Operational Analysis and Effectiveness - Term Paper Example

Operational Analysis and Effectiveness Introduction Operations management requires efficiency and effectiveness in management of the three critical aspects of business, which include customers, process and employees. Management of customer expectations requires putting in place efficient process and effective management of employees. It can be said that operations form the core function of any organization which is dependent on all other functions including marketing, finance, and human resources. Like in any other operations management, the fundamental tasks in supermarket operations include planning, organizing, staffing, directing, motivating, allocating, monitoring, controlling and informing. All these tasks are strategically designed and planned, and implemented at every branch to meet strategic objectives of the organization that include increasing profitability of the business and attracting more customers while retaining the previous ones. Quality in products and services forms the fundamental principle for success of any business. Integration of quality products and services into business strategy therefore is an important consideration for carrying out business and operations, and on this dependant are the business’s profits and losses, and sales and marketing strategies. This discussion elaborates the aspects of service quality in terms of process and capacity that need to be considered in supermarket operations. Various factors influencing these aspects have been identified based on previous literature. Corresponding to each of these factors, strategies have been formulated to address issues related to process and capacity planning in supermarket while identifying advantages and challenges associated with the strategies. The situation in discussion is related to one of Australia’s biggest supermarket retail branches based in up-market region of an Australian city. High profile customers seeking esteemed quality food and beverage products, clothes, and utility items categories are the main visitors in this branch. Considered as one of the best shopping places and known for its uncompromising customer service, this supermarket has recorded unbeatable profits over the last few decades. Being hired as the new branch manager, responsibility to sustain its brand value and competitive position in the challenging supermarket world is a tough task to be achieved. However, operations managers cannot make decisions or change systems in isolation. Both, strong coordination and consideration of all business contexts are required for effective strategies to be designed to run sustainable operations. Entering with preconceived notions about this leading supermarket posed serious challenge to taking charge of the branch. Initial observations of the staff, customer responses, peak hour patterns etc necessitates the need for an assessment of service quality based on process and capacity at this branch in order to restore operations as desirable for achieving good profits and customer inflow. For the assessment of service quality, questionnaire will be administered to approximately 150 customers visiting the branch from Monday through Sunday (adopted from Prud’homme & Boyer, 2005; p.90). Quality in any service operations is largely determined by the ability to meet customer needs (Rosander, 1985); in supermarket operations customer needs may include, besides good quality products, availability of sales persons/staff whenever customers need; appropriate and easy-to-shop passages for all items; availability of enough check-out cashiers without having to wait in long queues; practices meant for filling orders; delivery time; procedures meant for returning purchased items; quick and visible service desk to take customer complaints; availability of trolleys/bags at various counters; accurate packaging and pricing etc. Questionnaire to assess service quality would include questions related to these aspects of supermarket operations. Based on customer responses to these questions, semi-structured interviews will be conducted with the staff. Subsequently, all responses will be reviewed and similarities as well as uniqueness in the responses will be noted and categorized. These categories will give main areas of focus for correcting the situation. From employee responses, a theme will be decided either by a number of participants that agreed on the theme, or by uniqueness of the information (Merriam, 1998). Finally, based on the relational patterns and contextual information, the themes will be grouped under 3 major concepts concerning operations management, i.e. process, employee related and customer-related. Operations management in a supermarket setting involves consideration of various factors such as location of the store; internal layout including categorization of goods and external layout such as parking space, passage to parking etc; capacity based on expected number of customers, peak and low sales periods etc; product design including packaging and labeling of goods, types of services; process design to deliver best products and inventory; performance and procedures for measuring, monitoring and improving performance; logistics including supply chain and transportation requirements; stock control through effective inventory management and appropriate stocking facilities; technology to support supply management, safety and security, scanning, automated banking etc; staffing requirements according to demand; pricing of goods and regular updation; maintenance of equipment, goods, and premises (Waters, 1999). Whilst these complex factors encompass operations at a supermarket retail outlet, all these activities are also interdependent for smooth functioning of operations and achieving profitable