October, issue 1 volume 1

International journal of Innovative Research in Management ISSN 2319 - 6912

(October, issue 1 volume 1)

Service Operation : in UK’s stores

Adam Hall

Business Management and Leadership program

Leeds (UK)

Introduction

A service operation is a set of implicit and explicit benefits performed with a supporting facility by an organization. The service concept is expectations and perception of services in customers, shareholders, employers, and lenders. The service system is procedures, layout and equipments used to provide services and maintain quality for customers. A service operation is a transformation process of converting input to desire output by appropriate application of resources. It provides strong end to end working practices. This process is used to co-ordinate the business, users and customer as per the requirement. It also helps to manage, control, measure and feedback improvement through operations. Service operation is mainly responsible for management of technology which is used in market to deliver and support services. During service operation, it is essential that the process which is used in operation would be well designed and well implemented. Some activities such as service improvement, monitor performance and gather data are need to be systematically during service operation (ITIL,

2007).

Furthermore, in a service organization, it requires the use of service operation.

Service operation is a part of service management lifecycle. It is responsible for performing and executing processes that make most effective use of quality and cost of services. The main goal of every service organization is to satisfy their customers and customers‟ expectation with providing good services. These expectations relate the nature of service duration, package and flexibility during services. For that reasons, service organizations should provide good design and delivery of their service model (Bowen and Ford, 2002).

Here I would like to choose two organizations from commercial sector one is

Tesco as globally operating service provider and other is Sainsbury as locally operating service provider. Where Tesco which has an international setup for providing their

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(October, issue 1 volume 1) services in international market and Sainsbury has a localized operational setup for provide their services in UK.

Analysis of operating environment

An operating environment refers to organization for identification of influences.

Operating environment provides careful investigation of scope to which the company is capable to deal with changes that are occurred in the market. According to Bert et al.

(2004), the internal perspective aims of the organization are to identify the influence which can be analyzed the strength and weakness of opportunity in market. Whereas the external perspective aims are to identify threats and opportunities in market.

The components of Tesco and Sainsbury which are important to operating the environment or SWOT analysis of those are:

Strength

Tesco has very good UK core business over the world. It expands its business in international market. It has extremely continued to grow its business by offering low rates of its products as compare to other competitor. Tesco is very strong in both food and nonfood areas in its business. In UK, its market for non-foods product was around ₤75 billion. It also provides online business and has four hundreds and fifty thousands online users. In addition, it has 1.5 million customers from its personal finance. Tesco has established 30% of their stores in international market and try to expand its business in

UK as well as in international market (datamonitor.com, Aug 2004). Tesco also has most committed and loyal staff in all stores and has good brand image which is associated with good quality and effective goods.

Furthermore, Sainsbury is local organization based in UK. It sets a good image in customers‟ perception as a supermarket. The key strength of Sainsbury is its marketing and branding which has distinguished in customers‟ mind and also differentiate it from other competitors. Its sales growth has been supported by increasing significance for customers of its brand. It is vastly visible in UK with other supermarkets or organization

(universityessays.com).

Weakness

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In UK, Sainsbury has a strong image and brand value in customers as well as in market. As customers‟ point of view, it is difficult to slot them in a category. Competitive advantages are missing in Sainsbury with regarding price, variety, quality and customer services. It couldn‟t create a single market which differentiates it from others. The successful business strategy of any business is its capabilities in order to fulfill customers‟ requirement which is a sustainable competitive advantages (Hugh and Mahen

, 2000). Sainsbury should try to make changes to overcome its weakness which generates weak attempts. These weaknesses of Sainsbury are creating more confusion in customers while they shopping in Sainsbury store.

In addition, Tesco is extremely dependent on the UK grocery market (73.8% of

2003 revenue). It is still in expansion phase because it does not included operational activities. Secondly, it is used fossil fuel in its transport network. Financial profit was impacted because of bad debt, household insurance claims and bad credit card arrears. To operate as specialist retailer, Tesco‟s outlets are not set up properly. In addition of

Tesco‟s non essential area, the rising cost of living and mid to high ticket price items could suffer lower non-refundable incomes. Tesco has mainly dependent on UK market which could be creating problem in strategic view (datamonitor.com, Aug 2004).

Opportunity

Tesco has so many opportunities to grow in the Asian countries. Presently, Tesco has its outlet only in six European countries. In order to ensure mainstream of economics scale, Tesco is largest global grocer to buying power level which provides good opportunities to open its new outlets internationally and expand their business in international market. Tesco provides some benefits for customer such as online catalogue shopping, online shopping and customers can make online transaction as well which helps to grow in technology field.

