ASHCROFT INTERNATIONAL BUSINESS SCHOOL
INTERNATIONAL OPERATIONS MANAGEMENT
Prepared by : HAFIZ MUHAMMAD AQIF
Student Number: 0875237/1
Date : 19-07-2010
Academic Year: 2010/2011
Semester/Trimester: Spring 2010
TABLE OF CONTENTS
No Item Page No
INTRODUCTION OF ORGANIZATION 3
ORAGANIZATIONAL MAJOR OPERATIONAL ISSUES IDENTIFIED IN RESEARCH 9-13
APPLICATION OF THEORIES AND STRATEGIES 4-9
COST ANALYSIS OF CURRENT OPERATION 11,12
RECOMMENDATION 14-17
CONCLUSION 18
REFERENCES 19-20
APPENDIX 20-21
INTRODUCTION OF THE ORGANIZATION
Muswell Hill Sainsbury local branch have been opened in back 1966 with the full potential customers around it. As this branch is local so it's not big enough as compared to its others stores. During the period from 1966-2010 there are numerous changes took place, mainly the layout and the interior as well as new self checkout machines were installed in year 2009. In respective to customer service there are 10 MAC rules applied in the store. Over the years it has remained true to its goal of offering great product at fair prices with a strong ethical approach to business.
This branch of Sainsbury is committed to offer products that are better for customers and for the environment. Muswell Hill Sainsbury local branch offer around 16000 products in the store. Having a full utilization of human resources this branch is doing a great job in respect of generating revenue around 0.5million a week with it's around 160 employees including part timers. But there are some numerous issues which I want to talk about in my assignment. The major issue of this branch is the customer service desk which is very small not visible and welcoming.
Good customer service is the lifeblood of any business. We can offer promotions and reduce prices to bring in as many customers as we like. Good customer service is all about bringing customers back and about sending them happy to give positive feedback about the business along to others. The essence of good customer service is building a relationship with customers, a relationship that individual customer feels that he would like to per sue (ref15)
THE OPERATION MANAGEMENT (Ref17)
Operation Management deals with the systematic design, direction and control of processes to produce and distribute the products and services in a very effective and efficient way for internal and external customers.
There are some very important issues regarding operation management which are very helpful to run the business smoothly. Operations managers are responsible for the key decisions that affect the success of the organization.
In any manufacturing firm the head of different departments like customer services, production and inventory control and quality assurance are responsible for reporting to COO. Based on business strategy, the finance and operations functions, decisions are made on how to invest resources and convert them into physical assets and material inputs. Operation management can be better understood by looking into the diagram which depicts the true simulation of any manufacturing firm.
PROCESS
Any activity or group of activities that takes one or more inputs, transform them, and provides one or more outputs for its customers.
Operations
Support Operations
Finance
Human resource management.
IT department
Marketing
Purchasing
OUT PUT
Quality finished goods
services
OUT COMES
Satisfied Customers
Profit
INPUTS
Materials
Managers
Equipment
Facilities
Land
Workers
Power
The diagram above is showing that how process works. All the boxes shows major components giving picture of processes and how these boxes are inter related step by step.
TIME, COST AND QUALITY
To manage process in the organization effectively we do need to remember Time, cost and quality Triangle.
TIME
COST QUALITY
Quality food has always been the foundation stone of Sainsbury's business. The re launch of its organics range last year, followed by the re launch and extension of 'Taste the Difference' have enhanced its credentials in quality food (Ref 3)
In the context of service quality research, it has been demonstrated that the behaviour of service employees affects the customer perception of the service (Bitner et al., 1990).
All the processes must be designed and monitored to minimise mistakes, prevent problems, and achieve similar outcomes overtime.
Sainsbury has been very efficient at controlling its costs in recent years, which ultimately helped it to achieve revenue growth, and will help to maintain margins while competing more on price. (Ref 1)
Time is valuable for every business, more customers you are able to assist in a day, the more customer satisfaction you can gain, and the more money you can bring in to the business. That is the bottom line of the profitability. Sainsbury is always efficient in timely purchasing the product as well as the completion of the processes
MANAGEMENT THEORY
One way to identify the design problem is to develop the Cause and Effect Diagram also called fishbone that relates a key performance problem to its potential causes. It was firstly developed by Kaoru Ishikawa, the diagram helps management trace disconnects directly to the operations involved.
The main performance gap is the head of fish. The major categories of potential causes as structural ''bones'' and the likely specific causes as ''ribs''
CAUSE AND EFFECT DIAGRAM (FISHBONE)
This figure shows the causes and the weak point of the business of cost of poor quality.
