Business Operations in BJ’s: Strategies for Achieving Competitive Advantage

by

Elijah Clark

Business Operations in BJ’s

BJ's is a leading stockroom club operator in Eastern United States. As of January 29,

2011, the company operated 189 stockroom clubs, 103 of which operated petroleum stations, in

15 states (BJ’s Wholesale Club, 2015). The company contends with an extensive variety of local,

national, and regional retailers and wholesalers offering food and general stock in the market,

including supermarkets, general stock chains, specialty chains, gasoline stations, and other

stockroom clubs, some of which have essentially more prominent budgetary and promoting

assets than BJ's (BJ’s Wholesale Club, 2015). Significant contenders that operate distribution

center clubs, which operate on a multi-national premise, include Costco Wholesale Corporation

and Sam's Clubs (a division of Wal-Mart Stores, Inc.). BJ’s revenues occur from the offer of an

extensive variety of food and general merchandise, gasoline, and from membership charges (BJ’s

Wholesale Club, 2015). The company's gasoline stations are self-service, dependent on "pay at

the pump" innovation that accepts credit and debit card exchanges. Cash is additionally accepted

at a few locations. Both customary and premium fuel are accessible. The company maintains

gasoline costs beneath the typical costs in every business sector as a method for representing a

positive value picture to existing and prospective members (BJ’s Wholesale Club, 2015).

Global Supply Chain

Supply chain management (SCM) is utilized by organizations to assist in determining

how products and services reach customers. The macro-processes include planning, storing,

production, shipping, and distribution of products (Mentzer, DeWitt, Keebler, Min, Nix, Smith,

& Zacharia, 2001). Additionally, SCM is used by suppliers as an assistant in generating efficient

supply chains. The process is optimal for dealing with the internal and external production flow

of products, services, and information (Mentzer, Myers, & Stank, 2007).

The focus of SCM is to achieve a competitive advantage by implementing a more

efficient process and better quality product for consumers. The perception and loyalty of the

consumer determines the success of customer-driver organizations (Mentzer, Myers, & Stank,

2007). Data, insight, and experience are essential to having a competitive advantage (Mentzer,

Myers, & Stank, 2007). In creating a competitive advantage, organizations may seek agreeable

and shared partnerships that help produce consumer loyalty. Through partnering, organizations

can cooperate to fulfill the customers' desire for customization, accessibility, and affordability

(Mentzer, Myers, & Stank, 2007). In creating a competitive advantage, organizations need to

produce customer value by offering unique value propositions (Petersen, Ragatz, & Monczka,

2005). Additionally, organizations should concentrate on remaining above the competition by

persistently developing product enhancements and improvements (Mentzer, Myers, & Stank,

2007).

Chris Tramont of Sanford, Florida and Kevin Bedford of Lake Mary, Florida are BJ’s gas

station team members and are responsible for the day-to-day operations of the gas station in

which they work. Those responsibilities include managing aspects of the petroleum product

purchasing and delivering to their BJ’s gas station location in addition to performing daily

operational procedures and management responsibilities (C. Tramont, personal communication,

May 17, 2015).

In an interview with Chris Tramont, the team member stated that the success of BJ's

gasoline is dependent on the company's ability to achieve rapid stock turnover and a large figure

of sales to attract and maintain consumers, and to control costs (personal communication, May

16, 2015). Additionally, he believes that the company's lower cost and pricing structure is an

important competitive advantage. Historically, BJ's gasoline has been a successful global supply

chain (BJ’s Wholesale Club, 2015). The company's quarterly working results may be

unfavorably influenced by various elements including losses in new clubs, price changes in

response to competitors' costs, increments in operating expenses, instability in petroleum

and energy costs, federal budgetary, tax policies, climate conditions, natural disasters, weather

conditions, related start-up expenses, timing of new club openings, and local monetary

conditions (C. Tramont, personal communication, May 17, 2015).

