“ Management Practices at Grainger”

Linda Fermin

MGT 330: Management for Organizations

Prof. Tia Robinson

September 10, 2012

The Five Functions of Management At the most fundamental level management is a discipline that consists of a set of five specific functions: planning, organizing, staffing, leading, and controlling. (Baack, Minnick and Reily, 1.1) In order for an organization to be effective it must intergrate all five functions. There are many different sizes and types of organizations but they all seek to serve a social need. When a commitment is made to each function the success of the organiation is greatly enhanced. Goals are set and the desired outcome is identified. Through leaders a vision and mission must be created. There are different levels of managers and styles. Management plays a crticial role in the success of an organization. I am going to review each of the five functions of management and how the company that I work for has successfully encompased each of them into our business. Grainger is a global organization that has many different lines of business. Grainger’s mission is to help customers save time and money by providing them with the right products to keep their facilties up and running (www.grainger.com). The company has been in business for over eighty years. It has evolved over the years from the first nine page motor book catalog company to a global maintenance, repair and operations (MRO) supplier. The company must provide customers with the products and services they need, when they need them, in order to keep and grow market share (Grainger).

Planning Function Grainger holds twenty three percent of the market-share for the MRO business. The company has been in a rapid growth phase for the last ten years. Sales continue to increase and the current distribution centers have been at capacity for holding product. Leaders spent many months making decisions on future activities based on the growth trend in sales and wanting to get the product to the customer faster. They created a strategic plan to build an additional distribution center. The internal and external environments were examined. Internal factors were reviewed. How much product was currently available in the distribution network? What percentage of sales came from the west coast? What would the return on investment (ROI) be and how long would it take to be profitable? What would the cost be to build a new distribution center? Where on the west coast should the distribution center be located to ensure ease of shipping to the customer? Where can we find and hire a skilled workforce and get them trained? Some of the semi controllable external environments that were reviewed included: - how quickly could the suppliers get the products to the new DC - how the local teamsters union that was very active in the Patterson area could affect incoming team members - would the local community embrace Grainger Some of the non-controllable external environment included understanding the tax incentives in California and any pending lawsuits. Horizontal integration strategies were created with the goal of increasing market share, growing sales and/or controlling the channel of distribution. When the analysis was complete the strategic, tactical and operations plans were put together. The strategic plan was made to build an 820,000 square foot distribution center in Patterson, California that could serve more customers more quickly. The land was purchased, permits acquired, and the building plans put together. The building was built in twelve months. An initial start-up budget was created to cover the expenses and the costs of building this new distribution center. Once the building was built and staffed an incremental budget replaced the start-up budget. The merit increase portion of the budget was set for a three