Value Chain Analysis
Over the last few years Dollar General has taken many steps to deliver value to its customers. The Dollar General stores compete on the basis of convenience with highly price sensitive consumers. The chain also strives for simplicity with both 10 basic-needs core SKU categories and and even dollar price points. Simplicity, price, and convenience are of high value to a Dollar General consumer. Dollar General practices a low cost business model and each step the company makes contributes to the value delivered to the customer.
Before major transformations in the last two decades, Dollar General stores had followed a pack-away strategy to store all unsold seasonal merchandise for the following year. Since most stores only consisted of about 6,900 square feet, small back rooms piled up quickly with inventory causing overflow in some stores. Focus of managers was on how to keep the rooms organized with irrelevant product rather than operational activities that involved staff and the customers. Managers minds were also clouded with how to get the seasonal SKU’s into the hands of the customers. Dollar General was able to evaluate this strategy and notice that the focus on the back rooms and no room for extra inventory could erode the value the customer receives from shopping in Dollar General. Dollar store could potentially lose space for its core category products that initially attract the consumers. In the video “Keeping the Supply Chain Moving,” a shoe store is featured in which the layout also suffered from a tiny back room. (CFIRE) The owner was often unable to provide certain shoe styles to her customers due to inventory pile up in her back room. Value is lost.
In recent years Dollar General put the consumer value in front of them and made structural changes that addressed the legacy issues (Kaufman 8). These changes were accompanied with the decision to eliminate the pack-away policy. This enabled Dollar Generals to provide...
Cited: Keeping the Global Supply Chain Moving. CFIRE, 2009. YouTube. Center for Freight & Infrastructure Research & Education, 31 May 2009. Web. 05 Aug. 2014. .
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