Operations Management of Z Mart - Essay Example

 Operations Management of Z Mart Z Mart is a discount retail outlet in a chain of supermarkets that sells a range of products from clothing apparels to electronics. The outlet is hugely popular among customers and that accounts for the large number of shoppers at any given time. The marketing strategy is to identify with the customers and give them the opportunity of buying high quality products at discount rates and allow payment modes of cash, credit cards and checks. However, the customer volume at the store has been observed to be greater than was initially expected. This level of customer turn out had not been anticipated at the time the business was set up and has led to prolonged customer wait time at the billing counters as a result of inadequate planning. Due to financial constraints, hiring extra staff to man counters is not possible. This case study will try to highlight potential areas of improvement in the management and organization of Z Mart to avoid late handling and bad customer experiences. It is easier to visualize the problem if one considers the layout of the shop. The main entrance and exit have counters that bill customers for all their merchandise before they exit the shop. The billing section for electronic goods is at a distance from where the (Customer Service Managers) CSMs are stationed which partly accounts for the delay in handling customers payments. Situation Analysis On the basis of the manager’s notes the current situation can be described as a busy discount store with a steady flow of customers and with 14 counters from where billing can be done. The electronics department is removed from the billing counters at the main entrance and has a couple of counters to bill goods bought at the electronics section. There are two customer service managers per shift. Any checks above $100 need to be cleared by them. This causes a problem as the process of checking-out the customers is slow and there is an unnecessary glut of impatient customers queuing at the electronics counters. The situation analysis needs to consider the current scenario and how the store manager and his team of sales representatives can add value to the Z Mart business and how the manager can make a good impression during his review. In this case study, the manager needs to first identify his areas of concern and plan strategically so that he can enhance efficiency without incurring additional overheads expenditure. Strategic Planning Forecast: Depending on the discounts offered the manager and his staff should be able to predict the customer flow for that particular day or week as the case maybe. Capacity plan: Based on the forecast the manager should deploy his staff strategically to counter crowding and enhance customer service. Schedule: Based on the number of staff present and the number of departments which have special offers or greater discounts and expect higher sales volumes the manager must schedule the CSMs. In order to facilitate quicker dispensation of billing and sales services, the CSMs should be placed near the counters of the departments. Assure quality service: The manager should supervise the quality of service rather than get tied down to one counter himself. Motivate and train employees: The manager has done the right thing under the circumstances and supported his billing clerk in a time of crisis. However, for a greater efficiency for a longer period of time, the manager must look to upgrade his billing clerks’ authority to clear checks above $100. In order to maintain staff motivation, the manager may introduce a system of rotation of duty so that everybody has the chance to feel valued and not be exhausted. Relocate facilities: The manager should get approval for making changes in the layout of the store to optimize space and customer facility. Identification of Main Issues After preliminary assessment of the situation a few problems stand out clearly that leads to lack of efficiency and inadequate customer service. i. Not all the sales clerks have the authority to accept checks beyond $100. ii. A lot of time is lost in completing the billing process waiting on CSMs to clear the checks. iii. Billing clerks also double up as sales representatives and shop assistants and have to show the customers around. They even have to man the locked cabinets and attend to the customers who want products from the cabinets. iv. There is lack of planning and anticipation in customer turnout and deployment of man power. v. Due to cost cutting endeavors, much needed extra hands cannot be hired. So one must be very careful in optimizing output from the given manpower. vi. The store manager is occupied in handling billing and a high end staff member is not being utilized to his potential. vii. The customers have to wait for an average of 40 minutes to be serviced. Alternative Solutions for the Identified Problems Having identified the main problems as poor planning and utilization of manpower some alternatives are being suggested for consideration. The suggested changes need to be monitored and need to be phased out depending on priority. The manager may consider reorganizing the layout so as to make the billing counters easily accessible to the CSMs. During the time of crisis, for example: a huge number of customers are waiting in queue at the billing counter, the CSM should be flexible to come and man the billing counters themselves. Providing training and upgrading existing staff members should be a priority so that shop assistants from different sections can operate optimally when placed at different locations depending on the customer volume. When customers find the queue too long they should have the freedom to wander off to the other sections and then return to the electronics section in a little while. Another option is to provide training to motivate the manager so that he is able to identify and correct issues before they come to a head. Installing close circuit television cameras, over the billing counters and the locked cabinets in which expensive electronic items are displayed will ease the pressure on individual sales clerk. When heavy discounts are offered or new products are launched, Z Mart may consider requesting the companies whose products are being sold to send their sales representatives on a temporary basis. This will help in the business of Z Mart as well as the retailer as the persons displaying their products will be knowledgeable about the products and the Z Mart employees will be left to take care of the billing and attending to the customers. Introducing a system of issuing tokens or tickets to customers waiting in queue may give them the option to wander around and come back when their names