Optimal Retail Location Analysis

This assignment focuses on determining the optimal retail location using empirical methods. Students will evaluate factors such as demand patterns, competition, accessibility, and operational efficiency. The analysis should also consider electric energy systems, active network management, and service operations management. The final report should present a justified recommendation for the best location considering all these aspects.

Business operation
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1 ...........................................................................................................................................1
PART 2............................................................................................................................................6
PART 3 ...........................................................................................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Operation management related to the manufacturing activity , which aim to develop
different practices for achieving high level of efficiency in firm. It refers to make convert to the
raw material into finished goods (Akkerman, Farahani and Grunow, 2010). The present report is
based on the Ocado which is online grocery shop in UK. This report make analysis on the
important components of operation management and use of soft management system in
organization process modeling.
PART 1
Essential components for effective business operation management
Ocado is online grocery shop which offers its services in the UK. The company has no
chain- stores and does all home deliverers from its warehouse. It is considered the best online
retail company in UK since 2010 ( Fisher, Glaeser, and Su, 2016). Firm products range include
online grocery products, Flowers, toys and magazines. Ocado's operation management are
highly- tasks oriented and tend top follow clear steps until the services completed. Following
are the essential components for effective business operation management.
Supply
In the online retail, it is supply very important component of the operation management.
In this component company supply tends to primarily data. e . It's supply chain management
focuses on delivering products from its warehouse to end users ( Gómez-Expósito, Conejo and
Cañizares, 2016). This technique helps to them for making their services more cost effective and
produces products at lower cost. In the supply chain management they adopted centralized
channel. Its picking operation start with warehouses, which are 20 size more than supermarket.
It provides cost effective strategics.
Efficiency
It is primary goal of the Ocado's operation management. The company uses lean
management system in its operation. In the online retail management, it is essential that work
should be perform effectively and efficiency. For maintained efficiency company puchase
products from the waitrose and also create its own brand. is . This technique helps to business
house for maintain efficiency and meets demand for customers. Along with this organization
also committed to provide environmental friendly produdts and sustainable business practices
which is supported by its operating model (Larson and Gray, 2011). Efficiency of this model is
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that it provide the lowest products westage in the company and use energy efficient way to
distribute groceries into customers' homes.
Reliability and Adaptability
It refers to provide quality work and adapt services as per the requirement of their
operations. For the Ocado's operation they include to produce a certain amount of units to meet
potential demand. Adaptability, include make accept all important changes in the business for
this Ocado's focuses more on technology development (Martinez and et. al., 2010.). With adding
more superior changes in its business they are moving towards technology. The organization
become pioneering in the online retail company by using own bespoke systems, know-how and
software which helps to them for generating reliability in company.
Quality control
The Last feature of the Ocado's group is to improve quality. For the operation
management it is very essential to make adoption of the quality in its business services. The
quality control, is another major aspects of the operation management. For online retail company
it is important to maintained quality in each and every phase. In the organization to maintain
higher quality needs to assess the check each and every products by double checking methods. In
order to maintained quality they also make appoint supervisor so they can attend higher quality
in its work and products (Palizban, Kauhaniemi and Guerrero, 2014.). Retail company serve
fresh food to their customers. For giving more healthy food, it's online centralized system helps
to provide leading delivery of their goods.
The Ocado's model is totally customers focused operation model. It provides to
customers for ordering online order, saving time and efforts to going to store. This model is also
helps to organization to make Higher level of predicability of stock and improving ability to
fulfil customer's orders accurately.
Soft system methodology
In the online business, Ocado's trying to develop its business model by using hybrid
model facilities. The company possessed pioneering position in the online market. Firm is
committed to provide its services through online channel and giving the best customers
experience. They are continuously focusing on the become a cost leader and create a virtuous
cycle in between growth, efficiency and investment.
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The organization is not following the traditional retail models. In the online retail model,
the retailer make commitment of the complete the entire retail mission in modern way.(Patel,
Guedes and Pearce, 2017). Ocado's developing model is consists hybrid model facilities in which
they are making focuses on giving their online services and along with this, organization is also
trying to opening their own stores in the UK. These hybrid facilities help to capture the market
and services. Such types of step are taken by the organization so they can overcome with risks
which might they have to faced after Morrison joining forces Amazon. Both companies are
become partners and try to sell their products through the online process. Amazon sale wide
ranges of online food products to their customers and along with these they also offer small
range of the food products to their customers.
