3.21 service operation management

BACKGROUND

1919- Jack Cohen began to sell groceries from a market stall in the East end of London

1924- The name Tesco was formed

1958- The opening of the first supermarket

1993- ‘Every Little Helps’ was launched

1995- Tesco clubcard launched

2000- Tesco.com was launched

2003- Tesco mobile launched

(Tesco plc, 2021a)

Number of stores worldwide:

2008- 3,751 - 2020- 7,005

(Tesco, 2020)

Number of employees worldwide:

Over 400,000 colleagues serving customers online and instore

(Tesco plc, 2021b)

SERVICE CONCEPT Tesco Superstore,

Narborough,

Leicester

 Tesco’s main

service is to

provide a range

of fresh and

frozen food.

 Apart from food,

a range of other

services are

provided.

 Their everyday

processes

mainly include

filling the shop

floor, serving

customers and

general checks.

EVERYDAY PROCESS

Source: Adapted from Johnston, Clark and Shulver

(2012)

Source: Based on author’s own personal

experience

OBJECTIVES

1. To identify the two main problems that are present at Tesco,

Narborough Leicester.

2. To find the most suitable solutions that will help to improve the

two main problems.

3. To provide recommendations to Tesco, Leicester based on

improving the service provided.

PARETO CHART

The two main problems identified from

the Pareto Chart are:

1. Long Queues

2. Product Availability

Source: Based on the author’s own personal experience

and questionnaire

See Appendix A for questionnaire

Once I had all the questionnaire responses I asked

myself, a family member and an employee to rate all

the problems from 1-10. This was in addition to the

questionnaire.

TWO PROBLEM AREAS

Service Performance

Problem: Long Queues

Reason: Lack of staff training, which means staff are less efficient than they could be.

o Service performance relates to how well employees perform their job, if staff are not trained then they will not be as efficient and successful as those who are more experienced (Stank et al., 2003).

o If employee performance is poor, and queues form, customers will feel dissatisfied (Johnston, Clarke and Shulver, 2012), thus leading to a decrease in customer loyalty (Davis and Heineke, 1994).

o Jayaram and Xu (2014) found that job training can increase employee performance, thus increasing the overall service performance. Training allows for extra skills and knowledge to be gained, thus allowing efficient services (Mozael, 2015).

Service Capacity

Problem: Product Availability

Reason: Staff shortages on the shop floor. There is a human resource problem.

o The capacity of a service is arguably the most output that can be received in a certain time and one factor that can affect this is the level of staffing (Lovelock, 1992).

o Staff shortages can affect service capacity due to there not being enough staff to deal with an demand increase (Johnston, Clark and Shulver, 2012).

o Shortages in staffing levels often leads to the demand not being fully met, thus decreasing the capacity (Seguin et al., 2020).

o Factors that may prevent an organisation reaching its maximum capacity can include the number of employees in a service organisation (Ng, Wirtz and Lee, 1999).

From the Pareto analysis and the information available, I will be focusing on the following two areas:

RESOURCES AND DATA

The main method of data collection used was a questionnaire. The use of primary data allowed

me to gain up to date information for the analysis. The questionnaire and results can be seen

below: Appendix A

Summary of Questionnaire results:

In addition to the questionnaire, I also used secondary data methods to help collect all the information

required for example observation, google reviews and other sources of literature.

PROBLEM 1- LONG QUEUES

Source: Based on author’s own personal experience

ANALYSIS OF THE LONG QUEUES AT TESCO STATISTICAL PROCESS CONTROL CHART

o Sample taken of the time stood in the queue to pay over 6 days at various times

o The wait should be between the UCL and UCL

o 1pm, 5pm, 6pm, 8pm, 9pm 10pm- special cause variations

(due to it being peak times)

o Tesco are not in control of their queues

Source: Based on author’s own

personal experience

OPTION MATRIX

Source: Based on author’s own personal experience and

questionnaire

See Appendix A for questionnaire

COST- BENEFIT ANALYSIS OF IMPLEMENTING SOLUTION 4

Costs:

Training

Average wage per employee for 2 hours = £14.20 (GOV.UK, n.d.).