Forecasting and Demand Management

The success of BJ's gasoline was generated by using the five core Global Supply Chain

Management Strategies (GSCMS). The strategies included within GSCMS are value

management, demand management, product and service management, resource management and

relationship management. The ability to gauge interest is vital to preserving and determining

supply levels. Interest and demand is the amount in which a product or service is sought by

consumers (Mentzer, Myers, & Stank, 2007).

In fulfilling interest, organizations need to assess the business sector and evaluate the

product demand by the value in which shoppers are willing spend on a particular item. Supply

alludes to the organization's ability to deliver the volume required to fulfill the consumers

interest (Mentzer, Myers, & Stank, 2007). If the interest for an item is higher than its supply, the

value of that item will likely inflate. If the interest for an item is much lower than its supply, the

demand for that item will likely see a reduction. Demand management is when organizations

successfully consider and manage product or service interest and supply (Mentzer, Myers, &

Stank, 2007). The interest alludes to comprehending the sales and promotional efforts. Supply

alludes to the finances, procedure, and logistics connected with creating the product or service

(Mentzer, Myers, & Stank, 2007). Anticipating future interest is essential for the accomplishment

of the organization. The interest gauge originates from the organization's activities including

sales, promotions, and customer producing partners.

Demand forecasting is taking into account the normal accessible volume and consumers’

desires. When the interest is estimated, the supply volume will help with deciding the sales

forecast. According to Mentzer, Myers, & Stank (2007), sales forecasting techniques are used

within global supply chains for managing sales forecast. A time-series technique uses historical

data trends and patterns to forecasts sales. Within the petroleum industry, the supply

management team should consider the time of season and time of day that produces the highest

consumer demand and supply level (Taylor, 2006).

Regression analysis evaluates the variables that affect sales, which include advertising,

value, quality, and the economy (Mentzer, Myers, & Stank, 2007). Strong variables are used to

forecast supply and demand value. A petroleum service provider could benefit from using

regression analysis to forecast future value and demand. Within the petroleum industry,

providers often rely on numerous variables regarding the economy to determine the proper value

and demand. To determine supply and demand, a qualitative technique is used for considering

long-term and short-term forecasting adjustments.

Forecasting is continually reviewed and optimized as new information becomes

available. BJ's has seen success over the years by focusing on producing accurate and realistic

forecast (C. Tramont, personal communication, May 17, 2015). BJ's uses tools and available data

to forecast demand across the global supply chain (BJ’s Wholesale Club, 2015). The forecasting

process details an interactive cycle that includes a forecast demand, segment demand, and

demand management.

Kevin Bedford explains that an adjustment in the company's product mix could

negatively influence certain financial indicators (personal communication, May 16, 2015). For

instance, the company keeps adding petroleum stations to its store base. Costs of petroleum are

historically unpredictable and are liable to fluctuations because of changes in local and universal

supply and demand. Critical changes in petroleum costs may influence the company's sales and

overall revenues. Since petroleum produces low overall revenue rates when contrasted with the

rest of the company's business, the company could hope to see the general gross net revenue

rates decrease as sales of petroleum increases (BJ’s Wholesale Club, 2015).

The company utilizes diesel fuel, natural gasoline, and electricity in its operations and

distribution (BJ’s Wholesale Club, 2015). Expanded government regulations to limit carbon

dioxide and other greenhouse gas outflows may bring about expanded compliance expenses, and

legislation or regulation influencing energy inputs could substantially influence the company's

productivity.

Business Processes

With the unconventionality of global business environments, companies must concentrate

on developing advantages over competition by rethinking business processes and producing a

higher level of consumer satisfaction. Consistently assessing and improving the basics of

business and components of organizational operations is described as business process

management (BPM). BPM is otherwise called the procedure in which organizations constantly

re-invent themselves. As per McAdam and McCormack (2001), the improvement of

globalization and competitive rivalry have forced organizations to re-invent themselves

consistently if they desire to remain competitive.

Companies can re-invent their processes by continually observing their workflow and

structure alongside benchmarking. Organizing activities specifically from sourced material to

assembling and afterward to the customer is described as supply chain management (SCM). Re-

inventing permits organizations to becoming more productive in conveying and assembling

products and services to consumers. A supply chain is used to help an organization improve

customer satisfaction and generate a competitive advantage. In an attempt to lower the cost of

processes, organizations should create processes that are efficient by streamlining across other

firms (Croxton, Garcia-Dastugue, Lambert, & Rogers, 2001). In situations where the

organization can re-invent the business process within a single area, it should implement that

procedure into alternate business locations.

