ACME Mexico City Analysis
Acme New Mexico
The author of this report is asked to conduct an analysis and issue a report for the ongoing operations of Acme New Mexico. First, there will be a focus on two data-collection techniques, those being sustainable supply chain management and decision support systems. The purpose of each technique chosen will be explained in addition to why each choice benefits the company. However, the limitations of each option will be explored and discussed as well. The costs and training of each technique will be mentioned. The problem, opportunity or challenge of Acme Mexico City will be mentioned as well as the roadblocks associated with achieving the necessary metrics and outcomes.
The reasoning behind the two techniques selected is not hard to decipher or justify. Sustainability is often dismissed a sham or unrealistic, even when it comes to supply chain topics. While petroleum is by no means going away anytime soon in the near future, its use and prevalence in energy and other sectors will become less and less as renewable and/or cleaner energies comes to the forefront. Indeed, energy use around the United States is at 2001 levels at this time and we are more than a decade removed from that year. The use of LED and LCD televisions instead of CRT televisions as well as the use of more energy-efficient car are but two examples of how energy use is actually dialing down and not up in the United States at this time.
Supply chain topics and logistics are no different. Planes and trucks that use renewable or at least cleaner technologies such as natural gas, hydrogen and electricity are the wave of the future even if the profitability quotient is not quite up to snuff with petroleum and similar energy sources at this time. It is only a matter of decades, if not years, before that changes. However, fuels for transportation and shipping are far from being the only topic that can and should be looked at when assessing supply chain sustainability. Just as a real-world example, Wal-Mart ships a lot of its goods in mixed packages that they call “break packs.”
For example, half a dozen to a dozen or more different small packs of goods are packed into boxes and sent to the stores in a mixed fashion. The boxes are broken open and the goods are sorted by department and the distributed to the relevant departments. The boxes are then broken down and sent back to the distribution center from which they came. It is emblazoned right on the box that the re-use of the boxes saves the company more than a dollar every single time a box is sent back. The boxes are also used to store layaway goods for customers and such so as to save money on having to purchase new boxes. Cardboard that is discarded, such as that from manufactuers and makers of goods that sell goods in Wal-Marts, is placed into a baler and sent to a recycler (EL, 2009).
It is quick and easy tactics like this that Acme New Mexico should look at. Even if the “per instance benefit” of these tactics is fairly paltry, the repeating of this sort of tactics en masse can add up to a tidy sum over time and this can only help the bottom line of the company over the long-term. Also, it is the right thing to do. Obviously, the level of need regarding supply chain and logistics for a home improvement store is going to be an overarching concern. It would not be to the extent of a factory since good sonly have to be shipped in, and not out, for the most part but every little bit helps irrespective of what is being shipped and why. Acme Mexico City should do its part to keep things lean and mean at its base of operations in Mexico City and should also facilitate the use of green energy and efficient tactics for any and all shipments that go to and from vendors, to and from customers and to and from other Acme offices.
Acme could really go a step further in terms of energy conservation in many parts of the world and allow employees to work remotely rather that commute to an office if their physical presence is not required in the store, although Mexico City is not really in a place where this can be done (CareerBuilder, 2014). However, it is something that can be allowed for and planned for the future if/when the infrastructure and regulations allow. Mexico City is not well-known for corruption-free politics and good infrastructure, so Acme needs to be realistic and wise about its locus of control as doing what is done commonly in the European Union nations as well as the United States and other corners of the world is just not an option in Mexico City at this time.
The other vein of analysis selected was decision support systems. Decisions have to be made every day. Some of them are major and some of them are fairly inconsequential. However, big or small decisions add up and this is especially true if they are very good or very bad. As such, it is imperative to have support systems and frameworks that allow for the collection, assembly and analysis of data that allows for proper and informed decisions to be made. This is something that cannot be done casually or with haste because giving too much favor to a decision framework is wasteful but giving too little does not allow for the proper data collection and analysis to take place (SearchCIO, 2014).
Despite the benefits of the two items above, there are costs and limitations to them as well. As far as limitations, supply chain sustainability can sometimes be a little more pricy, at least initially, than conventional techniques because the technologies are more nascent in nature and this can lead to startup and operational costs being a little on the high side. Re-use and conservation benefits are pretty clear-cut but converting to greener tactics and technologies and the fact that there are fewer companies supporting the greener energies than the conventional ones can lead to issues such as shortages, long turnaround times on support and so forth. As such contingencies and backup plans are a must. As far as decision support systems, limitations on those include the fact that not all data is good data and not all data is looked at in the right way.
