Question

Juskstock supplies was founded by Bob Juskstock in the early days of the oil boom in Newfoundland to supply clothing to offshore drilling rigs and supply boats. He quickly grew the business to selling safety clothing and safety equipment and hired his cousin to manage sales and the final delivery step to customers. Bob is a hands on owner / manager and is involved in all the daily operational decisions. Bob oversees the identification of new products, inventory management and filling of customer orders. There are 10 people in the warehouse who receive, ship, deliver and take direct orders from customers. There is a general office manager who manages the office, does payroll and handles all the financial transactions and accounting with the assistance of 3 clerks. Bob and his cousin meet each morning to decide what gets shipped out that day and assign the shipping & delivery tasks to four of the warehouse staff. All the warehouse staff receive, ship and deliver. Bob rotates the responsibilities amongst the warehouse staff so that their jobs are more interesting, and he can allocate staff as needed each day. Products are generally stored in a specific area based on product type. However, whoever is shipping sometimes has to spend time trying to locate the product. When there is a new product, the shipper often has to find out who received it and where the receiver decided to put it. As the range of products and number of shipments has increased, warehouse staff are starting to become frustrated with the amount of time they spend looking for things. Delivery is starting later in the day than it used to. Sometimes they are not able to complete their deliveries for that day because they run out of time. The staff asked Bob if he could hire a junior person to help find stuff in the warehouse so that they can load the truck faster. Bob and his cousin are so busy keeping up with the current workload that neither is spending any time acquiring new clients. Bob and his cousin are nearing retirement age and Bob would like to sell his company. He has been told by a business advisor that although there is strong potential for growth, his company operations are very dependent on him and his cousin and this is a risk for someone buying his company. His company would fetch a much better price if it were re-structured to remove those strong dependencies and positioned to successfully seek and handle growth. How should Bob restructure his company to • Decrease the daily operations dependency on himself and his cousin • Increase the sales capability • Improve the efficiency of the warehouse • Maintain the loyalty of the staff

Answer 1

1. The daily operations dependency can be reduced through employing more workforce. This is based on the principle of comparative advantage, that a person should perform that task in which he his comparatively much ahead than the other person. Thus if Bob and his cousin can acquire clients, as well as can manage warehouse, but they should do that work in which they are more efficient amd should assign another person for different task. This leads to division of work and specialisation of the employees, thus reducing the wastage.

2. Sales capabilities can be increased by expanding the business through advertisements and B2C marketing. The online platforms gives immense potential to meet the customers outside your geographical reach and thus expands your base. Moreover the aggressive advertisement prints an impression in the mind of people and they are induced to try your product. But the most important is providing quality to tje customer. No business can survive for long without giving quality products to their customers.

3. For increasing the warehouse efficiency, the focus must be made towards categorisation and grouping of products. Products must be kept differently according to their type and nature and then sub parts should be made to categories those products by alphabets. Thus for eg: it would be easy to find a Flash Sleeping Bag, as it would be placed in bag category, sub category sleeping bag and in F block as the initials of the product is F.

4. Loyalty of the staff is maintained by providing them regular incentives, continuous on the job training ti make them more efficient, providing them a safe working environment, making them feel that they are partners of the company and finally making them believe that the growth of the company depends upon how they work for it.