SAM'S STRESSING FAST EXECUTION BY CLEAR COMMUNICATION

DEENA AMATO-McCOY

NEW YORK -- Sam's Warehouse Club, Bentonville, Ark., is "executing" projects more effectively and meeting business goals more often by opening up the lines of communication between store employees and headquarters senior management.

"Part of the challenge is how can we build a communication mechanism that will enable us to reach 100% execution," said Brett Hutton, credit and member benefits manager for Sam's Warehouse Club.

Execution, according to Hutton, is a term that refers to the ability of employees to complete a given task in the time and manner that Sam's upper management expects it should be done.

Because the firm believes that improved communications can result in higher execution rates, which in turn drives business success, Sam's instituted a focused one-on-one communications program to help employees meet company objectives.

Hutton spoke about Sam's communications initiative at a session at this month's National Retail Federation annual convention here.

Sam's Warehouse Club, a division of Wal-Mart Stores, Bentonville, Ark., uses staff meetings, dubbed Saturday Morning Meetings, to open the lines of communication. The meetings consist of upper management in the home office communicating with employees of various positions in the stores.

The forums give participants an opportunity to discuss sales, update membership programs, recap special programs, review merchandise and operations and present new items, Hutton said.

Of at least equal importance, the meetings help break down communications barriers between departments as well as between upper management and lower-level positions.

Because employees working in the stores come into closer contact with daily situations than do executives, most of Sam's competitive intelligence can and does now come directly from the store-level staff observations.

"The main thing we gain from the meetings is that we get issues on the table in real-time," Hutton said. "We cannot react quickly if information has to filter up through the system. This way we can take competitive initiatives and best practices formulated during the meeting, then disseminate the information throughout the clubs."

So far, Hutton said, the club's execution rate ranges between 50% and 100%. "I am aware that the range is wide, but I know we are better today with our execution than we were one year ago. Our continued work on our communication will increase that number -- I am confident of that."

The ability to react quickly is the hub of Sam's execution strategy.

Hutton explained that David Glass, chief executive officer for Sam's Warehouse Club, once challenged Sam's and Wal-Mart Stores' senior management to put a red star over the door of every club and Wal-Mart store in the chain, and be done the following weekend.

According to Hutton, Sam's uses this as a benchmark for how quickly the clubs need to execute to remain competitive. Glass put this theory to the test during a contest at the chain to increase sales and enhance appeal of undeveloped items.

Again, during a Saturday Morning Meeting, Glass challenged Sam's operations and merchandising groups to put featured quantities of "fat-free chicken lasagna," along with a spot box in the freezer cooler area of every club -- and he wanted the task done by the following weekend.

Hutton reported that the following weekend, there was 100% execution in all 435 clubs, which all had the spot boxes and featured quantity of the product.

"There was also a 300% increase on the item," he said. "This is an example of the expectation that we have within Wal-Mart and Sam's Club to react quickly to stay competitive as a company within this industry."