Operations Management: Case Alko Oy

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Operations Management Assignment: Case Alko Oy

1.0 History and Current Situation
Alko is a Finnish Government owned alcoholic beverage retailing store that has monopoly on selling wines, spirits and other alcoholic products over 4,7 ABV. Alko has over 350 stores around Finland and its annual revenue is almost 1 200 million Euros. Alko employees around 2800 people, and has taken a role as a responsible alcoholic beverage retailing monopoly which takes into consideration economical, social and environmental issues in all of its operations. Alko’s operations are strictly regulated by a set of rules about alcohol retailing, and its activities are being constantly monitored. As Alko is the only company that can sell alcoholic beverages over 4, 7 ABV, it has an extensive range of products from rare whiskeys to exclusive champagnes, without forgetting the traditional Finnish beverages. (Alko Statistics on the Net, 2011) Alko was founded right after the alcohol prohibition ended, 5th April 1932 and since that day it has been legal to buy alcoholic beverages with some exceptions during the years. In 1943, Alko implemented a method to observe the consumption of alcohol. This cardboard pass that every customer were given, became one of the most familiar items in Finland. Every time a customer bought alcoholic beverages the Alko staff marked a necessary amount of alcohol bought from your pass and when the limit was reached, the customer was not allowed to buy anymore beverages until the new pass was given to the customer. During 1950s and 60s, the restrictions were eased, for example mild wines were taken out the restriction program. In 1969 the retail of beer was liberated and moved to the grocery stores. Since the late 1960s the operations and organizational policies have stayed relatively same and until this day the company has grown and now includes over 300 stores with a variety of over 2000 different products on its supply. When talking about the impact Alko has had during the years in Finland, the amount of money that the state started earning in taxes by freeing the alcoholic beverages in 1932, was one of the major steps that made it possible to form the developed welfare country that we are now used to live in. (Alcohol Sales Since 1932, 2012)

2.0 Business Strategy
Alko tries to maintain its image as a responsible retail store of hard alcohols. Its goal is to be the best retail store in Finland measured both by social responsibility and customer service. Its strategic core is build around responsibility, customer service and qualified personnel. Alko's priority is to satisfy customers' needs and exceed the expectations of each individual customer. (Alko’s Strategy and Goals, N.D) Keeping a large inventory of various types of products to satisfy customers’ needs takes a lot of effort. A key to success for companies like Alko is good operations management. Alko’s stores need to have enough inventories to satisfy constantly changing demand, and it needs to keep its inventory up-to-date by frequently surveying customers about their personal preferences. For example, Alko has started to include more organic and Fair Trade products in their selection due to increased demand. (Alko’s strategy and goals, N.D)

3.0 Capacity Planning and Management
As a retail store, Alko Stella, Mikkeli, uses capacity planning with the inventory, facilities and human resources. Due to the monopoly, Alko don’t change its long-term planning in terms of demand and supply. Alko uses short-term planning and forecasts to reach the anticipated demand. Alko plans its inventory by comparing sales from the previous weeks and sales from the same time last year to decide what kind of amounts are needed in order to maintain the capacity needed to keep the business effectively running. When it comes to capacity planning with facilities, for an example, in 2010 Alko in Mikkeli moved to bigger facilities due to the lack of capacity in the previous store....
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