Operations Management

Topics: Value chain, Management, Supply chain management Pages: 6 (1823 words) Published: February 13, 2013
A conventional “bricks and mortar” grocery does not have an online presence, only a physical one. It is built on a face-to-face customer service, and usually always has a building for their operations. A “brick and mortar” grocery has advantages and disadvantages compared to an online operation, like Theorganicgrocer.com. First of all, their major disadvantage is the overhead. The cost of property, insurance, taxes and staff is much higher for a “brick and mortar” operation than an online operation. The biggest advantage for a “brick and mortar” operation is customer security. To a customer, if a company has physical presence, it is seen as more reliable as the company is far less likely to fold overnight and disappear. Online operations on the other hand seem to have maximum exposure and increased profits. Most people however, seem to be under the impression that running an online operation will be an easy task but it can be somewhat challenging. Online operations require less investment and more decision making. Decisions are practically the biggest investments made in the online world. Decisions on what the website should look like, how the products are going to be listed, in which way should the products be marketed would have to be made. Theorganicgrocer.com is based on market research and they focus on dependability, reliability, timeliness, quality, and price. They offer delivery, organic produce and customer specified date and time of delivery. Apart from that, they make sure that their website is constantly updated to reflect the current price. They believe that the key to their success is the simplicity of use of their website.

Question 1
What are the comparative operational differences of a conventional “bricks and mortar” grocery to an online operation? What are the comparative value chains for each system?

Comparative Operations| Bricks and Mortar Operation| Online Operation| Display | Customers are able to physically touch and handle items that they are interested in buying.| Customers can only see pictures, graphics and texts that describe the product that they are interested in buying.| Expense| Usually require a bigger budget to lease space, rent property and to pay for other location expenses. | Smaller budget as they do not have to worry about building leases or property expense.| Location| Has a physical business location which limits the amount of customer traffic and foot traffic from shoppers, especially if they are not in a bigger city or metro area| They are not limited to one location and have no geographical boundaries.They can service local, national, and international customers.| Communication| There is face to face interaction with customers. | It is hard to communicate with customers through an online store.Online retailers may have a hard time getting information across to the customer and must be sure to answer all possible questions by the customers through text and graphics on the site so there is no confusion during the purchase. | Technology | Uses the same technology that has been around for years and rarely changes.| Technology is constantly changing and there is a need to keep up and adjust accordingly. | Inventory| Has a large amount of Inventory on hand. Re-orders before the inventory runs out and there is a shortage of stock.| Has a lesser amount of Inventory on hand.Only re-orders when customers request for it.| Work Hours| Have traditional or at least set hours. This helps local customers know when the business is open.| Has varying or non-traditional hours. This is helpful when dealing with an international customer as it accommodates with their time zone. | Reliability| There is a sense of trust and reliability that comes with having your own brick and mortar store.Customers still feel safer buying from a store.| Customers do not feel safe as there are shady websites everywhere.|

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