Value Chain Analysis of Costco

Costco Wholesale Corporation is a membership-only big box warehouse club retail chain store American multinational corporation. Jeffrey Brotman and James Sinegal founded the retail chain company in 1983. Today, we’ll discuss the value chain analysis of Costco Wholesale supply chain analysis; primary and supporting activities in the process of value chain analysis Example Company. They are inbound and outbound logistics, operations, marketing, and customer service; infrastructure, HRM, technology, and procurement as an application of the value chain analysis process.

Substitutes of Costco Wholesale

• The Kroger Company,
• Home Depot,
• Amazon
• Sam’s Club,
• BJ’s Wholesale Club,
• Lowe’s, Kmart,
• Best Buy, 
• Target Corporation
• Aldi, 
• Walmart

The Value chain analysis of Costco Wholesale supply chain analysis would analyze the primary and supporting activities in the process of value chain analysis. They’re inbound and outbound logistics, operations, marketing, and services; infrastructure, HRM, technology, and procurement. Here’s the supply chain analysis of Costco value chain analysis company example as follows;

Value Chain Analysis of Costco

Let’s discuss the primary and supporting activities involved in the process of value chain analysis of Costco Wholesale supply chain analysis. It is an application of value chain analysis based on Porter’s model; some of the key elements and components of value chain analysis are as follows;

Primary Activities of Costco

Some of the five main primary activities in the value chain analysis of Costco Wholesale supply chain analysis are as follows;

Inbound Logistics of Costco

I-Relationship with Suppliers

Costco Wholesale has established very good professional relationships with consumer goods-providing suppliers. It allows the company to receive the consumer goods supplies on time, properly warehouse them, and send them to the required destination of the retail store.

II-Requirement for Suppliers

Costco Wholesale deals with a diverse range of suppliers, vendors, and manufacturers in various categories of goods from different countries worldwide. They must comply with the company’s supplier code of conduct, guidelines, reviews, and standards in order to start with a retail chain brand. The supplier requirements comprise of following areas;

• Food safety GMP audit
• GFSI audit
• Preventive control/HACCP
• Supplier approval program
• Foreign supplier verification program
• Region-specific requirements
• Food packaging
• Personal hygiene control
• Pest control
• Irradiation control
• Microbiological testing
• Allergen control
• Product traceability

III-Directly From Manufacturers

Costco Wholesale has a relationship directly with various manufacturers and producers of brands without involving any suppliers or intermediaries. It allows the company to procure goods directly from the manufacturers and receive the supplies in their depositories where they deliver the goods and supplies to their warehousing units.

Outbound Logistics of Costco

I-Cargo Express Freight

Cargo Express Freight is a transport and logistical service providing firm of Costco Wholesale and it provides the service of same delivery across the country nationwide. It has the professional expertise to manage all types of deliveries safely and efficiently.

• Some of the key features of the company’s transportation services are as follows;
• Warehousing and distribution facilities to manage the storage and distribution of goods on time
• Multiple transportation options to decrease the shipping cost
• Capability to manage bulky products and goods
• Efficiently managing the last-mile delivery
• Ensuring transparency by providing real-time tracking

Operations of Costco

I-Inventory & Warehouse Management

Costco Wholesale implements various strategies for managing inventory like amplifying the procurement volume from every vendor and limiting perishable items. In fact, the retail chain brand employs an advance warehouse management system to facilitate communication among suppliers, stores, and warehouses. As a result, it helps the company to decrease inventory and warehousing costs.

Marketing & Sales of Costco

Costco Wholesale runs various types of promotional campaigns to provide discounts on bulk and wholesale purchasing. The company often employs the email media channel to inform customers. In fact, the retail chain brand follows a specific monthly calendar that highlights the upcoming products and goods.

Services of Costco

In order to amplify the customer shopping experience, Costco Wholesale offers various types of services to the customers. Some of them are as follows;

• Warehouse finding near to customer location
• Home delivery service
• Changing or editing the address
• Updating account information
• Verifying membership
• Canceling order
• Price adjustment relevant to their budget
• Replacing and returning customer orders
• Auto-renewal of membership

Supporting Activities of Costco

Some of the main supporting activities in the value chain analysis of Costco Wholesale supply chain analysis are as follows;

Infrastructure of Costco

Costco Wholesale has a well-developed infrastructure of supply chain network, warehousing facilities, distribution centers, and transportation network. The strong on-ground infrastructure helps the company to smoothly perform its various retail operations and timely deliver consumer goods to the customers.

HRM of Costco

Costco Wholesale has employed approximately 316,000 employees to manage its global operations. The human resource management department of the company plays a key role in managing the diverse workforce; and conducting training programs for employees’ skill development. It focuses on creating a satisfactory workplace environment that promotes mental and physical health.

Technological Development of Costco

Costco Wholesale invests a significant amount of capital resources in technological development. They could be in the form of e-commerce platforms; data analytics, advanced inventory management system, self-servicing kiosks, membership, community engagement, and others. The technological development helps the company to provide a great in-store experience and an easy check-in and check-out process.

Procurement of Costco

Costco Wholesale is highly cautious about ethical sourcing and procurement of raw supplies and consumer goods. The retail brand has set specific guidelines and standards for suppliers, manufacturers, and vendors to comply with in order to keep working with the company.

Conclusion: Costco Value Chain Analysis Example Company | Application of Value Chain Analysis Process 

After an in-depth study of the value chain analysis of Costco Wholesale; we have realized that Costco Wholesale is the world’s leading retail wholesale chain brand. If you are learning about the Costco value chain analysis example company; then you should keep in mind the abovementioned primary and supporting activities. They’re inbound and outbound logistics; operations, marketing and sales, and services; infrastructure, procurement, HRM, and technological development as an application of the value chain analysis process.