BJ's depends heavily on its capacity to purchase supply in adequate amounts at

competitive prices (K. Bedford, personal communication, May 16, 2015). The company sources

its supply from a wide mixture of domestic and worldwide merchants (BJ’s Wholesale Club,

2015). The company's ability to discover qualified merchants who meet their standards, and to

get to supply in an opportune and proficient manner, is a significant challenge, particularly

regarding merchants sourced outside the United States. The company has no confirmations of

continued supply or pricing, and any merchant could change the terms upon which it offers to the

company or may discontinue offering to the company (K. Bedford, personal communication,

May 16, 2015).

As the business grows, the company continues to make important investments in

technology in operations and administrative functions (BJ’s Wholesale Club, 2015). The value,

potential interruptions and problems associated with implementing innovative technology could

disrupt of reduce the process efficiency. Additionally, technology could require the company to

divert assets from its core operations to ensure the success of the implementation. In addition,

innovative technology may not provide the necessary or anticipated benefits and could take

longer than expected to recognize the benefits. Additionally, the technology could cost more than

anticipated or fail. To balance a portion of the unpredictability in the expense of the company's

retail gasoline deals, the company has intermittently hedged a portion of anticipated future

petroleum product acquisitions through the utilization of trade exchanged options (BJ’s

Wholesale Club, 2015).

Operations and Production Systems

Operations management is alluded to as the arranging, execution, control, and process

enhancements in which organizations give to consumers. The focus of operations management is

to prove an effective technique to finishing operational processes. The operations manager is in

charge of decision-making concerns and customer satisfaction. To satisfy consumer demands,

the operations manager considers and provides answers for vital, strategic, and operational

decisions (Mentzer, Myers, & Stank, 2007).

Global business environments have put tremendous demands on making structures

respond rapidly to changing consumer demands (Chan, Swarnkar, & Tiwari, 2007). This has

created system frameworks that include the need for different decision-making entities to

enhance global execution through interaction. Organizations use multi-agent frameworks (MAS)

to help with making strategic plans and assisting with operations. In addition, the framework is

used as a piece of industrialized circumstances and in framework based systems (Caridi &

Cavalieri, 2004).

With the pressures of competition, and to remain competitive, organizations have

balanced their emphasis on creating shared systems that benefit both producers and suppliers.

MAS models give decision-making entities access in the assembling system. The decision-

making components produce advantages for organizations by being more composed, canny, and

versatile. MAS scientific categorization fuses five characterizations of order, which include the

application area, operators, control, organizations, and correspondence (Caridi & Cavalieri,

2004). Global supply chain processes allow for cost reduction and gives BJ's gas the ability to

evaluate the petroleum volumes compared to the projections. The process examines the data flow

from production, to transportation, to refineries, and then to the consumer.

The company's sales and growth revenue are dependent on the company's ability to open

new club locations and gasoline stations in existing and new markets (BJ’s Wholesale Club,

2015). The company has no guarantee that it will be able to achieve its forecasted profits and its

expansion is dependent upon the company finding suitable locations, which could be affected by

local regulations, construction, and competition.

Conclusion

The macro-processes of BJ's were examined and provided details into the global brands

gasoline entity. The results showed that the company is within a competitive industry but offers

its product at a uniquely lower value than its competition. The company utilizes forecasting on a

local level and can benefit by expanding its focus to global markets. Opportunities exist for BJ's

gas to use technology for forecasting software systems. Implementing new technology into its

organization to help with processes, gives the company flexibility to react to consumer demands

and supply requirements, which should increase profitability. The structure of BJ's gasoline is

asset-based in regards to local responsibilities. The company can benefit by focusing on core

activities, which include increasing the volume of new memberships. Effective communication

should help the process flow and improve product delivery to consumers.

References

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