Operations Management in Tesco Kennington Superstore - Case Study Example

Operations Management in Tesco Kennington Superstore Introduction: Operations Management is an integral part of any organization as it is a way the organizations create and deliver their products and services to the customers. The operation function is one of the three core functions of practically any organization, and includes: marketing and sales function, product/service development function, and the operations function (Slack, et al., 2013). Operations management enables companies to achieve their mission, vision and strategic objectives. Below is presented a report where two organizations the Tesco Kennington Superstore and the London Zoo are analyzed in terms of operations management processes. Part I: Operations Management in Tesco Kennington Superstore Background of Tesco Tesco is the UK-based biggest retailer, which was founded in 1919. Since the opening of its first store, the company has grown its business significantly. Tesco operates more than 4,000 stores in 12 different countries and employs more than 500,000 employees (Tesco plc, 2014). Tesco Kennington Superstore is located at Kennington Lane in London. The store operates 7 days per week with slightly different schedules: Monday-Friday from 08-00 to 22-00, Sunday from 07:30 to 22:00, and Sunday from 10:00 to 16:00. Average sales area is 38,600 sq ft. Facilities, store and format, processes General and Enabling Facilities The Superstore has six general facilities, including the following: pharmacy, clothing collection, direct collection, deposit money, money gram, ATM, and toilets. In addition to general facilities, there are enabling facilities, such as automatic doors, lap trays, facilities for people with mobility impairment, non assisted wheelchair access, and facilities for people with visual impairments (such as large print, audio tapes, and Braille-system of reading for blind people). Also, there is Customer view point, where customers are free and encouraged to leave their feedback and share their perceptions about the store. Also, there is provided free bus delivery for Tesco’s customers. There is a free parking for more than 150 places, with the maximum stay of 2 hours and available only for store customers. Store & Format The store is clean and bright and the building is light and warm. Across the store there are signs of Tesco Price Promise which imply that the company matches the price of own-brand products. Processes Check-out process Check-out is the main processing capacity at any store. Customers of Tesco Kennington Superstore can pay two ways for their goods: either with a help of the checkout assistant or through the automated self-scanning technology (Slack & Lewis, 2010). Usage of the automated scan technology, customers of Tesco can pay for their goods and products without involvement of Tesco’s staff. On the check-outs the customers can use highly-personalized Tesco clubcards, which tracks their purchases and enable customers to collect coupons and additional bonuses, accumulate it and then spend it for the products they often buy or convert into money-off vouchers and discounts (Slack & Lewis, 2010). Having successfully utilized this technology and using it for almost 20 years, Tesco has “built up an astonishing insight into its customers’ lives, preferences and buying patterns” (Slack & Lewis, 2010: 210). Click and Collect Another important part of the Processes Layout in Tesco Kennington Superstore is its service “Click and Collect”. The service of Click and Collect enables customers just to click and collect the goods from the Tesco stores, which makes their shopping experience less stressed and more comfortable. Major characteristics of the operations in terms of input, output and 4 Vs Tesco Kennington Superstore uses a mixture of both input and output measures for its operations. Due to the integration of Information technology, operations of Kennington Tesco Superstore are predictable in its nature and enable management to plan the required input resources by utilizing Information Technology. Below is provided basic overview of input and output measures used in Kennington Superstore for measuring its operational capacity. Kennington Superstore: Input and Output measures of capacity Input measures of capacity: Output measures of capacity: Sales floor area Number of items sold per day Number of check-out automated scanners and scanning rate of X items per hour Check-out operative hours Operating hours of the store Number of visitors per day The nature of operations process (4Vs) in Tesco Kennington Superstore Volume – High With regard to operations management, volume refers to the volume of productivity in relation to the amount of resources such as labor that are needed for the production. High volume refers to a high ratio of production versus resources needed. Tesco Kennington Supermarket has high volume of operations as it includes not only actual work of the superstore but also serves as distribution center for online orders’ delivery. Having successfully utilized Information technology into its operations, Tesco’s management also has achieved greater flexibility and speed of processes, thus increasing production levels. Elimination of paperwork has provided Tesco’s employees to spend more time on the improvement of customer’ service (Slack & Lewis, 2010). Variety – High Tesco Kennington Superstore offers as high variety of products, from short shelf life ready-to-eat chilled foods to canned Tuna fish or uncooked grains. The key department on which the focus has been made is fresh food. There is a big choice of fresh products, especially