Venezuela SHOULD be a very rich country

But it isn't.

A couple of months ago I wrote this article on the next steps for the now opposition led National Assembly in Venezuela, recommending what in my opinion are the immediate measures they must take regarding exiting the current crisis the country is in. So far, none have been done.

Most leaders in Venezuela are making a right when faced with this sign 

Today I came across this very interesting article, that captures in one sentence, the constant affirmation what every venezuelan knows (and constantly preaches): "Run the right way, Venezuela should be a very rich country"

Thing is, it isn't a rich country. Which begs to ask the question: Why? Which brings the most simple answer: Because it's run the wrong way.

Most of the Venezuela's middle class -filled by opposition- place the blame on the government and its strict (and crazy) policies, economic controls and laws. This makes some sense, as any business school graduate knows that as the saying goes, "the fish begins to rot from the head". However, the fish also has other body parts apart from the head.

I was having lunch with a friend yesterday at an upscale mall in Caracas when after finishing our meals, we decided to take a walk, eventually ending up at the most visited place any venezuelan attends to in his daily routine: a supermarket. Once inside, we found out a recently arrived flour shipment had made its way to the market and we took the respective two packages (1 kg each) allowed per person, per week, each package costing 2 cents (yes, $0.02). It's so cheap because it's a regulated product. However, whether you're buying regulated or unregulated products, you still have to checkout, right?

Despite many warnings, they keep going past this

Despite the supermarket being relatively empty -which is a rarity-, we ended up spending over an hour in there. You may ask, why? Well, after ten minutes or so (definitely not more than 15), it took us around 45-50 minutes to do checkout and pay. Yes, you read it right: 10 to 15 minutes shopping, 45-50 to checkout. Inevitably, you will probably ask again: Why? I mean, after all, a cashier checkout at a supermarket shouldn't take you more than five minuntes (and that's an insulting time), even if the market is full -which it wasn't. In other words, one could say:

"Run the right way, a Supermarket checkout should take no longer than five minutes"

But in Venezuela, it doesn't.

Going back to your question: Why? The answer is, quite, quite, simple. Because it (the supermarket) is run the wrong way.

Some time ago, I came across this fascinating report on what is called FedEx's Super Bowl: Christmas Rush. Whether you like FedEx or not, if you watch the video or fast forward to the 4:04 mark, where they are filming at FedEx's main hub in Memphis, TN, also known as "The Matrix, you'll listen to the manager say "if you stand here for fifteen minutes, you will see the world's economy pass before your eyes"

This profound statement can be used to explain Venezuela's critical condition, without any comprehension of GDP, CPI, official exchange rate, Black Market, or whatever economic or financial term you wish to use. Instead, just recite this: "if you stand in a supermarket line for fifty minutes, you'll see the explanation of Venezuela's crisis pass before your eyes."

In other words, you will understand why Venezuela should be a very rich country, but it isn't. More importantly, you'll see why Venezuela is run the wrong way:

1. We have a supermarket in an upscale mall, run the wrong way.
2. We have a shipping process in an upscale mall, run the wrong way.
3. We have a distribution process in an upscale mall, run the wrong way.
4. We have a pricing process in an upscale mall, run the wrong way.
5. We have a checkout process in an upscale mall, run the wrong way.
6. We have a payment process in an upscale mall, run the wrong way.

Now keep in mind this is just one supermarket. Add the other 20 stores located all across the city, you now have twenty (or so) supermarkets. Now multiply that by the five most popular supermarket chains, you have a total of 100 supermarkets. Each one of them with is run the wrong way. Finally, multiply that by the six process we listed, all run the wrong way. That's a total of 600 processes, just in the market-retail business industry.

Time passes....

In the end, what other result can it be?

I find it hard to believe that nobody has thought to himself something within the lines of "We have a process that is run the wrong way. Maybe we should fix it, so we can run our business the right way." I simply cannot understand how does a supermarket manager cannot visualize that the less time customers spend checking out (meaning, the fastest they go through the cashiers), the greater revenue the market brings.

This isn't astrophysics, or some sort of complex math problem. It's simply common sense.

Many alternatives can be proposed and I am quite sure some of them can be implemented as well. Below I will list a few:

The BEST Solution is: Drop all fixed prices and distribution controls on regulated products: the easiest and most swift solution. Prices of regulated products will go up, but in the end you let the free market flow and economy will find an equilibrium point, with the supply and demand curves. Resellers of regulated products are posting prices that 10x times the fixed price anyway. Economy 101.

An informal street vendor sells regulated products for 10x time its fixed-price

That of course, is a decision that must come from the government and the manufacturing businesses.

BUT... If you can't (or won't) drop fixed prices and distribution controls on regulated products, then we still have many variants of what can be done:

1. Have one (or more) cashier for non-regulated products: if a costumer is buying an $8 pasta sauce and a set of knives, he shouldn't suffer the same fate than those buying regulated products.

2. Have one (or more) cashier for senior citizens: it's inhuman to have a senior standing up for fifty minutes, when all he wants to do is buy food.

3. Have one (or more) cashier with fast dial-up/high speed connectivity with bank lines: paying with credit/debit cards is supposed to be quicker than paying with cash, not slower.

4. Have one (or more) cashier for express or fast checkout/less than five products.

5. Ban cashiers from using their cellphones while at work if they have customers waiting in line (or ban them altogether).

6. Have one (or more) pre-checkout cashier, so a customer can already have its order taken care of and then only has to pay when he arrives at the cashier.

I hardly believe any of the major supermarket chains will lose a substantial amount of money, if they would decide to incorporate one or all of these suggestions.

This is definitely not what I learned from that famous Toyota's Lean manufacturing case I studied in Business School,
and apparently, neither have the supermarket owners and managers

I will wrap up this entry for now, as I have more material to cover for another post, but I will add a few lines before moving on: most real estate in Venezuela has lost its value, probably around 30 or 40%, yet most of the population argue against the fact that similar to the 2008-09 housing bubble, Venezuela is currently sitting on a buyers market, and instead believe this is a selling market.

Once again, another vital and primary core of the economy, that is also run... the wrong way.