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Analysis of Costco Wholesale Service Provision

This paper is a detailed analysis of Costco wholesale company which is situated in Las Rozas, Spain. The wholesale leads in its operation in the provision of various products. The store is located at an urban Centre, a strategic position for its operation. The essay will be providing an analysis of the store’s service provision, specifically on the improvements for good efficiency and effectiveness. The wholesale sells various products such as bulk groceries and electronics. The strategic position of Costco wholesale is to maximize market reach. Since the wholesale is located at an urban Centre, it enables the company to achieve a high value of revenue hence allowing consistent profitability in the organization (Laguna et al., 2020). Costco wholesale uses a warehouse-style layout in its operation. The main objective of its operation’s above strategic decision position is to minimize extra spaces.

The wholesale uses warehouse-style layout as retail locations, thus providing extra spaces for storage. Therefore, the company does not incur additional costs for more storage spaces (Sievidova et al., 2019). The strategy is also meant to highlight jobs and exemplary leadership within the wholesale to establish and promote the development of its employees (Arcentales-Carrion et al., 2020). The store’s objective is to encourage employee motivation and minimize turnover. The company has got its leaders from its employees mainly due to internal leadership. Costco wholesale displays its good in shipping pallets instead of arranging and displaying its goods on shelves, thereby reducing inventory costs. Also, wholesale has a diversified strategy in its operation, and the wholesale supply chain management is focused on the provision of goods of high quality at relatively reduced costs. The efficiency of Costco’s operation could be increased with the establishment of a good E-commerce which gives more information about the company to the customers.

Layout Plan

The Current Layout of Costco Wholesale.
Figure 1. The Current Layout of Costco Wholesale.

The wholesale adopted a warehouse-style layout which is effective for its operation given that it saves on space for storage thereby, reducing the costs of storage. The goods are well-arranged pallets which is a good arrangement given its effect on the customers when looking for the products they need. Since the wholesale is a tall building, the layout is fitted with escalators that lift the customers to Patios and is effective as it saves on time. The main goal of customers is to get the products they want; looking at the Costco wholesale layout, and it lacks shortcuts (Weje and Ameme, 2018). Therefore, the design provides low flexibility to the customers, and it can be improved with the provision of flexibility routes that are strategically indicated. Again, the checkout service points have to be made available on all wholesale floors.

Customers requiring specific products waste a lot of time as the layout is not efficiently organized. The customers may sometimes move to the upper floors and fail to get what they need. The wholesale can improve its design by doing some rearrangements of the products. For instance, electronics goods should be placed in a specific area for all machines. Therefore, to make it easy for the customers, they can adopt a checkout service point at the same place, given that sometimes electronics are not easily identifiable (Kaiwen, 2017). Also, the layout should be adopted with several checkouts during busy days to provide neatness in the wholesale (Khan, and Tabassum, 2021). It will help reduce queues, which often happens as customers queue to check out some goods. However, self-checkouts can help solve the issue; for further convenience regarding the self-checkout, the company needs to popularize how to operate with self-checks.

Process Map

Process maps provide a simple way to record aspects of a process to help improve it. It helps provide insights into a process that the customers can visualize. It is a tool that pinpoints areas that require changes for an operation’s efficiency and effectiveness (Bahramara et al., 2017). An efficient way to reduce queuing in Costco wholesale could be the establishment scan and go technique. It is the easiest and convenient method of purchasing for consumers. Moreover, it is a good technique that brings about innovation and improves customer experience (Alipour Bertilsson, 2019). Costco wholesale can adopt the method as it also helps obtain helpful information regarding the habits of its customers and maximize the company’s operational strategies. Therefore, such a method makes it easy to identify areas that necessitate improvements regarding the process (Rowell, 2018). Below is the explanation of why the scan-and-to-go process would change and increase the speed of the process.

Adopting the scan-and-go method in Costco wholesale will drastically reduce the steps and procedures under which payment is made. Hence, the process minimizes the time to carry out payments. Therefore, the customer could experience a good shopping involvement with convenience and less time. Also, the interaction among the occupants could reduce which is an essential factor resulting from the recent pandemic. Since the method is effective, Costco wholesale should adopt a way to make more aware and use the scan and go technique. As earlier stated, establishing a more checkout system would be more efficient as it saves time. Oppositely, the more a customer spends more time at the wholesale, the more they browse and eventually purchase more items.

Capacity Service

This section will analyze the capacity management of Costco wholesale concerning the queues. In business, there is a need to create convenience concerning flexibility and the transient nature of the store. There is always an uncertain number of customers who visit the store. Graph one shows the amount of revenue collected over ten years. Therefore, it is an indication that the amount of stock has increased, and it means more customers are now buying at the wholesale (Siawsolit, 2020). To counter and create effectiveness in wholesale, the company needs to have an excellent strategy to handle a large number of its clients. Therefore, the store should consider using the ‘chase capacity plan’ in which there is a pool of human resources meant to help when the wholesale is busy (Kisswani and Elian, 2021). It is also why the scan and go technique should be implemented because it can handle a good number of customers in a minimized time limit as opposed to the usual check-out system.

It shows the number of revenues since 2007 and 2019.
Graph 1: It shows the number of revenues since 2007 and 2019.

