Operations Management and Service Excellence

This study material provides an in-depth analysis of operations management and service excellence in the context of Starbucks and Greggs. It covers topics such as the four Vs analysis, performance objectives, and design analysis. Additionally, it explores the key requirements and challenges of supply chain management in the industry.

OPERATIONS
MANAGEMENT AND
SERVICE EXCELLENCE

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
Part A...............................................................................................................................................3
Four Vs analysis..........................................................................................................................3
Performance objective analysis...................................................................................................5
Design analysis............................................................................................................................7
Part B...............................................................................................................................................8
Overview.....................................................................................................................................8
Key requirements & challenges..................................................................................................9
Global operation strategy & macro-environment.....................................................................10
Analysis as well as evaluation...................................................................................................11
Recommendations.....................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

MAIN BODY
Part A
Four Vs analysis
Four Vs of Starbucks
The four Vs is basically the framework which helps the organizations to have a consistent
operations within their organization and thus consist of four Vs which are
Volume
Volume is basically the quantity of products in which they are being produced. In short, it
defines that how much quantity of a product would be required in order to satisfy the needs as
well as demands of the customers. The volume of the products is generally key to the business of
Starbucks and is essential for their business. Starbucks is generally known for high volume and
low cost coffee as well as fast food production (Wirtz and Zeithaml, 2018).
Variety
Variety is generally the variety and types of goods as well as services which are being
produced by the organizations and sold in market. Starbucks generally provides a range of
products to their customers ranging from simple coffee and tea to different types of fast foods.
Besides this, their services also varies from customer to customer (Dharamdass and Fernando,
2018).
Variations
Variation is basically the extent to which the demands and needs of different stakeholders
changes with time because of external factors. For example- due to change in the weather
conditions demands of customers for food items fluctuates like in high temperature and
summers, customers generally prefer cold coffee thus Starbucks have a variety of items in its
menu as per these changing demands.
Visibility
It is predominately the ability of customers to track the experience and conveniently
order via well-through operation process (Campbell, Jardine and McGlynn, 2016). Starbucks
have incorporated a high degree of visibility in its operation process where the customers can
easily track the purchased product through their tracking application. Besides this, Starbucks
have a separate tracking system where they track the raw material and different suppliers for
smooth delivery.

Greggs four Vs
Volume
Greggs remain cautious and consistent when it comes to the volume of products. The
volume of the products which Greggs produces in its bakery mainly depends on the needs and
demands of the customers. Greggs remain concerned of its inventory level where it avoids
producing a bulk quantity of bakery products. Instead it precisely analyse the demands of the
customers and hence produces a moderate volume (Thürer and et.al.,2018).
Variety
As variety is defined in terms of the kinds of product and services thus Greggs offers a
variety of items to its customers ranging from sausage rolls to soup. Although it offers a range of
bakery products to its customers but all of them relates to a single product line which is the bread
based items and hence have not changed its product line from ages.
Variations
Variation mainly relates to the change in demand with time thus Greggs is highly
recognized for its high adaptivity to the changing environment. Since its establishment, Greggs
has been adapting to the changing demands of the customers due to external factors and thus
provides them entice them through this (Martyn and Anderson, 2018). Like for the autumn
season, customers mainly wants hot soups thus Greggs in 2015, started serving chicken curry
soup for autumn.
Visibility
Greggs have developed its own application where the customers can easily track their
order and see the live status in order to ensure smooth and convenient delivery. Besides this, the
employees employed at the outlet are highly employed to make the experience of customers
memorable and unforgettable (Wirtz and Lovelock, 2016).
Difference in profiles
The major difference between the profile of Starbucks and Greggs is the varieties which
they are offering to the customers. While on one hand, Starbucks has extended its product line
from coffee and beverages to coffee creamer market on the other hand, Greggs have lack behind
in this aspect where they are much slow at innovating their product line (Padma and Wagenseil,
2018). In comparison to Starbucks, Greggs remain cautious of its inventory level and hence

prevent bulk production which saves its production cost while Starbucks is well recognized for
bulk volume due to which their production cot remains somewhat high.
Illustration 1: 4 Vs analysis
(Source: The 4V's of operation management, 2013)
Performance objective analysis
Performance objectives is basically the targets which the organizations sets for achieving
their long-term as well as short-term objectives.
Starbucks
Quality
Quality is primarily how high value does the organizations deliver to their customers and
comply to various standards. Starbucks is well-known for its high quality products and services
and thus provides a world-class quality to their customers. The Arabica beans which are being
used in their coffee are generally purchased from the farms which are present in developing
countries and later on these beans goes through a well-through process and then delivered
(Yerpude, Singhal and Rathod, 2019).
Speed
Speed mainly refers to the pace at which the services and products are being offered to
the customers. Starbucks is highly recognized for its great and easy process where the products
are efficiently delivered to the customers. For making this process effective, Starbucks has a
well-defined supply chain where the products which are being ordered by customers are tracked
time to time through RFID for ensuring rapid delivery.