Numbers can only be harnessed and wielded so much. Sometimes, it takes drilling down and truly getting to the bottom of what is causing a trend and/or impeding progress and if the underlying methodology is not up to snuff, the outcomes won’t be all that great. Just as one example, if the average number of customers on a given day is 1000 an hour, that is a good starting point of analysis but looking at the day as a whole can be exceedingly unwise or even obtuse because breaking it down by hour or even in halves or quarters of a day would be much better, if not by hour. For example, if the first half of the day was 1,500 customers an hour and the second half had 500 customers an hour, the overall average would be 1,000, just as noted above, but the first half of the day would be entirely different than the second. That is a very basic example, but it gets the point across.
There would be costs involved as well. While decision support systems might be fairly easy to justify, one need only look at things like ethics programs, managerial accounting costs (very close to being the same thing as decision support systems) and social responsibility efforts. Some view those as vital and important while others view them as poppycock and a waste of dollars that could or should go to profits. Sustainability energy concerns are no different. The aforementioned cost curves being a bit trickier for green energy right now would be the foothold that someone needs to urge Acme to stick with conventional energies until society and the economy make it clear that the newer energy types have truly arrived and are ready for mass consumption at a lower price. It is a risk to embrace new methods and technology but staying mired in the old ways is less than wise and can be much more damaging over time.
Training is not a huge concern with supply chain sustainability as reusing boxes and using alternative fuels does not take a whole lot of training to get the point across. However, staffing the positions related in any way to decision support systems is something that should not be taken lightly. For a line item that can easily be justified as something to pare down or even eliminate, the people and managers behind decision support system frameworks need to be on their game and need to provide the right data at the right time. If the department is not sure of the right way to go, an ultimate decision should be delayed if at all possible. At other times, it is not always possible to know the proper answer with certitude and an educated guess has to be given. Regardless, the data needs to be timely, given the proper amount of weight, the proper level of analysis and the ultimate goal should always be to get the best results at all times but without violating legal or ethical standards.
As far as a challenge or issue for Acme Mexico City, the more prevalent challenge that has to be addressed and assessed was already mentioned earlier. Mexico City and Mexico at large are notorious for their waste, corruption and other societal and infrastructure problems (HuffPo, 2014). This is not to say that Mexico is a giant slum, but their problems relating to crime and graft are prolific (Yahoo, 2014). They struggle greatly with the violence of the drug cartels as well as politicians that are more concerned about lining their own pockets rather than doing their appointed job on a scale that makes the United States and other modern industrialized nations look like kids’ play. The concept of throwing a bribe just to make things go smoothly would shock people in the United States and Europe but it is commonplace in Mexico. This is not to say that the European Union and the United States do not have high regulatory and legal hurdles for businesses because they do. However, the problem in the EU and the United States is more related to over-regulated and insipid laws rather than corrupt and/or lawless politicians.
Obviously, Acme is not going to get into that game but the decision-makers and executives need to keep in mind that such behavior is common or even expected but Acme should not dare stoop to that level or allow Acme’s reputation to become soiled in the nation or Mexico or anywhere else. Wading through the labor laws and unions will be trouble enough because the prevailing market wages and conditions will be stretched or even ignored by the workers that have a vested interest in the pay and benefits they will receive as well as the people that represent them (or want to represent them).
The author of this report has come to a draft staffing schedule that shows each hour time slot, the minimum amount of people necessary for that slot and the amount of people planned for that time slot. In general, the author of this report took the minimum staffing level and added a buffer of 20% so that if people call in sick or quit, then the minimum amount of people needed for the floor at any given time is still met without having to call in anyone new from outside work. This will eliminate excessive instances of paying people working less than four hours $500 even if they do not work the full four horus and people earning $1,000 will have worked their entire eight hour shift before earning $1,000. If the full wages are due even if one leaves early, this is surely the best way to go because overpayment of wages is wasteful and it is easier and more expedient to have extra people on staff.
If it is found that 20% is too much of a cushion and the floor is overstaffed, then the cushion can be reduced to 10 to 15% but going only the minimums is less than wise and should not happen because scrambling for fill-ins, paying people wages they really do not earn (if they don’t work the full day and thus make the same as someone who did) and running the risk of the floor being understaffed just cannot be allowed for so doing a cushion is the best way to go. Such a strategy will also assist in ebbs and flows in the business day. Acme will have committed to paying the wages, so the staff that is not busy working can help with other tasks and projects during their down time. It should be noted that part time and full time shifts will be staggered and positioned to keep the overall headcount below 30 total but over the minimum by at least 3-4 people at any given time except for the times where 28 people are needed and the 30-person cap cannot be exceeded. The author of this report would express some derision about the 30 person cap when the minimum level staffing is 28 for two different hour slots during the day and 26 for a couple more. The 28-hour slots allow for a less than 10% staff loss before the minimum amount is eclipsed and only four hour are left in the day at this point. If the staffing counts dips below 28, this will require calling in someone else and paying them at least $500 and that is exceedingly wasteful.