fruits and vegetables. In addition to fresh food department there are available the following key sections: food, bakery, food cupboard, frozen food, drinks, baby, health and beauty, pet care, household, home and entertainment. In order to deliver all these products and services the company has to perform many various operations, such as washing, storage, deboxing, handling food-contact packaging, filling containers, sealing and labeling of chilled products, assembly and packaging of a chilled ready-meal or cooked food, etc. (Elstone, 2007:5). Variation – High Variation is also high in Tesco, as the customer’s preferences and habits are changing more quickly. Tesco has heavily integrated Information technology in order to smooth its operations and better forecast demand for specific items. Thus, for example, the above mentioned Clubcard enables the company to decipher and store the data about every customer and the items he has purchased. Further, this data on the customer’s shopping basket is decoded into 45 pieces of data and categorized as to the brand, price, type of recipe, exotic, etc. (Slack & Lewis, 2010: 211). Further, the company uses this data in order to differentiate customers by categories and sub-categories based on their buying habits and lifestyle. This process enables Tesco to provide customers with what they really need and what they do expect on the shelves of Tesco Supermarkets. Thus, the company manages variability, which is quite high. Visibility - High With regard to operations management, visibility refers to the amount of the operations the customer can see in process. Tesco Kennington Store has relatively high level of visibility as the customers can see how certain items are produced, packed, cut, sliced, or baked. Customers can choose and select fresh produce individually. Also, customers can walk through the store, read all the information about the product item and spend as much time as they need for it. In case of special discounts and other relevant offers there are big signs enabling to attract customer’s attention. Total Quality Management in Tesco Kennington Superstore Tesco has made a significant focus on the quality of both its products and accompanied service. The company has to ensure food safety; however, it utilizes different procedures depending on the product type and covers a range of factors, such as building fabrication, personal hygiene, and equipment design (Elstone, 2007). Quality of products As the main focus is made on the chilled fresh food categories, Tesco has developed more effective logistics and supply chain operations in order to be capable to deliver fresh products on the shelves of the superstore. In order to ensure quality of the fresh food the company has also utilized temperature controlled systems and plastic tray system (Sparks, 2006). Having introduced plastic trays, Tesco has managed to reduce time needed to “put stock out on the shelves for consumers” and “to eliminate effort of removing corrugated packaging from the store” (Sparks, 2006: 131). Also, Tesco offers its own-brand labeled products, which can be easily found on the shelves of the Kennington Superstore. Customer Service In order to ensure quality of customer service, the company has located in Tesco Kennington Superstore the point of customer’s perception, where customers are encouraged to leave their feedback and tell about their concerns regarding different issues. Just-In-Time As the focus of the Tesco was made on the fresh food category, the company has utilized Just-in-Time method in order to be able to handle rapidly fresh foods from supplier to retail shelf, thus maintaining less stocks as inventory (Sparks, 2006). In order to perform home delivery operation, Tesco uses its existing store as a distribution center, and thus saves costs on the building and maintenance of a new warehouse (Slack & Lewis, 2010). Thus, Tesco utilizes Just-In-Time technique, as the customers living in the Kennington area are more likely to get their delivery from the Kenington Superstore by a corporate van. After the customers have made orders, these orders are redirected to the server computer of the store nearest the customer’s home (Slack & Lewis, 2010). Tesco Kennington store is quite big and has many different departments. In order to smooth the process of searching a specific item, the trolleys are equipped with a touch-pad computer with shelf-identifying software (Slack & Lewis, 2010). All these makes the operations lean as reduce costs of operations and saves time. Quality Audits Tesco carries regular audits against the corporate standards and check for compliance to each section/procedure. The results of the audit processes can be received from a Tesco Technical Manager or on the Tesco Technical Library (Elstone, 2007). Also, the company carries out annual policy reviews, which enable to continuously improve companywide operations and activities (Humby, Hunt, & Phillips, 2004). Part II: Management Operations at the London Zoo Background of the London Zoo London Zoo is one of the attractions for people of different ages coming from the UK and from abroad. Since its establishment in 1830, the London Zoo has gained positive reputation as both leisure and educational place. The number of visits is subject to heavy seasonal fluctuations. Average daily number of visitors is around 5000. Operating hours of the London Zoo are 10-00 to 5:30. However, the larger share of visitors arrive by 11-00 am and spend in average 4 hours 50 minutes in the Zoo. Facilities, store and format, processes General and Enabling Facilities General facilities at the London Zoo are the locations where animals