Kroger Buyer Essay, Research Paper
The Kroger Company is an Ohio based retailer and manufacturer of grocery products with over 2,000 retail outlets covering 24 states. There are ten Kroger Marketing Areas that report to Headquarters in Cincinnati, Ohio. The Michigan Kroger Marketing Area covers the State of Michigan with offices in Livonia. The Livonia office supports 83 retail stores in the state with local Marketing, Product Procurement, Personal Training, Merchandising, Market Research and Facility Engineering. The role of a Produce Buyer for Kroger requires many management skills. The Buyer has to depend on many different individuals to get product from the field to the hands of shoppers. The individuals the Produce Buyer deals with includes people inside Kroger and outside organizations such as growers, distributors, brokers, jobbers and trucking companies. The Produce Buyer s responsibilities include procurement of product, pricing of product, shipping of product, retail-merchandising direction, forecasting and evaluating department performance.
The Produce Buyer needs to examine multiple items to develop the plan for getting produce to the consumer. The first step is developing an Ad-plan to meet their sales and profit objectives. The design of an Ad-plan requires current knowledge of market conditions, competition checks, last year s ad-plans, last year s sales and movement reports, and sales meetings. Market conditions include product availability, seasonal products, quality of product, growing areas, and product and transportation cost. Analyzing the competition involves visiting competitors stores and reviewing their advertisements from prior years. Reviewing Kroger s previous year advertisements assists in developing a base for an effective Ad-plan. The use of sales and movement reports supplies performance of the Ad-plan implemented for the same time period last year. The sales meeting involves the gathering of all merchandising directors and local VP s to coordinate the process of developing an overall Ad-plan for the Michigan Kroger Marketing Area. The Ad-plan meeting is used to make adjustments and corrections to achieve the sales goals and objectives for the entire organization.
The Produce Buyer needs to make use of multiple forms of communication to perform their daily duties. The use of email and faxes are mechanisms to help facilitate the procurement process. Email is used to get market conditions from various parts of the country, transmit purchase orders, confirmation of orders, interoffice communication, store communication and vendor solicitations. Received faxes supply market conditions for the country, vendor solicitations, response to product recalls and survey orders. The phone is used to contact stores about quality problems, receive detailed feedback from brokers, make product orders, schedule meetings, and locate late deliveries.
The two key organizing functions a Produce Buyer would use to achieve projected goals are developing Sales Plans and Department Layouts. The Sales Plan and Department Layouts provide stores with information on where and how to display products and gives them ordering guidelines. This information is used to determine what to buy and how much product should be purchased. The placement of product within a store has a direct effect on the amount of product that will be sold. Placing bananas on the end of a display piece will move better than if placed between apples and pears. The growing area would have a direct effect on the quality and appearance of the product that could result in an increase or a decrease in sales. If Florida s strawberries lacked color, then the determination would be made to purchase from the colorful California variety to produce the needed sales.
The process of establishing standards, goals and targets, measuring performance and identifying deviations for the Produce Buyer are the guidelines for a manager to insure plans are carried out or modified to achieve the organization s strategy. The sales plan is set by the Produce Buyer as a tool for the store produce department manager to use as a guideline to reach the target goals for the buyer. The sales plan supplies the necessary merchandising standards for the stores to help maximize sales. These include special product handling, ordering specifications, fruit layout and cross merchandising tips. The buyer s performance is gauged by monitoring product movement on a daily basis, by weekly sales reports that recap the previous week s retail sales and profit and comparison of these figures to the set budget. The other gauge used is the shipment report to evaluate actual movement versus projected movement of the week. The sales plan requires adjustment when projected sales and profit are not met for the week. To compensate for not achieving the week s targets the following week s sales plan must be modified in an effort to meet the goals.
The Buyer uses a budget as a control tool to set goals for sales, expenditures, and profits. At Kroger, the Buyer strives to achieve both a sales dollar goal and a profit
percent goal. These goals are set up in four-week increments called periods. There are thirteen periods in a calendar year. The first step in the budgeting process is to develop a sales forecast and sales budget. In the Kroger organization, each of the ten Marketing
Areas controllers are given a budget by the Cincinnati corporate office for their division.