Dependability
It is basically the most important part of the performance objective which addresses that
how much dependable the organization is while ensuring the timely delivery of services and
products to customers. Starbucks have wide chain of suppliers across the countries and thus are
highly efficient to deliver the ordered products in time (Sun and Zhu, 2018).
Flexibility
Flexibility is predominately the extent to which organizations are able to change their
operations in order to match with the requirements and needs of customers. This performance
objective is highly essential for the organizations to adapt to the changing needs of customers.
Starbucks every year comes up with something new to adapt to customer's requirements. For
example- more than half of the population likes to drink coffee or other beverages along with
some snacks that would make their taste more mesmerizing thus to fulfil this demand, Starbucks
opened a Kiosk in their outlets where customers can read newspapers along with their food
(Duggan, 2017).
Cost
Cost is basically the extent to which organisations keep their production low and thus
offers the products at low prices to their customers. Starbucks have an extensive production
process where each and every product undergoes a though testing. Due to the production in bulk
volume, Starbucks generally incurs high production cost and this is the reason behind high price
of its products.
Greggs
Quality
Greggs is highly concerned with the quality of the products ans services which they serve
to their customers. The wheat which this bakery uses for its bakery products goes through a high
refinement process and are taken directly from the farmers after its cultivation. Thus, the wheat
goes through a well-through process where it is reduced to granular pieces and then delivered to
the customers in form of bread related products (Ferdowsian, 2016).
Speed
Greggs have a well-structured supply chain through which the products ans services are
being delivered to the customers efficiently. The mobile application of Greggs has enabled

customers to order their food more efficiently and conveniently. Greggs through the use of
advanced technology tracks the order of customers and hence measures its timely delivery.
Dependability
Greggs has made its website highly customized where the customers can conveniently
order their food and hence search for the different aspect easily. This has helped Greggs to
enlarge its customer base as due to high consistency in delivery and more convenience, customer
are more likely to visit Greggs frequently (Movahedi, Miri-Lavassani and Kumar, 2016).
Flexibility
As flexibility mainly relates to how organizations changes their operation for meeting the
customer needs thus Greggs is widely known to mould their services and products as per the
changing demands. For example- when Greggs analysed that customers are constantly looking
for the online food application where they apart from ordering food can also see ordering time
and processing time, customized its website and designed in an innovative way for fulfilling
customer expectations.
Cost
As Greggs remain cautious of its inventory level and thus does not produces its products
in bulk quantity thus their production cost remains low. Instead of ordering in bulk volume,
Greggs orders its raw material in frequent periods which lowers their production cost. Due to low
production cost, company normally keeps the prices of its products low and offers at low price
without compromising quality (Fernandes and et.al.,2017).
Difference in markets
Starbucks mainly targets the urban people having high income and thus keeps their focus
on the white-collar professionals who wants coffee to relax from busy schedule. While on the
other hand, Greggs targets rural as well as urban markets and thus concentrate their focus on
both high income group as well as low income group (Kerzner, 2018). This eventually affects the
operations objectives. For example- Starbucks targeting high income professionals will have
different objective like high price while Greggs targeting high income as well as lower groups
will have different objective like price ranging from low to high.

Illustration 2: Polar diagram
(Source: Polar Diagram, 2018)
Design analysis
Design of customer service process
The four Vs and performance objectives of both Starbucks and Greggs highly influences
their customer services process. For example- The various dimensions of four Vs and
performance objectives shows that Starbucks have a a separate online enquiry portal where the
customers can easily enquire for any aspect of the outlet. Besides this, theses four vs and
performance objectives have also influenced the customer services process of Greggs and has
enabled them to develop an EMEA queue and divided it into tier 1 queue and tier 2 queue. In
this, customers does not have to stand in a long queue for their order and thus can easily see the
processing time (Lee and BAKER, 2017).

Illustration 3: Customer service process
(Source: Customer service process, 2012)
Store layout
The four Vs and the performance analysis have also influenced the typical store layout of
Starbucks and have helped them to attract customers. The outlet of Starbucks consist of the
round table with the cutting edge along with chairs and sofas and each and every table has a
space of around 18 inches in between them. Besides this, the store has a straight floor plan
where the shelves as well as racks of the kitchen are arranged in straight line for avoiding traffic
and ensuring organized flow. On the other hand, Greggs store have angular floor plan for giving
the sophisticated vibe to the customers and to increase the visibility. It store have a dining area
which are of varying size along with the front counter presentation window. In front of this
presentation window, there is a separate cafe built having tables and bean bags (Gloet and
Samson, 2017).

