3.21 service operation management

Company Introduction and Service Concept

The Bell in Tanworth In Arden is a local independent restaurant and bar who claim to offer a ‘cosy bar and amazing food in the heart of a beautiful village’.

There are 3 key aspects of The Bell’s concept as a business. This is the

essence of what The Bell want to provide to the customer:

1. Offer an eclectic food menu which caters for all

2. Provide cosy and warm surroundings

3. Offer ‘next to none’ service by a small local team

(The Bell at Tanworth in Arden, 2020)

Why These Areas Have Been Chosen to Explore Further

The aim of this presentation offers a consultancy style approach to address some issues in The Bell’s service operations.

The 2 key areas that are under review are:

• Queue and Waiting Times- this is due to primary research finding that a large amount of customers have complained about long waiting times in their customer journey.

• Service quality- primary research also showed a lot of factors that indicate a poor service quality, these factors together have compromised a high quality of service.

This presentation will use various tools and frameworks to analyse the primary research gathered to provide recommendations to ensure the service meets their service concept.

As these 2 areas were highlighted by manager and staff during consultation, it has appeared that these were the two key issues to be addressed.

Primary Research Gathered

• 2 sources of primary research were gathered.

• The first was a questionnaire sent to 10 employees of The Bell. This questionnaire gathered information on the complaints received and information on what the employees flagged as causes for these complaints. The results for this questionnaire are shown in Appendix 1.

• After the information from staff interviews, an interview with the owner/ manager of The Bell was conducted to find out more about the problems outlined by the staff members and to gain some key figures needed. The interview outcomes are shown in Appendix 2.

Queue and Waiting Times

• From the primary research gathered, results showed that the most popular complaint was waiting times.

• From the staff questionnaire (Appendix 1), 4 out of the 10 employees agreed this was the biggest problem facing The Bell however when asked about the causes of this, the answers varied.

• In the interview with Ashley, the manager (Appendix 2) he also agreed this is the biggest problem the business faces and he worked out he is potentially losing £74,880 per year because of these long waiting times.

• It’s interesting that all the staff members had different opinions on what was causing this and the manager seemed to agree with all the causes mentioned. It also interested me nothing has been done to try and rectify this problem.

• This next section is going to use a variety of tools to identify some recommendations that can reduce these waiting times.

Ishikawa (Fishbone) Diagram showing the key contributors to Queue and Waiting Times

(Wright, 2004)

An Ishikawa Diagram was created with the goal of identifying and grouping the causes which generate a quality problem, which is useful in risk identification stage (Ille, 2010)

Single Server Analysis • The Bell is based on a FIFO system in which every arrival waits to be served regardless of

queue times. Service times differ from one customer to the next, but the average wait time is known. Arrivals are finite due to a Poisson rate pattern. From this, a single server analysis can be used (Kalyanaraman, 2011).

λ = 6 arrivals per 1-hour µ = 9 people served per 1 hour

• Ls= 2 tables in the system waiting per 1 hour.

• Ws= 33-minute average waiting time a customer spends in the whole customer journey.

• Lq= 1.33 people waiting to be seated.

• Wq= 22 minutes average wait time.

• P= 66.6% of the time The Bell staff are busy.

• Po= .34 probability there are no people in The Bell.

See Appendix 3 for equations.

Key Findings: This analysis showed that 33 minutes of the customer journey is spent waiting which is a third of the average time a table spends at The Bell (1.5 hours), this is a substantial amount of time. 66.6% of the time The Bell staff are busy which means 33.4% is spent on idle time which could be utilised in other ways.

Option Matrix So

lu ti

o n

s

Importance/Weights 10 8 6 4 4 3 Score

Problems Delay in food prep time Floor Staff overworked Lack of staff training Large menu prevents quick service Long seating wait times Floor Capacity too large for resources

Increased Kitchen Staff 10 2 6 8 1 6 204

Increased Floor Staff Training 1 8 10 1 10 5 193

Reduce Capacity Of Restaurant 10 8 1 1 7 10 232

Increased Floor Staff 1 10 5 1 10 8 188

Reduced Menu 10 1 1 10 1 6 176

Reduce Time To Be Seated 1 8 6 1 10 3 163

The 2 solutions identified as the key drivers for effective change are:

1) Reduce Capacity Of Restaurant

2) Increased Kitchen Staff

These 2 options will be taken forward

0

50

100

150

200

250

Increased Kitchen Staff

Increased Floor Staff

Training

Reduce Capacity Of Restaurant

Increased Floor Staff

Reduced Menu

Reduce Time To Be Seated

Developed by Stuart Pugh in 1996 as an approach for selecting concept alternatives, it is often used throughout planning activities to select service features and weight options (Pugh, 1996).

