The use of Operational Analysis and Effectiveness
This supermarket retail division is in the top five in Australia. It is distinguished by far above the ground level performance of its employees. This results in high excellence of service, provided by supermarket staff. Also product offer is considered to be complete with high value standards. Manager of this branch is in charge for the operations and processes. Responsibilities include the range of list, but could be categorize in three sections. These are customer-related duties, employee-related duties, and goal-setting duties. It is manager’s job to ensure work flow and customer-friendly environment. For example, short check-out line, fast friendly service, helpful personnel, available baggers, etc. Employee-related duties would be recruiting; interview, hire training, planning and scheduling work shifts, maintaining personnel records, safety and security, etc. Manager is also responsible for inventory management and layout of supermarket store. Goal-setting duties include more strategic tasks, such as future sales projections, sales figures, expenses, labor cost, price changes and competition. Although this supermarket retail branch is in top countries operators, the problem with service quality emerged, as a consequence of staff attitude and their performance. Assumingly, service quality in terms of process and capacity design, emerged as challenging area. Therefore manager should analyze operations and identify the main causes.
Very often employees’ actions are measured to be the cause of poor quality of service; however, the cause could also be in the system and in the processes, which are management responsibilities. Employees are assets being utilized, which are the part of a futile process not adding value. Operations scheduling, work measurement, and the most importantly service processes have essential influence on business performance. (Prajogoh) Therefore, in order to find the issues and address these, supermarket operations and service quality study should be conducted. This could be done by certain operations management tools and models.
To begin with, Key Performance Indicators (KPIs) are of considerable importance for performance measurement. Furthermore, they measure growth being made towards organizational goals. Usually, they are used to measure activities which are difficult to measure, such as engagement, service and satisfaction. The act of monitoring KPIs is known as Business Activity Monitoring (BAM). There are specific KPIs for supermarket store. Sales are highly important for the key measures. Actual sales compared to target, apparently could reflect the success of the supermarket operations, and if set sales targets are being meet. In addition, sales for the year could be analyzed and compared with the last year sales, or with the certain period in the past. Further, sales per square meter could reflect how efficient total floor area is being used. Also, if wage cost could be defined by dividing actual wage being paid for a period and actual sales for the same period. Not less important is the data about average sale per single customer/transaction, as well as actual sales per trading hour. In relation with these comes the conversion rate, which reflects the number of transactions by the number of customers who entered the store. In addition, units sold per customer/transaction could also be important measure. Eventually, the average time spent by customers in the supermarket could be measured by sophisticated techniques utilizing Radio Frequency Identification (RFID) and wireless technologies, or manually. There is a direct correlation between time customers spend in the store and the amount of products they buy. However, KPIs fail to quantify staff morale. Also, they could be expensive and difficult for the company. Sometimes they represent a rough guide for company’s performance; therefore these should carefully be defined, according to the industry’s standards and customers’ perception and values. (DMS Retail 2010)
KPIs are typically tied to an organization's policy using concepts or techniques such as the Balanced Scorecard, which is another useful measure of company’s performance. This performance measurement system combines financial and non-financial measures of business performance. (Finch & Byron 2006) The balanced scorecard suggests that the business is observed from four perspectives, which are financial, customer, internal business, and innovation and growth perspective. Therefore, developing metrics, collecting data and analysing these should be relative to each of these perspectives. Importance of financial perspective is fully recognised, as well as its accuracy. However, this measure alone is not enough in guiding company’s actions and strategic decisions. (Balanced Scorecard Institute 2009)
Process analysis is a basic skill needed to understand how a business operates. (Jacobs et al. 2008) In process analysis there are particular operations management tools being used? These are flow diagrams, time-function mapping or process mapping, process charts, and service blueprinting. Flow diagrams shows scheme of the employees movement. By this it helps understanding, analysing and communicating the process itself. Time-function mapping or process mapping indicates activities in the process taking flow and time dimension into consideration. It ensures identification, and by that elimination of extra steps, duplication or delays in the process. On the first level the customer is in the control. In the case of supermarket, this could be when customer arrives in the shop. This could possibly include all the steps a customer takes during the service delivery process. (Keogh 2009) Second level includes interaction between customer and supermarket employee. For instance, warm greeting, after which comes service request. If the request is standard, it comes to third level, where service is removed from customer’s control and interaction, and employee performs required work. End of the process is at level one, where customer is again in the focus. For example, this could be paying of the bill and departing the supermarket.
