Commercial distribution assignment. Total quality management - Total Quality model

1. MERCADONA

2. INDEX
 Introduction
 Total Quality Model
- Principles of TQM.
- Five components through TQM.
 Standarization & Logistics
- Process standarization and improvement.
- Managing store network.
- Managing the store.
 Economic Crisis
 Conclusions
 References

3. ◉1977: Mercadona was founded.
◉1990: - Juan Roig took over the control of
the Company.
- Challenge: International retail
chains in Spain.
◉1993: Total Quality Model.
◉1998: Growth in sales and profits period.
◉2008: Biggest Supermarket Chain. 1210
stores and 61500 employees.
INTRODUCTION

4. “
UNIVERSAL THRUTS
 “To be satisfied, one must first
satisfy others”
 “No one is born knowing”
 “How you measure me is how I
behave“

5. Principles & Components
Total Quality Model
TQM

6. Defined 5 jobs classifications:
Process owner
Instructor
Executor
Coordinator
Assistant coordinator

7.  Everyone is reliable.
 Whatever does not provide value to
“The Boss”, is not done.
 Every Company is an assembly line.
 To have a scientific mind.
Core Principles:
 Doing it right the first time, zero
defects.
 Everything can be improved.
 The Company has to prescribe.
 Abide the law.
 To convince, no defeat.

8. Customers 
“Boss”
Employees
Suppliers
Society
Capital
TOTAL QUALITY MODEL

9. The customer –
a.k.a ”The boss”1) Price 2) Innovation
5) Contact4) Prescription
3) Time and
convenience

10. The Employee
Stability
◉ 2008 – All 61500 employees had
permanent contracts
◉ Stable working hours:
7am-2; 8am-3; 2pm-9; 3pm-10
◉ Schedules alternate each week 
employees knew their schedules 1
month in advance
Recruitment & training
◉ 2008€58 mil on training, approx.
€1000/employee
◉ Each store employee had 1 month
training with store specialists
◉ Empowerment – specialists were not
paid, but they took great pride and they
received a day off
.

11. ◉Compensation
 Highest salaries in the sector
 30 days off / year
 Day care benefits & maternity leave
 All employees were paid the same
(except store coordinator)
◉Advancement
 ONLY internal promotion
 Transparency
 Part-time jobs for students seeking
careers
◉Working conditions
 No clocking for employees
 Each store – Locker rooms &
common room for employees
 2007  fully automated logisticks
block near Madrid
 “Don’t make a person do what a
machine can do”
◉Quality of life
 Stores in employees vecinity
 Since 2003 ALL Mercadona stores
were CLOSED on Sundays
 “Employees have families too”

12. The Supplier
 Mercadona worked with over 2000 suppliers, of whom
approximatively 100 were integrated
 Long-term contracts  win-win
Suppliers
Integrated

13. Society
◉ Environmental
productivity
 Use less natural
resources
 Plan routes so that
trucks are full 95%
of the time
 2008: 19,000
reduced trucks &
78 million km
eliminated
◉Social Impact
 Reduce
disturbance by
using the same
drivers for each
store
 New method of
unloading: faster
and in the
appropriate time
of the day
◉Neighbourhood
development
 Bringing back traditional
markets
 Renovated markets and
placed stores in the
same buildings
 Working with over 1000
merchants
 23 stores within markets

14. Capital
 90% of its profits were invested back into the company:
2006 2007 2008
€565 million €602 million €572 million
 Labor and asset productivity:
Sales/empl € 232,260 € 226,749 € 205.61 € 166.23
Sales/ft ² € 908 € 564 € 548.12 € 402.76
Average US
supermarket
Spain’s Highest
grocery retailer
World’s largest
retailer

15. Process standardization
and improvement
Process standardization
Process owner designs
store process
Process owner designs a
process method document
Store process improvement
Process owner
looks for
improvements
Improvement
is successfull
Improvements
implemented
in test store
Improvements
implemented
in larger area
Improvements
implemented in
whole chain

16. INCREASE SALES
THROUGH EFFICIENCY
Decentralized
ordering
More efficient
ordering
Reduction in
waste
Increase in
Sales
Standardized
workforce
More
efficient
working
hours
Reduce
waste of
labor
Increase in
sales

17. Managing the Store network
Activities
Regional
Coordinator
• Discuss problems
• Visits 6 stores a day
• Responsible for the overall well being of a Mercadona
Activities
Prescription
Instructor
• Improve flow of information
• Specialized in different sections
• Be alert to developments
• Visiting competitors
• Listening to customers

18. Managing the stores
 Numbers of employees working
always the same
 The tasks varied
 Nothing is outsourced
Store
coordinator
Ambiance
specialist Non Ambience
aisle specialist Cleaners Cashiers
Maintenance
specialists
Assistant
store
coordinator

19. The Economic Crisis
GDP: 0.9%
2007 2008 2009
Beginning of
Global
Economic Crisis
Economic Crisis
affected Spain
GDP: 3,4 %
Cut down production
and investment. Spain
has the highest rate of
unemployment in the
EU

20. How to keep growing ?
Sales were increasing but there were “Bosses” leaving the Company so:
- Mercadona decided to lower its prices.
- Take a look at its assortment (too deep), eliminate 1000 products.
- Reduce average household 100 €/per month.
GOAL: Reduce prices 17%, increase 8% customers, make them buy 5%
more.

21. Let’s review some concepts
Yellow
Is the color of gold, butter and
ripe lemons. In the spectrum of
visible light, yellow is found
between green and orange.
Blue
Is the colour of the clear sky and
the deep sea. It is located
between violet and green on the
optical spectrum.
Red
Is the color of blood, and
because of this it has historically
been associated with sacrifice,
danger and courage.
Yellow
Is the color of gold, butter and
ripe lemons. In the spectrum of
visible light, yellow is found
between green and orange.
Blue
Is the colour of the clear sky and
the deep sea. It is located
between violet and green on the
optical spectrum.
Red
Is the color of blood, and
because of this it has historically
been associated with sacrifice,
danger and courage.

22. Mercadona Harvard Business School case.
Finding opportunities in times of crisis. “Mercadona
Case”.
https://www.youtube.com/watch?v=6vo-p0aAge0.
References:

23. You can find me at:
◉ adiarama2000@gmail.com
Thanks!