outcomes including greater revenue, increasing number of customers and employee motivation and retention. Employees’ significance in the profitability of any business is best understood through Bain & Co’s principle as explained by Hopton, Bain & Co. (cited by Quirke, 2000, p.46), according to which employee attitude impacts profitability through better communication because better communication creates better employee satisfaction and improves perception of line manager; this further reduces staff turnover and increases commitment, which enhances customer satisfaction and retention thereby leading to greater profits. This principle can be aptly applied to the present situation in this high-profile supermarket. However, other factors such as pay, incentives, work-life balance cannot be ruled out in gaining employee commitment. This may be further reinforced by what Quirke noted, ‘to keep customers, companies have to continually improve the product and the service they supply. Service and customer satisfaction depend on the commitment and ‘emotional labor’ of employees’ (2000, p.48). Galloway (1993; p.44) emphasizes on the point that staff members that directly come in contact with customers play a significant role in establishing service quality as perceived by the customer. Gaining emotional labor of employees requires various initiatives from the organization as well as managers, such as empowerment, appreciation, reward and recognition, credibility, accountability, training and skill development. Bowen and Lawler (1992) assert that empowering employees to deal with critical situations will bring out creativity, spontaneous decision making, and avoid frustration to the customers; this will also enhance employee confidence as they will have the authority to use necessary resources at their command to provide customers what they want. Peccei and Rosenthal’s (1997) research clearly illustrated that reward and recognition were qualifications to increasing commitment to customer service besides job satisfaction, challenging roles, and learning and development. This supermarket’s capacity decisions have been affecting its performance in terms of customer satisfaction resulting in less customers and low profits. According to theory, three critical requirements for capacity planning are forecast demand, measure, and choosing optimal plan (Keupp, 2001; p.4). Hitt and Brynjolfsson’s (1996) review emphasized that productivity, profitability and customer inflow largely depend upon information technology. This review hypothesized that productivity enhancement also depends upon skills of staff and organizational systems that help in enhancing staff skills by giving more independence and decision-making opportunities with the help of data and information systems. A similar principle was underpinned in King and Park’s (2004) study which advocated role of store characteristics and information technology in increasing productivity gains in supermarkets. These processes enhance both service quality and service value which further result in increased customer satisfaction (Cronin, Brady & Hult, 2000). Underlying issues with respect to process and capacity can be identified from customer responses, which will assist in identifying the major contributors to declining service quality and customer satisfaction at this branch. Customer feedback needs to be sought for almost every aspect of supermarket operations, as outlined by Waters (1999). Foremost factor for service quality is quality of products sold at the supermarket. This involves comprehensive list of factors to be checked such as premium quality food products; freshness and appearance; packaging measures; exclusion of expired and damaged items; and optimum pricing. Further, customers should be asked about their comfort level in locating goods/items in terms of arrangement and order. Location of goods has to be clearly demarcated and categorized so that customers do not have to move form one corner to other for locating items of one category. For example, ideal location for all groceries should be one area and next to that should be the frozen foods, veggies etc. Utility items, clothes and other items should be separated from perishable items. Clear demarcation with directions can be of great help to the customers. Secondly, customers’ safety and security measures need to be clear so that they feel safe while shopping. For this, customers’ awareness of fire extinguishers, fire exits, security personnel etc can be assessed from the questionnaire. Next, pricing issues need to be assessed; considerations should include price updation, clear price tags and other tags, and discount related information. Thirdly, staff availability and accessibility impact customer satisfaction to the largest extent though supermarkets are meant to work in a self-service fashion (Galloway, 1993). Looking for staff availability to assist customers whenever needed would be one of the main concerns, as customers seek help in terms of missing price tags; to locate specific items; for demonstration of usage of certain items; inability to find different types/models of a specific item etc. In addition, customers made to wait for longer time in queues for billing/payment, or leaving any staff station unattended is not desirable. This would question the capacitization process followed in the supermarket. These standpoints provide much understanding of abilities and workings of operation from customers’ perspective; but, emphasis on the effectiveness of processes to be followed in operations management need to be considered. In addition, a need to understand how customer expectations are created and/or change with time is also required. Another dimension to assessing service quality at the branch involves frontline staff perspective, which includes