Total quality management (TQM) plays significant role in business’ success. Quality of services is defined by certain dimensions. Convenience is in terms of availability and accessibility of the service. Reliability is the ability to perform the service consistently and accurately. Responsiveness is the willingness of service provider to help customer, and deal with the problems. Time, in since of the speed the service is being delivered. Assurance, the knowledge represented by personnel to the customer, and the ability to convey trust and confidence. Courtesy is the way that customers are treated. Tangibles, involves physical appearance of equipment, facilities and personnel. Consistency is the ability to provide the same quality of service constantly. In order to analyse service quality of supermarket, SERVQUAL instrument could be used. It focuses on tangibles, reliability, responsiveness, assurance and empathy. SERVQUAL reflects strengths and weaknesses of the business, by locating the gaps in service quality. For example, these could be gap between customer actual expectation and managements’ perception about these. Or gap between service quality and service actually delivered. Further, gap could appear between service delivered and how the same is communicated to the customer. (Stevenson 2009)
Some useful tools in TQM are check sheets, scatter diagrams, cause and effect diagrams, pareto analysis and statistical process control (SPC). Check sheets purpose is to record data. It ensures recognising of the facts and patterns that could lead to subsequent analysis. Scatter diagrams give the relation between two measures. For instance it could be absenteeism and productivity. Cause-and-effect diagrams are another tool for identifying quality issues, more precisely potential cause for particular problem. These are problem-solving tools, where the cause of the problem could be explored trough brainstorming. (Heizer & Render 2003) Pareto analysis is a technique to identify quality problems according to their importance. Focus is on only few quality problem areas which are considered to be important. These few are the causes of all other problems. Therefore, purpose is to locate the main causes. (Reid & Sanders 2005) This is often referred as the 80-20 rules, because Pareto concept states that approximately 80 percent of the problems is caused by 20 percent of the items. (Stevenson 2009) Some examples of measurement areas are frequency of effort, amount of errors and overtime generated to correct these, and number of customer complaints. (Wright & Race 2004)
Another essential tool in measuring supermarket service quality in TQM frame is benchmarking. It is a form of measurement, which is highly useful for highlighting the key areas to be improved. The purpose is to measure business performance and practice against another business performance and practice. It provides a systematic way of identifying, measuring and setting improvement targets in the process against competitors, especially ones to be considered as a industry leader. In order to apply benchmarking methodology to supermarket, several steps should be done. First would be to identify problem areas, where certain research techniques could be applied. In other words identify what to benchmark. For example, informal conversation with customers, employees or suppliers, or exploratory research such as focus groups, marketing research, surveys and questionnaires, process mapping, quality control variance report or financial ratio analysis.
Second step would include formation of benchmark team; this should consist of representatives of all the key stakeholders in the process being studied. Third step is to develop a baseline for relationship, develop an intimate knowledge of supermarket’s own practices and performance, and point against which improvement could be measured this may be by the use of flow charts, identification of problem areas, cause-and-effect analysis etc. Research and select partners is the subsequent step, where partners should be organisations that are non-competitors and not necessarily in the same business. (Wright & Race 2004) The next step is to compare processes via site visits or detailed discussions, exchanging information with the partners that allows both sides to gain some new ideas about how the process is carried out, it is performance results and what enables good performance. Plan for change should be done next, as a result of what information and knowledge is being transferred from benchmarking partners. Ideas that could be adopted and are adopted should be identified to improve supermarket process, as well as the methods for implementing these. Eventually, new process should be implemented by putting the ideas in place, monitoring their success and getting ready to re-benchmark them at specific intervals. Following benchmarking process there are some advantages, such as that it allows a focus on processes that will make a significant difference to supermarket effectiveness. It also allows a customer meeting point as well as an efficiency focus. It enables a detailed examination of the drivers for success and effectiveness.
