Iga Operational Analysis And Effectiveness Business Essay


Operations management is one of the most important aspects in production or manufacturing management. Every supermarket that provides goods or services has their own operations activity. Those activities include product development, creation, distribution and production. It connects all the operations within the organization. Operations managements focus on managing the distributing of products and services. As far as the organization structure is concerned, some firms will have a discrete operations function (Lind & Perttunen 2004). Performance measures with respect to organizational performance are an instrument to assess progress against stated program and organizational objectives.

However in supermarket industry, it is a fundamental for the branch manager to responsible for changes of services into the customer satisfaction. Slow growth and intense competition in retail markets increases the need for retailers to use strategies focused on retaining and attracting the right customers (Sirohi et al 1998). Underlying performance management at both the organizational and employee levels is a set of performance measures. The objective of such system would be to increase the efficiency, effectiveness and performance at both organizational and employee level.

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IGA is Australia's third-largest supermarket organization behind Woolworths and Coles and they had more than 1000 branch retailer around Australia (Speedy 2007). Supermarket shopping is often categorized as a self-service retail environment. In order for supermarket retailers to build good relationships with their customers, tracking their levels of satisfaction with the fundamentals of the supermarket is important. Providing good services, quality products and customer satisfaction are becoming important for the supermarket to stay in the industry. In order to become a successful branch of supermarket, the manager of the branch need to keep track of the employee performance, service quality and customer satisfaction. As a branch manager of IGA, they're responsible for conducting the operational analysis to improve business and surviving in the competitive market.

Branch manager need to identify the problem that occurs within their supermarket. One of the most common problems that occur in the supermarket is the declining of branch employee performance, which in turn will effect the service quality and employee satisfaction. The mistakes can be made by confusing operational efficiency with strategic effectiveness (Porter 1996). Porter is suggesting that the attraction of the efficiency offered by the increasing range of production techniques has directed management towards short-term profitability at the expense of increased strategic advantage gained from understanding customer value expectations. This essay will discuss the reasons for performance declination and give the possible strategies in order to make the operations effective.

This discussion starts by showing the concept of service quality, its definition and the service quality at IGA supermarkets branch. Superior service quality can help firms become more profitable and help them sustain a competitive advantage in their served markets. It also identifies the strength and weakness of the service which is currently being delivered. Service quality has been seen as critical for service firms to position themselves strongly in a competitive environment (Durvasula et al 1999) and it also indicates its business performance (Hurley & Estelami 1998).This is followed by the reasons of performance declination. Secondly, it discusses many possible strategies which make IGA branch operations effective. Thirdly, it provides the implementation process of all these strategies. Finally conclusions are drawn from all the above analysis and possible recommendations were given.

Service quality is the delivery of excellent or superior service related to customer expectations and occurs for most services during the interaction between a customer and a service provided. Most of the service quality definitions go within the features of products which meet customers' needs and thereby provide customer satisfaction .Feinburg and de Ruyter (1995) pointed the importance of adapting the definition of service quality in different cultures. Ueltschy and Krampf (2001) argued that differences in culture affect measure of quality in a service sector. They summarized the service quality measures as culturally sensitive and may not perform properly or comparatively in a culturally diverse group domestically or abroad. Cultural factors are said to have greater influence on people's evaluation of services than on their evaluations of physical goods due to involvement of customer contact and interaction with employees while a service is delivered (Mattila, 1999). Other researchers look at perceived service quality as an attitude. As perceived service quality portrays a general, overall appraisal of service and global value judgment on the superiority of the overall services.

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Zeithaml(1990) have emphasized the subjective aspect of the concept of service quality where the only criteria that count in evaluating service quality are defined by customers. He continued that only customers can judge quality and all other judgments are essentially irrelevant (Zeithaml et al 1990). In order for a company to control their service quality, it is vital to focus on the specific attributes that are valued as important to the target customers and to deliver the correct type of service with respect to these attributes. Regardless of how service quality has been formed , the result of the customer's own comparisons of expectations and outcome or simply experience based perceptions and most researchers strive to find out and understand what attributes , resources and activities that need to include when evaluating service quality.

Performance management is defined as a process which adds to the effective management of individuals and teams in order to achieve high levels of organizational performance (Armstrong & Baron 2005). It is a process of management that adds effective management to the individuals and teams in order to achieve higher levels performance in the organizational (Wheelen, 2003). Some people look at performance management as performance joined with the pay schemes and others look it as performance appraisal systems. In easier terms, performance management gives the people the chance to improve their performance and apply their skill more usefully.