The controller in turn requires that the Merchandising Director of each department submit
a sales and rate for the entire year broken down by period. The directors need to consider
economic conditions, competitors actions, and seasonal fluctuations to ensure an accurate forecast. Once the Directors have completed their departmental budgets, they return them to the controller for their review. The controller will apply these budgets to the planned budget for the Marketing area and if needed, the Directors may be requested to fine tune their projections in a effort to meet the needs of the entire company. It is the ultimate responsibility of the controller to ensure the Marketing Area stays on the correct path to return the expected results. The Buyer uses the budget set by the Director of the department as a guideline in planning, organizing, and controlling procurement activities. An operating report is issued at the end of each period, which summarizes the sales, revenues, and expenses and compares actual results to projected budget. The Buyer uses
the operating report as tool in measuring performance.
The role of the Human Resources department at the Kroger company is staffing, compensation, performance, safety, training and development, and labor relations. Many of these functions can be applied to the role of a Produce Buyer in the organization. The job description for a Buyer is a collaborated effort between Human Resources and the Director of Produce Merchandising. The Human Resources Department acts as a filter in screening out applicants for the buying position who do not meet the minimum requirements of the position. Training programs and workshops are facilitated by Human Resource personnel and are focused on strengthening a Buyer s professional and personal growth. A Buyer s Performance Review is normally administered by the Director of Produce Merchandising and then a copy of the performance review and objectives is reviewed and filed in the Human Resources office. The information on the Performance review is use to determine the promotability of a Buyer. Key information related to promotability is highlighted on a Successive Planning Chart in the corporate Human Resources office in Cincinnati. The Planning Chart lists all management personnel in the company and is used to determine when an individual is ready to be promoted and to what position. This process is used when filling a vacant buyer s position.
A Kroger Buyer is faced with individual and group decision-making each day. Weather conditions, late truck arrivals, product quality, and product quantities can cause problems where a Buyer would need make a decision. In many of the cases, due to the highly perishable nature of the commodity, decisions need to be made quickly. In most cases a buyer would use the four steps in the decision process:
· Define the problem – Friday afternoon the buyer realizes he may be short on product to fill the following Thursday s store orders based on purchase orders.
· Consider and select an alternative
1. Order additional product now (Friday) for next week. If wrong, may be stuck with extra at end of week.
2. Wait until Monday to see orders. If more product required, add product to Wednesday s purchase order. Product add-ons could delay truck arrival until Thursday creating out-of-stocks for Thursday s store deliveries.
3. Other considerations:
* Based on last 2 promotions, orders dropped off late week
* Quality and appearance of product only fair
* In-store promotion, not Ad item
* Cannot buy product on street
· Implement the decision – Wait until Monday
· Evaluate the results – Review orders at end of week to evaluate decision
During the semi-annual Produce Manager Meetings the Buyer is faced with multiple individual dynamics that affect the decision making process for the group. The meetings always have at least one over-dominating individual affecting group participation. The Buyer is faced with the challenge of dealing with this Squeaky Wheel. To handle the situation the Buyer must call upon other members of the team to solicit their input to the discussion at hand. The result of member participation forces social loafers to participate and prevents the Squeaky Wheel from dominating the meeting and intimidating other group members.
The primary motivator for the Produce Buyer is through the use of empowerment. This is used to expand the power the Buyer has over his job by increasing planning responsibilities, and decision-making. The Buyer has the ability to negotiate special pricing contracts with growers of various products without input from their director. The Buyer also plans and facilitates the training of the store produce managers under the supervision of the director.
Through the use of Display Contests the Buyer demonstrates their ability to motivate the store produce managers to achieved sales goals. The display contests include a monetary reward for the creativity and the building of a unique produce merchandising display at the store. The results of the contest help to generate additional sales revenue for the department within the store. This technique leads to the ultimate goal of the Buyer and could provide the produce manager with an attractive outcome in the form of cash upon winning the contest.
Kroger uses an annual Performance Review to evaluate the Produce Buyer s job performance. The first step in the evaluation process is Human Resources supplying the Director two Performance Review forms. The Director keeps one form and forwards the other form with a copy of the Buyers personnel and performance objectives from last year to review. Step two of the process has the Director and Buyer individually fill out the Performance Evaluation form and set objectives for the coming year. The Buyer must give examples of their management skills in their work-related environment. The third step is giving the Director the completed form at which time the Director compares their evaluation form with the Buyers self-evaluation. The Director then discusses the evaluation with the VP of Merchandising. The last part is the Director and Buyer meeting to discuss the evaluation. When both parties agree with the evaluation, the Buyer and Director sign and forward the Performance Review back to Human Resources.
