Human resource surveys have shown that poor operations could be responsible for up to 90 percent of the problems encountered in businesses today. It may even be hard to recognize a problem as operational, if, for example, staff morale is low or sales are down. The temptation to ignore operational issues is common. Sometimes you can only view operations by their lack, as good systems seem seamless. In addition, to embrace improving co-op operations is accept constant change.
An organization can muddle through many tough situations that affect co-op accomplishments, but the best indicator of long-term success is customer satisfaction, which can only be delivered with good operational systems. Good operations ensure systems and procedures are in place to take a co-op to the next level. It can be something as simple as having the right office supplies available to staff when and where they need them (customer service is hindered when staff have to hunt for a pen or order form) to having the training and technology available to obtain and use important information like department sales, inventory turns, cost of goods and percentage of labor.
“Operations are like a jigsaw puzzle for your organization—you don’t put it together all at once, and there are logical steps to follow by looking at labor, margin and expenses,” said Mel Braverman, the CDS core team leader and consultant for Improving Performance, incorporating his vast experience managing co-op retail and wholesale operations. The work of operational management is never done, no matter the size or complexity of an organization’s structure. It continues to evolve, and the direct result of strong operations is that marketing efforts have a base from which to build on success, adequate financial controls are in place, and concrete channels of communication are clear for staff and management.
As the team leader for improving performance, Mel’s role at CDS is multi-faceted. He provides training on margin management, merchandising, individual department management, as well as general manager mentoring. New GMs can participate in a year-long program with Mel addressing financials, boards, management and merchandising. He also works with managers on developing a Rapid Improvement Plan (RIP) to improve the store’s performance by assessing systems like labor, customer service and department merchandising. In addition, Mel works with stores using CoCoFisSt, giving a store comparable data from other stores around the country with which to compare themselves. Mel’s goal is to see every store he works with performing as an upper quartile store.
Mel asserts that good operations don’t happen all at once—and by taking on various areas of improvement one or two at a time it will be manageable. Focusing on a few key issues is also the most effective use of a manager’s time. “Success is built on small accomplishments day-to-day. It’s the rare person who hits the lottery,” said Mel. “If you want to go from a 31 to 33 percent margin, go to the individual departments.”
For instance, the RIP has been applied to a number of individual store departments like produce or grocery, but Mel found the impact went beyond just the department, to ultimately improve margins or labor storewide. At Sevananda Food Co-op in Atlanta, the first quarter with RIP in the produce department saw a 15 percent increase in sales, while labor dropped from 15.5 to 13.9 percent. “The payback is often within three months,” said Mel. “The results can be real obvious, real fast—if stores follow the plan.”
One of the major issues Mel believes hinders strong operational performance is a lack of a system of accountability within departments. “Something I see fairly regularly is the need for general managers to hold teams more accountable. I hear ‘I can’t get the produce manager to do it.’ You have to create a culture of accountability.”
In addition, as co-ops join supportive networks regionally and nationally, a co-op can benefit much more by having management systems in place to reap the payback of greater cooperation through technology. “Once you give people the specifics of what you want them to accomplish, and hold people accountable, co-op operations will be enhanced. After that, the technical challenges co-ops have will not be as hard to accomplish because people will understand the potential, and their ability to impact the bottom line.”
Training, internal and external, is also an important part of the operational picture according to Mel. Training is an investment, not an expense. In addition, getting education within your own business environment is extremely useful. “Co-ops that don’t train get real stale. Their view of operations is how they operate, not that there could be other ways of doing things. You want to create excitement and energy by bringing in fresh ideas. In a retail environment, if you’re not changing, you will eventually fail. Competition won’t be less in the future.”
Mel also extends a note of caution to those who overlook operational problems. “Operational problems create crisis, and crisis does not speak well to the long-term success of an organization. Management is just putting out fires. Crisis management takes you out of being a dynamic organization.” It also has its emotional down side, causing staff turnover and burnout. “As an industry we value people, and want to run sound business operations to take care of people,” said Mel.
Running a tight ship operationally is not just locally beneficial, but for the movement as a whole. “We are responsible to the members for their investment. We’re caretakers of that, and should take that role seriously.”