Managing operations

8 August 2016

Competitions with Tesco express located at St. Johns Wood are not really competitive. Local shops are most near them and comparing local shops with Tesco, it is not a big competition. Also, Sainsbury’s and Marks & Spencer, both of them located far away from Tesco, few blocks away. Tesco busiest hours are always the lunch hours when people nearer Tesco go buy lunch deal. Except for weekends, they’ll go to Tesco when they need or want something or when they are passing by. (‘They’ is referring to customers. ) Tesco in St. Johns Wood open at 7am every day except on Sunday, Tesco starts at 11am.

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Then on Monday to Friday, Tesco close at 9pm where as on Saturday, 8pm and Sunday at 5pm. Core business Here, the staffs are very focus on the customers; staffs have to understand customers and fulfil on the customers’ needs. Among the staffs; the staffs have to put a great teamwork to make d store clean, acceptable and relax. They also have to respect each other since Tesco welcomes women to work in Tesco, gender diversity. What Tesco does is to improve the highly value brand, making their own products so the profit will go to them not to other suppliers.

Also to build teams to create more value and that is why staffs are hired more here. Below, fig1. 1, is a business model of Tesco: Light blue is the core activities Grey is the virtuous volume circle Lastly, the dark blue indicates the enablers Fig 1. 1 the core business model of Tesco The dark blue indicates the outdoor activities where customers can see what the staffs are doing through the price; innovating their offer, or buy showing all their products build by Tesco and etc. The grey colour indicates how Tesco going to plan their business, e. g.

If the specific product is on peak, they going to start selling it more. Lastly, the light blue indicates the core activities, they sell, they buy, they move and they insight their products. Our focus of doing this report is to look at the objectives, strategic rate, operation design, location and layout and managing inventory. 2. The Transformation Model for TESCO Figure: – 1. 2 the Transformation Process. Tesco is the UK’s most successful and one of the world’s leading retailer, its provide good quality products and services at a cheap cost compare to its competitor such as Sainsbury and Waitrose.

Like all other business the company follows’ three stages of the transformation model. According to Hill, A. and Hill, T. (2011), the transformation model describes how an organisation of any category transforms its inputs into outputs. The three stages are namely input, transformation process and output. Input Input in a business are resources such as people, material or finance put into a system, which is then transformed so that desired output can be obtained. Here, Tesco’s input are the products and services that are being offered in the store.

Inputs are of two types’ namely – transformed resources and transforming resources. The transformed resources include materials, physical goods and products that are offered to customers, information etc. and transforming resources such as employees that provide services and help the customer in the store and equipment that helps in processing the physical goods all the way to check out etc. Transformation Here all the transformation takes place such as creation of product, from input of resources to packaging the finished goods and putting it in the shelves of the store.

Also, Information acquired through club card and from other sources is processed in this stage to provide the help and offering the customer according to their needs. Output Output is the final goods and services produced and delivered by Tesco for the consumption to the customer. Product goods and services are delivered according to customer’s order. These orders are delivered on time in order to retain loyal customers and a good customer service is provided to attract new customer. Once the customers are Satisfied with product/service it can be considered that the transformation process has been successful. 3.4 V’s analysis of Tesco expresses’ operations.

Although all operations are similar in the way they transform products and services, they always differ in a number of ways, Four of which are particularly important for an effective analysis. L H H L H L H L TESCO EXPRESS – PANZEER – The diagram above allows us to compare the Tesco express store, in St johns wood, with one of its closest competitors Panzeer , a small grocery store, in terms of production and how they serve their customers. Volume is “the level or rate of output from a process, a key characteristic that determines process behaviour. ” (Slack, et al, 2007, Pg 16).

When analysing Tesco expresses’ volume we generally imply it to size, specialisation, unit costs and systemization. Tesco express stores are a lot smaller than the hypermarkets or the supermarkets and can not potentially hold as much stock or have the same amount of customers coming in daily. They average a size of 200 square metres. However compared to panzeer,a much smaller grocery store perhaps half its size, tesco express entails a higher degree of systemization as it has each member of staff specialising in different tasks such as ordering stock, operating the till, unpacking the stock, refilling store shelves A Staff member at panzeer would perform 2 or more of these jobs. Variety is “the range of different products and services produced by a process, a key characteristic that determines process behaviour. ” (Slack, et al, 2007, Pg 16). Tesco hypermarkets can store a huge range of products from electricals, clothing, health and beauty and entertainment. In terms of variety once again Tesco express stores a much smaller, less complex range of products than the hypermarkets/supermarkets. They tend to store mainly food with an emphasis on higher-margin products alongside everyday essentials.

A very small part can be some health and beauty and magazines to match customer needs whereas panzeer s variety would be less flexible and more standardized on essentials such as milk, water, bread, dairy products, alcoholic beverages and canned food. Variation in Demand is the “the degree of which the rate or level of output varies from a process over time, a key characteristic in determining process behaviour. ” (Slack, et al, 2007, Pg 16) Both stores as whole have a low variation in demand meaning that theyre demand is relatively stable throught the day, week and year.

Their operations system consists more of a rountine . Tesco express may experience a slightly higher variation in demand for its products as theyre can be good and bad seasons for purchasing fruits in the year, it is an extremely well known and brand with a sensitive reputation that can be influenced and it operates more competitively than panzeers. However, demand will only be greatly affected by external influences out of their control. Visibility is “the amount of value – added activity that takes place in the presence of the customer also called customer contact.” (Slack, et al, 2007, Pg 16) Tesco expresse’s operations are somewhat hidden from its customers when it comes to its shifting and handling of stock in storage rooms, bakery for fresh croissants, bread and cookies, and a staff room. At panzeers, some of the internal operations are exposed to customers as there is a smaller space for carrying out its stock handling. The staff Do not really need customer contact skills as they are more self service machines than till operators, however the staff may need to help and advice customers on using the machine.