To overcome with these problems, Ocado's is focuses on developing hybrid facilities so
they can control their market. But for executive, these plan there are some problems which
might they faced.
Use of Soft system methodology
It is that approach which used bfor organizational process modelling and it can be used
for the general problems solving along with changes in management. Mainly there are seven
steps which are included in the soft system methodology. Following are methodology which are
given below.
Enter situation considered problematic
This step is based on the concerned with the real world and gathering information and
views about the situation which are considered problematic (Porter, 2011). In the case of Ocado's
the main problems which they are facing in hybrid situation is belongs to the stakeholder and
current performances, for opening stores in the UK. In these they need to hire new employees.
Express the problem situation:
Recognize the real world is messy, it is concerned with the capturing the real world. The
second step is based on the ideas to capturing the views of the situations and draw the rich
picture. With the helps of the rich pictures organization can make development of different
aspects of the different situations.
Formulation of Root definitions
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It is critical step in the SSM. The root definitions is a statement that captures assess of
the particular situations. It is type of statement purposes which made by organization for
achieving their tragets
Build Conceptual Model of Human Activity Systems
For solving the problems in the retail company they can also draw the conceptual model
which helps to them for avoiding problem in the effective way. It is considered as the typically
model which helps to organization to make draw their problems and identify sloution(Slack,
2015). For example, in the Ocado's the main problems is related to make monitoring and control
if their hybrid facilities in the effective way. For these they need to make invest in the human
activities. For this they need to control the operational activities to address efficiency and second
problem related to providing desired results to organization.
Compare Models with the real world
A At this stage organization need to make comparison in between the conceptual model
and problems situation which expressed in the system (Slack, Brandon-Jones and Johnston,
2013). In the Ocado's the main problems is make their hybrid model more successful. Firm is
given the conceptual diagram for solving their problem. So they make comparison that actually
conceptual diagram can solve problems or not.
Define Changes that are both Desirable and Feasible
The company is want to introduced hybrid facilities in its business models. There are
different types of problems which need to be solved. For achieving desired results it is important
that Ocado's make take ideal recommendation which would be implemented. For this
organization need to make contribution of their employees (Song, Yun and Kwak, 2013). Along
with this for hybrid facilitates they need to train their employees so they can also provide good
services to their cusromers.
Take action to Improve the Problem Situation
If the developed system is able to produce, desirable’ and ‘feasible results then they
organization can implemented their process. But there are some consequence as well. The main
problems which associated with the organization is make development of employees in the
organization. For improving skills of workers they need to make investment in their training and
development programs.
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For maintain and improving the situation of the company Ocado's can make changes in
their current business model. For this firm need to make different changes in its business and for
that they need to identify main issues
Business issues of Ocado's
There are different types of business model which used by retail company for making
their retail practices more smooth and helps gain market share.
Centralized Inventory
Ocado's retail model is based on the centralized business model. All the retail goods are
transferred directly from the warehouses to the customer's home (Subramanian, and
Ramanathan, 2012). The main advantages of centralized management system is that where
warehouses are centrally located among the customers locations. The main issues in that for
establishing centralized warehouses at centre location of the city for which firm need to make
investment in their warehouses.
Customers value chain analysis
It refers to the value chain analysis which used by business firm for developing more
flexible strategy. It is diagnosed process which used by firm for making customers value
commitment towards brands. Main problem of customer's value chain analysis in the retail
company is that it takes a lot of time for making analysis.
Cost implication and sustainability
For all the retail organization it's very important to produces cost effective products along
with the sustainability. In the Ocado's they are producing cost effective product by making their
own brand and making partnership with waitrose (Wang and et. al., 2010). The main issues is to
bring sustainability in their operational model. For making sustainability they need to make focus
on their use Eco- friendly products.
To get over with these issues firm need to adopt the 4 VS operational model which aid
quality and speed in their operation system.
4 VS model of operation
Operation management is important key for every organization. Ocado's model is
majorly focuses on developing effective strategics for their operational model which helps to
them for designing and manufacturing and designing their products effectively(Akkerman,
Farahani and Grunow, 2010). Following is 4 vs model of the company.