The main function of the HR is to do recruitment by advertising for new employees and liaising with employment agencies. Doing their training and development programme.In this figure, there seem to be less number of staff in this branch of Organization. This could cause by less recruitment for the branch, untrained staff and some time staff is absent, so the store cannot fulfil the number of responsibilities around the shop.
Another aspect of limited customer service is the equipment failure e.g. till failure, telephone line broken down, unavailability of leaflets and brochures and access to complain form.
Customer will be unhappy if the problem is not resolved quickly, sometime customer service department do need to call manager on duty to assist the customer. This take too long and make customer experience bad.
TOTAL QUALITY MANAGEMENT (ref13)
W Edwards Deming placed great importance and responsibility on management, at both the
Individual and company level, believing management to be responsible for 94% of quality problems.TQM is a philosophy that stresses three principles for achieving high levels of process performance and quality. These principles are related to customer satisfaction, employee involvement and continuous improvement in performance.
It is very simple plan, do, act and study diagram also called DEMING WHEEL , named after the renowned statistician W.Edwards Deming who taught quality improvement techniques to the Japanese after World war II. The figure shows the cycle which lies at the heart of the continuous improvement philosophy. The cycle consists of following steps.
PLAN : Design or revise business process components to improve results
DO : Implement the plan and measurement of its performance
CHECK: Assess the measurements and report the results to decision makers
ACT : Decide on changes needed to improve the process.
First of all we do need to make a plan of making Customer service desk bigger for this store in order to get maximum results. Training & development programmes and some more budgets to make a desk bigger are needed for this improvement.
This model is used by firms actively engaged in continuous improvements to train their work teams in problem solving.
It is a fitness for use, a value, and gives conformance to descriptions on products and services, support with more activities and have psychological effects on people.
For the scenario in my assessment total quality management performing real functions in meeting the expectations and satisfaction
PARETO ANALYSIS (ref 14)
In the late 1940s quality management Guru Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. Pareto later carried out surveys on a number of other countries and found to his surprise that a similar distribution applied
Pareto Analysis is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect. It uses the Pareto Principle (also known as the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of doing the whole job.
Pareto chart is a graphing tool that prioritizes a list of variables or factors based on impact or frequency of occurrence.
The figure showing the 80% of work affected by 20% of activity
Customer service flow chart
The following is the flow chat of the customer service in Sainsbury:
START:
Customer Entrance
INPUT:
Marketing
Customer service before sale
Products availability
Process:
Sales & services
Customers Satisfied
Whether the problem solved?
Complaint process Yes No
Resolved Unsatisfied customer
No Yes
Not resolved
Satisfied customer
Finish
Refund
MANAGEMENT THEORY (ref20)
Henri Fayal, often termed 'the father of management' emphasised the role of management and concluded that all activities that occur in business organizations could be divided into six main groups.
Technical, Commercial, Financial, Managerial, Accounting, Security
He concluded that all of these activities are interdependent so it is the role of management to make sure these activities work smoothly to achieve the business goals.
In this branch of Sainsbury there is lack of technical aspects. If we do change the location of the customer service desk and add more tills as well as the layout, we can get maximum advantage in the long run.
OPERATION STRATEGY (Ref 2)
It specifies the means by which operations implements the firm's corporate strategy and helps to build a customer driven firm. It links long term & short term operations decisions to corporate strategy and develops the capabilities the firm needs to be competitive.
As customer desire constantly change the firm's operations strategy must be driven by the needs of its customers.
Operations strategy provides the resources to develop the firm's core competencies & core processes. It identifies the strategy the firm will employ in international markets. A market analysis categorizes the firm's customers, identifies their needs and assesses competitor strengths. All of this information is used to develop competitive priorities. These priorities help the managers to develop the service and products as well as processes needed to be competitive in market place.
OPERATION MANAGEMENT ISSUES:
For any organization there are some issues regarding each process to work effectively. These are classified as follows:
COMPETITIVE ADVANTAGES (Ref16,12)
There are certain factors that a process or supply chain must possess to satisfy its internal or external customers at present or future. Competitive strategies are concerned with doing things better than rivals. Competitive capabilities are the Cost, Quality, Time and flexibility factors that any process or supply chain actually be able to deliver.
Company should focus on the competitive priorities of delivery speed and development speed for their process called time-based competition.
