Milestone

Milestone 1

Introduction

According to McNamara (2019), operations management focuses on managing processes that lead to the production and distribution of products and services. For the purpose of the new business opportunity, ChewyVet, operations management plays an important role in determining structure, design, and management techniques used to achieve efficiency geared towards improving the Chewy’s bottom line.

Operations management professionals will re-evaluate current processes and develop new ones. From production to delivery and customer satisfaction, operations management for ChewyVet handles strategic issues that questions whether current processes meet time and quality commitments (Kenton, 2020). Using information uncovered, operations management will drive process improvement in each department for the success of ChewyVet.

This business opportunity involves an expansion of an existing business. Chewy.com is an online pet supply retailer, seeking to expand its market share and profit on recent market trends. Areas discussed throughout this plan touch on consumer trends, technology, processes, and management. Today, online vets are focused on emergency services and one-time care. Chewy’s expansion will bring convenience to the next level.

Significant Forces

In 2019, Chewy reported that company saw 39% in its active users, now with 12 million users. Chewy CEO, Sumit Singh, believes that the growth is due highly engaging customer service and expansion into new territories, like Chewy RX; the company’s retail pet pharmacy. (Anderson, 2019). In addition to these discovers by Singh, I believe that technology, online purchasing, and the most recent pandemic are three significant forces that have molded operations management for Chewy and will continue to shape the business’ outcome.

The online pet industry, and online shopping are growing, and so is Chewy. Increased access to technology and improved logistics continues to be a significant force that drives Chewy towards this new opportunity. Starting in the early 2000s, logistics technology has been advancing quickly. These advancements have shaped operations management handling of logistics and quality delivery. From GPS monitoring and tracking to collecting data, new technology makes future prediction easier, helps mitigate risks, and avoid inefficiencies (Butler, 2019).

Furthermore, Americans are spending more time online and sacrificing in person experiences for the convince of online shopping. Looking specifically at the pet industry, online sales in this segment has seen increases with Americans spending more on their pets year over year pet. A recent study showed that millions of Americans are purchasing pets items in addition to their online products, supporting growth predictions in the space of 23% by 2023. (American Animal Hospital Association, 2020).

“The spike in ecommerce sales largely came from consumer spending habits in the second quarter, which was plagued by the height of the coronavirus pandemic that caused widespread store closures and stay-at-home orders.” (Ali, 2020, para. 3). The second quarter saw more orders placed online that previous years. The correlation to the pandemic and online sales is clear, many Americans are now stating they would continue with online services post-pandemic (Ali, 2020). Operations management for ChewyVet will need to adapt to these positive forces and implement solutions that support demand increases.

Key Obstacles

Management has a tall order of business to handle the obstacles Chewy faces. Regulation pertaining to VCPR (Veterinarian-Client-Patient Relationship) will need to be closely monitored by Chewy management. VCPR regulation continues to develop as telemedicine becomes more widely accepted. The regulation currently poses an issue for Chewy as it requires an in person or non-electronic relationship to be formed prior to engaging in an online relationship with a vet (AVMA, 2020).

To adhere to the requirements of this regulation, Chewy will need to deploy field agents or rely on a large network of vet and vet technicians to cover each service area. Either method can prove costly and inefficient. Which is why operations management teams at Chewy will need to frequently evaluate the process and make necessary modifications along the way to achieve desired outcomes.

Another obstacle that Chewy faces is its over reliance on third partly technology. Although this is the norm for most companies, over reliance leaves Chewy vulnerable to data threats, operation interruptions, reduce quality of service, and loss of efficiency. According to Chewy’s S-1 filling, the company utilities leased software to run its internal operations. Failure of these service providers could damage the company’s reputation, brand, and sustainability Chewy (n.d,). These are all crippling outcomes that management should realize and plan to actively monitor and mitigate these risks.

Changes

Due to the evolving business atmosphere in the wake of a post-pandemic era and increases in the pet industry, Chewy will adapt to new methodology and structure. With ChewyVet, the company addresses the need for convenience and safe human interaction. Chewy will need to translate its legendary digital customer service to the vet space, a high tactile and hands-on world. By merging customer service and quality online vet care, Chewy may be able to overcome the challenges of introducing a new idea to the market. It’s important to retain Chewy’s culture and achieve operational efficiency, but by leveraging digital tools like video calling, scheduling and communication automations the company will be able to maintain its level of service in the new business line.

Business Operations

Chewy.com is an online pet retailer headquartered in Dania Beach, Florida. The company makes a business in reselling pet supplies, accessories, pharmaceuticals, food and other pet products. To achieve nation wide coverage within the United States, Chewy has strategically placed fulfillment centers in seven states. The newly public company is listed on the NYSE under the symbol CHWY in 2019 but has been in the space for 8 years. Having to answer to shareholders, Chewy is heavily focused on expanding its market share, increasing profits, and being the convenient stop for all pet products.

According to their SEC filing, Chewy (n.d.), states it uses an advanced platform to manage and grow sales and customers; all while reducing transactional and operational costs. They have invested heavily in their technology platform but rely on third parties to maintain and scale the technology. Chewy anticipates that this continued management will result in lower costs per transaction while sales grow. The current operations structure and operational resources includes integrated technology decreased operational personnel, and an automated planning and fulfillment process. Chewy is able to forecast demand, plan inventory placement, and optimize human resources.

The ChewyVet service will leverage the current high touch customer service model that maximizes staff productivity by utilizing tools and technology to store and access customer data.

Key Trends

The pet industry has been trending positively in the recent years. According American Animal Hospital Association (2020), a 2018 study shows that Americans pet spending habits tripled in the past 20 years with $72.6 billion spent on pets. When evaluating from a general point of view, quality of life and health has been a new tread that’s gaining consumer popularity in recent years. According to Danziger (2019), consumers are more health conscious in their choices and opting out when it comes to heavily processed foods. This human consumer trend is being translated to pets as well.

In fact, many human trends translate to pets, driving human modeled pet services. There are fitness trackers for dogs, herbal supplements, animal biome health testing similar to 23 and me, and fresh food deliveries similar to Hello Fresh. There is an accepting trend towards humanizing pet services and products (Kestenbaum, 2018).

Impact

The impact on the pet industry and online sales in the past two decades and most recent have been noteworthy. It has proven that the business environment is in an constant mode of change, open to disruptions and innovators. This in particular makes operations management for Chewy a delicate yet opportunistic matter. There is room to evolve but on dangerous post-pandemic terrain. Consumers are focused on health, convenience, piece of mind, and safety. There will be more consumers entering the space, meaning more opportunity for Chewy to profit. But with regulations changing quickly, the company should be careful when expanding its market share. Not doing so could mean big trouble instead of big rewards.

The pet industry continues to seeunprecedented growth. According to Kestenbaum (2018)“almost 85 million households have a pet and over the last 30 years pet ownership has gone from 56% to 68% of all households. Some of the changes in pet ownership are due to technology and the advent of online purchasing. But most of the growth is because of changes in culture.” (para. 1).

Look at a multigenerational view, consumers embraced the pet ownership as a staple in life. Lifestyles and businesses are more accommodating to pets and pets are used for not just companionship, but also emotional support and service. This leans towards a positive outcome for Chewy.