MANAGEMENT INFORMATION SYSTEMS REPORT FOR WHOLE FOODS MARKET
Prepared by Group 1
Cinthia Lopez
Daniel Favorito
Melissa Veillard
Report Distributed April 30, 2012
Prepared for
Professor Thomas Abraham
MGS 3040*05
Introduction
On behalf of
Team 1, I would like to welcome all our blog visitors. Throughout the 2012 Spring Semester, a research will be conducted to analyze the effectiveness of Management
Information System used on Whole Foods Market Operations. The intent of this
research is to learn how such a big company uses info system resources to
create a professional edge and later on point which aspects could be improved
and developed. This project is going to give us insight information and help
our team understand the importance of Management Information System. What a
better way to learn than to ask directly through the source. Thank you for
joining us and feel free to add comments and suggestion.
Whole Foods Market
established in 1978 by John Mackey and Rene Lawson was first known as Saferway.
Saferway was small store in Austin Texas that promoted natural foods. In 1980,
Mackey and Lawson partner with the owners of Clarksville Natural Grocery
resulting in the opening of the original Whole Foods Market. The supermarket opened with
only 19 staffs but it rapidly expanded throughout the United States. Whole Food
Market, opened new stores by acquitting other natural food chain throughout the
1990’s. By 1999 Whole Foods Market had
opened its 100th store. In 2011 they have opened stores in Canada,
United States and the United Kingdom. Today
Whole Food Market is the world’s leader in natural and organic foods, with more
than 310 stores in North America and the United Kingdom and is currently employing
over 62,000 employers.
Facts & Figures
Team
Members: 58,300+
Distribution
Centers: 10
Regional
Bakehouses: 7
Commissaries:
5
Common
Stock: traded on Nasdaq®, symbol: WFM
Company Website
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Business Strategy
Five forces
Porter’s five forces model is used to assess
the fundamental characteristics and structure of an industry. According to the
five force model, the five competitive forces determine industry profitability:
bargaining power of customers, threat of substitutions, bargaining power of suppliers, threat of new entrants, and rivalry among existing firms.
To begin with, the bargaining power of buyers is weak because
consumers in the organic industry are not looking for cheap prices by rather
high quality food. Whole Foods Market
has loyal customers because of the quality of their products. The company
differentiates from their competitors because of their wide variety of food
they offer. Ultimately consumers have little buying power when it comes to the
specific pricing of products but they do have the influence to continue or discontinue a product. On the other hand, the bargaining
of suppliers, deal with increasing price and reducing the quality of their
products. The organic industry is growing each year, and so are the suppliers
and as a result, the suppliers bargaining power have increased.Whole Foods now has a variety of suppliers they can choose from.
Threats of new entrants are always a major concern in any corporation. The biggest entrant threat that Whole Foods faces are large supermarkets entering the organic industry. For example, if Walmart starts to sale a variety of organic products, Whole Foods will see a decline in their sales. Walmart is known for their low prices and are located all over the United States which makes it easy for Walmart to be able to steal consumers from Whole Foods. Currently, supermarkets only have a limited selection of organic products so Whole Foods still has an advantage.
The threat of substitution products is not something of importance in the organic industry. The only thing that can replace organic food are conventional foods which most of their customers would not consider to purchase. Another threat of substitution that Whole Foods may encounter is if supermarkets such as,Wal-Mart and Shop-rite carry full lines of organic products. If large supermarkets start to carry organic products and create their own products under store brand name then that will drive consumers away from organic food retailers.
Rivalry among existing firms is common in the
organic industry. The competitors range from convenience stores, local farmers,
natural food store and even internet grocers. Whole Foods has been trying to
gain as much of their competitors as possible by merging with the competition.
Whole Foods Market differentiates themselves with their Eco-Friendly stores
that are built with recycle products. The company has been
ranked among the most socially responsible business due to the way they operate
their business nationwide. Another way the company differentiates from their competitors
is by being is
very selective with their products and only offering the highest quality to
their customers. To begin with, Whole Foods Market does not
sale cloned or offspring animals like other competitors.They
only sale natural products that consist of minimally processed foods that are
free of hydrogenated fats and artificial flavors, colors, sweeteners, preservatives.
They guaranteed one hundred percent satisfaction on all items. They also have
an outstanding customer service throughout their whole corporation. The
organization’s goals, objectives, culture, and activities consist with the organization
strategy. The corporation’s core values consist with the way Whole Foods is
trying to differentiate themselves from their competitors.
· Selling the highest quality natural
and organic products available
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Analysis
Since Whole Foods Market decided not to focus on one single segment but on a variety of products, each store store is divided in the six sectors listed above. In order to maintain the proper functioning and avoid the "silos" (departments which are not connected), a data analyst manager supervises each departments operations.