Customization of product design, variety of products and volume flexibility are other dimensions for any business in this competitive world. Managers should carefully define steps and time needed to produce a product. We should analyze each and every step to determine whether they can save time without harming the quality before implementing the strategy. There are two ways of being competitive.
By selling goods at lower price which is possible for our company by economies of scale. Company can produce huge volume of output by spreading the cost over more units of outputs.
By differentiating our products from rivals (TESCO, ASDA) which enables us to charge higher price if desired. We can differentiate our products in various ways like Quality, packaging, customer care and additional extra features etc.
Delivery of products with steady product quality to the customers at the lowest price is very important. Timely delivery of a product results in customer satisfaction. We should also focus on volume flexibility as well.
2: PROCESS ISSUES:
A firm or an industry cannot gain a competitive advantage with faulty processes so these processes should be analyzed and improved using certain special tools and techniques.
Process structure determines the process type relative to kinds of resources needed and how they are segregated according to their characteristics. Product-process position and layout arrangements are important to put these decisions into tangible form.
Customer involvement, resource flexibility and capital intensity are major issues of any process.
Few points should be kept in mind regarding resource flexibility and capital intensity.
Resource flexibility
Capital intensity
Flexible workforce
Automation to address mixing of capital and labour.
Worker flexibility
Substitution of capital equipment for labour.
Volume of business
Investment can be justified by cost reduction.
Sufficient collective volume
Conveyor belt
The process cannot be completed without assembly so it can be done by a conveyor belt. Each and every worker will do a separate job relating to assembly of table which is beneficial for our company both in fast production and reduced cost.
3: CAPACITY ISSUES (Ref 7)
Solutions for capacity issues are required for different functional areas throughout the organization. Capacity is the maximum rate of output of a process in a firm.
Company makes decisions on the availability of true capacity information regarding accounting, marketing, finance, operations and human resources.
Management information systems should work effectively on cost information, financial performance measures, demand forecast and work standard issues. Operations should be involved in the selection of capacity strategies that can be implemented to effectively meet the future demand.
We should emphasis on both short term and long term capacity planning as the company vision is to earn profit in future years and this could be achieved by looking on these points.
Long term capacity planning:-
Economies and diseconomies of scale.
Capacity timing and sizing strategies.
Systematic approach to capacity decisions.
Short term capacity planning:-
Constraint theories.
Bottlenecks identifications
Product mix decisions
Line process to manage constraints.
While talking long term planning company can achieve economies of scale by viewing the following points
Spreading fixed costs.
Reducing construction costs.
Cost of purchased materials.
Capacity decisions should be linked to processes and supply chains throughout the organization.
4: LAYOUT OR OUTLINE ISSUES (Ref 5)
Location and layout for business plays crucial role to achieve advertisement and distribution advantages.
Layout is physical arrangement of human and capital resources. I have also gather information on space requirements and closeness factors as shown in the table below
Department
Area needed Sq. ft.
Administration
4000
Social services
2500
Institutions
2200
Accounting and finance
1400
Education
1500
Internal Audit
3400
Total
15000
The above table will look like the block plan I have prepared as below
3
6
4
1
2
5
100 ft
150 ft
A block plan allocates space and indicates placement of each operation. To analyze the block plan I have come across some advantages that administration department is attached to related main departments like social services, internal audit and institutions.
Accounting and finance department is attached with its related blocks of internal audit, education and social services and so on.
5: STAFFING ISSUES:
I think this issue should be considered early in the planning process as it plays crucial role to success. It is necessary to identify the number of staff recruitment and retention and their training.
May be its difficult to recruit part time or short fixed term posts, or unusual roles outside normal career profession. We should consider the time and costs of advertising posts, and the most appropriate places to advertise nationally and locally to save time and money. Some important issues we should keep in mind while employing new staff with unique or unusual roles is as follows
Identify the core skills competences needed for the role.
This issue can be resolved by assessing the workers time to time basis so that there should be an effective allocation of work.
Retention issues.
These issues can be solved by giving strict notices to employees rather than a sudden retention notice because we have to continue our order processes.
Staff absences.
We should cover staff absences by part time employees.
Ensuring practitioners are competent as new skills are required.
Training programs are sufficient to resolve these types of issues
Education and training needs are also important factors which would be helpful for the company in the situation of changing roles. While employing staff we also keep in mind the local area staff to reduce their time and cost to the job places and also the staff union matters. Pay rates should not be different or less than the other companies to avoid mobility of labour. Sharing of knowledge among the staff should be simple so that they should be motivated and work effectively.
