a high-quality turning mechanism and a certain diameter for the umbrella. Now, we’re not going to tell them where to go buy their thread necessarily, other than that there’s the vendor code of conduct that it can’t be child labor, and you now have to provide your source of work; you now have to trace your work for a lot of food items. And they’re going to deter- mine the spec of what we want, and they’re going to bid it based on that spec.
We have eight regional buying offices in the U.S., two in Canada and one in each other country. Needless to say, the manu- facturer wants to accommodate the buyer in each region. And shame on us if we’ve got four different buyers wanting four different packaging and sizes because that buyer’s decided that something will sell better in that region. From the Costco side, we have to turn them down and say, “Guys, think of the inefficiencies that we’re creating, the efficiencies that we’re losing.”
Q. Small businesses are a significant element in the Army’s strategy to promote effective
competition,
X percentage for small businesses and X percentage for minority-owned small businesses. We probably can be more pragmatic on that than the Army, but we will have small business trade shows, if you will, to advise small vendors. We sometimes can turn them on to manufac- turers that use small vendors, or tell them how to sell to a company like Costco. Sometimes we can turn a regional item into a national item.
I think small businesses bring innovation and unique regional tastes. As much as we’re an international, cement-floor, big- box retailer, we’re also a merchandiser. And part of merchandising is offering exciting merchandise, and sometimes exciting merchandise can be found at the regional level. Tere may be a particular item that is unique to a particular region that we never would have found out about if we only worried about big national brands. It’s a treasure hunt.
representing 26
percent of all contract dollars awarded, because they are thought to be more innovative and quicker to respond to changing needs than larger companies.
What competitive value do small businesses
bring and services?
A. On the one hand, I did say that because of our appetite and our size, our quantity needs, sometimes a small vendor can’t supply us. On a regional basis, we will bring in small vendors to do things, and sometimes that will create exciting opportunities for us, new items. So we can’t lose sight of that innovation. We don’t have some of the limits that the government does—we don’t have to have
to Costco’s goods
Q. Improving the professionalism of the workforce is the newest area of focus for Army Acquisition. What sort of culture does Costco strive to instill in its work- force? If you had to describe this in three sentences to a new employee, what would you say?
A. We’re trying to instill in them, first of all, that our mission at Costco is to pro- vide the best-quality goods and services at the lowest possible prices to our mem- bers, and doing it in an honest way. And where there are promotional opportuni- ties for the individual, it’s an open-door policy. Finally, that we deal with things with a high degree of honesty and integ- rity, and everybody gets a fair chance.
When we talk about quality, it’s not just quality of merchandise; it’s how often the bathrooms are cleaned; it’s the 10-foot- wide parking spaces instead of 8-foot-wide.
And we get great grades for quality, even though it’s just a no-frills warehouse. We get high marks for customer service, even though in our case the best service is self- service sometimes. Our returns policy is great; we get compliments all the time.
Te other thing is, how do we deal with adversity? And that’s something that our CEO has talked to our managers about at the managers meeting: You deal with it head-on. Years ago, we were written up in the Northeast about a rodent problem at one of our New York City locations. Now, if you sell food, whether you’re a restau- rant or a convenience store or a retail supermarket, at some point you’re going to have a rodent issue. It must have been a slow news day, but it was on one of the national programs. Tey asked Jim, our CEO at the time, and he said, “I’ll meet you at the warehouse and we’ll walk it.”
I remember in the office the next day, asking him,
“How did it go?” And
he said, “Well, I was standing in the middle of the produce section, taking the interviewer’s questions, and I was responding to one of the questions, and he said, ‘Let’s take that again. You sounded a little defensive.’ ” And this is an investigative reporter. He saw that we weren’t trying to hide anything. We didn’t write him a letter from our lawyer saying, “If you have any questions, send them to us. And no, you can’t go near our warehouse.”
So I think how someone deals with adversity, whether it’s an E. coli recall or a problem at a hotel through Costco Travel, the best way we can deal with things is to deal with them straight-on, and if we have made a mistake, we don’t throw a bunch of lawyers at it. We make it right with the customer.
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CRITICAL THINKING
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