8
Publix Produce Analysis to Reduce Waste Cost
Jane Doe College
KDR
In the corporate world, I know I need to provide risk tolerance and risk exposure in the company I work for. The risk tolerance is the amount of market risk the company as an investor can tolerate. Risk exposure is the loss potential of the business.
Publix, the company I work for has noticeably suffered severe produce loss. Although donating produce to shelters has proved productive as a write-off contribution to society, I do feel that this compromises our overall intent to secure positive intent to retain our employees and continue to employee them in a progressive and independent manner. The risks that my company “Publix” faces are unsold produce inventory, labor unrest, financial risk, unexpected market trends, and problems from the distributors. Publix strives to create and also continue to satisfy expected income for our cherished employees that correspond to the current market trends. The company’s sales teams closely monitor the POS trends in expectations, convey POS data in real time to my company, and develop immediate forecasts of potential innovative and creative implementations that fortify our already existing reputation for offering a very select, distinguished, and renowned ability to provide elite and often diverse produce product. Our specific designs are intended to likely cater to, and pacify the most persnickety buyer. The Publix reputation is at stake as we continue to waste product and decline financially by ignoring our failure to ensure proper produce is handled in a systematic manner. Our produce department, being much in demand, is designed, packed, and shipped so that this resource and means of vital health is reaching our Publix distributors within a week’s time at most. The objective is that when the produce products reach the shelves of Publix, they must be sold. Unsold inventory is waste. Since the produce trends change according to season, any unsold inventory is shipped back to our company headquarters, and the unsold produce is either scrapped, or given to a local homeless shelter. So, it is very important that there is no unsold inventory. Although donations are considered a tax exemption, we can better contribute to our society by successfully retaining potential earnings and giving back to society alternatively (preferably).
Other risks are labor unrest. Even though labor unrest can disrupt “Publix” and specifically their produce department, as a company completely, the generous policies of our company towards its employees reduce the possibility of a labor unrest. There is the financial risk if our company does not receive payments from distributors if there is a transportation violation (food spoilage), financial fraud, or a natural disaster strikes the company. The probability of this risk is relatively low. There is also the possibility of unexpected change in market trends. Even though the probability of this risk is very high, this risk is managed through close monitoring of POS data by both the sales teams as well as the marketing personnel in the company. Another risk is that the distributors may stop carrying the elite, choice, and unusual demand from our customers. The probability of this risk is moderate, however, the chances of this risk impacting our company are not very high, because there are other grocery stores in areas who have shown interest in carrying the exotic produce represented by our company.
It’s important to recognize that reasoning in business can be distorted by confirmation bias where evidence that contradicts preconceived notions is ignored. The Publix motto “we will never intentionally disappoint our customers” cannot ignore changes in market trends, as this could lead to severe losses from our unsold inventory. However, anchoring foundations happen in our company because market information and changes in trends are given very high importance when making decisions. It is obvious that Publix risks from loss aversion, with every change in market trend, and the production design of our produce department change, and these changes can increase the costs for the company (Grable, 1999). We need to acknowledge that Publix is losing serious revenue through unnecessary waste.
Within our company “Publix”, the risk being addressed is directly related to the total sales of multiple grocery produce supplies, while still maintaining household products, pet products, dairy, and maintaining our reputation of delivering satisfaction regardless of any one individual’s complaint.
The first table exhibit shows risk tolerance scores. The scores are on a rating scale from 1 being the lowest to 5. The fifth column gives the importance into the score as a percentage. The total importance of our scores can lie between 1 and 5. The importance of each table adds up to 1.0. As representatives of Publix, we intend to recognize, assess, and solve to our best ability the immediate issue concerning our objective which is investigating and solving produce loss and waste within Publix, and satisfying George Jenkin’s passion to create, promote, and resolve customer expectations.
Risk Tolerance Table:
#
Risks
Importance
Score
% RF
1.
Unsold Inventory
0.4
2
0.8
2.
Labor Unrest
0.2
1
0.2
3.
Financial Risk
0.1
3
0.3
4.
Unexpected Trend
0.05
5
0.25
5.
Distributor Trouble
0.05
3
0.15
Total
1.0
1.7
In the risk tolerance table, the unsold inventory is the most important risk and has a weight of 0.4. The risk tolerance score is 2 because my company has limited capacity to bear this risk. A high unsold inventory can ruin our company and can even lead to its closure. Let us take a numerical example, the percentage tolerance total score is 1.7. The risk tolerance of my company is (1.7/5) X $2 billion = $680 million.
Risk Exposure Table:
#
Risk
Importance
Score
% RF
1.
Unsold Inventory
0.4
1
0.4
2.
Labor Unrest
0.2
1
0.2
3.
Financial Risk
0.1
2
0.2
4.
Unexpected Trend
0.05
5
0.25
5.
Distributor Trouble
0.05
4
0.2
Total
1.0
1.25
Then risk exposure must be considered. The risk exposure is the actual exposure of our company to financial risk. The importance of each risk remains the same, but the exposure rating changes. For example, unsold inventory has an importance of 0.4 whereas the risk exposure is 1. This exposure is lower because the company takes several steps to reduce unsold inventory risks. It uses algorithms, historical data, and current point of sales data to accurately identify trends from the current data and immediately changes design so that our pet toys match the current trends. These efforts reduce exposure to the risk of unsold inventory. The risk exposure total score is 1.25. The risk exposure of our company is (1.25/5) X $2 billion = $500 million. This shows that risk exposure of said company is less than its risk tolerance. This situation is relatively safe for the company.
Note: calculations of said imaginary company figures are only an example of financial results.
KDR
WC: 1,120
· I like the idea of the risk tolerance/exposure that you have in your paper, but what is needed after you spoke about the risk is a narrowing into the problem definition we created as team: the problem with how does Publix avoid receiving waste?
· It’s a wonderful paper about Publix and their risk tolerance and exposure, but all that is needed were the items mentioned below.
· For Instance, in the Team instructions, this is what is given for my portion of the paper.
· This is where the paper needs to focus:
· The Situation (only include portions of company history if directly related to the problem/s)
· a. Background of the Problem
· b. The Complex Problems
· c. The Objectives (make the list clear and as specific as possible).
· You have a great broad overview of Publix’s business, but what is needed is a narrowing into the three complex problems that we created, and what I sent over in the meeting notes.
· Then, create the objectives.
· In Green, you touched on John’s subject, creating alternatives. This is something that John could possibly implement in his section.
· Most of your paper looks like it can be used in Evaluations (everything not highlighted), which is my part of the paper. Essentially, I am trying to create a decision tree by using John’s creative alternatives; however, your paper is not focusing on weighing risks. Just on the black bullet points shown above.
· *** Overall, the paper is great, but just needs to focus on our problem definition, background of the problem, complex problems, and objectives. Most of what is needed in your part of the paper is highlighted in yellow. If you stick with the topic of waste, then you will be on target!
References:
Grable, J. &. (1999, n/k n/k). Science Direct . Retrieved from Elsevier Science Inc.: https://www.sciencedirect.com/science/article/pii/S1057081099000414
Kahneman, D., Lovallo, D., & Sibony, O. (2011). Before you make that big decision. Harvard business review, 89(6), 50-60.
Hvide, H. K., & Panos, G. A. (2014). Risk tolerance and entrepreneurship. Journal of Financial Economics, 111(1), 200-223.
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