The Produce Buyer uses their influence to attain goals through the use of both legitimate and referent power. Legitimate power is demonstrated through the management position held by the Buyer in the organization. The Buyer establishes guidelines and policies for the produce department that are followed by each individual under the Buyer s supervision. The Buyer is respected by the individuals under them because of the experience gained from working through the ranks. This allows the Buyer to relate to the conditions the produce manager experiences within the store.
The Produce Buyer deals with suppliers and growers to procure fruit for the stores. The procurement involves gathering information from various suppliers and farmers to determine costs and availability. Once a supplier or farmer is identified, then the Buyer can negotiate and persuade them to supply the amount of product at the cost needed to enable the Buyer to achieve their plan budget goal. In return the Buyer agrees to purchase product in specific times and amounts. The farmer or supplier is persuaded through the Buyer s use of referent power.
A Kroger Buyer will demonstrate a number of different confilct management strategies depending on a pecticular situation. A recurring issue that presents itself at the store is the produce manager not merchandising the produce department according to the Weekly Sales Plan. A Buyer will use one of the five management strategy techniques to address the store s decision of not following the Sales Plan to specification. The Buyer applying the appropriate techniques to the produce manager s variant of the Sales Plan will help to achieve the cooperation of the store produce manager and may provide the Buyer with information that would be valuable to the operation of the Produce Merchandising Department.
The Buyer could use accommodation or compromise to address a store produce manager not following the Weekly Sales Plan. Through the use of the accommodation style the Buyer could choose to allow the store produce manager to leave the department as-is. This decision may be based on the department exceeding the sales and profits budget over the previous few periods and on the appearance of the department during weekly store visits. In another case the Buyer may use the compromise style to persuade the store produce manager to modify their department. The Sales Plan stated bananas were to be displayed in a certain area other then where this produce manager had them displayed. The final outcome resulted in bananas being displayed in two locations. One display was done to the Weekly Sales Plan specification and the other display is the stores produce manager suggestion.
The Director is the primary source of influence on molding a successful Produce Buyer. The Director uses their expert power to persuade the Buyer to modify their weekly Ad-plan. Knowing that a certain item needs to be excluded from the Ad-plan, the Director would use their knowledge of product, quality and market conditions based on vast experience in the produce industry to advise the Buyer in the direction needed to adjust their Ad-plan. Based on previous encounters with the Director, the Buyer would make the necessary changes to revise the Ad-plan.
The Produce Buyer uses the influence tactics of a tactician to use the ability to get produce to the store. There are certain items needed to be brought first to the market to keep an edge over the competition. One on these items is Vidalia Onions. The Buyer has to rely heavily on reason to persuade their growers to give Vidalia Onions to Kroger first. The grower that is able to supply Kroger with the first shipment of Vidalia Onions will supply product for the entire growing season. The Buyer uses their position of power with Kroger to make buying decisions on where the product is purchased.
The Buyer contends with two forms of stress which occur within the job itself: weather and transportation. Weather conditions have a direct effect on quality and availability throughout the country. Rain can flood fields causing delays picking product and can cause damage to crops. Extreme temperature ranges can damage crops, forcing the Buyer to find alternate suppliers or growers. Transportation problems can be related to weather when a major storm closes interstates. Other transportation issues include produce being loaded late and mechanical failures. Both conditions can force a Buyer to react quickly to find alternate sources of product.
The Buyer reduces stress related to weather and transportation with knowledge and experience of where to go to supplement supplies. Rainy conditions in the West could result in product not being available for shipment in time to fill orders. A truck could break down just outside of Michigan with a load of product scheduled for shipment to stores that same day. In both cases, a Buyer would have to turn to alternate suppliers that can be depended on to deliver product within 3-4 hours, sometimes less. A Buyer can reduce the stress factor by having the experience and knowledge of where to turn in a variety of situations. Timing in most cases is critical.
In recent weeks, Kroger has gone through a major organization change that will affect 50% of the local workforce in their Michigan Distribution Center. The Distribution Center is going to eliminate servicing independent supermarket chains from this facility because they are in direct competition with Kroger Supermarkets. The reorganization will eliminate the procurement, merchandising, advertising, finance, and sales support staff, whose main function is servicing independent markets. The primary reaction of the employees at the distribution center is one of uncertainty. Although they know that many will be let go, they do not know who, when, or what type of compensation they might receive. It makes it impossible for these individuals to begin making plans for the immediate future. Kroger is aware of the stress placed on the employees from not knowing and the negative affects that could result from a disruption of daily activities. Knowing this, Kroger is showing their support of the people at the center by striving to find placement in their organization or within another organization within the grocery industry.