In Sainsbury, with additional resources and capability, it is using some new application tools and latest technology in order to improve in weak sectors. It has various loyalty programs and good strategies to provide good services for customers which provide opportunity to win the trust of customer and ensure them as committed and

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(October, issue 1 volume 1) increase the sales. In financial service sector, Sainsbury has a strong post and new business opportunities to explore their business in UK.

Threats

SWOT analysis of Tesco includes possible threats as tax increases and fluctuation in the stock market. In market, there are various competitors in supermarket retail segments and also there is a huge competition. Because of competition, there is a huge war of price in market. According to Porter (1980), every organization has developed framework and strategy which analyze the nature and extent of the competition and also determine degree of competition. With the help of nature and strength of an organization could assist managers to develop competitive strategy for organization (Campbell et al.,

1999).

While in Sainsbury, it has some strategies and operations but this strength always laid the supermarket business model. Sainsbury tries to explore its financial services which disrupt image and efficiency of its.

Tesco made strategy that focused on long term growth to sustainability in market and also help to achieved international gesture. In international market, Tesco has opened hypermarkets very quickly in small quantity. Tesco also built customer sufficient and awareness sales that used its global supply and retail expertise chain in order to manage stock (news.bb.co.uk). The next step of Tesco in case of environment awareness is to introduce labeling scheme. This scheme shows the carbon footprint on its every product.

Furthermore, Sainsbury is developing new business networks. This strategy includes working with other businesses like NGO community including their competitors. It could be help to resolve environmental or business related issues

(article13.com, Aug 2004). Sainsbury is expanding its business in other fields and also planned to open 70 new outlets (Ashbridge, 2010).

Service concepts

Service concept plays a vital role in service design and development. As

Goldstein et al. (2002) suggested that service concept explains the how and what of service design. It is a relationship between an organization‟s strategic objectives and

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(October, issue 1 volume 1) customer needs. It could be said that service concept is very important aspect in service design process. It helps to design, development and innovation in service. According to

Heskett (1987) “Service concept is the way by which an organization would like to have its services perceived by its customers, employees, shareholders and lenders”. Apart from that service concept is a description of the consumer needs, how these needs could be satisfied by the service providers, what action has been taken for their satisfaction and what appropriate course of action need to take to achieve this (Edvardsson et al.,2000).

In addition, in general service concept includes service operation, experience, outcome and value of services. These are important domains of service concept (Johnson and Clark, 2001). Further, Clark et al. (2000) has designed an approach for service concept known as „bits and pieces‟. According to them this concept is based on what and how. The figure below explains various links of service design process.

This framework is useful for evaluating service concept so that service provider can make changes and improve their services in order to satisfy their customers.

Tesco Service Concept:-

Tesco uses online services known as tesco.com, as their service concept.

According to Ding et al. (2010) Tesco organization mainly focus on service approaches such as marketing, making service easier, new methods for control and development of services for far-flung geographical locations. Tesco.com is an online service of Tesco as

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(October, issue 1 volume 1) their customers can buy products online while at home or office. This service includes both front office and back office services. Apart from this, Tesco also focus on customer presence at their organization. For instance, customers can also directly interact with

Tesco employees while shopping. In this process, customers can also experience of the additional services surrounding by the Tesco organization. Tesco‟s online service is also known as back office services.

Customer Value Delivery

The services which fulfill the customer needs and also meets the strategic intentions of the organization known as excellent services. It could be result of service design and delivery of interrelated process. As Tesco organization believes that their main priority of business is their customers must be at heart and they are superior to the competition and commission. Tesco‟s employees trained in the way they can make easier customer‟s shopping while maintaining value attributes of the company such as the assortment, getting the quality and the prices according to the customer‟s need (Ding et al., 2010). Moreover, their customers can save time and efforts as they can purchase any

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(October, issue 1 volume 1) products with the aid of tesco.com and home delivery charges are £5 which is quite cheap.

Sainsbury Service Concept

Sainsbury is one of the leading supermarkets in the UK and mainly focus on providing locally sourced, healthy and good products to their customers. The company has a great home shopping network. Sainsbury offers various approaches for services such as „order and collect‟ which is totally different from their competitors. When the order is picked and packed by the store teams, customers can collect their order directly from store with minimum service charges. Their electronic shop makes shopping to the order line customers by the internet. The advantage of this service concept is that by joining home shopping services customers can build their own catalogue and they can purchase any product by internet, fax or phone. Apart from that, Sainsbury uses comprehensive approach for service concept which involves products of all standard.

