Systems Thinking Report: Costco Wholesale Retailer Operations

This report presents a systems thinking analysis of Costco Wholesale retailer operations. It begins with a rich picture illustrating the complexities of the retail environment, followed by a CATWOE analysis to identify stakeholders and their perspectives. The CATWOE analysis examines customers, actors, transformation processes, worldview, and owners within the context of Costco's business objectives, particularly focusing on the delivery of organic products. The report explores how Costco can improve customer satisfaction and streamline its supply chain. Finally, the report offers recommendations for optimal solutions, including identifying effective suppliers, improving delivery services, and maintaining inventory, to drive better sales and efficiency within Costco's operations. These recommendations are designed to enhance Costco's competitive advantage in the wholesale market.

Running head: SYSTEMS THINKING FOR COSTCO WHOLESALE RETAILER OPERATIONS
Systems Thinking for Costco Wholesale Retailer Operations
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Table of Contents
1. Rich Picture.................................................................................................................................2
2. Root Definition Report using CATWOE....................................................................................2
3. Recommendation of Optimal Solutions.......................................................................................5
References........................................................................................................................................7

2SYSTEMS THINKING FOR COSTCO WHOLESALE RETAILER OPERATIONS
1. Rich Picture
(Figure 1: The Rich Picture of retail store functionality in Costco)
(Source: Created by author)
2. Root Definition Report using CATWOE
The CATWOE analysis can be described as a technique in which the identification of
stakeholders would be greatly performed, their actions would be understood and thus the most
beneficial actions would be sought accordingly. From the designing of the CATWOE analysis,
the perspective of the stakeholders within the project could be properly understood. The impact
from the view would help in understanding the kind of changes that would be made for the
business (Costco Wholesale, 2020). In this discussion, the focus has been put on Costco

3SYSTEMS THINKING FOR COSTCO WHOLESALE RETAILER OPERATIONS
wholesale, it would help in understanding the business perspectives of the company based on
determining the aspects, which need to be achieved by the business. The areas within the
wholesale business that are currently being faced by Costco have also been discussed within the
following section.
Thus, the following discussion within the report would cover the six aspects within
CATWOE in relation to the business objectives:
Customer – These can be considered as the stakeholders who would be affected based on
the services being offered by the company. In this case, it has been seen that the delivery of
organic products would be made to customers. The improvement in delivery of the best form of
fresh organic products would increase the customer satisfaction rates (Islam & Manaloor, 2017).
Moreover, improvements in delivery by logistics provider would also enable the reach of the
business to the customers as per their needs. Since, customers are focusing on their fitness goals,
hence Costco would need to understand the customer preferences and thus procure the best
supplies of organic products from the best suppliers (MacNaught, 2018). Thus, customers can
order fresh organic products and thus the delivery would be made to them accordingly.
Actor – The business manager, product designing experts and logistic partners are the
stakeholders or actors who would be impacted with the core business processes within the firm.
The business managers should be careful during the designing of strategies for the firm. Hence,
they should think of various strategies based on offering new products for the company (Eschler,
Taylor & Palkar, 2015). They should also decide over the possible aspects, which could
determine the presence of the business on a global basis. Hence, in order to ensure that customers
would be receiving the primary products based on their preferences, the company would need to

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identify the core business processes, which could be turned towards impacting the customer
mind (Roy, Hall & Ballantine, 2019). Hence, devising new strategies based on customer
preferences would need to be developed.
Transformation – This can be defined as the primary aspect that helps in determining
the changes in business activity, which could be affecting the customer. During deciding over the
process of transformation, the processes would be defined, which would be made as inputs.
Based on the defined inputs, the outputs of the firm would be considered (Apopiy & Dmytrenko,
2017). Hence, in this scenario, Costco would need to primarily identify the well-known suppliers
of organic foods at different locations. Whenever a customer would place an order at Costco, the
company would help the customers by arranging them with a local store from which the essential
goods could be purchased. The logistics provider would also play an active role during the
delivery process (Lazibat, Baković & Damić, 2015). Whenever an order would be shipped from
the supplier, the logistics provider would ensure quick delivery of the order to the store in order
to provide uninterrupted and fresh supply of organic materials. As customers would get fresh
products from the Costco wholesale store, hence, this would put a major positive impact over the
internal process.
Worldview – Costco helps customers by offering a wide range of organic products for
their daily needs. Based on the supply of products made by the wholesale retail business, the
customers would be able to purchase their necessary goods. However, during the process of
purchasing of goods, the most important aspect, which needs consideration is based on choosing
the right suppliers who would hold responsibility for providing the fresh products to the
customers (Testa, 2015). Hence, Costco would need to choose the right supplier from which
supplies could be directly procured and brought in to the retail store at an immediate basis.