employee commitment, behavior, attitude, motivation and practices. Besides systems, procedures and processes, employees’ involvement is of utmost importance for effective and efficient management of operations. Whether it is location and layout, or quality of goods, or capacitization, staff involvement is the key factor in achieving customer satisfaction and profitability. Hence, assessment must include staff perception and inputs in order to enhance overall productivity and profitability of the branch. Factors influencing operations from staff perspective include skill and training levels; secondly, motivation and commitment levels. Varying capacity to meet demands of peak customer inflow times is a common process followed in supermarkets. These demands are usually met by employing part-time staff, which may not be skilled and trained to meet customer expectations. In addition, commitment from contractual staff usually low and turnover is high thus posing a greater threat to service quality. Second factor concerning motivation and commitment of staff is hugely debatable issue in almost all human resource settings. Literature outlines five major aspects of employee motivation and commitment, i.e. empowerment, appreciation, reward and recognition, credibility and accountability, training and skill development. Semi-structured interviews with staff will help in identifying gaps or issues with staff motivation and commitment. Based on responses received from customers through the questionnaires, issues with location and layout of products can be streamlined further to meet their expectations. These responses will highlight major gaps that are present in the process followed currently. Any issues with safety and security also can be addressed by highlighting exits, safe ways, fire extinguishers, training staff on safety procedures and allocating security staff at all entrances etc. The most challenging task in improving service quality is that of capacity planning, which should ideally be able to balance demand from customers and fit into the service delivery system. Forecasting the trends of demand plays a significant role in capacity planning. Keeping in mind that it is not possible to always meet the demand with existing capacity, understanding customer expectations in terms of capacity will help in preparing for specific situations that arise during high demand. In their article, Armistead and Clark (1991; p.6) outlined specific chase strategies for capacity management, which may be appropriate to be considered in the present scenario. As described in Sassen’s five chase strategies to capacity management, firstly, altering the number of service providers and/or the hours worked, often involving the use of part time staff; however, this may not be a viable option for delivering service quality owing to training and skill issues associated with part time staff; secondly, sharing capacity between different parts of the service delivery system; thirdly, staff from backend operations may be moved to the shop-floor or at cash counters to meet the demand and moved back after meeting the demand; fourth option is that of using suppliers through subcontracting or leasing to provide resources; finally, customers may be made more self reliant by improving information and technology at all processes of the supermarket including billing and cash collection. As this supermarket is well established and re-known, level strategies such as price alterations, advertising and promotion, use of appointment and reservation systems, making customers queue for service or developing off-peak demands may not be appropriate options in capacity management. Nevertheless, in order to successfully implement these practices, employee commitment, in other words emotional labor, is of utmost importance. One-to-one discussion with staff members will help in identifying issues related to motivation and commitment. Presence of significant staff dissatisfaction/frustration cannot be ignored in service industry. Most importantly, staff goals should be aligned to organizational goals through clear roles and responsibilities; proper communication channels; appropriate performance monitoring and evaluation processes. Experienced staff may be empowered with critical responsibilities such as training, quality monitoring, shift in-charge etc, which will help in various aspects of operations management as well as enhance staff motivation. For example, training new recruits can be an ideal responsibility that can be given to experienced staff; this will address any existing skill issue of new recruits and also boost the morale of experienced workers. Secondly, other motivational factors such as incentive schemes, rewards and recognition, staff-driven initiatives, staff participation in critical decision making will reinforce their commitment and motivation. Staff needs to be held accountable for their role through appropriate performance management process. For instance, experienced staff can be given the responsibility of managing one entire unit in terms of forecasting, process, and capacity management; this delegation will especially work well during peak times. The chase strategies will assist in addressing supply-demand mismatch at any point in time by employing different alternatives to meet the demand. As outlined by Mahadevan (2007; p.298), by employing different chase strategies, demand may be met by hiring additional workers; increasing number of working hours; permitting staff to work overtime with pay; or by obtaining more resources from outsourcing agencies. Alternatively, low demand may be compensated by giving leaves or less work to the frontline staff after excessive stress; staff may be cross trained in different functions or departments; maintenance or backend work may be