100 employees for 2 hours= £14.20 x 100 =£1420

To train quarterly (4x a year) = £1420 x 4 = £5680

Resources:

Computer= £499 (Currys, 2021a)

Projector= £149.99 (Currys, 2021b)

= £499 + £149.99 = £648.99

Utility Cost for 4 training sessions= £70

Total Cost= £5680 + £648.99 + £70 = £6399

Benefits:

Tesco, Leicester sales revenue = £13, 331, 149 (Tesco plc, 2020)

10% increase- 13,331,149 x 1.1= 14,664,264- 13,331,149= 1,333,115

Benefit = £1,333,115

Cost of turnover is £30, 614 on average per employee (Bright HR, n.d.)

To replace 20 employees in a year= £30, 614 x 20= £612,280

Total Benefit= £1,333,115 + £612, 280= £1,945,395

Intangible benefits can also be gained through an increase in staff training. For example, it can lead to a more motivated and

satisfied workforce, meaning that there will be an increase in productivity.

PROBLEM 2- PRODUCT AVAILABILITY

Source: Based on author’s own personal

experience

CUSTOMER OPINIONS

− “There’s not much choice of frozen food so I have to go to

Iceland for that which is a shame”

− “OWN LABEL products are simply NOT DISPLAYED. Draw up a

list and see where it doesn’t get you.”

− “They frequently run out of basic items. There appears to be a lot

of empty gaps... There are certainly better superstores.”

− “Stock goes in and out and there aren’t all the essentials one

needs”

− “Not much on the shelves”

− “Shelves often lack and sometimes little choice”

The responses gained from the questionnaire were similar to above google reviews. For example one

participant said “often when I go to Tesco there is a lot of empty shelves and this is highly frustrating” and

another “They should manage to maintain the stock better as it is frequently running low”.

Source: Google Reviews (n.d.)

OPTION MATRIX

Source: Based on author’s own personal experience and

questionnaire

See Appendix A for questionnaire

COST- BENEFIT ANALYSIS OF IMPLEMENTING SOLUTION 3

Cost:

Average pay per hour= £7.10 (GOV.UK).

Tesco, Leicester opening hours- 6am-12pm (18 hours) open 362

days a year

£7.10 x 10 = 71 71x 18= £1,278 per day

£1, 278 x 362 = £462,636 a year to have 10 employees extra a

day.

Benefit:

Sales revenue, Tesco, Leicester= £13,331,149 (Tesco plc, 2020)

Increase of 9%= £13,331,149 x 1.09= £14,530,952

Benefit= £14,530,952 - £13,331,149= £1,199,803

There are also intangible benefits that can be gained such as, an increase in motivation and wellbeing.

This is because employees would not feel as pressured to do as much. In addition, team morale would be

boosted, thus decreasing employee stress.

SUMMARY

This presentation focused on identifying the main problems that are present at Tesco, Leicester. Through the

use of the Pareto Chart, the problems identified were:

1. Service Performance - Long Queues

2. Service Capacity - Product Availability

To understand the service performance and service capacity issues further, a fish bone chart and tree

diagram were designed to show the cause and effect of the two issue.

For service performance, a statistical process control chart was used to assess if Tesco had the queues under

control, which they do not.

For service capacity, google reviews were used in order to gather data regarding customers views to assess

the issue. It was found that there were many reviews pointing towards the lack of product availability.

Once the problem had been analysed, an option matrix and cost-benefit analysis was created to come up

with solutions and to see if they would be beneficial for Tesco to implement.

RECOMMENDATIONS

Problem 1- Service Performance (Long Queues)

The top 2 solutions that were identified to solve the issue of long queues were to train staff more frequently and to increase the number of till staff each shift

It is recommended that Tesco, Leicester should train staff more frequently as the cost- benefit analysis proves it is a very low cost, yet effective solution and would meet the criteria for the issue the best. If Tesco implement this solution then it would allow them to be more efficient with transactions, thus enhancing customer loyalty.

Problem 2- Service Capacity (Product Availability)

Top top 2 solutions that were identified to solve the product availability issue were to increase the number of employees on each shift and to change the employees job design.

From the 2 recommendations, the first solution of increasing the number of employees on each shift was seen to be beneficial. It would reduce the stress of other employees and allow for more effective shelf replenishment, thus increasing customer satisfaction. The cost of implementing this solution is low cost and therefore, it is recommended that Tesco implement this.

General Recommendations

As the pareto chart showed, this Tesco store have other problems and so it is recommended that they invest into their current employees and develop their skills and ability as this would help to resolve the wide range of issues there are. In addition, is also recommended that Tesco should ask for staff feedback more frequently to find out what the employees value.

Thank you for listening!

REFERENCES

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