BUS430 Strayer University QuickTrip Operation Management Case Study Analysis I need a 6-7 page paper in APA format : Complete an analysis of the QuickTrip

BUS430 Strayer University QuickTrip Operation Management Case Study Analysis I need a 6-7 page paper in APA format :

Complete an analysis of the QuickTrip. Assess the organizational layout, performance metrics, and the technology that is used to measure performance and connect with consumers.’

Write a six to seven (6-7) page paper in which you:

Evaluate QuickTrip operations strategy and explain how the organization seeks to gain a competitive advantage in terms of sustainability.
Analyze how operation management activities affect the customer experience. Select two (2) operation management challenges and provide the solutions for confronting them.
Examine QuickTrip value chain and evaluate its effectiveness to operations in terms of quality, value creation, and customer satisfaction.
Determine the different types of performance measurements that can be used to measure QuickTrip service-delivery system design. Select at least two (2) types that can be applied and provide justifications for the selection.
Examine the different types of technologies applied to QuickTrip service operations and evaluate how the technologies strengthen the value chain.
Use at least two (2) quality resources in this assignment that do not include the initial case study. Note: Wikipedia and similar websites do not qualify as quality resources. 9-611-045
REV: JUNE 23, 2011
ZEYNEP TON
Qu
uikTrip
p
2
Chet Cadieux
C
(Cheet), CEO of tthe Tulsa, O
Oklahoma-based QuikTrip (QT)
In November 2010,
conveenience storess and son of one
o of QT’s founders, Cheester Cadieuxx (Cadieux), sstood up to d
deliver
his an
nnual address to more th
han 1,000 emp
ployees from
m the chain’s Atlanta-area stores. “I waant to
thank
k you and let you
y know wh
hat a great job
b you are doin
ng,” Chet beg
gan.
Once again,, we outperfo
ormed our competition th
his year. In 2010, we posted a by-sto
ore
profit which was
w almost do
ouble that of the
t top quarttile of compeetitors in our business. Alsso,
thee vast majoriity of you aree shareholders in QuikTrrip so you sh
hould be happ
py to hear th
hat
yo
our average an
nnual return on investmen
nt was 18% du
uring the lastt decade. And
d our customeers
keeep raving ab
bout our serv
vice. But I do
on’t want yo
ou to take th
his for granteed. We need to
un
nderstand and
d adapt to thee present and future wantss of our custom
mers.
Sin
nce its foundiing in 1958, QT
Q had openeed over 500 sttores, but Cheet had future growth in miind as
he con
ntinued addressing his Atlanta employ
yees. “And forr all that we h
have accompllished, we aree only
in 11 cities,” he sa
aid. “The nextt four years will
w provide eexciting oppo
ortunities forr growth. By 2014,
we pllan to have 73
32 stores. We have saturateed some mark
kets and are beginning to saturate otheers, so
most growth will come
c
in new markets.”
m
or 2011, QT planned to opeen 33 new sto
ores in existin
ng markets aand enter a neew market—N
North
Fo
Carolina. Tradition
nally, when QT
Q entered a new market,, it opened 100 to 12 storess per year unttil the
markeet was satura
ated. But Ch
het thought it
i was time tto be more aaggressive. He was consid
dering
openiing stores in North Carolina at twice the usual sp
peed, with ass many as 200 stores openeed by
September 2012.
The U.S. Conv
venience Store
S
Indu
ustry
ores in the U
By
y December 2010, there weere 146,341 co
onvenience sto
United States, over 60% of w
which
1 Sales
were single-store operations.
o
S
in 2009 had been $5511 billion.2 O
Over 80% of cconvenience stores
also sold gasoline and
a diesel fueel, accounting
g for approxim
mately 80% ($$328.7 billion
n) of all fuel saales in
3
the U.S.
U market. The
T average convenience
c
store
s
with fueeling stationss served 1,1000 customers a day,
or app
proximately 400,000
4
a yea
ar.4 The avera
age cost to bu
uild and open
n a new storee, including aall real
_______
_______________
_______________
________________
___________________________________________________________________
Professo
or Zeynep Ton prep
pared this case witth the assistance of Research Associatte Matthew Preble of the Global Reseearch Group. HBS ccases are
develop
ped solely as the ba
asis for class discusssion. Cases are no
ot intended to serv
ve as endorsementss, sources of primaary data, or illustraations of
effectivee or ineffective man
nagement.