Cost/Benefit and B.E Analysis

Cost Benefit

Reduce Capacity in Restaurant

(from Appendix 2 information) The manager

has said he would need to lose 3 small tables in

the restaurant as a potential option to make an

effective change to wait times.

He worked out that each small table earns him

on average (based on 3 sittings on that table

per day which average a £80 bill) £1,680 per

week. This brings the total cost per year=

£83,616.

This has been outlined from the option matrix

as the most effective solution so there’s no

doubt that this is going to give The Bell the

biggest chance of reducing their wait times.

The overall benefit of reducing wait times has

been worked out by Ashley in Appendix 2:

Wait times lose 20% of repeat custom and

repeat custom is responsible for 40% of his

revenue per year (£374,400-repeat custom)

which means that he’s potentially losing

£74,880 per year due to this waiting time

problem.

This means that from addressing this issue the

business can make an extra £74,880 per year.

Increased Kitchen Staff

(from Appendix 2 information) The Manager

has said for effective change to food wait times

he would need to employ 2 kitchen helpers, in

which he pays £18,000 a year each.

This brings the total cost for employing 2

kitchen helpers to= £36,000 per year.

This was outlined in the option matrix as the

second most effective solution so its evident

that implementing this is going to positively

impact wait times.

As discussed in the previous point, addressing

wait time issues could potentially earn the

business an extra £74,880 per year.

This analysis has proven very interesting. The most impactful solution was identified as reducing the capacity of the restaurant to reduce the waiting times. However, the cost/benefit analysis has shown this option to be financially unviable. From implementing this change the business will be losing an additional £8,736 revenue annually. This has shown this isn’t a suitable option going forward.

The next most impactful solution identified was increasing kitchen staff to reduce the wait time of food preparation. The cost/benefit analysis has shown this option to be financially viable, hopefully making the business an extra £38,880 revenue a year if waiting times are successfully reduced. This will break even on month 5 (some workings out have been shown in Appendix 4).

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0 1 2 3 4 5 6 7 8 9 10

BEP Analysis (monthly) Employing 2x Kitchen Staff to Reduce Queue and Wait Times

Cost Revenue

Service Quality Despite queue and waiting times proving to be the most significant issue facing The Bell, a number of other

complaints were mentioned in primary research, all which linked to service quality. These areas included lost

bookings leading to customer dissatisfaction, noise complaints, no air-conditioning and low stock of items. Together

these factors compromise the service quality which is worrying to The Bell as their service concept states they want

to provide cosy and warm surroundings and offer ‘next to none’ service by a small local team.

Ishikawa Diagram (Fishbone) showing the key contributors to poor service quality

An Ishikawa Diagram was created with the goal of identifying and grouping the causes which generate a quality problem, which is useful in risk identification stage (Ille, 2010)

(Wright, 2004)

Problem Tree Analysis

This Problem Tree Analysis shows the causes and effects of poor service quality. This is based on information from Appendix 1 and 2.

The causes were broken down into 4 key points. The effects all resulted in a poor overall service quality which in turn compromises the service concept promised.

Customer Experience Analysis (CEA) (Information from Appendix 2)

‘Offer next to none service by a local friendly team’

Overview: Although the food was good and the service was friendly, the staff appeared overworked and the poor booking system makes the visit more stressful than it should be. Key factors identified were: loss of bookings and staff incompetence.

Customer experience is the internal and subjective response customers have to any direct contact with a company (Schwager, 2007).

FMEA to assess the key factors contributing towards poor service quality

Function Potential Failure S Potential Cause(s)/

Mechanism(s) of Failure O D

R

P N

Recommended

Action(s) (From

Appendix 1 and 2)

Bookings are often lost

People are getting

turned away and

customer disatisfaction

8

Bookings are recorded incorrectly

due to old fashoned paperbased

system and lack of staff training.

8 8 512

Better quality standards in the

bookings process, staff training

and monitoring. Manager needs

to review this.

Lack of air con

Providing cosy and

warm surroundings'

service concpet is lost

3 This is not provided. Open fire may

not be needed. 2 6 36

Manager needs to outweigh the

amount of complaints he gets

about this with the cost of

installation of air con.

Small batch ordering causes low

stock

Customers don't receive

desired product.

Offering a menu that

'caters for all' concept

isnt met.

4

The small independent scale of this

busiess doesn’t cater for large scale

consumption. These spirits are

becoming more popular and

inventory not reflecting this demand.

5 5 100

The manager should anticiate his

most popular items and stock

appropriately.

Noise Compliants

Providing cosy and

warm surroundings'

service concept is lost

6

Large table noise can impact smaller

tables close by, this is due to the

layout of the restaurant.

5 5 150

The layout of the tables can be

reviewed. Reduce capacity of

restaurant.