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Volume dimensions
The aim of this dimension is to make low cost products at the high volume. Volume is the
key in every organization which helps to business for improving their production capacity. The
volume helps to business to manage their work (Fisher, Glaeser, and Su, 2016). For market
capture and allowing more production in the business it is important that to produce more low
cost products in the business. Ocado's is using centralized model in their business approach so
for that they can improve their operational management system. For this firm can also need to
make some changes in their business.
Variety dimensions
It means to produce a lot of variety in the business for customers. For the Ocado's
business firm need to produce a lot of variety in the enterprise. Ocado's uses low cost production
system and generate more variety of products to the business. In the online retail it is important
to produces give more variety of the products to customers (Gómez-Expósito, Conejo, and
Cañizares, 2016). In the present, retail company is providing a number of variety of products to
their customers.
Variation Dimension
It refers to changing capacity of manufacturing according to the demand of customers.
Through the operational model, firm able to produces services at the low prices with high quality
(Larson, and Gray, 2011). As per the demand of customers, Ocado's is offering services and
along with these it also helps them for satisfy their customer's demand.
Visibility Dimension
It refers to the customer's ability to see, track their experience or order through the
operational process. For the retail company maintain high level of visibility refers to track their
online product or pick up the products from the counter (Operations process model. 2017). Its
helps to business make their delivery more effective and customer's also get benefits from this.
PART 2
Rich picture
Following is the Rich picture of the of Ocado's retail company.
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Root definition
Ocado owns and operated grocery stores in online ventures' by following quality and speed in
operation management in order to achieve their customer's satisfaction
CATWOE
Following is CATOWE model of the ocado's company.
Customers – Public of UK
Actors- Staff of the organization
Transformation process- delivering products from warehouse to customer home at the low cost.
Weltanschauung- the company is leading company in UK retail sector where cost effective
strategy is important for survival
Owners- company's top management
Environmental constraints- Manufacture facility, technological development.
AS IS diagram
Following is AS IS diagram which showing current business situation of the Ocado's
online venture. This diagram helps to understand the what is the current scenario in the
orginzrion.
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To be diagram
For the solving the above problem the organization can be used Fish-bone diagram. By
understanding the cause and effects relationship. It helps to organization for solving problems
and their impacts.
PART 3
Performance objectives are the Milestone and the path to achieving origination's goal. It
is helps to organization for measuring their performance and developing their strategics.
Performances objectives of Ocado's includes speed, Quality, cost, delivery and flexibility. All
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Illustration 1AS IS diagram
( Source:Operations process model. 2017)
Illustration 2: To be diagram
(sources: Slack, 2015)

these are the performance objectives of organization and assist to make their operational plan for
effective.
Managers of the company is trying to develop such strategies, so they can shuffle their
performances objectives into priority objectives. Following are the performance indicators and
key objectives of retail company.
Increases quality
The min objectives of the operational management is to maintain quality in their business
. Main problems which faced by the Ocado's retail company is to give sustainability in their
products (Martinez and et. al., 2010). For maintain quality in their operation management,
managers of the company is applied to the lean approach so they can maintain reduces defective
products from the operation and for achieving suitability they need to apply green practices. For
example giving fresh food to consumers. To apply this new process they need to provide training
to their workers so they can learn this technique to increase quality.
Improved speed
After Morrison and Amazon tied up, the firm have to face high competition in the online
retain. Ocado's is followed its own operational model in which they transfers of products from
warehouses to consumer's house. by the following this process they save time of their
consumers. For improving speed in their operational model, retail company need to set standard
time for each activities so customer's can meet their products on time (Palizban, Kauhaniemi,
and Guerrero, 2014) Supply chain and distribution network is also need to be develop across the
country and follow decentralised system. Resources which required is to install information
network in the company.
Cost effective products
In order to make cost effective product's company, needs to adopt such techniques which
helps to them for producing cost effective products. To maintain cost firm make their own
products tfor customers. In the operation management for maintain cost they can allow Six
Sigma or Kezien theory which helps to control cost at the workplace. Along with these, firm can
also make their cost control strategy and adopt Just in time approach.
Delivery
Ocado is always ensured that each customers receive their products on the time.