Performance appraisal is a process that brings together all the different approaches to the management of performance (Taylor 2005). Performance appraisal is a tool used at a normal basis to measure the employee's performance. It is a chance to take an overview of a particular period in keeping the record of what has been achieved by them. Performance appraisal can have a good effect on the employee motivation and satisfaction. It will provide employees with identification for their work efforts (Taylor 2005). Taylor (2005) stated that the existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. This tool is useful because it will improve the performance of the employee and the productivity of the company. It does also improve the relationships between staff and moral within the supermarket.

IGA has been operating very effectively from many years in Australia (IGA 2010). It excels in excellent products and services. If one of the staff members of IGA seems to be declining in their personal performance, it will affect the quality of service. The reasons for this declination can be due to many reasons. Some of them are like brand image problems, improper customer service, management problems; personal problems among staff, reward systems, complex situations, etc. there are many strategies which can increase the performance and customer satisfaction of the company in order to develop customer-staff relationship in terms of service there should be and interaction between customers and the staff,. Pleasurable interaction refers to cognitive assessment of an individual's exchange with an employee and personal connection is an expression of customer's acuity of bond between two parties in a dyad (DeWitt & Brady 2003). They continued that some of the factors that will increase the satisfaction levels amongst customers are the staff, products and services, point of sales and activation and network.

Employee performance is considered as ineffective when productivity is below than the considerable standard which is acceptable at a given time. Performance declination of employees at IGA may be due to the job, the manager or the company. Danaher and his teams (1997) stated in their research that two approaches have been taken in order to find the key factors in which the management can focus to improve the supermarket overall customer satisfaction. The first is gap analysis which measures the gap between customer's expectations and perceptions of the service as an indication of service quality. The second approach is linear regression to determine the relative importance service attributes in driving overall customer satisfaction (Danaher et al 1997).

Gronroos (1984) found that service quality comprises of three global dimensions. The first dimension is the technical quality. Gronroos (1984) stated that the dimension refers to the outcome or what is delivered or what the customer gets from the service. For a retail store, technical quality may include the range of products offered and the availability of parking space. The next dimension is the functional quality which refers to the manner in which the service is delivered or how it is delivered. Customers of a retail store will measure whether the salespeople are friendly or whether products are easily returnable. Finally, the last dimension is the corporate image. Gronroos (1984) argued that the store's image is built by mainly both technical and functional quality and to some extent other factors like the traditional marketing activities.

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It is difficult to measure service quality as compared to good's quality. The difficulty to measure is due to fewer solid sign available when consumers purchase services, fewer search properties, but higher in experience and credence properties (Parasuraman et al 1985), as compared to goods. It also requires higher consumer involvement in the consumption process (Gronroos 1984). The most popular service quality model in the 1990s is the model by Parasuraman et al., (1985). Their model supported Gronroos'(1984) findings on as the models are based on these three underlying themes where service quality is more difficult for the consumer to evaluate than goods quality. Service quality perceptions result from a comparison of consumer expectations with actual service performance and finally the quality expectations are not made solely on the outcome of the service; they also involve evaluations of the process of the service.

Standard processes in control the quality is by making sure that all the departments in the supermarket are well aligned in pursuit of the businesses' goals. It ensures that the sales team doesn't make promises that the people can't deliver on, that it delivers the data that operations or finance need and that all departments agree on common objectives for the business. Although it sounds simple enough, most companies fail on this basic level of communication and why so many of them have difficulties managing growth. Once the branch established a business process diagram, they need start implement it. If not, the quality of the services will continue to suffer which may result in customers abandon the supermarket and the investment will be wasted.

In order for the supermarket to maintain their daily business, they need to make sure that they have their customer support. The easiest way to understand customer needs is by having a way for them to give a feedback about the branch. This will complement the quality processes and will enable the supermarket to react to the problem that has not been anticipated earlier. The manager can simplify and speed up the problem diagnosis process by splitting up big method in smaller ones with clear interfaces and checkpoints, so that senior level manager is not required to diagnose the issue.

Service is said to be distinguished from goods due to its intangibility. The tangibility aspects of a service have a significant effect on perceived service quality. The importance of physical environment in a service setting is due to its ability to influence consumer attitudes (Koernig 2003). As customers are involved in the production and consumption process of a service conducted within a physical environment, the physical environment will have a deep impact on customers' perception of service experiences (Bitner, 1992).

After the manager of the supermarket had analyzed the problem, now is the time for them to start solving it. By doing that, they going to show a sincere interest in solving customers' problems and also store personnel's ability to handle customer complaints directly and immediately. They highlighted the need to have problem solving as a dimension by itself because of the importance of service recovery in providing good service (Harris et al 1999).