A FMEA (failure mode and

effects analysis) is a

structured technique that can

identify all failure modes

within a system, assessing

their impact and planning for

creative actions (Abdelgawad,

2010).

Cost/Benefit Analysis Cost Benefit

Staff training day for booking system process

To do this, Ashley would need to:

1) Close for lunchtime business on a less busy

day: £2,300

2) Staff wages for all 10 staff who process

bookings over the week for 3 hour training

day: £210

(10 staff x 3 hours x £7ph = £210)

Total cost= £2,510 per year (training day every

year?)

This was identified as the key factor to limiting

service quality from the FMEA, so by rectifying

this problem significant change can be

implemented to improve service quality.

Per week 4 bookings are lost, each booking has an

average of £110 which could lose him £440 a week

in revenue.

If this issue is addressed in a training day, a

potential additional £22,880 per annum is

gained.

Reduce capacity of restaurant to separate

smaller tables from large parties to reduce

noise.

To successfully separate smaller tables from

larger parties, 2 larger tables need to be

removed to allow space. This means a loss of

£3,360 per week, a loss of £174,720 per

annum in revenue (from Ashley's estimates)

This was the second highest key factor

identified in the FMEA, this shows a clear

improvement in service quality if noise

complaints were reduced. Ashley and his staff

both agreed this is how you would need to do

it.

The Bell gets on average 4 complaints a week in

which he estimates a loss of £320 in lost return

business per week. Per annum, £16, 640 would

be made in additional revenue once this

recommendation was implemented.

From the FMEA, the two most critical factors towards poor service quality were: lost bookings and noisy tables. From this, 2 solutions were identified from Ashley and his staff: 1) Staff training day for booking system procedures 2) Reduce capacity by 2 tables to reduce noise for smaller tables.

This Cost/Benefit Analysis has shown the recommendation to be taken forward to improve service quality and to meet their service concept is to ‘provide a staff training day for the booking system process’. This is because the cost is very small compared to the benefit which can make the business an extra £20,370 per year when costs of training are deducted. This shows significant financial viability.

The second most popular option, removing 2 tables to reduce noise complaints was shown to be completely financially unviable, losing the business £158,080 per year in revenue. This is not an option and needs to be discounted.

(Information sourced from Appendix 1 and 2)

To Conclude: Recommendation for Queue and Waiting Times

• Queue and Waiting Times were identified from primary research for being the most popular complaint The Bell faces, losing the business £74,880 a year. An Ishikawa Diagram showed the key contributors that were outlined in the research.

• From this a Single Server Analysis noted that 33 minutes of the customer journey is spent waiting which is a third of the average time a table spends at The Bell (1.5 hours). This highlighted this issue needed to be addressed.

• The Option Matrix showed the two most impactful solutions were to reduce the capacity of the restaurant and to increase the number of kitchen staff.

• The Cost/Benefit Analysis outlined by reducing the capacity of the restaurant, the business would lose -£8,736 per annum in revenue making this option financially unviable.

• Increasing the number of kitchen staff however proved to be effective in reducing wait times and financially viable, as with successful implementation of this, the business could make an additional revenue of £38, 880. From conducting a break even analysis, the break even point of this option is 5 months.

• It is from this finding that my first recommendation to The Bell is to employ more kitchen staff to reduce the queue and wait times experienced.

To Conclude: Recommendations for Service Quality

• Service quality was identified from staff questionnaires and manager interviews as problematic in the business. This was surprising to find as the service concept promises to offer ‘next to none service’. I believed it was important to address the service quality issues so the service concept could be met.

• Firstly a problem tree analysis/ Ishikawa Diagram showed the 4 key areas that prevented effective service quality. Following this a Customer Experience Analysis helped me understand the touch points of the customer journey to identify the key areas where service quality was compromised. The analysis demonstrated that the key faults linked to a lack of staff training and booking loses/faults in the booking process. A FMEA further confirmed that lost bookings compromised service quality the most and noise complaints were the second most damaging factor identified.

• A cost/benefit analysis took these 2 key factors and analysed the solutions that were proposed by Ashley and his staff. This identified that to reduce noise complaints (reducing table capacity so tables were spaced better), the significant cost of this outweighed the smaller financial benefit leading to this option being ruled out as financially unviable. However, from solving the lost bookings problem by implementing yearly staff training days proved to be financially viable and to the benefit of the service quality of the restaurant.

• It is from the findings of the CEA, FMEA and cost/benefit analysis that a staff (booking system) training day is my recommendation to improve the service quality of The Bell and to meet their service concept of providing ‘next to none service’.

