Transformation Process Model within Tesco
Tesco was founded by Jack Cohen in 1919 when he started selling groceries from a stall in east London. Jack Cohen opens first Tesco in1929 at Burnt Oak, Edgware, North London .In1932 Tesco stores has been expanded to Private Limited Company. In 1947 Tesco Stores (Holdings) Ltd entered into Stock Market with a share prize of 25 pence. In 1961 one of Tesco stores in Leicester enters Guinness world Records, since it was largest store in Europe. In 1974 Tesco opened a first petrol station. In 1983 Tesco Stores (Holdings) Ltd has became Tesco PLC. In 1990's Tesco has expanded largely and started expanding their stores around the world. In 1994 they started Tesco Express. Tesco Express is a form of traditional supermarket in residential areas, city centres, small towns and Petrol Stations. My assignment report is based on Tesco express.
Operations Management is about how organizations produce goods and services. The operations function of the organization is the arrangement of the resources which are devoted to the production and delivery if its products and services. The transformation process model is used to describe the nature of operations.(Nigel Slack 2004)Relating transformation model to Tesco,
Input transformed resources are goods to be sold, customers.
Input transforming resources are staff, facilities such as computers, billing machines.
Transformation process involves selling goods, giving advices to customers, Capacity and Inventory control.
Output includes customer's satisfaction, goods sold and profits made.
To differentiate between operations we must consider the 4V's of an operation, namely Volume, Variety, Variation and Visibility.
Volume dimension of an operation depends on number of products or services made by the operation. In this case study, the output of transformation model is number of customers served. The number of customers is definitely more in Tesco when compared to a smaller shop because prices in Tesco are cheaper compared to smaller stores. This is because Tesco buys the products in bulk, buying in bulk reduces changeover cost to supplier, and also they might get price discounts when buying in bulk which reduces the unit cost. Whereas a smaller store doesn't buy in bulk effectively cost increases, which in turn increase the unit cost. So the volume in Tesco is higher compared to smaller stores.
Variety dimension deals with different types of products or services made by the operation. In Tesco the operational process is standardized, so the variety is medium to low. Staff in Tesco is given certain set of guidelines, they work according to these set of guidelines. The variety of services Tesco provides includes small-sized trolley, assisting customers and billing. Tesco stores are not prepared to sell the goods which customer asks, but they can provide with the goods they have. Since Tesco provides standardized service to the customers it is said to have medium to low variety.
Variation dimension deals with change in demand for output over time. Sine Tesco Express is generally located near residential areas, city centres and also the emphasis is mainly on the food there may not be heavy variation in demand because, everyone consumes food or food products daily. But there may be little fluctuations in demand at the time of Christmas or Easter, these may be predicted easily. So Tesco may encounter higher utilization of resources, low unit cost and predictable amount of demand.
Visibility dimension provides information about how much of internal working is exposed to its customers. In Tesco some of their operations are totally visible (that is front-office environment) to the customers such as billing the items, assisting customers with different products, arranging the goods in shelves etc. Some of its operations are not visible (that is back office environment) such as inventory control, capacity control, supply chain management etc. So it is a mixed high and low visibility operation.
Layout and Process Flow of the Operation:
In order to design layout we must select the process types and layout. Process types are of two types:
1) Product Process Type
2) Service Process Type
In this case study, Tesco Express comes under Service process type, because it involves with assisting customers and customer transactions. Since there is no need of producing the goods, product process type has been ruled out.
Service process type is divided into three parts, professional services, service shops and mass services. Since Tesco Express involves with many customer transactions, limited contact time, service is standardised and also volume is high, it comes under Mass services. Mass services include little customization, generally product oriented.
The next step is to select a layout type:
The layout is a mixed layout comprising of Process layout and Product layout (Line layout). The figure x.x shows a typical layout of Tesco Express. In the figure frozen food, milk and vegetables are grouped together, so that they can use freezer cabinets to keep them cool. And also beer and wine are kept together so that it is convenient not only for the customer to find it but also easy for staff to restock it. This type of layout where emphasis on convenient location for transforming resources is called Process layout.
Product layout involves locating the transforming resources entirely for the convenience of the transformed resources.(Nigel Slack 2004)In Tesco all the customers take same route while making a bill. Customers must wait in a queue for making a payment to the bill. So Tesco comprises of both Product and Process layout.
There are five performance objectives they are:
1) Quality: Tesco owns a pride of selling high quality goods to the customers. They also provide a high quality service assisting to customers. The store is also maintained to be very tidy and neat. They replace the outdated goods every now and then. The maintenance of price tag is also very clear. It also has a very good interiors and also welcoming. The staffs behaved in a highly professional manner, very friendly and were happy to help customers.
2) Speed: The time taken for total transaction was lagging in the store. This is due to the heavy queue for billing in the store in peak times, whereas in off-peak times the speed was higher. But is Tesco larger stores when ordered a home delivery the speed was comparatively higher than usual. The rate at which goods are available was also higher.
3) Dependability: Tesco has high prediction of opening and closing hours. Parking outside the store was ample, with two designated parks for disabled drivers. The queuing time is a bit problem, since there are only three tills available for the billing. The ratio of replenishment to out of stock goods is high. Overall dependability is medium to high.
4)Flexibility: Flexibility can be judged by taking different considerations such as a)Wide range of products: In my case study of Tesco I had to find fault with the range of goods available, I would like to highlight the lack of choice in terms of brand. There was rarely a choice between top-brands or home-brand purchases. This problem was inherent throughout the store and I felt a little restricted.
b) Volume flexibility: Since the queuing time is high volume flexibility is a bit lower compared to other stores.
c) Service Flexibility: Tesco displays the promotion goods at the entrance itself and also introduction of new goods. So service flexibility is higher.
Inferred operation Strategy:
Tesco Express is a condensed form of a traditional supermarket in residential locations. Placed for optimization, outlets maximize the requirements of the local community while maximizing the bottom line of the company itself. It is a modern day mutuality merger and success rate of Tesco Express is very high. So the strategy includes supporting the local customers, giving customers healthy and good choices.
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