Illustration 4: Store layout
(Source: Store Layout Design: 9 Tips for Arranging Your Retail Shop, 2018)
The major characteristics of the core operations generally consist of volume, variety,
variation and visibility which helps the organizations to conduct their operations in an efficient
manner. The customers services and layout design plays an important role in these operations
and thus helps to provide quality services to customers. Having the right process and layout
enables the outlets to ensure organized flow of the products and thus helps to manage the core
operations efficiently (Suarez, Calvo-Mora and Roldán, 2016).
The layout design and process are highly affected by performance trade-offs. When the
performance of any aspect is highly enhanced then it eventually decreases the performance of
another aspect and this is performance trade-offs. Like if the outlet have a great customers
service process but the layout decision is not up to the mark and is causing a heavy traffic at the
workplace then this will eventually reduce the market position and performance of the company.
Thus, it is essential to have a proper balance of each and every aspect whether customer service
or design layout.
Part B
Overview
Supply chain management
Supply chain management is basically the overall administration of flow of products and
services and thus involves converting raw material into finished products. The supply chain of
Starbucks is highly imperative and thus helps the company to effectively manage their
operations. The management of the supply chain of Starbucks basically streamline the activities
from supply side and consist of the functions ranging from procurement of raw material to final

transportation (Dinu, 2017). Due to highly structured supply chain, Starbucks have a wide range
of suppliers spread across different countries whoo are involved in proper delivery of raw
material to the company and efficient delivery of products to customers and clients. This supply
chain not only helps in efficient operations but also assist to increase the performance of
Starbucks. Due to the efficient and timely delivery of products to the customers, company is able
to go beyond the expectations of customers and this eventually increases their consumer base.
Key requirements & challenges
Requirements
In order to effectively streamline the supply chain process, there are huge day to day
requirements which Starbucks considers
Input
This is basically the raw material which is being used for manufacturing the process.
Starbucks is regularly involved in ordering a great amount of raw materiel to manufacture
different products. Each production division daily produces units of products and for this they
want raw material. Thus, the management of company daily takes the advice from production
division on the how much raw material will be required and then order the required amount for
production (Wirtz and Zeithaml, 2018).
Suppliers
Once the management of supply chain gets the units required for production, they begin
to negotiate with the suppliers and negotiate contracts are made. This varies from raw material to
material. As everyday different kinds of raw material are ordered thus the management, is
constantly involved in communicating with the suppliers for taking negotiation decisions
(Dharamdass and Fernando, 2018).
Capabilities
People
These are the people who are constantly engaged in managing the entire supply chain.
People who are concerned with the supply chain are highly trained and developed in Starbucks.
They have the required functional expertise and thus are fully aware of how to effectively
manage the warehouses, purchasing and transportation. Besides this, they are continuously
provided with training on the changes in technology in supply chain (Campbell, Jardine and
McGlynn, 2016).

Infrastructure
The infrastructure in supply chain is basically the physical as well as informational asset
which is needed for running supply chain. The infrastructure of Starbucks is highly imperative
and thus consist of wide range of mobile equipments which are required for distributing
products. Besides this, Starbucks have large number of building where the manufacturing occurs
and each building varies in terms of products being produced. Along with this, the company have
a wide transportation network where it ensures timely delivery of products to customers.
Challenges
Fuel cost
The most prominent challenge which Starbucks faces while managing its supply chain is
the increasing fuel cost. Due to the transportation of large number of products, company
generally incurs a high fuel cost and this eventually increases their overall expenses. Due to the
rising diesel charges in UK thus problem has become fierce for the organization that has cut
down its revenue ratio (Thürer and et.al.,2018).
Enhanced customer services
As now customers have become highly conscious towards the products they order and
thus wants full transparency as where the package is and how much time will it take. This has
been a great problem for Starbucks because sometimes it becomes difficult for the company to
remain interconnected with customers and thus sometimes due to external factors their
connection gets disturbed. This affects the perception of customers (Martyn and Anderson,
2018).
Global operation strategy & macro-environment
The supply chain management of Starbucks is greatly affected by the the wider macro
environment like for example- when the political stability of the country is not stable then it
results to high corruption rate and this eventually the supply chain of Starbucks. Starbucks
respond to this political instability by effectively analysing the political environment of the
country in which it is planning to expand (Wirtz and Lovelock, 2016). Besides this, like due to
low economic growth of country the unemployment level increases and this affects the Starbucks
to great extent as they are unable to hire talented employees for their outlet. Company respond to
this by outsourcing the employees and by attracting the candidates from different countries.