Copyrig
ght © 2011 Presiden
nt and Fellows of Harvard
H
College. To
T order copies or request permission
n to reproduce maaterials, call 1-800-5545-7685,
write Ha
arvard Business School Publishing, Bo
oston, MA 02163, or
o go to www.hbsp
p.harvard.edu/edu
ucators. This publicaation may not be d
digitized,
photoco
opied, or otherwise reproduced, posteed, or transmitted, without
w
the permisssion of Harvard Bu
usiness School.
611-045
QuikTrip
estate, construction, and inventory costs, was roughly $2.8 million dollars in urban markets and
slightly under $2 million in rural areas.5
Convenience stores differed from grocery and drug stores in that they were smaller, carried fewer
products, and stayed open longer. Stores averaged about 2,700 square feet of selling space6 and
offered a range of items including hot and prepackaged foods, fountain and bottled drinks, grocery
items, coffee, snacks, beer, tobacco products, and lottery tickets; some of the larger chains also offered
private-label foods and drinks. Convenience stores offered customers a quick shopping experience;
the average customer spent only three to four minutes from arrival to departure.7
There was a great variety in the scope of operations and range of products. U.S.-based 7-Eleven
operated 32,000 stores in North America, Asia, Europe, Australia, and Mexico8 while Sheetz operated
365 stores across six states in the eastern U.S. and specialized in made-to-order fresh food items.9
Some convenience stores offered dining areas; some shared retail space with fast-food restaurants,
banks, and other retailers.10
QuikTrip’s Evolution
QT was founded in 1958 in Tulsa, Oklahoma by childhood friends Chester Cadieux—Chet’s
father—and Burt Holmes. After graduating college and serving three years in the U.S Air Force,
Cadieux wanted to start his own retail business and found a partner in Burt Holmes. The two
decided to open a convenience store. Their first location was in their hometown of Tulsa and sold
only groceries. In the early years, Cadieux worked the night shift alone, which, he later joked, earned
him the right to be president and CEO. He held both positions for over 40 years until succeeded by
his son Chet in 2002. (See Exhibit 1 for QuikTrip’s major milestones.)
Under Cadieux’s leadership, QT expanded into large Midwestern metropolitan areas in the late
1960s and then into other large U.S. cities. Initially, QT’s growth strategy was to open stores
piecemeal in small towns around its major Midwestern markets.11 Cadieux observed that, while this
offered employees rapid promotions, it placed inexperienced employees in critical jobs.12 Cadieux
scrapped this strategy when he realized that small markets would not generate enough profit for
future large-scale growth.13 QT ultimately closed stores in 37 small markets to focus on what Cadieux
called the “3Ms—Million Metropolitan Markets—those markets that have populations exceeding a
million.”14
In 1971, QT started selling gasoline and closed stores that could not support pumping stations. It
required a large upfront investment to enter this highly competitive business and it was more than
two decades before QT had established a reputation for selling high-quality gas at low prices. In the
mid-1990s, the company invested millions of dollars in improving the quality of its gas and began a
new advertising campaign which involved handing out coupons for free gas, giving away floor mats
through car dealers and mechanics, and offering to fix any car problems caused by QT’s gasoline.15
Chet explained:
My father worked mercilessly to get better supply-chain advantage, quality, branding, and
prices to become the best at selling gasoline. Our branded gasoline is now recognized as toptier by companies like BMW and Audi. Our customers perceive us having both great quality
and the lowest price. And we’re confident about the future of our business because our
breakeven on gas is lower than any of our competitors. That means that, if, someday, people
quit buying gasoline, all of our competitors will go out of business before we do.
2
QuikTrip
611-045
In the 2000s, food industry experts stated that close to one-fifth of all meals in the U.S. were eaten
in the car16. QT, observing this trend and hearing from its own customers that they wanted to buy
fresh food on the go, decided in 2007 to sell fresh food. Ron Jeffers, vice president of operating
systems, explained: “Our customers used to take our products home to cook. But now they are very
active, constantly going from activity to activity. And they want food they can eat while driving to
the next activity. Mealtime is not a time they want to spend.”
Instead of preparing fresh food in the stores, QT decided to invest in developing centralized
QuikTrip Kitchens (QTKs), which prepared and delivered fresh foods—never-frozen baked goods,
sandwiches, salads, and fruit—to each store daily. On entering the fresh-food market, QT set out to
become the best gasoline, convenience, and food retailer in the eyes of its customers, competitors, and
employees. Chet knew, however, that it would be a while before customers could equate convenience
stores with good food.
