Value Chain Concept
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 SKIS 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 he 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 ere also clouded with how to get the seasonal SKU 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. KEFIR) 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 fresher and more relevant merchandise. The remodeling of the strategy also contributed to effectiveness of the District Managers-They are no anger elbows deep in back room inventory with the store managers digging up Ski’s.
Now, District Managers are now able to increase in-store training and improve labor planning by simply avoiding the back room problem. Dollar General was able to protect the core SKIS value that it delivers to its consumers. By evaluating its back room policies and activities, it was able to identify the value lost with decrease in manager/employee productivity and potential to lose core SKU storage space.