Another factor is that in both stores there is a short time-lagg between customers choosing the goods they want and retrieving them which slightly suggests they are more visible. 4. Performance Objectives Fig 1. 3 5 performance objectives of Tesco using polar diagram The success of Tesco is not only measured financially but also its operation effectiveness. The 5 performance objective will help to determine the current status of the Tesco store. Tesco’s best performance objectives are the Flexibility and the Dependability.

With the big variety of choices Tesco are always able to satisfy all kind of customer demand. With their promotions for the new launched products they are providing a great value to the customers. That proves the good flexibility objectives of the company. Dependability Other really significant Performance Objective is Dependability. Tesco always provides great amount of stock in all of their stores. With their own delivery services and having deliveries in all parts of the day a customer can be always satisfied with the needed goods.

The size of the stores is according to the place where the particular store is positioned and they are always big enough to cover the amount of customers going thru the shop. With the exact number of tills they are able to serve many customers and that also improves the speed as a performance objective. Cost Cost is also one of the characteristics for Tesco. They are able to provide low costs to the customer by cutting down to minimum some of the unnecessary costs, such as cleaning expenses and for example making more self-service tills to reduce the expenses for stuff salaries.

Other very important reason for the low costs is the lower quality of the products. Quality Quality is not the most significant Performance Objective. They don’t rely on the highest standards of quality of products and customer service. This is why Tesco is very competitive on cost. The price per unit is lower because they rely on the huge quantity of demand and not so much on higher quality and more expensive products. The stores of Tesco are clean and tidy but on the level of answering the standards and nothing above that point. Speed

Speed is an important performance objective that is needed to keep in check if the business wants to their satisfied customer. According to slack (2007), Speed means the elapsed time between customers requesting products or services and their receipt of them. The St. Johns Wood store tries to minimize the time of the customer as there is staff are always there in the counter while other quickly re shelve the stock the needed. It is strongly believed that the faster customer can have service, the more likely they are to spend in the store and buy the product thus allowing making more profit while keeping the customer satisfied.

Moreover, They also have equipped themselves with two self-service machines in order to avoid wasting customer’s valuable time queuing in store just in case if the store gets busy. Flexibility Here, flexibility mean being able to change and adapt to the situation according to the needs and offering substitutes when needed. It can be in either in terms of product or services in the store. This is an important performance objective for Tesco as it means making sure that the new product in the market are made available and filling the stock even when the supply is scarce so that the customer expectation is met.

Also if one product is not available, making sure that a substitute product is provided. Tesco also takes measure to deal with the sophisticated demand of shuffling checkout queues. The store encourages flexibility programme such that allows employees to work for longer time thus benefiting customer by allow them to receive more satisfactory services also increase the speed of operation. Flexibility is also influenced by market changes and advancement and by competitors. Therefore, it can be noticed that flexibility affect the speed of operation in the and also improves the dependability.

Tesco has enjoyed a substantial profit margin in the past years because of the cost and the flexibility that it offers which meets the consumer demand and also their unique design and quality of the manufacturing processes that produce their own brand product. Moreover, their strategy of “pile it high and sell it cheap” gives them competitive advantage. Here, looking at all the objective it can notice that each of these 5 performance objective are interlinked with each other.

If the balance of one is disturbed, it affects rest of the 4 characteristics. Therefore it is essential that the store should try keeping and maintaining a balance for all of it. 5. Design The purpose of design is to satisfy customers. Design for a company is so important for many reasons, some of them being ; it helps businesses connect with the customers, having the right design helps boost sales ‘companies that were effective users of design had financial performances 200% betterthen average’ (Quoted from Lecture 3 Slide) etc. The design of Tesco St Johns wood is perfectly developed to be the most comfortable for the customers and the staff to be able to serve them. You can see the floor plan of this particular store in (appendix 1) In order to find out which design is right for the business there has to be a lot of research done. A normal procedure that would be undertaken is: 1. Generate and develop ideas from both internal (employees, market research, etc. ) and external (customers) sources. 2.

Screening ideas – helps to rule out ideas which seem not to have potential 3. Feasibility Study – carry out more research into the remaining ideas e. g uniqueness of idea, selling price 4. Preliminary Design and Development – involves developing the best design for the new idea 5. Testing Prototypes – a model of the actual design that is tested before actually making the real one 6. Market Sensing and testing target markets – finding out if customers would actually like this design? 7. Final design – make any changes necessary to the initial design 8.

The Decision – the head office decides whether to go ahead or not with the design 6. Concept The concept of the Tesco we are doing is the mini market. Tesco have been allocated with different sizes, for example, Tesco extra, Tesco metro and Tesco express. The Tesco in St. Johns Wood is the Tesco express that we are specifically look at. They are selling not much product as compare to the bigger Tesco’s as mentioned before. They are just selling the necessities for daily life such as snacks, desserts, drinks, lunch meals, laundry powder etc.

Below is a diagram of a concept screening: Basically, what can be explained through the diagram is the concept on our Tesco in St. Johns Wood using right now. Is it feasibility? Can it be accepted? And what are the downsides of that concept? So, in order to know the answers, they have to invest something to control the difficulty, to see the consequences of returning the item and looking at the risk on what will happen to the Tesco. If all of them are answered, evaluate everything to make it a little bit pack and neat.

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