This condition and happenstance is really a limitation imposed by the Mexico national and Mexico City local governments. Requiring that people be paid irrespective of the hours they work and to be paid $100 in pesos for doing nothing is absurd. Unless the employee is restricted in what they are allowed to do in their free time, above and beyond the ability to leave the store (such as is commonly the case in the United States), the fact that they have to be paid a regular hourly wage while not being productive is foolish and is a burden to businesses. It is practically begging firms to hire more part-time workers. That being said, the use of part-time workers is not a panacea either because of the 50% restriction. In the name of trying to protected and help employees, the authorities in the country of Mexico and city of Mexico City are actually hurting the fortunes of workers to the point that it seems like almost by design to pit workers against businesses, not to mention unions as well.
Staffing Needs vs. Planned Staff — By Hour
Minimum Staffing Needed
7 am to 8 am
8 am to 9 am
9 am to 10 am
10 am to 11 am
11 am to 12 pm
12 pm to 1 pm
1 pm to 2 pm
2 pm to 3 pm
3 pm to 4 pm
4 pm to 5 pm
5 pm to 6 pm
6 pm to 7 pm
7 pm to 8 pm
8 pm to 9 pm
9 pm to 10 pm
10 pm to 11 pm
As was started to be noted above, there is going to be turnover and sick associates and thus a buffer zone is required to prevent scrambling and unnecessary payroll and benefit expense in the event that someone calls in sick. While the buffer need not be excessive, it should also not be too small either. The time period from 5 pm to 7 pm is going to give little margin for error but the rest of the day should be stable most times. Presumably those two hours are the peak hours of consumer traffic and thus the hard cap of 30 associates is very unfortunate. The hard cap of 30 employees really only affects those two hours and, to a lesser extent, the four to five hours preceding it. However, having 30 people on staff when 26 is the minimum should be sufficient, so the late afternoon hour slots should be fine. The use of part-timers should be pushed for less-skilled jobs such as entry-level workers and other non-management personnel. The reason for this is that full time workers are effectively being paid for their lunch hour, so $100 per full time person is being spent with no return other than the expectation that the person will be back after the hour lunch is done.
To delve a little deeper on items that have been touched on before relative to proper staffing levels and flexibility, non-standard environments and days can lead to massive swings in shopping levels. For example, if a hurricane slammed into the Mexico, people would be buying planks of plywood, nails and hammers in bulk to the point that they would sell out (AP, 2014). In addition, the staffing caps that are currently rigid and in place would almost certainly be well short of what is needed and called for if a mass run is made on certain types of goods due to a weather event or a run on a type of good due to a perceived, projected or actual shortage. For example, if the incandescent light bulb ban happened in Mexico like it did in the United States, there would be a huge run on those light bulbs caused by people hoarding the bulbs for their own purposes before they become hard if not impossible to find in stores (FoxNews, 2013).
The relaxation of the 50% requirement for Acme Mexico City would be a rather large boon to the firm as it would allow much more ease in filling staffing gaps. Only having to pay a part time employee $200 or $300 rather than the full $500 for a part time shift would be extremely advantageous if such an employee were only needed to fill the last 1-3 hours of the day and/or to fill a gap until the next batch of full time employees fills the void mid-day. If a full-time person goes out sick after five hours and that person’s normal replacement later in the day will not be there for three more hours, a part time person could be brought in to fill the gap. In addition, if an hour is busier than expected, the part time people could be kept on post until things truly and verifiably draw down. Since the work day is 16 hours, that makes it fairly easy to utilize part time and full time people to ensure coverage and the use of the standard shifts is still the best, but it would be wise to keep options open in case there is an unexpected peak or valley in the normal flow of business due to holidays, weather events, political events or something else that affects the retail sphere.
Another reason that the 50% tier being relaxed is a good thing is that the full timers get a lunch during the peak hours of the day if they work the latter shift of the day. As such, a staff full of full-timers is going to lead to a massive staff shortage during the peak hours. As such, the latter part of the day should be dominated by part-timers while the early part of the day can have more full-timers, but there should definitely be more part-time workers than full-time workers. As noted before, full-time positions should be limited to essential and tenured personnel and should not be burned up on people that are interchangeable and in any way unnecessarily restrict flexibility for Acme Mexico City.