(Sainsbury.co.uk)

Customer Experience

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Customer experience is an interaction process between customer and organization. As Christopher and Schwager (2007) cited that “Customer experience is the internal and subjective response customers have to directly or indirectly contact with a company”. The direct contact refers to the service, use and purchase whilst indirect contact refers recommendations, unplanned encounters with representations of the products. In this context, Johnson and Clark (2005) said that customers can interact with organizations via products, process and employees. It may be face to face, by telephones, e-service and other remote interaction. Customer experience has various dimensions such as emotional, sensorial and cognitive. It also helps organizations to perform better and give sustainable abilities in competitive environment. The model below shows organizational framework for customer experience.

Customer journey is a process which addresses all aspects of customer experience such as knowledge, relationships, perceptions about the organizations and its products.

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As Mascarenhas (2006) says that customer relationship management is widely used by the organizations in order to make customer journey happy and satisfied. Customer relationship management (CRM) is a business strategy for maintaining relationship and contacts with the customers. However, CRM has some drawbacks as well. As Buttle

(2005) argued that any organization who thinks to adopt CRM strategy might face some significant issues such as cost and time as it could take three to five years for implementation.

In the below figure of the customer journey of experience consists some element related to the customers experience. This cycle based on the whole journey of customer to the product. This cycle involve some elements such as need, enquiry, approach, recommends, purchase, experience, problems and reconsider. The first element is customer need; if customer has any need for any product then he/she takes an enquiry for that product then he/she applies approach to get that product as their requirement. If they can‟t get the product then they recommend for that product, after recommendation they are able to purchase that product. Then they will take some experience of that product and then address the problem. This is the whole journey of customer‟s experience. This figure clearly shows the experience cycle.

Customer Journey at Tesco and Sainsbury is divided into various elements such as entering, shopping, benefits, satisfaction and exit. The figure below describes customer journey at Tesco and Sainsbury.

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The diagram showing below describes customer journey at Sainsbury.

The diagram showing below describes customer journey at Sainsbury.

Service Delivery System

As cited by Brown et al. (2009), a system by which service packages and service concepts were delivered to the customer in known as service delivery system which includes customer‟s perception. For this approach, organizations make strategy such as

“how the offer is designed and deliver to customers with the help of personal, client,

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(October, issue 1 volume 1) technology and physical support?” (Brown et al., 2009). In addition, the service package is collection of services and goods which includes psychological benefits, sensual benefits and physical items and also includes supply chain that is said to be an integral part of service delivery system (Heskett et al., 1990). Furthermore, in an organization, information technology in service delivery systems plays vital role in online shopping facilities for their customers. The main advantage with use of IT services in service delivery system is effectively utilize options, lower cost and improve image and services which are use in extra sales.

Tesco uses various approaches to find out needs of customers and its solutions.

Tesco also uses the IT services to satisfy their customers which provide best online services as compare to others with the help of tesco.com. The main goal of tesco.com is new innovations which attract customer for their products. Tesco also uses delivery system (Klinger et al., 2003). This approach is most suitable for lower volumes of business. The low variable cost approach has been viable with high number of orders.

With the help of tesco.com, Tesco provides easier online shopping and delivery services for customers (tesco.com).

As supply chain is the integral part of service delivery system, the company goal is to continuously improvement by reducing stock holdings in the depots which provides interaction with the different areas of business. It is also famous using best practices and latest technology which lean its management (Ross, 2005).

Furthermore, Tesco has to develop new innovations in supply chain by continuous replacement systems which will generate customers demand and primary distribution.

Tesco announced usage of green systems in its operations which has to be monitor to create or improve benefits in the service delivery system (tesco-graduates.com).

In service delivery system of Sainsbury, it is taking benefit of its paragon implementation in distribution network which benefited its depots by ITMS that integrated transport management system. This system has increased Sainsbury‟s productivity of work by 8% and cut turnaround time of store by 15% and also increases the on-time delivery levels by 17%. But Sainsbury still need to improvement in active transport management system of its service delivery systems. This active transport management system introduces extraordinary levels of control in operation (Brooks,

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2009). Sainsbury now been used ITMS system in its sixteen depots for full transport optimization process. This system helps to deliver assessable benefits in various fields.

This system consists civilizing services to stores and providing its contribution to corporate social responsibility.