As we are planning business plan keeping in mind by one of its issue of volume flexibility so in order to cope this situation I think part time or temporary staff should be employed as well. Relocation issues of staff should be planed accordingly.
WAITING LINE ANALYSIS (ref19)
In a waiting line system, managers must decide what level of services should offer. A low level service may be not expensive in the short run but it may cause customer dissatisfaction. On other hand, high level of service will cost more.
In this branch of Sainsbury there are a ques of people especially on weekends at customer service desk. Some customers want refund, some want to get information about product and some of them wants to book a particular product. The management do need to deploy some more staff in order to cope with the ques situation, the best utilization of resources
ISSUES OF SAINSBURY MUSWELL HILL
Very small Customer service desk available in our store.
Not visible and welcoming.
Only one customer service assistant available.
Some time long ques.
Sometime Untrained staff at the desk.
Lack of motivation in staff.
Training and development.
Inadequate information at customer service desk. e.g.: no product catalogue.
First of all I would like to say about the customer service desk of this branch that is very small and some time it is very hard to find out by the customer. The location of this desk is not good as well as there is only one staff member who is dealing with the queries. Especially on weekends there are long ques of customers waiting for solving their problems. Sometimes untrained staff is dealing with the customer queries so they take more time as compared to trained staff, the ques are getting bigger and bigger and customer getting frustrated and sometime swearing. Another problem at desk is the lack of motivation in staff, which is sometimes the management give a lot of jobs to do that is not possible by one person to finish those out, so that the staff get de motivated and just think about wages rather than giving productivity for its organization.
We can increase the efficiency of the staff by inducting training and development programmes and by motivation so that more multi task people can be produce.
RECOMMENDATIONS
Change the place of customer service desk.
More visible transparent & welcoming.
Information about store promotions e g: 3 for 2 etc.
More information about product & services by catalogue.
Nectar Registration directly, no needs to send by post and wait long.
Online order facility, because size of our store is small, especially for disable
People
Feedback on service & product and give £20 voucher by draw.
Survey among customer what else we do need to sell.
Encouragement to have nectar card, because nectar holder spend £2800/anum as
Compared to non nectar holder
POSSIBLE IMPACT ON THIS BRANCH
More Customers visiting our store(traffic, conversion will increase)
Availability of the service to wider range of customers.
More revenue would be generated by store.
More competitive advantages.
These Recommendations and their Impacts on the organization can be shown in table
TABLE 1
RECOMMENDATIONS COST BUGDET IMPACT ON CUSTOMERS
Change the place of customer service desk & add two more tills in customer service department to increase quality of service.
Set up cost for 1 till & desk approx £2000
Easy, quick and more accessible customer service.
Customers will be more likely to use the desk if it is faster.
Follow strategy of other stores
The cost will depend on the strategy and its effectiveness.
Customers have same level of service across all Sainsbury
Introduce training & development programme
Cost will depend on the type of training and the length of the training: approximately £200 - £300 per 2 hour session
Professional service by staff , customer will come back
Information about store promotions .e.g. 3 for 2
Visible sign board costing approx£300
Customer satisfaction
Information about product & services by catalogue
Cost of employing an additional customer service adviser? approx £600/month
Save customer time
Nectar Registration directly, no need to send by post and wait long
Employee extra staff
More chances to get a Nectar reward
Online order facility, because size of our store is small, especially for disable people.
People processing the orders and potential delivery costs?
Saving time
Feedback on service & product and give £20 voucher by draw
Member of staff could carry survey
Customer feel valued by business
Shopping delivery service
If order is under £50, delivery charges £5
Customer feel easiness not to travel for shopping
TABLE 2
RECOMMENDATION
EVALUATION CRITERIA
EVALUATION/EFFECTIVENESS
Change the place of customer service desk & add two more tills to increase speed and quality of service.
Is there an increase of the number of customers using the desk?
Is the quality of service improving?
Are the customers are being served faster?
More customers notice and read the board to decide their purchase.
Customers positive feedback on the customer service desk
Customers are waiting less at desk. Queues are shorter.
Follow strategy of other stores
Is the management of the store more effective? Does it allow saving time?
Management will save time and money, therefore run store more efficiently.
Introduce training & development programmes
Are the programmes in line of the development programme of the store?
Is there an increase in the speed of service / better service?
Are the staff trained and more qualified?
Training and development programme is appropriate and in line of the store development programme.
Significant increase in the quality & speed of service.
Staffs are more trained and more qualified therefore quicker and professional.
Information about store promotions .e.g. 3 for 2
Is the information easily available, accessible, visible and comprehensive?