Since the graph indicates an increased number of customers, it also shows how its customers perceive the wholesale products. The Costco wholesale of Las Rozas of Madrid, Spain, should always conduct good customer research. The research should entail the current tastes and preferences of the company compared to previous years. The trend should then be used to predict the future uncertainties that might arise concerning how the customers’ experience should be handled and the products (Dworakowski et al., 2021). The report about the prediction of future demand of the products should be communicated to the concerned manufacturer. Such a strategy establishes trust among its customers since the system also involves the wholesale ensuring a high quality of standards in its goods (Sitaker et al., 2021). This can be strengthened by providing an extended warranty of goods once the customers purchase them. In connection, it could be appropriate and efficient for customers to place a checkout locality at the end of every shopping on every floor.

ITO’s and the 4V’s Analysis

The whole functioning of a company is based on the general ITO model. The entire transformative procedure entails the inputs and the outputs, whereby the inputs have two parts the transformed and the transforming resources. Applying the above-mentioned concerning Costco wholesale, the transforming resources are machines, staff, trolleys, and suppliers. On the other hand, transformed resources are customer satisfaction, products and information. The transforming resources are meant to help the transformed resources on several occasions. The resources in the Costco wholesale Madrid include both the services and the goods (Johnson, 2021). Moreover, Costco wholesale in Madrid should improve the children’s play area to allow shoppers an opportunity to do their shopping. In connection, the children who spend their time in the wholesale can make good future customers. Customer satisfaction depends on the services provided by the layout and its employees.

Therefore, the more the wholesale increases the quality of its services, the more the store becomes more effective. The queuing of customers in respective places of services increases the time of stay for the customers and, thereby, is inefficient (Michel, Saucède and Fenneteau, 2019). A good understanding of the input functions can help pinpoint areas in which improvement is made (Morente, 2021). The 4V’s entail the volume, variety, variation demand and visibility. The Costco wholesale volume is enormous and includes electronics and bulk groceries. There is need for the store to improve on the variety of the goods sold. For instance, the electronics should consist of all types from various manufacturers, and their quality should be of a high standard. Given the uncertainties, the company needs to research its customers’ general demand for goods (Aranizadeh et al., 2020). The study should be based on experience and should be well conversant with the days where demand is high to help in the constant availability of the stock (Karar and Chattopadhyaya, 2021). For visibility, Costco wholesale has a low level, and the concept involves the capability of the company to involve the customers to contribute to fostering a better company. In case of customer queries, the Costco wholesale of Las Rozas of Spain has plenty of places at distinct strategic positions.


As stated in the analysis, appropriate operational management theories have been applied in the Costco wholesale of Madrid, Spain. As a result of the research undertaken on the Costco wholesale effectiveness, I have had a chance to critique and reflect on good operational techniques for processes and decisions. The performance objective explicitly showed the strengths where the wholesale put their focus majorly. For the excellent performance of such an organization, it is essential to undertake a proper analysis to ensure various services and goods are improved accordingly. The ITO’s and the 4V’s are crucial in understanding how to achieve performance objectives with high importance. It has also provided me with great insight into deciding which operational goal can be applied to identify the best operational issue. Furthermore, the layout analysis has pointed out what needs to be done to improve the effectiveness of the store.

Moreover, the analysis was able to identify the time taken by the customers to make their purchase and has been able to locate the scan and go technique. It has shown that the method is appropriate and saves time for the customers. Concerning the capacity service, the main issue was queuing; therefore, the analysis recommended that the wholesale undertake predictions to minimize the queuing of the customers. The company is well-reputed and is among the best stores. The issue is queuing, and its customers know that they have to deal with it whenever the wholesale is busy. The research was meant to look at the general functioning of the store and provide some parts which necessitate improvements to enhance customer satisfaction. The analysis has also pointed out the need for preparedness regarding uncertainties that often arise in business operations.

Reference List

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Arcentales-Carrion, R., Colina Morles, E., Sucozhanay, D., Duran, R. and Siguenza Guzman, L., 2020. Process mapping and modeling: a theoretical tool analysis. Test Engineering and Management, 83, pp.25914-25925.

Bahramara, S., Yazdani-Damavandi, M., Contreras, J., Shafie-Khah, M. and Catalão, J.P., 2017. Modeling the strategic behavior of a distribution company in wholesale energy and reserve markets. IEEE Transactions on Smart Grid, 9(4), pp.3857-3870.

Dworakowski, D., Thompson, C., Pham-Hung, M. and Nejat, G., 2021. A robot architecture using ContextSLAM to find products in unknown crowded retail environments. Robotics, 10(4), p.110.

Johnson, T., 2021. Cultural differences in business: How culture can influence business operations for American companies operating in Spain.

Kaiwen, H., 2017. Research on the present situation, problems and countermeasures of the architecture of Lingnan flower-bird-fish art wholesale market. American Journal of Civil Engineering, 5(6), pp.418-425.

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Weje, I.I. and Ameme, B.G., 2018. Evaluation of Plan Implementation: Peri-Urban Development and Diobu Layout plan, 1975-2018. The Environmental Studies, 1(2), pp.70-79.

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