It is clear that using the bare minimum staffing levels is unwise but going too overboard is not a good idea either. In addition, the use of full-time workers, especially for the latter half of the day, should be avoided as much as possible except to help maintain continuity with more indispensable and hard-to-replace positions as the work days grind on and attrition and turnover set in. While it would be better to use less workers and single out the reliable and tenured ones, the labor laws and requirements as they exist in Mexico City make this somewhat cost-prohibitive for personnel.
However, it can be beneficial to use full-time workers to a certain extent but also not do so in a way that leads to excessive labor costs and other related expenditures. Labor union advocates and such may not like it, but pushing down the cost curve is a way of doing business and labor unions and politicians are naive if they believe that businesses will not legally cut corners where they can, and this is ignoring the companies that openly flout or even violate the law. While businesses can certainly take advantage and otherwise abuse the needs of their workers, effectively punishing businesses for just trying to do normal business borders on the offensive but it is a cost of doing business in Mexico City as well as other countries. Regardless of where a business is situated, there are always legal, social, economic and ethical burdens that must be addressed and answered to.
Another thing that should really be addressed is the fact that the two hour overlap for full time employees occurs about two hours before it is really useful. If the overlap occurred between 5 and 7 pm, it would make things a lot easier in terms of keeping staff levels where they need to be. This is yet another constraint and damper on flexibility that is clearly at odds with the business needs and desires of Acme Mexico City. It is a foregone conclusion that there are peak times of the day and year and impeding and hurting the ability of a firm to staff their store as it is truly needed is a bad idea when it’s self-imposed by the store that is operating but it’s a further annoyance when a labor union and/or a government is imposing the unrealistic or unfair standard. While employees should have a voice, allowing them too much control and flexibility is essentially letting the inmates run the asylum.
Another point of analysis that should be assessed is that the advance team and analysts that are working on the Acme Mexico City store are in North Carolina. If the peole that are analyzing and crunching the numbers, metrics and tactics are native to the United States, they better be made to understand that Mexico and Mexico city are quite a different world than the United States in terms of labor laws, the amount of graft and corruption in business, the amounts of the same in government, the infrastructures of the countries including communication and travel to/from work and shopping as well as the basic home improvement needs of families and individuals in the area. Mexican citizens are typically much more disadvantaged, if not impoverished, than typical Americans and thus the priorities that do or do not exist can vary quite widely.
In general, trying to use a cookie cutter approach from one country to the next is not a good idea and can actually be disastrous. This is even true when speaking of directly neighboring countries like the United States and Mexico. To use a better of example of neighbors being polar opposites, India and Pakistan are direct neighbors. In fact, the two countries used to be a single country some years ago. Establishing a McDonald’s with no changes to marketing and product offerings would be a risky proposition in Pakistan due to a commonly held anti-American sentiment but it would be lunacy in India due to the fact that the cow is considered a sacred animal to Hindus in India (the dominant theology there) while it is no big deal and is often normal in most other parts of the world including the United States, the home country of McDonald’s. The goal is to apply the general goals of the firm but in a way that acclimates and adapts to the needs and wants of the locals.
In the end, Acme should do well with its Mexico city store and staffing plans but they just need to keep in mind the conditions on the ground in that area as well as the commonly held facets of staffing a store well but not to excess or in a way that leaves the firm in a lurch and/or having to make expensive decisions to cover their bases when things go south. It is imperative that Acme not get complacent or presuming about their endeavors in Mexico City or anywhere else. However, it is math and metrics and not magic and getting a good outcome for all involved is certainly possible with a little forethought and preparation.
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Retrieved February 3, 2014, from http://www.environmentalleader.com/2009/11/30/wal-mart-turns-corrugated-waste-into-pizza-boxes/
FoxNews.com. (2013, December 31). Lights out for the incandescent light bulb as of Jan. 1, 2014. Fox News. Retrieved February 3, 2014, from http://www.foxnews.com/tech/2013/12/31/end-road-for-incandescent-light-bulb/
HuffPo. (2014, February 4). Mexico Corruption. Huffington Post. Retrieved February 4,
2014, from http://www.huffingtonpost.com/news/mexico-corruption/
Patton, L. (2012, September 5). McDonald’s Plans First Vegetarian Restaurants in India. Bloomberg Business Week. Retrieved February 3, 2014, from http://www.businessweek.com/news/2012-09-05/mcdonald-s-plans-first-vegetarian-outlets-in-india
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Retrieved February 3, 2014, from http://news.yahoo.com/mexico-arrests-top-drug-cartel-figure-200011556.html
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