5 Reasons Costco Leads in Wholesale Operations Management
If you look at any industry, you can see who leads and who follows and determine best practices for that industry based on that information. In the area of wholesale operations, Costco is the undisputed leader. Here are five reasons why.
- Product Quality – Costco delivers low-cost products without sacrificing quality. Its Kirkland brand is one of the most recognized brands in the world and has a dedicated consumer following. In every department, Costco ensures that it carries the very best quality merchandise.
- Store Location – Costco stores are always located in high visibility areas. The philosophy of its management team is to maximize market reach. To do that, they must perform excellent demographic research and know where likely customers are going to come from. They must also know the income levels of the people in the immediately surrounding area. Costco management goes through the trouble of making sure its stores are in the best locations.
- Inventory Management – To achieve the best in inventory management, Costco uses a warehouse style of distribution, often putting retail store space and warehouse space in the same location. Costco often also displays merchandise on shipping pallets, which cuts down on costs associated with merchandising.
- Automation – Costco has automated much of its wholesale operations. Scheduling personnel and sales people using automated processes saves the company time and money. It also ensures that the best sales people are available at peak times of operation.
- Layout Design – Having an effective store layout leads to better customer service and higher profits. Costco manages to layout its stores intelligently so that customers can find items easily and leave happy. This ensures customers return to spend more money. Also, because Costco uses a warehouse style of layout, the company saves money on distribution and product merchandising.
Wholesale operations must be effective and efficient if you want them to be profitable. All the pieces must work together to make your operations smooth from top to bottom. Take some cues from Costco and manage your wholesale operations with the end in mind. Sell top-quality products at a good location, manage your inventory effectively, layout your stores to make it easy for customers to find your merchandise, and automate your processes.