live. These are the zones, which visitors primarily come to attend. Enabling facilities include the areas where people can have rest and eat (seating areas, restaurants, and café facilities). Also, it is possible to suggest that there are facilities for employees, facilities for food preparation, toilets, etc. Store & Format No information is available in the case study regarding this issue. Processes There are many different processes in the London Zoo, which mainly consist of the following categories: taking care of animals (cleaning, feeding, etc), cleaning the territory, actual visits and excursions in the Zoo area. Major characteristics of the operations in terms of input, output and 4 Vs London Zoo: Input and Output measures of capacity Input measures of capacity: Output measures of capacity: Total area Number of animals Operating hours of the Zoo Number of visitors per day The nature of operations process (4Vs) in the London Zoo Volume – High As the number of visitors of the Zoo is quite high, with average number of around 4900 people, the volume of operations also is high. Variety – Low The Zoo has a low level of variety since the services are offered to the customers at the Zoo are generic. Variation - High Variation at the London Zoo is high, as this type of business is subject to fluctuations of fashion, public interest and changes of social habits, leisure preferences, and other factors. Visibility The London Zoo also has a low visibility. The customers are not able to see the service or product until the point where they visit the service. Total Quality Management in London Zoo As it has been recognized in the case study by the management of the London Zoo, there was a problem of measuring customer’s views and perceptions regarding the quality issues. There has not been introduced quality management system in the London Zoo, and that is why there had been identified the following gaps in the quality: low level of staff helpfulness and poor communication with visitors, poor quality and provision of catering facilities throughout the zoo, poor comfort of animals, limited number of events and presentations, poor overall impression of the zoo’s appearance, and poor visibility of animals. Part III: Comparison of the London Zoo with the Tesco Kennington Superstore Even though the both the London Zoo and Tesco Kennington Superstore are the locations with high number of visitors and high volumes of operations, Tesco superstore has much greater advantage over the London Zoo in terms of its operational activity. Tesco has integrated Information technology and software in order to remove human factor and thus to decrease costs and time for its operations, while the operations in the London Zoo are heavily dependent on human resource which is in deficit. All this influences on the quality level of service. As it has been specified in the case study, one of the other issues that the London Zoo was facing was the issue of the customers not being satisfied with the Zoo in terms of the quality of service they were getting from the Zoo. Tesco, on the contrary, has developed the whole quality management system and is continuously “listening” its customers having established special zones in the Kennington superstore. Service delivery is very important in any facility whether it is a Zoo like the London Zoo or a Tesco like the one visited. It is not just the service that is important but actually also the way this service is delivered to the customers (Brown, 2013). That is why the management of the London Zoo might adopt some strategies, which have been successfully implemented by Tesco. Conclusion Being able to provide an optimum operation model for any process is necessary in ensuring that the costs are kept at a minimum while being able to make sure that the service delivery is not affected negatively. In the case of the London Zoo for instance, they must be able to go far and beyond the generic strategy development so as to develop a solution that can help the zoo to serve the customer well while minimizing the cost of operation at a minimum. Using technology and other modern resources may help in doing this. Although technology may not help a lot in a Zoo, there are still some ways it can be used to minimize the costs and to significantly augment the quality of service the Zoo give to the people who visit. Tesco Kennigton Superstore is an excellent example of effective operations management. However, it might be challenging for the London Zoo to invest significant sums for improving its operations. Still, there are some other ways, which might not be costly but very effective. Further research and analysis is required. References: Brown, S. (2013). Operations Management: Policy, Practice and Performance Improvement. London, UK: Routledge. Boyer, K. (2009). Operations and Supply Chain Management for the 21st Century. London, UK: Cengage Learning. Elstone, P 2007, ‘Tesco Food Manufacturing Standard’, Version 5. Retrieved from www.itesco.cz/cs/tesco-v-cr/pro-dodavatele/Contents/0/tfms_v5_aj.pdf&rct=j&q=&esrc=s&sa=U&ei=cihWVOa8KMOuPOLUgdgJ&ved=0CDkQFjAH&sig2=y98LztHMgKpxT05EAPYz_g&usg=AFQjCNGyG3nRpFZWh9nu2EbFcnCQIgILEw Pycraft, M 2000, Operations management. [Cape Town]: Pearson Education South Africa. Slack, N. and Lewis, M. (2011). Operations strategy. Harlow [etc.]: Pearson Education/Prentice Hall. Slack, N., Brandon-Jones A., and Johnston, R., 2013, Operations management, FT/Prentice Hall. Sparks, L 2006, Retailing logistics & fresh food packaging: managing change in the supply chain. Kogan Page. Tesco plc, (2014). Tesco plc. [online] Available at: http://www.tescoplc.com/index.asp?pageid=276 Read More