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Dollar General (NYSE:DG) is a U.S. chain of retail stores headquartered in Goodlettsville, Tennessee. Dollar General belongs to the discount and variety stores industry and was founded in 1939. Having variety and discount stores at more than 10,000 locations, the company's current key people include Rchard W. Drelling as CEO and David M. Tehle as CFO (About Us, n.d.). With annual revenue of more than $14 billion in fiscal year (FY) 2011, the company has more than 90,000 thousands employees. Low cost items are main product category in which DG deals. The business model of Dollar General is based on selling convenience goods, quality brands, discount pricing, and variety in business model according to locality served. Dollar General competes with Wal-Mart but with much smaller retail and discount stores as compared to Wal-Mart. Having more than 10,000 neighborhood stores, DG maintain 'simple' layout of her stores. The main products that DG stores carry are grocery, frozen foods, cleaning supplies, toys, clothing, dry food, pet supplies, tobacco products, and seasonal items. DG brand is involved in various philanthropic projects and social service projects as well. The most renowned philanthropic is the Dollar General Literacy Foundation that awards school scholarships and literacy funding to schools. For the FY 2013, GD's net income for the quarters of 2013 is $136 million. Dollar General Brand has effectively served the communities that small for Wal-Mart to open supermarkets and supercenters. By targeting this niche, DG has evolved into second largest discount store chain in the U.S. retail industry. Dollar General has also established distribution centers on the same pattern as of 'Sam's Club' of Wal-Mart. This indicates that the company has replicated the business model of Wal-Mart but tailored it to meet demand from neighborhood vicinities.
Inputs: Inputs are those materials and processes that a company uses to generate/deliver output (Proper, et al., 2010). The output in this case of Dollar General is the products, services, and customer satisfaction. It is observed that the three key inputs used by DG to generate outputs are human resources, capital, and enterprise. It is the combination of these three inputs that DG has established herself as a household brand in retail industry.
Human resources (employees and executive management of Dollar General) are also a critical input which the company utilizes to perform tasks that are currently operational. The input is critical in the sense that proper staffing allows Dollar General to keep their distribution centers, transportation fleets, and store facilities adequately staffed, nether under-staffed and nor over-staffed. This reflects positively on the payroll of the company along with providing management efficiency.
Capital is one of the fundamental inputs to any production or service process. In fact, capital is one of the main factors of production. The capital as input in case of Dollar General includes finance as investment, computers, assets, and cash to bear the expenses of managing the business. The capital as input is used to organize all other factors/inputs to be achieved as a final output. This is most critical input as no business activity takes place without financing the activities and various processes.
Enterprise is also amongst the main inputs that are required to run a business. All the decisions regarding other inputs and processes are taken by the entrepreneur. Hence enterprise as an important input is widely acknowledged. Human as well as material capital is managed by the entrepreneur, whether actively or through delegated persons.
Transformation Processes of the company
Dollar General is a chain of conveniently located small-box stores (Dollar General Form 10-K, 2013). The main purpose of company operations is to provide everyday-low-prices in all product categories. In retail stores sector, the most critical processes used for transformation are purchase, distribution, and transportation (Stevenson & Hojati, 2007).
Purchase: Purchasing is most visible and important process for a retail store brand. Purchasing is a methodological process used by Dollar General to buy products as well as services from various firms. In this process, Dollar General buys goods and services from various vendors, both internationally based as well as local. The importance of purchasing is critical as an input since this process singularly makes the firm capable of storing these goods and selling them through their point-of-sales (POS). Without this activity, subsequent inputs such as distribution and transportation cannot take place. Large stores such as Wal-Mart and Dollar General have formalized this process activity. Distribution: More than 10,000 stores of Dollar General are supported through eleven distribution centers strategically. In distribution as a transformation to the company operations, all the goods to be sold from point-of-sale (POS) stores of Dollar General are stored in eleven geographic centers. The distribution includes collecting products at designated centers later to be transported to store locations. The process is critically important as this allows the firm to store goods in advance. Through these distribution centers, products are shipped to stores for sales. DG has effectively developed 'distribution' as a transformation process as tags and bar codes are placed on products procured from original manufacturers of the products. Transportation: Transportation is the process that Dollar General utilizes to dispatch products to the store locations. Although, Dollar General uses third-party trucking firms to transport the products to DG stores, the trailers being used in transportation are provided by Dollar General Company. The process is very important as timely receipt of products is critical to the overall operations of Dollar General Stores. Any disruption in the transportation process may end-up jeopardizing the supply chain network of the company. Therefore, transportation is amongst important transformation processes that DG uses to dispatch products and replenish stocks of network of DG retail and discount stores. Inventory management: Inventory management is one of the key processes that Dollar General applies within the context of business operations. The process involves maintaining sufficient levels of inventory to meet customer demand. The management includes maintaining adequate inventories keeping in consideration the demand patterns. The process also includes eliminating excessive inventories thereby decreasing the cost of storage and holding. The process is critical for operational efficiency as an imbalance occurs in maintaining optimal level of inventories without having a proper and responsive inventory management system.
Outputs are the outcomes of performing transformation processes by utilizing the inputs. The outputs can be in form of products, services or both. In case of Dollar General, the three main outputs are products (sold at store locations), services, and customer satisfaction. Products: The foremost direct output that Dollar General generates is the products that it sells in all the Dollar General stores across different geographic locations of the U.S. territory. The importance is because primarily the customers come to Dollar General Stores to buy these products, more than anything else. Although DG procures products from vendors and does not manufacture them primarily, these products remain the main output of the company in generating revenues. Services: Services are tertiary outputs that Dollar General generates while engaging in business operations activities. These services can range from assisting customers to replacing defected products. Today's retail stores, specifically the discount stores are heavily dependent on timely services delivered by their staff to customers. Customer satisfaction: The main desired output by DG management is 'customer satisfaction'. It is through the utilization of products and services (the other outputs mentioned earlier) that Dollar General attains profitability and provides value to its customers. The indirect outputs that Dollar General provides include: The products and services of Dollar General are not strictly divided into products as outputs and services as outputs. This means that the company in her annual reports filed with Securities and Exchange Commission (SEC) does not categorize and distribute the outputs giving definitive percentages to products and services. However, mainly the company generates products as outputs whereas services as well as customer satisfaction…[continue]
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