completed. Off-peak time would be excellent for increasing team bonding among staff, which could be done through mentoring individuals and teams through group discussions; enticing innovative initiatives and participation from staff. Critical aspects such as evaluating performance and providing feedback can be accomplished. Empowerment to take charge of critical responsibilities and decision making instigates greater involvement from the staff. Initiatives taken by staff and management get greater support. Once staff members’ experience and credibility have been tested and established, empowerment can be pushed down to every level. By doing so, decision making can be quick and more appropriate because the decisions will be taken by people who are in direct contact with customers, with actual work and are fully aware of situations besides having firsthand information with no manipulation or misinterpretation. Next, accountability through appropriate performance metrics will provide clear direction to the staff as to what is expected out of them and what actions are required to be carried out in order to meet the organizational objectives. Performance management process for employees helps in setting clear targets for all staff members. These targets could include resource productivity, quality, and customer satisfaction scores. Implementing these strategies to re-establish service quality in terms of process and capacity does face some challenges. For instance, preparing for capacity management with the five chase strategies requires approval and commitment from top management as it requires higher costs either in the form of extra hours to be paid for staff, or extra members to be employed, or additional costs in terms of acquiring personnel from agencies and one-time investment in information and technology, or costs related to the associated change management process. Moreover, employing part-time staff will question their skill and training, which will again impact the end customer. The entire process requires an assessment of other resources including information, facilities, equipment and materials after appropriate forecast. Secondly, minute changes in inventory and supply chain may be required before making changes to capacity planning process. Thirdly, staff perspective options for motivation and commitment requires making existing staff adopt a different culture, which may not be easily accepted. Issues related to biasness, misinterpretations, malpractices etc would be the potential risks if not handled effectively. Moreover, any changes to staff incentive programs, rewards and recognition or even change in working hours would require approval from top management. Conclusions In conclusion, establishing service quality in supermarket operations is a function of effective process and capacity management. This discussion elaborates on ways to assess current process and service quality through customer feedback and interviews with staff members. Considering the critical aspects of supermarket operations, main issues related to process, capacity planning and employee commitment can be identified from the customer feedback and discussion with staff. Five main chase strategies and their applicability in the present situation have been explained along with advantages and potential risk factors. Considering the risks, definitive solutions to issues may be identified only based on the situation. In order run the processes effectively and deliver service quality, employee commitment has been considered as the most important requirement. Means to enhance employee commitment have been identified as empowerment practices, goal-setting process, performance management, rewards and recognition, and training and skill development; however, employee expectations will differ and also change with time. Finally, it may be concluded that service quality is determined by customer satisfaction and resulting profits plus number of customers, and is achievable through a process that delivers high-quality products with minimum or no errors/dissatisfaction to the customers. References Bowen, D.E and Lawler, E.E. (1992). The Empowerment of Service Workers: What, Why, How, and When. Sloan Management Review. Vol.33(3). Pp.31-39. Cronin, J.J, Brady, M.K and Hult, G.T.M. 2000. Assessing the Effects of Quality, Value, and Customer Satisfaction on Consumer Behavioral Intentions in Service Environments. Journal of Retailing, Vol 76(2) pp. 193–218. Hitt, L.M. and E. Brynjolfsson. 1996. “Productivity, Business Profitability, and Consumer Surplus: Three Different Measures of Information Technology Value.” MIS Quarterly Vol.20(2) pp:121–142. Galloway, R.L. 1993. Principles of operations management. London: Routledge. (Ch.4, pp: 38-47). Keupp, M.M. 2001. How Operations Design Affects Business Efficiency. Germany: GRIN Verlag. King, R.P and Park, T.A. 2004. Modeling Productivity in Supermarket Operations: Incorporating the Impacts of Store Characteristics and Information Technologies. Journal of Food Distribution Research. Vol. 35(2), pp: 42-55 Mahadevan. 2007. Operations Management: Theory and Practice. New Delhi: Pearson Education India. (Ch.11, pp:286-322). Merriam, S. B. 1998. Qualitative research and case study applications in education. San Francisco : Jossey Bass. Peccei, R. and Rosenthal, P. 1997. The antecedents of employee commitment to customer service: evidence from a UK. The International Journal of Human Resource Management, Vol.8(1), pp: 66-86. Prud’homme, A.M and Boyer, K.K. 2005. A Comparison of In-Store vs Online Grocery Customers. In Kornum, N and Bjerre, M’s Grocery e-commerce: consumer behavior and business strategies. UK: Edward Elgar Publishing. (Ch. 5, pp: 79-96). Quirke, B. 2000. Creating Differentiation. 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