Customers have the information about the current promotions in the store.
Customers are informed and able to make a decision about their purchase. Customers save money.
More information about product & services; a catalogue
How many customers are using the service and order from the catalogue?
Do they find it useful and convenient?
Do the services reach a wider range of the customers?
Customers order more products from the catalogue that are not available in the store.
Customers provide a positive feedback about the services and find them useful and convenient.
Wider range of customers visiting store
Nectar Registration directly, no need for the customer to send the form by post
Are more customers registering to receive the advantage card?
Is there increased interest in savings by using the card?
More customers are registering to have an advantage card and increase their chances to get a Nectar card rewards.
Customers save money and use the advantage card on regular basis.
Online ordering point, because the size of our store is small
How many customers are finding it useful to order online in the shop?
Are the customers satisfied with the service?
Do customers save time and money?
Increasing number of customers order products online
Customers provide positive feedback on the services
Feedback on service & product and give £20 voucher by draw
Are customers willing to take part in survey?
Do the feedback / survey provide relevant information for future planning?
Customer feel that they have an impact on the business and provide valuable information on products and services
The information is also used to plan and develop strategies for the future.
Shopping delivery service
Are there a significant number of customers using that service?
Do they find the service useful?
How many disabled people are using the service?
Number of customers uses the service as they find it hard to transport the shopping themselves.
Customers provide a positive feedback for the service.
Wider range of customers is visiting the store because of the service available to them.
Questions
How to decrease the cost of current customer service desk?
Answer:
We can decrease the cost in long run
Because we are having more staff on the customer service desk, it will not help in short run, but the cost will decrease in the long run.
One of the tools for competition in case of more staff in customer service desk, more quality service than competitors.
How to improve the quality of services?
Answer:
Survey questionnaire.
More friendly customer service.
Introducing Staff training & development programme
How to make customer service desk more time efficient?
Answer:
Fixing two more tills at customer service department
Reducing ques by having more staff at desk.
Trained staff to process form more quickly.
Quickly introduce a new product at CSD.
CONCLUSION
In the conclusion I would like to say that, although this branch is doing well on its place but still I analysed different issues in this branch of Sainsbury by giving special consideration on processes happening in the store and applying different management theories. I talk about different operation management issues including process issue, capacity, layout and staffing issue especially the customer service issue is very important that I would like to bring forward. I did make some recommendations to improve the customer service and other issues, which could be beneficial for the betterment of the company itself as well as good impacts on its stakeholders (customers, suppliers). By applying theses recommendations this store can improve the processes happening around the store as well as it can increase the revenue by 30% to 50%. However with the extension of the customer service desk with more staff, will do a long term impact on the business return, resulting generating more happy customers.
REFERENCES
Ref1: database: business source premier Market Watch: Global Round-up, Feb2009, Vol.
8 Issue 2, p65-65, 1p; Assessed on 23 June 2010(AN36380938)
http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=36380938&site=ehost-live
Ref 2: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no.29
Ref3: database: business source premier Market Watch: Food, Feb2007, Vol. 6 Issue 2,
P13-13, 1p; Assessed on 10thJune 2010 (AN23952370)
Ref4: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 34
Ref5: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 120,121
Ref 7: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 240, 241
Ref 10: Sainsbury, Assessed on 16 June 2010
www.jsainsbury.co.uk
Ref 11: balanced scorecard, Assessed on 18June 2010
www.balancedscorecard.org
Ref 12: Science direct, Journal of retailing and consumer services 17.4(July 2010): P.300-305(6).
http://dx.doi.org/10.1016/j.jretconser.2010.03.001
Ref 13: business balls, Quality management Gurus. Assessed on June 14th 2010
http://www.businessballs.com/dtiresources/quality_management_gurus_theories.pdf
Ref 14: Project smart, pareto analysis, Assessed on 28th June 2010.
http://www.projectsmart.co.uk/pareto-analysis-step-by-step.html
Ref 15:Emeraldinsight,Journal: customer orientation of service employees, assessed on 15june 2010
www.emeraldinsight.com/0956-4233.htm
Ref 16: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 33
Ref 17: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 24
Ref 18: Krajewski, Ritzman and Malhotra. `` Operations management" 9th Ed, Pearson no. 316
Ref 19: California State University San Marcos, Waiting line models Assessed on 28th June
http://courses.csusm.edu/ba662jh/docs/QueuingModels.pdf
Ref 20: Foulks Lynch publications. `` Managing People", ACCA Text book 2004, page no 12-13