5SYSTEMS THINKING FOR COSTCO WHOLESALE RETAILER OPERATIONS
The company would also need to think about the brand reputation in the global market,
which would only be possible through considerable efforts made during devising strategies and
dealing with them efficiently. The logistic partners chosen for the business should be careful and
attentive during the entire process of procurement and delivery to the store. Any delay in
delivery service would lead to degradable service and thus customers would not be able to
purchase the right product (Hasan-Al Mamun et al., 2018). Hence, the entire aspect within the
business should need to be managed efficiently by the business managers.
Owners – The owners are considered as the most essential stakeholders who would be
able to provide their final consent regarding instigating changes within the organizational
context. They would be responsible for both direct and indirect outcomes from the overall
business functions. Hence, they would directly communicate with the all other employees within
the organization (Camillus, Bidanda & Mohan, 2017). The business manager within the
company would devise strategies by communicating with their staff. Upon drafting a plan, this
plan would need a final approval from the owner who would provide their final consent and
based on that, the business offerings would be supported in favour of customers.
3. Recommendation of Optimal Solutions
Based on the understanding over the problems and issues that could affect Costco in the
wholesale market, certain recommendations that could be put forward and which would be
fruitful for the organization are being discussed as follows:
1. Firstly, Costco would need to identify the potential and effective supplier who would
be able to produce the fresh and organic products, which would be made available to customers.
After locating the favourable supplier of the products, the most essential services would be

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procured at a lower shipping cost, which would be made only after a proper negotiation. This
would in turn reduce the costs at which Costco would be able to sell their products to their
customers at their store. Moreover, Costco would also need to continuously their inventory and
stock at their stores. This would help them in ensuring that only the fresh quality products are
being displayed to customers. A continuous monitoring over the product by expertise employees
would be majorly be required.
2. In order to drive better sale of products, Costco would need to bring efficiency within
their delivery service. Customers might regularly visit their stores for procuring important
products being delivered by the company. Hence, wise judgement should be made over the
logistics providers. They should be efficient within their service. The organic products, which
being in high demands should need to be re-stocked on an everyday basis and hence logistic
provider needs to be diligent in their approach. Moreover, the delivery costs needs to be lowered
since all the prices would be affecting the customers. Customers would always look for quality
products at lower costs and hence Costco would also need to maintain their expectations by
ensuring these products are of high quality and readily available at their stores.

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References
Apopiy, V., & Dmytrenko, I. (2017). Increasing competitiveness of retail trade on the basis of
structural transformations. Journal of Research on Trade, Management and Economic
Development, 8(2), 80-88.
Camillus, J., Bidanda, B., & Mohan, N. C. (2017). The business of humanity: strategic
management in the era of globalization, innovation, and shared value. CRC Press.
Costco Wholesale. (2020). Retrieved 9 April 2020, from https://www.costco.com/sustainability-
introduction.html
Eschler, J., Taylor, H., & Palkar, S. (2015, January). Researching Dynamic Phenomena in
Complex Organizations: Collaborative Practice Research with Theory Triangulation.
In 2015 48th Hawaii International Conference on System Sciences (pp. 4671-4680).
IEEE.
Hasan-Al Mamun, M. D., Zakaria, N. M., Ahmed, R., & Rahman, L. (2018). On the
Transformation of Enterprise Operation Mode in the Era of Cross-border E-commerce:
Taking Sam’s Club as an Example. Ind Eng Manage, 7(239), 2169-0316.
Islam, S., & Manaloor, V. (2017). Selling organic foods through conventional retail
stores. Deciphering Organic Foods: A Comprehensive Guide to Organic Food
Production, Consumption, and Promotion, 105-149.
Lazibat, T., Baković, T., & Damić, M. (2015). The Review of Corporate Responsibility Policies
in Food Retailing. Trade Perspectives 2015, 202.

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MacNaught, P. (2018). BRAND BIAS AND CUSTOMER-BASED BRAND EQUITY IN THE
SUPERMARKET INDUSTRY. pdf. Economics, 498, 499.
Roy, H., Hall, C. M., & Ballantine, P. W. (2019). Connecting local food to foodservice
businesses: An exploratory qualitative study on wholesale distributors ‘perceived benefits
and challenges. Journal of Foodservice Business Research, 22(3), 261-285.
Testa, P. (2015). Decoding the Formation of a Retail Giant: The Evolving Geography of
Costco's Store Network. University of North Texas.