Other significant operations

Tesco has plentiful numerous significant operations. It is saving millions of pound and it also reduces road risks by implementing „an industry‟ leading occupational road risk program. It also operates 2,200 vehicles to its delivery services for online customers

(tesco.com). In addition, it reduced fuel consumption by 11% that saved approximately

1.4 million pound every year and also decreased traffic offences by 60% (Anon, 2009). In addition, Tesco concerned to managing and establishing „global direct footprint‟ as intensity of carbon per square foot of net sales area. This carbon intensity in 2006/07 is reduced by 11% with the help of Tesco which clearly shows Tesco‟s environmental awareness (ERM, 2007). Tesco is a part of environmentally responsible business. As the organization has invested in „Xerox ColorQube 9200‟ for customers as the world‟s first high speed solid ink office multifunction printer. These multifunctional printers, firstly installed in Tesco‟s personal finance supermarket in banking divisions headquarter at

Scotland. This type of printers has advantage that the design of its cartridge and new print head technology reduce greenhouse production and also cut down energy consumption life cycle by 9% (therecycler.com). Tesco strongly supports government to promote cultural change by reducing drinking problem in Scotland. It also encourages to Scottish government to considering the establishment of Scotland‟s first community Alcohol partnership. In addition, there is various significance operation performed by Tesco those are:

Staff training

Tesco provides a good training session to all their staff. Recently Tesco has introduced an alcohol sales training DVD to train their staff with new scheme. In Tesco, the cashier receives training on age restricted sales. They also trained to assess the customer‟s age by sight and asking for the proof of age if the customer seems to be under

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21. This process has not stopped the underage form overwhelming from alcohol. They easily get the alcohol from Tesco to take the help of adult person (Scotland.gov.uk).

Quality Issues

Any organization develops products and provides services according to the customer‟s need. Quality is a crucial factor for customer‟s choice of product and service.

Total quality management (TQM) helps to view quality of products from customer perspective. TQM has two key objectives. First, it ensures customer satisfaction and second, it emphasis on zero defects. Thus, it can be said that it is very important to meet internal and external requirements of customers to achieve business goal (Johnson and

Clark, 2005). People, culture and system are three corner stone of TQM. The key components of TQM are explained below with the help of diagram.

With the help of TQM one can easily identify the quality issues of any organization.

Here, quality issues of Tesco and Sainsbury are described through TQM.

Tesco:-

Bar code distribution issue

In the Tesco distribution centre, all the products are packed by scanning the bar code. However, at times there are some issues with the scanning of bar code due to which some insignificant impact has been noticed on the company‟s business operation. For example, rejected deliveries, blocked delivery days and re-labelling of the products.

Therefore, the company is proactive in improving barcode quality and works with its supplier in distribution centre. (gs1uk.org)

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Tesco‟s Fuel contamination

The company has been criticized for high percentage of silicon contamination in

Tesco‟ petrol as it became major problem for thousands of vehicles. Afterwards the company has apologized via newspapers and also assured that their petrol is back to normal. (petrolprices.com)

Tesco food quality

The company has also been fined for £18000 for out-dated food as it was found in

Tesco supermarket in Jigs lane North, and Warfield. The food was around 26 days past from their expiry dates. (wordpress.com)

Conclusion

Summaries the main significant operations and services of service operation are to coordinate and carried out with all the activities and process which are necessary to deliver and manage services at the agreed levels of the customers, clients and business users. These services are also responsible for ongoing management those are used to support and deliver good services to the customers. These service operations have lots of scope for any business such as service management process, new technology, more customers etc and these service operations also include service life cycle. This service cycle provides value to a business or organization. This service operation could be determined in two ways first is short term ongoing improvement and long term incremental improvement which is very important for all business unit and also support service operation for the success as well as growth of business. These operations are must understand to all business units to carry out and accept role which they play in service operation.

In addition, every business wants to achieve their goal and also wants to improve their growth. These needs pf organization is fulfilled by service operation. There are also some factors of success such as management support, business support, champions, staff and retention, service management training, suitable tools, validity of testing,

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(October, issue 1 volume 1) measurement and reporting those are help in service operation to achieve the goal as well as increase the growth of an organization (ITIL, 2007).

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October, issue 1 volume 1

Service Operation : in UK’s stores

Adam Hall

Business Management and Leadership program

Leeds (UK)

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October, issue 1 volume 1

Service Operation : in UK’s stores

Adam Hall

Business Management and Leadership program

Leeds (UK)

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