trimmed, skinless and boneless fillet for $4.99 a pound.
Te next step was to start buying salmon in bulk from Chile and Canada, which enabled Costco to lower the price to $4.79. Most recently, in the fifth round of changes, Costco further improved the quality with additional trimming, while keeping the price the same.
Costco sold 2 million pounds of salmon that first
year. In 2011, it million pounds.
“Nobody ever fell asleep on salmon,” said Matthews. “We look at that as a meta- phor for how we do business. It’s that year-over-year intent to make things better that got us there: How can we continue to enhance that relationship with customers?”
Costco institutionalized the salmon story by creating the Salmon Award,
given
by the CEO to recognize outstanding performance by employees and suppli- ers. Te company has a wall of Salmon Award winners in the lobby of its corpo- rate headquarters in Issaquah, WA. But the real impact is in the warehouses and depots, where employees are encouraged to look constantly for ways to improve quality and save the company and the customer money; and in the offices of Costco suppliers, who stand to share the benefits of more efficient operations. Even a 2-cent savings on the cost of ketchup adds up to $340,000 saved over a year, Matthews noted.
“We are always making small, incremen- tal improvements. We’re very focused on lowering costs and maintaining the lowest
cost in the marketplace,” said
John Telan, senior vice president, depot operations.
sold 130
IN SEARCH OF THE NEXT GREAT IDEA The next Salmon Award could relate to any area of Costco’s operations. Outbound shipping is one example of where Costco is making a concerted effort to find efficiencies in packaging, as well over half of its depot operating costs are for outbound freight.
At Costco’s 34 depots in North America, for example,
that approach has led to
improvements in the way the company takes its deliveries. “We studied this for a number of years,” Telan said. Te company concluded that it was spend- ing too much time on the paperwork and other administrative details related to the 1.2 million deliveries that the 34 depots together receive each year. Costco made several changes to route each incom- ing truck immediately to a loading dock and eliminated the need for the driver to get out of the vehicle. Te result was to knock 20-30 minutes off every delivery.
Te quest for efficiencies involves both employees and vendors. “For example, we work with our equipment manufac- turers (of forklifts, etc.) to find out how they can make something sturdier, big- ger or smaller,” Telan said. Close to 90 percent of Costco depot employees oper- ate machinery as part of their jobs.
Outbound shipping, too, is an area ripe for efficiencies, Telan said. “Well over half of our depot operating costs are outbound freight.” A major target for further efficien- cies is packaging, he said. “We’ve made some improvement, but there’s room for more, such as eliminating oddly sized or undersized items that make pallets harder to stack.” Te goal is to achieve full use of pallets and full use of outbound trailers.
“Every now and then, somebody comes up with a new way to load a pallet,” Telan said. Tus, Costco employees can make their jobs easier and more productive. And what do suppliers gain from a good idea, given that they don’t simply keep the money saved in freight costs? “Anything suppliers can do to help lower costs allows for more savings to our members,” Telan said. “And that, in turn, means they get to sell more.”
—Margaret C. Roth
ASC.ARMY.MIL 115
CRITICAL THINKING
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168