Change arises from process benchmarking is generally readily accepted by employees and management. Creating an opportunities for both individual and organisational development. However, some disadvantages could be that it is time consuming, and requires significant staff resources. Therefore, in order to be successfully implemented, some key elements should be considered. Rushing into comparison with partners without an intimate understanding of one’s own processes. Picking associates for convenience rather than for excellence. Not allowing enough time for the methodology to work properly. Selecting a process that does not have sufficient potential for improvement. (Hill 2005)
In modern supermarket industry, with intense competition, it is imperative to have broad understanding of the environment. Customer demands for improved service are constantly increasing. It became essential to continuously monitor business processes and operations, in order to keep track with the changes that occur. Useful measures for tracking service quality are internal and external. Internal measures are collected from technical and operational records, while external are obtained directly from customers. (Pura-Leal & Pereira 2007) Customer satisfaction is the key for success. Therefore, customer surveys and questionaries could be of great help in analysing supermarket retail branch operations, as well as service quality.
By conducting the survey it could be identified what are the main reasons for decline in service quality. When conduct a customer satisfaction survey, what they are being asked is important. But first, customer survey should begin with defining the quality from customers’ perspective, not internal one. Surveys should be integral part of service quality program. There are few purposes of conducting a survey, such as determining the objectives for possible reengineering of service delivery processes, establishing both the definition of service quality measures and supermarket target quality standards and defining priorities for managing quality or service issues. Also, it measures progress toward service quality targets and recognises changes in market perception, since customers’ perception, needs and priorities change over time. By conducting customer surveys on regular basis, and taking actions on provided feedback from customers, supermarket stores demonstrates commitment to customer satisfaction. These are survey content, type and frequency, and who administers it. Included in survey should be how service is delivered and how would customer prefer it to be delivered. Further, who delivers service and how they do it. How do customers rank the importance of various aspects of service? There are several methods of conducting the survey. One is informal customer feedback, which is continuously obtained and used in everyday interactions with customers. Mail surveys are common way of conducting it.
A questionnaire is mailed to a group of customers, and they respond in writing, usually anonymously. Mail surveys may address specific issues with only a few questions, or they may be more comprehensive. It is a way to contact a significant number of customers with limited resources in a relatively short period of time, and it can provide valuable input. On the other hand, response could be limited. The most resource intensive and logistically difficult type of survey is face-to-face interviews. But these can also provide the most in-depth understanding about customer requirements and perceptions. The interview is guided by a questionnaire, which is administered in person by staff. This type of survey requires significant interviewing and probing skills on the part of the interviewer, so that clear understanding of what is behind the customer responses is recorded.
Focus groups utilise many of the same techniques as face-to-face interviews, with a facilitator assisting the group to explore certain issues and questions. Focus groups are most often associated with new product development and marketing activities. (Austin 1995) Staff conducting surveys should be trained, and should have clear guide for which information is essential, and also how to process the same information from customer feedback. A well administered and interpreted survey should identify priorities, those areas requiring improvement that customers perceive as important, and supermarket store direction. It is critical to measure what is important to the customer, not what is easy to measure. The identified service quality criteria must become part of ongoing management reporting process, with quantifiable results reported to management, staff and customers. (Austin 1995)
Analysis of supermarket staff, in order to identify causes of decline in their performance, could be done by several methods. These could include employee survey, vision system, why-why reviews, etc. Surveys are typically designed to enhance organisational communication, measure employee views on operations and processes, and both measure and improve employee engagement. Employee engagement is more often the intended outcome of employee surveying. Further, survey is the first step in building a value chain that leads to forging the sort of organisational environment that supports and contributes to its success. When managed well, employee surveys can assist in increasing staff retention rates, lowering absenteeism, improving productivity, enhancing customer relations, and increasing profitability. (Sanchez 2007)
Essential factors that make supermarket branch operations effective and efficient would be employees, scheduling, processes and capacity design, service quality, inventory management and supply chain. Employees are often described as being a company’s most important asset. (Finch 2006) Furthermore, employees’ motivation, morale, commitment and satisfaction all have great impact on business bottom line. High level of motivation could lead to more efficient and effective performance, which reflects on productivity and profitability. Concerning staff performance, important factors are staff skills, knowledge, as well as training they receive. Also, work space could have influence on employees’ satisfaction and morale. For example, some studies suggest that lighting or air conditioning could have impact on the productivity. (Heizer & Render 2003)
