Management System at Trader Joe's

Engineering Management

A profession is defined as an activity which meets the following criteria:

1. Special and higher level of knowledge shared by all members
2. Restricted entry by a certificate or a degree
3. Ethical Code of Conduct
4. Public Service for a client or the community

Engineering satisfies all these criteria because engineers share the same skills and are obliged to get a bachelor or higher degree in engineering. For example, all chemical engineers can use the theories of mass transfer and heat transfer to solve a problem.

In addition, they follow the same ethical code of NSPE (National Society of Professional Engineers) and serve a client or a community. Engineers can work for a private or a public company, but they must Hold paramount the safety, health, and welfare of the public.Even if it is not necessary to get a certificate or a degree to be a manager, management satisfies the 3 other criteria. All managers put into practice the 4 functions of management, which are planning, organizing, leading, and controlling.

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There are several ethical codes for management such as the American Society for Engineering Management Code of Ethics and the Project Management Institute (PMI) Code of Ethics. Managers who work for a company or a non-governmental organization (NGO) take into account the public welfare. Therefore, engineering and management satisfy the several parts of the definition of a profession.

First-line managers (department head, supervisor, team leader) supervise non-managerial workers and are responsible for the daily basis production while higher managers (middle and top managers) supervise other managers and take strategic and long-term decisions6.

The top managers such as Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO), Chief Information Officer (CIO), Chief Diversity Officer (CDO), President and Vice-President, report to the board of directors and are responsible for the performance of the organization as a whole or for one of its larger parts. They make strategic decisions on a yearly basis. The middle management reports to top management and supervises first line managers. The middle managers are responsible for large departments or divisions consisting of several smaller work units. They make tactical decisions on a quarterly basis.

Harvard scholar Robert L. Katz described the manager skills in 3 categories:

• Technical skills: The ability to apply expertise and perform a special task with proficiency.
• Human skills: The ability to work well in cooperation with other persons, emotional intelligence.
• Conceptual skills: The ability to think analytically and achieve integrative problem solving.

The technical skills are very important for the lower level managers, but from lower level to top level management, this importance decreases while the human skills get the same importance for all level of management. From the top level to the lower level management, the importance of the conceptual skills decreases.

The success of Trader Joe's is based on a good application of the 4 functions of management which are planning, organizing, leading, and controlling.The planning of this company is thinking by settling the objective to sell unique world-wide products at a low cost in a cozy and intimate atmosphere. The customers are driven by gourmet tastes but hungering for deals. Trader Joe's has a cozy and intimate atmosphere that its rival lacks. Then, the organization of Trader Joe's is based on employees and quality products at low cost. The store employees are very welcoming and helpful. A team of buyers is actively seeking for the best products. Trader Joe's has four top buyers, called product developers, do some serious globetrotting. The other dozen or so buyers, or category leaders, spend more time in the office, fielding hundreds of cold calls a week from vendors tripping over themselves to make Trader Joe's a customer. The products are stocking according this simple approach:

1. search out tasty, unusual foods from all around the world;
2. contract directly with manufacturers;
3. label each product under one of several catchy house brands;
4. and maintain a small stock, making each product ght for its place on the shelf

So, Trader Joe's limits its stock and keeps small stores based on the paradox of choice of Barry Schwartz: Giving people too much choice can result in paralysis8.The leading of Trader Joe's consists of instilling in employees the philosophy of the company and giving good benefits. Future leaders enroll in training programs to run stores according to both company and customer expectations. The salary at Trader Joe's is higher by 20 % than rival's salary and employees receive medical, dental, and vision insurance; company paid retirement; paid vacation; and a 10% employee discount8. The performance control in stores is based on the customer feedback. Ten to fifteen products debut each week with the company's one in, one out policy according customer's concerns, product sales and product cost increases. The products withdrawn from the sale are brought back if the customers complain8. New employees whose performance is not as expected are fired according to Carolee Colter, owner of CDS Consulting Co-op in Nelson, B. C, Canada: In your store, establish a meaningful trial period for new hires, ask coworkers for feedback on their performance, and quickly part ways with those who can't or won't keep up the pace.

The lessons that Trader Joe's offers to aspiring entrepreneurs are:Planning: have a clear vision to stand out from the competitionOrganizing: develop a strong organization to launch the visionLeading: instill this vision for employees, loyalize them with a good salary and benefits and involve them in the management of the companyControlling: control the performance of employees and fire those who cannot keep up the pace, control the quality of the product or service based mostly on customer feedback.

Trades Joe's has the right management to continue to grow because its vision, to sell unique world-wide products at a low cost in a cozy and intimate atmosphere, is unique amongst competitors. Food retailers is general try to offer more choice to customers. For example, while Trader Joe's sells 10 varieties peanut butter, most supermarkets sell about 40 SKUs9.In addition, thanks to its unique way of purchasing and stocking items in stores, this company has an advantage on competitors and saves money. For example, Trader Joe's purchases a U.S.-made cheese directly from the manufacturers, which then ship their wares straight to Trader Joe's distribution centers. At a traditional supermarket, that same cheese would probably go through a distributor first, tacking on another cost9. Trucks leave the distribution centers daily for the stores. By keeping stores comparatively small and shying away from prime locations, Trader Joe's keeps real estate costs down.

The growth of Trader Joe's is assured by the loyalty of its employees who earn 20 % more than the giant supermarket employees. In California, assistant store managers earn a compensation package averaging $94,000 a year, and store managers' packages average $132,000. One analyst estimates that a Wal-Mart store manager earning that much would need to run an outlet grossing six or seven times that of an average Trader Joe's11.The performance control of items at Trader Joe's is more focused on customer's feedbacks than the competitors do. In return, customers keep talking, and they recruit new converts. Word-of-mouth advertising has lowered the corporation's advertising budget to approximately 0.2% of sales, a fraction of the 4% spent by supermarkets11.Unfortunately, no human work is perfect, Trader Joe's management present a weakness. By keeping the store stock small, a typical family couldn't do all its shopping at the store. There's no baby food, toothpicks, or other necessities9.