, where Wal-Mart used the slogan, “ Rolling back the prices,” and added catchy monitors near every isle entry and benches throughout the box store for shoppers to rest. Ultimately, as the CEO of the Dollar Tree stated, “The "bifurcation," is even harsher for the low-income families that make up the bulk of Family Dollar's consumers: on average shoppers have an annual income under $40,000, and 50% receive government assistance,” Linshi, J. (2014). [6]
The purpose of this report to compare the current distribution system to a distribution system without the aforementioned limitations on which distribution centers are allowed to service a specific area. In order to determine which system would be better, Darby Company has gathered additional information about the costs of shipping to other areas. For example, the Ft. Worth center could also service Denver, in addition to its current zones, Santa Fe could ship to any customer and Las Vegas could ship to Denver, Salt Lake City, and Phoenix, as well as LA and San Diego. In Appendix 2.2B, specific costs of shipping from distribution centers to customers are detailed.
Creating uniqueness in your product or services typically involves creating distinct features, functionality, support, durability, and brand image that your customers value ((MindTools.com, 2015). Dollar Tree has uniform pricing of $1.00 or less in all of its stores and their locations are more convenient than that of the other discount retail stores such as Wal-Mart and Target. Because all of Dollar Tree’s products are priced at $1.00 or less, consumers find it easier to shop there and a more pleasant experience. Dollar Trees product assortment is different from the other discount retailers; they carry mostly private labels. The difference in product assortment combined with its pricing makes Dollar Tree less vulnerable to competition ((MindTools.com, 2015). Dollar Tree also attempts to differentiate their stores from others by making their stores easier to navigate through by being well organized and ensuring that their stores are well lit, clean and
Inventory is important to the supply chain, yet it is not universally well understood. It is considered as an economic asset to a non-income-producing use of capital funds. It is characterized, both positively and negatively in the aforesaid sentence. Only when considered in light of all quality, client service and economic factors—from the viewpoints of purchasing, manufacturing, sales and finance—does the whole picture of inventory become clear. Effective inventory management is essential to supply chain competitiveness.
Amazon was founded in 1994 in Seattle, Washington, and since then they have grown into the world’s largest online retail business. Amazon concentrates on long term goals to succeed, such as providing goods to the public at fair prices, offering businesses an online outlet to sell products, along with video streaming, cloud storage, and an innovative drone delivery service. After operating for nearly twenty years, Amazon has proven that an online retail business can be successful. Recently there have been observations of whether Amazon is steadily keeping up with the fast pace of the online retail industry, or if they have hit their peak of innovation and will slowly dwindle away. A financial analysis of Amazon can prove that they are steadily keeping up in the fast paced online retail industry and that their long term goals are indicative to their new innovations.
Amazon.com was a venture into an emerging market of internet and had to face hidden and unexpected hurdles in order to survive and excel in the market. Therefore, Amazon.com kept modifying its strategies with their focus on enhancing customer experience of online shopping and to delivery exceptional services with complete convenience to their customers. One of the major strategic decisions was to compromise on cost saving stragegy when Amazon.com started to maintain its own warehouses in different countries in order to ensure timely and accurate delivery to their customers
The goal of this distribution strategy is to mark up our prices minimally as we have to make some profit. However, due to the low cost of production and relatively low cost of expenses, our distribution strategy relies on moving large quantities of inventory consistently. The more volume we move, the more profit we will make (Refer to Appendix
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the DC and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.