Process selection includes defining how supermarket service is organised. It significantly impact on capacity planning, layout of facilities, equipment and design of work systems. Process selection could occur in the case of new service, technological changes in products or equipment, or to keep pace with the competition. Approach to process selection should relate to key aspects in process strategy, such as capital intensity and process flexibility. In process selection should be decided how much variety in service and products should system include, what degree of equipment and flexibility is needed, and what is expected volume of output. (Stevenson 2009) As far as facilities layout is concerned, its design is an integral part of supermarket service. Moreover, it could provide not only product exposure, but also customer education and product enhancement. (Heizer & Render 2003) For example, by eliminating unnecessary movements of staff, and by improving safety at the workplace. In designing layouts taken into account must be the presence of customers and the opportunity to influence sales volume and customer’s attitude through carefully designed layout. Important factors to consider are traffic pattern and traffic flow. (Stevenson 2009)
In order to improve supermarket operations, certain strategically decisions must be made by manager. These should focus on TQM in terms of process and capacity design, as well on HRM issues occurred in the supermarket. TQM emphasises quality that includes whole operations from suppliers to customers, and manager’s commitment to continuous aiming toward excellence. TQM is of great importance, as it influences each of ten critical decisions of operation management. Implementation of TQM includes six concepts. These concepts are constant enhancement, employee empowerment, benchmarking, Just-in-Time, Taguchi concepts, and TQM tools. Some of these could be used by supermarket manager as the way to improve supermarket processes. Continuous improvements philosophy is never-ending process of improvements in employees, equipment, suppliers, and processes. The basis is that every aspect of the operation could be improved. (Heizer & Render2003) In this way, it keeps employees and management thinking about current processes, systems and structures.
Understanding the system and procedures, continuously reflecting on how well they work and the source of the problems that help in recognising improvements and create an environment for developments. Kaizen is Japanese name for a system to promote continuous improvement, and it suggests three guiding principles: process reviews, success conies from people, and constant need for change. Process reviews is the basic step for analysis, which involves the whole supply chain from the design of a service to its delivery to the customer. Successful Kaizen programmes rely on people knowledge, and their ability to identify improvements. High level of skills, employee participation and management support for implementing improvements are key factors in bringing success. Constant need for change is also crucial for success, as programme depends on everyone feeling the constant need for change. (Hill 2005) Another approach that could be used by manager, to improve supermarket operations could be the Deming cycle or PDCA (plan, do, check, and act). This tool is used to examine systems and processes and help to identify opportunities for continuous improvements. The first step is plan. Manager must evaluate the current supermarket processes and make plans based on any problems found. All current procedures need to be documented, date need to be collected, and problems identified. (Reid & Sanders 2005)
Employee empowerment is the part of TQM philosophy, where employees are encouraged to seek out quality problems and correct them. TQM provides incentives for identifying quality problems. Techniques for employee empowerment include building of communicative network that include employees, open and supportive supervisors, and building high-morale environment. Quality circle could be built, which is a group of employees that meets regularly to solve work-related issues. The member’s receive training in group planning, problem solving, and statistical quality control. (Heizer & Render 2003) Employee empowerment could be the key for manager to improve supermarket retail branch operations, and bring quality standards at the highest level, among top five in the country.
Another manager action that could increase efficiency and effectiveness of supermarket operations would be business process reengineering (BPR). BPS purpose is to rethink the way business is done, and is radical approach in bringing improvements. It transforms processes by reconfiguration. This involves delivering structures and breaking up existing functions and then reconstructing them around the redefined tasks and processes. BPR develop a process that meet needs and provide the highest value for the customers. Its aim is to achieve dramatic improvements in critical areas of performance. In addition, operations should be organised around the total process that adds values to customers, not around the functions and activities that form the value-adding activities. The analysis should begin with the outputs from the process that customers want. Next step is to develop a process or system that delivers these outputs. (Hill 2005)
In conclusion, by applying certain operations management tools to analyse supermarket retail branch operations and processes, manager could identify the causes of decline in quality of the service. Tools such as flow diagrams, time-function mapping, process charts, service blueprinting, KPIs, TQM tools, balanced scorecards, benchmarking, customers and employees surveys, or video surveillance, could help recognise the issues emerged. Furthermore, by being aware of the key factors that impact on performance, manager could decide the focus, and deal with the issues more effectively. The main emphasis should be on employees, processes and capacity design, service quality, inventory management, scheduling, etc. Each one of these could be improved by applying certain operations management strategies and concepts, such as TQM (Keizen, PDCA, and Empowerment) or business process reengineering. But most importantly, to support any of these approaches employees must be involved, as they are the ones bringing changes improvements.
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