Thank you for listening to my presentation

If you have any questions please don’t hesitate to ask

Bibliography

• Abdelgawad, M, 2010. Risk Management in the Construction Industry Using Combined Fuzzy FMEA and Fuzzy AHP. Journal of Construction Engineering and Management. Volume 136 Issue 9. September 2010.

• Heizer, J., Render, B., & Munson, C. (2017). Principles of Operations Management: Sustainability and Supply Chain Management (Global edition)

• Kalyanaraman, R. 2011. A Single Server Batch Finite Source Queue With Feedback. Annamalai University. DOI: 10.1145/2021216.2021228

• Ilie, G et al, 2010. Application of Fishbone Diagram to Determine the Risk of an Event with Multiple Causes. Management Research and Practice, Volume 2, Issue 1. March 2010

• Pugh, S, 1996. Creating Innovative Products Using Total Design. Addison Wesley Longman.

• Schwager, A. 2007. Understanding Customer Experience. Harvard Business Review.

• The Bell. 2020. The Bell at Tanworth In Arden. [online] Available at: <https://thebellattanworthinarden.co.uk/> [Accessed 22 March 2021].

• Wright, J. N. 2004. The Management of Service Operations, Thomson London, Second Edition.

Appendix 1- Results of Staff Questionnaire Employee Question 1- the most common

complaint?

Question 2- what 1 key aspect

needs to be addressed?

Question 3- what can be done to

address this?

1 Wait times Delays in food preparation time More kitchen staff needed

2 Lost bookings Staff knowledge of booking

system

Staff training on booking system

3 Small batch ordering Specialist/ independent spirits

and they are not available as out

of stock as sell out fast

Larger stock of specialist spirits

4 Wait Times Floor staff overworked More staff training so job is

more efficient and too many

tables in small restaurant.

5 Lost bookings A lot of staff can’t use booking

system properly and old

fashioned booking system.

Need to train staff to use the

‘diary format’ booking and

produce online booking system.

6 Noise complaints Large tables who seat up to 20

people are next to smaller tables

which is noisy for these smaller

tables.

Reorganising tables

7 Wait times Floor staff are overworked More staff on the floor/ bar

8 No air con Lack of air con Install air con

9 Wait times Delays in food preparation Lesser menu so chefs can

concentrate on fewer dishes and

slow seating times on entry.

10 Noise complaints Small tables are too close to

bigger tables

Less tables

Appendix 2- Interview with Manager/Owner, Ashley

Question Answer received

Do you agree that wait times are a problem? He agreed wait times are a problem and that they need addressed. He said its causing a lot of complaints

and is one of his key concerns.

He said in some research that he did- wait times are what stops 20% of repeat custom and repeat custom is

responsible for 40% of his revenue per year (£374,400-repeat custom) which means that he’s potentially

losing £74,880 per year due to this waiting time problem.

(Fixed Costs- £190,000 Variable Costs: £184,400, Variable Costs per Unit: £17)

He also provided information on projected sales per month with implementation of this.

Can you give me more information on the wait times? He provided the information I asked for so I could conduct my analysis- this information is included in my

single server analysis.

λ = 6 arrivals per 1-hour, µ = 9 people served per 1 hour, each table spends an average of 1.5 hours in The

Bell.

What needs to be done to reduce wait times in your opinion? He said that more staff could be employed on the staff floor and kitchen and menu could also be reduced

for a more efficient service (he agreed with everything the staff said).

He thinks that if more kitchen staff would be employed, this would help food waiting times. He pays on

average £18,000 per annum for a kitchen helper and he thinks 2 helpers would make a change to this wait

time although is worried about the cost implications.

Why are bookings being lost? He believes that staff who aren’t trained are taking bookings and this is leading to confusion but he also

admitted it’s an outdated system as its paper based. He thinks an updated system would be beneficial but he

was worried about the cost of this. He said to train staff to process bookings a training day would be needed-

cost: loss of lunchtime revenue= £2,300, staff wages= £210.

He worked out that per week 4 bookings are lost, each booking has an average of £110 which could loose

him £440 a week in revenue.

What are the implications if you lose tables to reduce wait times?

What needs to be done to reduce noise complaints?

Can you also elaborate on the customer journey and how this is perceived?

He said he could afford to lose small 3 small for effective change to wait times. He said each small table

earns him on average (based on 3 sittings on that table per day which average a £80 bill) £1,680 per week.

To successfully separate smaller tables from larger parties, 2 larger tables need to be removed to allow

space. This would mean a loss of £3,360 per week. However The Bell get’s on average 4 complaints a week

in which he estimates looses £320 in lost return business.

Details of customer journey is included in the CEA table, this information was from this interview.

This interview was conducted to understand the key figures needed to complete my analysis and gain a managers insight.

Appendix 3- Single Server Analysis Equations

Appendix 4- Break Even Point Calculations