“Our challenge is to be recognized as a gasoline retailer that also sells good food. Our QTKs were
intentionally built for much higher volume than we run today. That means that we are operating well
below capacity and, as a result, right now they lose millions of dollars a year. I know that and I don’t
mind because I am confident that it will pay off in the long term. Like my father did with gasoline,
we are going to work on food until we perfect it and reach that high volume. “
QuikTrip in 2011
By January 2011, QT had over 10,000 employees, owned and operated 549 stores in 11 U.S.
metropolitan areas (see Exhibit 2 for QT’s markets and dates of entry), and generated more than $8
billion in yearly revenues. Gasoline accounted for two-thirds of revenues but only one-third of
profits; two-thirds of profits came from store merchandise.
Store merchandise included fresh prepared foods, snacks, tobacco products, beer, grocery items,
and bottled, fountain, frozen, and hot beverages. QT also sold private-label food and drink items,
including its QT-branded coffee, energy drinks, sports drink, and frozen shakes as well as its Hotzi
brand breakfast items and the fresh-food items sent daily from its QT Kitchens. QT kept prices
competitive by only offering the core products its customers wanted and selling them in high
volumes. “In all categories we sell, we are a price leader in the convenience channel,” Chet explained.
“In high-volume categories like soda, beer, and gasoline, our prices are as cheap as Wal-Mart’s.”
QT stores were highly productive. In 2010, merchandise sales per labor hour was $94.67 for the
top quartile of convenience and gas stores, $85.50 for the average convenience and gas stores, and
$142.30 for QT. QT stores had much higher sales volume than competitor stores. Merchandise sales
per square foot for the top quartile of the industry was $13.83 per week, with an average store size of
2454 square feet. Merchandise sales per square foot for the average in the industry was $10.04, with
an average store size of 2000 square feet. For QT, merchandise sales per square foot was $15.48 per
week, with an average store size of 4343 square feet. Motor fuel sales for the top quartile of the
industry was 43,889 gallons per store-week and for the average 29,044 gallons per store-week. The
same metric for QT was 91,995.
Many in the company attributed QT’s success to the systematic practice of five core values by all
employees, from part-time store clerks to the CEO. These were: (1) Be the best, (2) never be satisfied,
(3) focus long-term, (4) do what’s right for QT, and (5) do the right thing. Focusing on the long term,
even when it came at the expense of short-term financial losses, drove big investment decisions as
well as small operational decisions. For example, recognizing that clean bathrooms would bring more
traffic into the stores, QT invested $12 million over three years to renovate its bathrooms. Determined
3
611-045
QuikTrip
to maintain a “family environment,” QT did not sell drug paraphernalia, rolling papers, or
pornographic magazines, although some of these were popular and profitable items. Chet provided
an example of QT’s willingness to take on even a long-term loss for the long-term good of its
employees:
When I became the CEO, I realized that there were hundreds of employees who had been
working for us for many years and who were working until midnight many days of the week.
That made it very difficult to have a normal life with a family. The only way to change that
was to add a full-time person in every store. It cost us $10 million a year for the rest of the
company’s history. I believe that it reduced turnover. It probably would have been difficult to
do this if we were a public company.
QuikTrip remained privately held and ranked 37th on the 2010 Forbes list of America’s largest
private companies.17 The Cadieux family owned 65% of QT, upper management owned 13%, outside
investors owned 10% and the remaining 12% of stock was owned by employees through QT’s stockownership and profit-sharing/401K plans.
Culture
QuikTrip’s purpose is to provide an opportunity for employees to grow and succeed.
— QuikTrip’s Purpose Statement
Since its beginnings, QT had focused on finding the best people, paying them well, and promoting
from within. However, company culture had changed significantly over time. During its first
decades, QT was highly results-oriented and store operations were militaristic. As Jeffers explained,
“Until the draft ended in 1973, most employees had served in the military and were used to an
autocratic system. In the years after, new employees without military experience clashed with our
‘Yes sir, no sir’ type of mentality. We had two cultures clashing.”
By the mid-1980s, Cadieux appreciated that QT’s culture needed to change when he saw that
some store managers and supervisors focused more on results than on how they achieved those
results. After some employees complained to Cadieux that they felt disrespected and mistreated by
their managers, he sent a memo to all managers expressing his anger at how some employees were
treated. (See Exhibit 3 for Cadieux’s memo.) At this point, Cadieux determined that QT needed to
standardize store policies and procedures. As he put it, the company “had become large enough to
act more responsibly.”18 QT began recording and standardizing policies regarding disciplinary
procedures, sales, performance evaluations, and much else.19
QuikTrip’s 1995 Reengineering Initiative
But in 1995, QT’s senior management still sensed that the chain was not delivering consistent
levels of operational excellence across all its regions. (See Exhibit 4 for QT’s purpose and core values
statements.) Jeffers elaborated: “Before the mid-1990s, our standards were vague. Basically, who you
worked for was the rule book and managers had a lot of subjective judgment. For example, one
standard was to look professional—such as no facial hair or visible tattoos—but we never specified
what that meant and each store manager interpreted it differently. So in 1995, we launched a major
reengineering effort.”