Managers of the company make sure that stock available all the time so none of the customer's
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left unanswered (Patel, Guedes and Pearce, 2017). For improving its speed they can track their
products through the GPS or many other technological tools so they can make their delivery
strategics more effective.
Flexibility
It is one the primary objective of the Ocado tor produce variety of the product. In the
retail industry it is essential that give variety of products to their customers as per their
preferences. For fulfilling demand of firm make agreement with Waitrose. To achieve flexibility
they also promote their own brand (Porter, 2011) For developing more flexibility they can use
merging strategy with the different other retail companies so they can enhance their flexibility in
their operational management.
Principles of Balance score card
It is Strategy of performances management tool- a semi standard structure report which
support by the automation tools that used by managers to keep track on the execution of
activities by the staff (Slack, 2015). Ocado uses BSC to measure individual performances and
assist to firm for achieving their performances. Following are the principles of the BSC.
Continuous process
The main aim of BSC is to link in between budgets and strategics. It should be made on
the continuous process so all the financial requirement can be made.
Decide each one job
Another principles of BSC is to create strategic awareness in the organization and make
sure that each one make effective effort in the firm's success.
Make align with corporate strategics
It includes corporate role and shared services for the organization. Ocado's role is to
produce variety of products in the retail (Ocado. 2017). BSC helps to them for measuring their
financial performance so they can make cost effective products with variety.
Convert strategy into operational objectives
At this stage the retail company make convert of their strategics into their priorities and
develop strategics to achieve their operational objectives.
Apply changes
At this stage firm, after evaluating their BSC develop strategic management system and
governance process for implication of strategics.
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Four perspectives of BSC for Ocado
In the balance score card there are four types of perspective which are given below in
table.
Financial perspective
Make focuses on the financial position of the
company. In the year of the 2015 it's net sales
were £1,202.9m, in 2016 it increases up to
£1,267.4m (Ocado. 2017). So retail company's
financial position is continuous improving as
according to BSC
Customer perspective
In the customers' perspective they are targeting
customer's group in more effective way. The
marketing department of the company is
producing variety of services to their
customers.
Internal process perspective
It refers to the observation internal activities of
the company. For monitoring internal activities
firm develop strategy by installing IT system in
their business.
The learning and growth perspective
It refers to provide training and development to
organization's employees. Ocado's always
make focuses of use of advance technology in
business such develop own IT department
Financial perspective
Objectives Measure Targets Initiatives
Enhancing sales The current sales on
the company is it
increases up to
£1,267.4m
Increases up-to 5% Understand customer's
needs and promoted
hybrid facilities.
Increasing gross
margin
The current gross
margin of the
company is 34.25%.
Increases up-to 2% Make control over
products cost and
merging with new
retail company
Increases return on
investment
Current return on
investment 2.98%
Increases up-to 3% By Online and
physical stores,
increases return on
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investment but need to
keep low cost.
 In the past three years company's highest sales was £1,202.9m, in the year of 2016
(Ocado. 2017). on the online plat from company sales in rapidly increase, but for the
long term prospective must allow physical stores as well.
 The gross margin of the company increases by 34.25%. for maintain this trend they need
to keep control over the cost. Controlling cost can be done by merging with other new
company.
 Ocado's current return on investment is 2.98% and in the year of the 2015 it was approx
2.9. So the organization making enough effort for improving their online business and
for they need to keep products prices low.
Customer's perspective
Objectives Measure Targets Initiatives
Enhancing customers
satisfaction
This will be measure
by the Net prompter
score of customer's
satisfaction which
currently is 78%.
Increases up-to 85% Conduct market
research on customers
experiences.
Increasing online
market share
This will be online
market share of the
company that is
approx 6% in UK
grocery.
Increases up-to 9% Make customers aware
about the online
business
Increases repeat
customer perspective
Repeat purchasing is
measured by the
registered customers
of the company.
Increases up-to 80% Increases visibility of
the websites and
offers easy delivery
methods
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 At, first company want to increasing customer's satisfaction by conducting market
research on the customers' satisfaction.
 For the online market share they are using effective marketing promotion tactics and
making Aware to customers about the company's products. Ocado make estimation to
increases online market share by 9%.