:
- IRMA- is in House database that connects all software together.IRMA stands for Inventory replenishment merchandising application. Whole Foods Market developed IRMA to be able to customize in any way they wanted it to. The only downside is, that is incapable of doing inventory. Inventory is done manually by handguns, each department has a purchaser and a seller.
- IPad touch technology -The IT
Programmer and Point of Sale System Analyst combined and created a mobile small
base application for IRMA and installed it in the IPads. Each employee is equipped with an IPad which contains a scanner, capable of reading barcodes. The great advantage of this technology is the superior quality of assistance it provides. In a few seconds, employees are able to tell their customers what are the product's details, such as weight, price and availability, adding a big value to their business.
-Micro Strategies- is a database query that interacts with IRMA. It extracts information from Irma and employees are able to group, calculate, sort and filter reports. This reporting tool allows employees to export reports in different format in excel spreadsheet.
-Micro Strategies- is a database query that interacts with IRMA. It extracts information from Irma and employees are able to group, calculate, sort and filter reports. This reporting tool allows employees to export reports in different format in excel spreadsheet.
-Microsoft SharePoint-is an internet service where employees
can share and set up websites showing calendars, products coming up events, manage
documents and publish report.
Ever since the creation of the first store, Whole Foods market has been devoted to provide the best customer service possible. Now that the company has become a large corporation with stores all over the country, the same principles remain untouched.
When it comes to interacting with the customers. WFM uses 5 main tools which are listed below:
- Whole Story - the company's blog which contain recipes and gastronomical tips (http://blog.wholefoodsmarket.com/)
- Facebook page - the company's profile page, which contains information on special sales and updates on the company's procedures (http://www.facebook.com/wholefoods)
- Twitter - the company's social network, which connects with customers through few, but meaningful words
- Youtube - the company's channel, which contains the latest tv commercials and advertising campaigns.
- Email - the company's main contact, which is intended to help anserwing their customer's questions.
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Recommendations
After analyzing this company's procedures and processes, we decided to address a few changes that would certainly improve the quality of their service and raise their profits.
- The high price of products: even though customers who shop at this market are willing to pay more for quality over quantity, this segment is becoming very popular, which attracts many others competitors. Whole Foods Market is known for being one of the priciest brands in the market, which repels many customers. Companies such as Trader Joe's, Wegmans and Fresh Market have gained market share in the last years, threatening Whole Foods Market supremacy in this segment. A good way to solve this issue would be to adopt a reverse auction method, making its suppliers fight to see which one would have the lowest price to offer.
Delivery: In order to fully compete with its opponents, Whole Foods Market must have a delivery system as big as the name of the brand. Currently, this service is limited to only a few stores in certain locations of the country. Since WMF always emphasizes the great customer services they provide, making the delivery option available to all would certainly satisfy not only the core clients but bring new ones to this franchise.
Control of quality: The change proposed by our group has nothing to do with the quality of the products sold at Whole Foods Market. The main concern of our group is that since this brand sells mostly green food, vegetables and other perishable items (items that last for a short period of time and that can putrefy very easily), the quality and lifetime of each product is really difficult to control. For instance, in case a shipment of a certain product contains irregularities, WFM has no way to identify which products are erroneous but look for them manually on each store, which is very time consuming and requires many employees . Currently, WFM does not have a system to trace all the products. By doing this, the company would avoid being involved in lawsuits as it happened last year with the frozen vegetables cans in Florida. A good way to turn this situation around would be to implement a system that allows you to know what products are being delivered.
- Shop online: In the competitive business world we live nowadays, a company that seeks to raise its revenues must diversify the way it sells. Whole Market Foods is in the process of creating an online store, which will add a great convenience value to its clients. However, according to the Manager Analyst interviewed by our group, this creation will take several months to happen, specially because all efforts are being put into the development of IRMA, the company's automatic inventory replenishment of merchandises.
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Conclusion
In conclusion, learning about Whole Foods was a great experience. With its differentiation and various types of healthy foods, Whole Foods Market is an innovative company that is very hard to compete with. Most groceries use self-checkout, to reduce time, while Whole Foods believe in interacting with their customers and therefore they do not use self-checkout. Although Whole Foods may seem expensive, it is a great investment in a person’s health. Their goal is to sell the highest quality products but at the same time offer high value for all their customers. High value is a product of high quality at a competitive price. They connects with their customers by providing a blog, a smart phone application and providing online services. IRMA has been an impact to the company because it’s their own data base and it’s less money to pay for a provider. IRMA also has flaws such as the consistency of updating to prevent bugs and viruses. We enjoyed discovering Whole Foods because it gave us the opportunity to learn that this company is not just any other super market that sells healthy food; it’s also an environment friendly company. This projects has help us understand the importance of Information System, before this projects we were not aware of how crucial Information System is to a company's success.We want to thank the whole team of Whole Foods Market for supporting our project.