Jeffers, QT’s director of operations at the time, worked with 13 store managers from across the
company for a year and a half to analyze and reevaluate QT’s processes and policies.20 They mapped
4
QuikTrip
611-045
store operations, then timed and standardized them. They each spoke with thousands of customers to
understand what QT’s clientele valued or wanted changed in their QT experiences. They also created
standards for how employees and stores should appear in an effort to create a consistent shopping
experience. “It was important to involve store managers in this process because that generated huge
buy-in,” Jeffers explained. “The managers were the ones mapping the processes, timing them, and
talking to customers. And once we were finished, it was the managers who explained what we did
and why to everyone.” From this effort, QT established new policies and procedures regarding
customer service, store appearance and layout, training, employee dress and appearance, the daily
activities worksheet (DAW), and the first standardized mystery shopper questionnaire.
As part of this reengineering effort, QT also created processes to involve employees in process
improvement. The company created resource groups for every position in the store, from part-time
clerk to store manager. Members of a resource group within a divisiona got together and discussed
problems and improvement opportunities related to store processes or products. Based on these
meetings, managers from each division recommended process or product improvement
opportunities to corporate. Store managers in the resource group were chosen by division managers
and the other group members were voted on by store managers once a year.
QuikTrip Store Network
QT stores were open 24 hours a day, 365 days a year. All stores had a standard layout and
merchandise selection determined by the corporate office to provide a consistent shopping
experience across all regions. All stores had unlocked multi-person restrooms. In 2010, QT began
experimenting with a new Generation 3 (Gen3) store format. (See Exhibit 5 for store images.) Gen3
stores were 20% larger than standard QT stores and featured coffee bars with premium beverages as
well as a broader range of fresh products. Both customers and employees were enthusiastic. On
average, these stores sold twice as much as a regular QT store and the coffee, ice cream, and smoothie
sales actually exceeded cigarette sales. It was expected that most new stores would be Gen3.
Because most customers drove to QT, the stores were in stand-alone locations with ample parking
and enough fueling terminals to ensure quick service. Chet explained: “There are many things we
are great at, but there are two things we are the best at—choosing the best people and choosing the
best locations.” Store locations were chosen using an internally designed statistical model that took
into account the demographics, crime rates, and vehicle traffic of any given location and estimated
total market sales volume and how much revenue the new store could expect to draw from nearby
competitors.
About 70% of store merchandise came directly from QT distribution centers (in Atlanta, Kansas
City, and Phoenix) or QT Kitchens (in Atlanta, Kansas City, Phoenix, and Tulsa), while 30% came
directly from vendors such as Coca-Cola and Frito-Lay. QT Kitchens delivered to each store daily,
while QT distribution centers delivered three times a week. Typically, a truck from a QT distribution
center served 12 stores and one from QT Kitchens served nine stores. Stores did their own ordering
from QT distribution centers, but ordering from QTKs was decided centrally by each division.
a QT stores were divided into nine divisions based on geography.
5
611-045
QuikTrip
Customer Service at QuikTrip
QT found it hard to describe its typical customer. Many customers shopped daily for their
morning coffee, paper, or doughnut. Others visited several times a day. About half of transactions
came from customers who shopped at QT at least once a day. For some, QT was the neighborhood
convenience and gasoline retailer, while others stopped in on the way to work—or during work—for
lunch or coffee. Many customers shopped at multiple QuikTrip stores—close to work, close to home,
on the way to the gym—and would drive past other retailers to find a QT (see Exhibit 6 for customer
loyalty in gasoline and QT’s market share in gasoline in different markets).
QT differed from other convenience stores by offering fast and friendly customer service and
meticulously clean stores and facilities. Kevin Thornton, QT’s Atlanta division manager, explained
the QT difference: “Every convenience store sells Coke and Pepsi. But we serve the customer faster,
in a friendly and clean environment, and have the best prices. We take a lot of pride in this; it’s
ingrained in our culture.”
Fast service was essential to QT’s success and differentiation in the convenience store market.
Customers came to QT to get in and out as quickly as possible and would not come in if the parking
lot or store were full. Store layout was designed to help customers find products as quickly as
possible. All stores had the same layout and the same merchandise, so no matter what QT store
customers visited, they could find the same products in the same places.
Employees shared cash registers; any employee could use any cash register at any time. Rather
than scan high-volume items, employees used speed ke…
Purchase answer to see full
attachment