are being announced and their merchandise is all ready and packed. Recommended Solution and Justification Implementing some of the alternatives suggested above specifically to the electronic department of Z Mart according to this case study is as follows: Bringing the electronic section to the center of the store and making it easily accessible to CSMs. Introducing a gaming section next to the electronics section will take away the pressure of clients while waiting in queue to get billed for their items. In order to distract customers while waiting in queue the location of the electronics section should be sandwiched between impulse buying sections and gaming/food court sections. The billing counters need to be split and the CSMs need to be placed on either group of billing counters. Staff should be trained in product knowledge to be able to deal with all kinds of customers and some should have authority to clear checks. Rotation of sales representations should be done periodically so that the motivation levels do not flag. SWOT Analysis Strengths: i. Infrastructure and products are in place and customer traffic is high. ii. Multiple locations and easily available outlets are suitable for capturing markets. iii. Very focused and devoted management and staff/ workers. iv. High sales volume makes up for the huge discounts on products which makes the store very popular. Weakness i. Lack of strategic planning and poor utilization of manpower. ii. Inadequate floor space and section arrangement. iii. Short staffed and few CSMs to authorize check payments. Opportunity i. Including games and a gaming section for keeping customer interest alive. This also provides distraction from boredom and frustration due to long wait in queue. ii. Training and upgrading staff members to enhance motivation. iii. Introducing CCTV cameras to monitor safety and prevent thefts; self-help kiosks and electronic display boards to advertise the products from different sections. iv. Upgrade the restaurant section to draw some of the crowd away from the electronics and billing sections and prevent chaos. Threat i. Lack of finance may prevent training staff and postpone the introduction of automated display boards, etc. ii. Competition from other discount retail stores like Wal-Mart and Best Buy, etc. iii. The manager sitting on recommendations fearing to implement changes so as to not disturb the applecart at the time of his review. Implementation The recommended changes must be implemented in a phased out manner. The priority for the manager is to upgrade staff capability and utilize his CSMs judiciously. Rearranging the floor should be the next in priority as that will ensure quick accessibility to CSMs, customers being engaged with gaming activities and refreshments. The third action item in his list of priorities should be soliciting collaboration from the companies whose products are being sold at a discount, to send their sales personnel to be present at Z Mart to take care of customers for their products. The next action item is to get approval for installing CCTV cameras and automated display screens. Smooth implementation will augment positive results and help to reverse the current situation. Results The combination of the changes mentioned above will help reduce customer frustration and maximize the output from the existing staff. It will also help set the manager’s priorities and leave him the space to better manage flow of customers and increase efficiency without increasing overheads. Value of work will increase which will directly and indirectly lead to better sales and better profitability. Customer service will be enhanced and satisfied customers will again increase the popularity of Z Mart. The store manager’s review will yield positive results because the outcomes of the changed strategy will increase efficiency, promote sales and enhance the reputation of Z Mart. Literature Review Z Mart is a discount retail store with outlets in shopping malls in all major cities. Z Mart markets products from several branded companies at reasonable prices and discounts. It is a popular shopping center for customers across all sections of society. Z Mart has a reputation of marketing quality products with a good track record of providing excellent after-sales service. Servicing the customers and endeavoring to enhance customer experience is a priority with Z Mart. Z Mart observes good and ethical sales policies that make it popular with the clients. It collaborates with reputed companies for the products that it retails in its outlets. The case study has led us to identify certain service related issues and offer solutions for the manager by suggesting a range of changes that will help avert crisis situations like over-crowding at the billing counters and customer frustration, in future. This analysis includes studying the current situation and identifying areas that need improvement. Alternatives have been provided which will help the manager to run the store more efficiently, thereby, giving himself the opportunity to shine during his review. A business case analysis simply stated is “A fact based argument for change” .. and involves a starting point, a desired end point and a description of the people and resources necessary to implement the change (Wyrsch, Hamblett, 2000). The authors suggest a 10 step process, similar to the one adopted for our case study: 1. Identify an opportunity 2. Determine the objective 3. Determine the alternatives 4. Collect and analyze data 5. Review the data 6. Consider the intangibles 7. Make a decision 8. Develop implementation plan 9. Develop marketing plan 10. Measure success. Brannock (2004), illustrates the process by comparing it to a cookbook approach, where total desired process output is determined by the Manager (chef), followed by calculating resource requirements and finally the sequencing of the processes necessary to achieve the planned results. The case study selected for this paper meets the recommendations and the theoretical underpinnings as illustrated by the relevant literature and all the alternatives provided are feasible given the constraints. However, only some of the alternatives have been recommended and a strategy for implementation has been discussed. Finally, we can say truthfully, that none of our factories at the different locations worldwide can be turned as sweat shops. Therefore, the future also is equally bright as the present for our products. REFERENCES Brannock, J.W. (2004). BCA: Business Case Analysis –examples, concepts, and techniques. STS Publications. Plant City, FL. Wyrsch, S. and Hamblett, D. (2000). Navy Medicine’s Business Case Analysis Retrieved from www.tricare.mil/conferences/2000/spkrpres/W605_Wyrsch.ppt Read More