 Ocado's must increases repeat purchasing in the business. Currently about 42% people
make repeat purchasing .it can be further improved by offering their high quality, low
priced products with free delivery.
Internal process perspective
Objectives Measure Targets Initiatives
Reduces overall
operating cost
Current operating cost
of the company is
approx 55% and
measure by online
operating cost only.
Reduces by 5% Implement efficient
systems and operations
management
Reduces
environmental
constrains
It will measure by the
environmental
performance review.
Reduces by 25% Produce eco-friendly
products
Maintain high quality
products
According to the TQM
of the company quality
of products is 75%.
Increases up-to
80%
train all staff on picking
orders and handing any
online
Queries.
 The first objective of the company is reduces operating cost at least by 5% and this help
to company for maintain their overall profits.
 Second objectives of the company is reduced usage Carbon from by 25% and for that
the company is producing Eco- friendly products to their customers.
 For maintain high quality products on the manufacturing, company trying to train their
staff
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Learning and growth perspective
Objectives Measure Targets Initiatives
Increases employees
satisfaction
This will be measure
by the employees'
satisfaction
questionnaire
Increases by 75% Create rewards and
initiatives to increase team
spirit
Increases employees
retention
This will be measured
by the salary of
employees
Increases by 85% Develop employees and
their skills.
Provide IT system
training
It is will measure by
employees'
engagement
Increases up-to
100%
Provide training for the
new IT online systems
 As according to the market survey which was conducted on the basis on the previous
customer's Satisfaction level and was recently rated at 62%. So for Increases employees
satisfaction management need to provide rewards.
 Another objectives of Ocado's for increases employees retention, origination must be
Develop employees and their skills by training and development programs.
 The final objective of the company Improve IT knowledge to their employees. For that
organization need providing IT to their workers.
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CONCLUSION
Summing up the above report it can be concluded that operational management is
important part of the organization's management. Ocado's operational model is different from
the traditional operational model. The company is following centralized distribution network
which aims to develop effective delivery services. For survive in the market it is important to
improve efficiency of operational model. Ocado's needs to providing training to their workers
so they introduced hybrid services in effective manner.
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REFERENCES
Books and Journals
Akkerman, R., Farahani, P. and Grunow, M., 2010. Quality, safety and sustainability in food
distribution: a review of quantitative operations management approaches and challenges.Or
Spectrum.32(4). pp.863-904.
Fisher, M., Glaeser, C. K. and Su, X., 2016. Optimal Retail Location: Empirical Methodology
and Application to Practice.
Gómez-Expósito, A., Conejo, A.J. and Cañizares, C., 2016. Electric energy systems: analysis
and operation. CRC Press.
Larson, E. W. and Gray, C. F., 2011. Project management: The managerial process.
Martinez, V. and et. al., 2010. Challenges in transforming manufacturing organisations
intoproduct-service providers. Journal of manufacturing technology management. 21(4).
pp.449-469.
Palizban, O., Kauhaniemi, K. and Guerrero, J. M., 2014. Microgrids in active network
management–part II: System operation, power quality and protection. Renewable and
Sustainable Energy Reviews. 36. pp.440-451.
Patel, P.C., Guedes, M.J. and Pearce, J.A., 2017. The Role of Service Operations Management in
New Retail Venture Survival. Journal of Retailing.
Porter, A., 2011. Operations management. Bookboon.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Slack, N., Brandon-Jones, A. and Johnston, R., 2013. Operations management.
Song, I. K., Yun, S. Y. and Kwak, N. H., 2013. Design of smart distribution management system
for obtaining real-time security analysis and predictive operation in Korea. IEEE
Transactions on Smart Grid. 4(1). pp.375-382.
Subramanian, N. and Ramanathan, R., 2012. A review of applications of Analytic Hierarchy
Process in operations management. International Journal of Production Economics.
138(2). pp.215-241.
Wang, X. and et. al., 2010. A production planning model to reduce risk and improve operations
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Online
Operations process model. 2017. [Online]. Available through:<http://figures.boundless-
cdn.com/2081/full/picture-201.png>. [Accessed on 14th June 2017]]
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Ocado. 2017. [Online] Available through: <http://www.ocadogroup.com/investors/reports-and-
presentations/2017/2017-02-08.aspx>. [Accessed on 14th June 2017].
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