One of the tools that can be used to manage the performance of the employee is the Total Quality Management (TQM) (Harris et al 1999). They argued that one of part of TQM is to empower all employees to seek out quality problems and correct them. With the old concept of quality, employees were afraid to identify problems for fear that they would be warning of their mistake. Often poor quality was passed on to someone else, in order to make it someone else's problem. The new concept of quality, TQM, provides incentives for employees to identify quality problems. Employees are rewarded for uncovering quality problems, not punished. Workers are empowered to make decisions relative to quality in the production process. They are considered a vital element of the effort to achieve high quality. Their contributions are highly valued, and their suggestions are implemented. In order to perform this function, employees are given continual and extensive training in quality measurement tools.

Generally for any supermarket to improve the customer satisfaction they generally start by considering the things that they can do for their customers. The supermarket would first emphasize at how they treat their employees. Over the years it has been proven that satisfied employees produce satisfied customers (Dotchin & Oakland 1994). They (1994) continued that the development of staff might be expected to increase both profitability and the retention of contented high-performing service agents using a combination of technology and service staff in their customer-service processes. At an early stage, managers should carefully consider an appropriate balance between the two. For the achievement of excellent service quality it is very important to understand the interrelationship between various service quality attributes and their dimensions. IGA should put more effort to understand their customer well through relationships concepts such as length, nature and quality of customer's experience with service organizations especially in the context of highly competitive market. A very crucial factor to IGA is to understand how services can be used to differentiate and enhance business-to-business relationships (Speedy 2007).

Good intentions in developing a quality service strategy will be lost if the fundamentals of an effective service organization are not present. It is recognized that there is no single generic service culture that is always successful, but all effective cultures place a strong stress on the key and developing roles of customer-service staff. Armistead and Kiely (2003) research that the attributes that contribute to service leadership include the professionalism within customer service who builds trust through dependability, respect, empathy, and diplomacy. Secondly, they also need inclusiveness in service processes encourages co-operative, teamwork and mutual support and understanding. Communication also allows expression for the individual and empowerment in the employees. Besides that, knowledge is shared by the staff at all levels and finally the technology that is incorporated confidently and appropriately should be put into the service processes. These attributes should ensure that the service organization is responsive, proactive, adaptable to customer needs, and opportunistic (Armistead & Kiely 2003). Employees look for clearness of direction, simple messages and consistent behavior by their manager.

Akbar et al (2010) have reported that excellent service is a profitable strategy because it results in attracting more new customers, more business with existing customers, fewer lost customers, more insulation from price competition, and fewer mistakes requiring the re-performance of services. However, a strategy that is effective in acquiring new customers may not be the most effective in retaining current customers (Sirohi et al 1998). In today's competitive environment the pursuit of service quality is now considered an essential strategy. Competitive advantage results either from neither implementing a value-creating strategy nor simultaneously being implemented by any current or potential competitors or through superior execution of the same strategy as competitors (Akbar et al 2010).

IGA can improve its branch personal performance through creating incentives and reward systems. These will enable employees to find new opportunities within an organization. If possible IGA can also implement the strategy where the employee can be involved in the supermarket decision-making processes. Lack of motivation, rewards and incentives sometimes result in performance declination among employees. This may be one of the reasons for decrease in performance declination at IGA. There should be a balance in costs at a level that will ensure the supermarket competitiveness. Employees should be rewarded for their skills, knowledge, accomplishments and abilities.

As a branch of IGA is suffering from the problem of employee performance declination, empowerment would be an appropriate strategy to overcome it. As in any retail environment, customer loyalty is paramount. Customer needs must replace operational challenges (Retail Week, 2003). Financial performance of supermarket industries relies on the generation high levels of customer satisfaction and loyalty. At IGA customer satisfaction is a critical performance indicator along with measures of unit productivity and administrative effectiveness. Another aspect of that is effective communication which included items such as "my work group is told about upcoming changes in time to prepare for them" and "I get enough information about how well my work group is meeting its goals" (Adsit et al 1996).

Supermarkets like IGA must enhance their quality to remain competitive in an increasingly aggressive and global industry. It is established empirically that customers overall cognitive or effective evaluation is based basically on the service quality, but the customers perception of the performance of the service quality encountered is compared with some cognitive or affective standards like a person's expected quality, perceived quality or value quality. This study brings out the service quality framework and best strategies that are used to increase the performance of employees and IGA operations.

The customer service will be improved purely based on mentioned strategies as they are proved by researchers as an effective method.

Despite of different way chosen to measure the employee performance, both quality and quantity measures are necessary in order to get full customer satisfaction. Thus, finally it can be concluded that employee performance, quality service and customer satisfaction are inter related to each other. If any one of this factor decline, it will affect the other two.