Global operational strategy
The most effective global operational strategy adopted by Starbucks is the distribution
strategy where the company after testing the different markets decided to expand its operations in
wider geographies. Initially the company made its presence in US but due to the advent if
technology and competition, Starbucks broadly entered the different markets and hence
expanded its distribution network. Currently company operates in more than 25000 locations
across the entire world and have diversified to a great extent. This distribution strategy adopted
by Starbucks was proved to be highly successful and in every location it successfully operating.
For its successful diversification, its supply chain management had an essential role where it
helped them to analyse each and every market and the adopt to different supply chain as per the
country (Padma and Wagenseil, 2018). The supply chain area helped the organization to assess
the competition which is prevailing between suppliers in that country and hence helped them to
effectively enter the market. Besides this, it also reduced the cost of market entry as it already
had a established name in market. As the supply chain of Starbucks was well-known by most of
the people thus it became easier for them to establish its position in new markets.
Analysis as well as evaluation
Value chain analysis
This is basically the framework which helps the organizations to identify their primary as
well as support activities for analysing these activities to effectively manage the resources and
hence reduce costs. The value chain consist of wide range of activities like outbound logistics,
inbound logistics and many more which helps to effectively manage the supply chain (Yerpude,
Singhal and Rathod, 2019).
Primary activities
Inbound logistics
It consist of activities such as receiving, distributing etc. This inbound logistics helps
Starbucks to initially receive and thus store the raw material for production of goods.
Operations
This is the another primary activity which relates to converting raw material into finished
products. The Starbucks makes use of various resources like machines, equipments, labour for
converting this raw material into the finished product (Sun and Zhu, 2018).

Outbound logistics
This is the activity in which organisation are involved in collecting as well as delivering
the final product to clients or customers. In this, the most effective resource of Starbucks which
is supplier is being used where they collect and hence deliver the final product to end users
(Duggan, 2017).
Support activities
Procurement
This is the activity which supply all required input to the organization for initiating
production. The procurement department of Starbucks supply the necessary resource like
machinery, materials, consumable items to the production department and thus support them by
providing the necessary items (Ferdowsian, 2016).
Human resource
The Human resource of Starbucks helps the company by overseeing the entire range of
activities from selection to the dismissal. It provides the most effective resource to the company
without which supply chain cannot be effectively managed which is staff. Thus it is responsible
for overseeing that where the staff is complying to production standards or not etc. (Gloet and
Samson, 2017).
Response to challenges and problems
The problems and challenges which the supply chain management of Starbucks faces on
a wide platform is fuel cost and customer service. Starbucks respond to the increasing fuel cost
by using fuel efficient vehicles during the transportation of materials. For example- Starbucks
have invested heavily on the container ships which uses a low gallons of fuels for the
transportation of their raw materials. Besides this, Starbucks have replaced its fuel consuming
trucks with the gas trucks which makes use of liquefies gases and thus have saved themselves
from the increasing fuel cost (Movahedi, Miri-Lavassani and Kumar, 2016). Another problem
faced by Starbucks which is the enhanced customer services where nowadays, customers wants
full transparency as how the product is delivered and which company has fast delivery speed.
Thus, to fulfil the customer expectations Starbucks have customized its mobile application
through which customers can not only track their product but can also remain in contact with the
supplier for any issue. Thus, Starbucks responds to this problem in a most imperative way and
continuously remains in contact with the customers for any kind of assistance. Starbucks while

initiating the delivery of products of customers provide a tracking id on e-mail or message
through which customers can easily have the live tracking of their products.
Impact on operational performance
The effective supply chain management helps Starbucks to improve their overall
performance and hence increases its productivity. Due to highly efficient supply chain, the
company is able to effectively deliver the products and services to customers which helps them
to establish their position in market. When the organization goes beyond the expectations of
customers then this creates a good image in their minds and heart which eventually help the
organization to attain competitive advantage (Fernandes and et.al.,2017). Thus, Starbucks is
well-known for its efficient supply chain and this has helped them to achieve competitive
advantage and capture the great market share. Besides this, Starbucks has a well-through process
where it has a great infrastructure and people who are highly skilled and competent to deliver
great services to the customers. Their skills goes a long way for Starbucks to sustain their
performance and helps them to enlarge customer base by diversifying in different markets.
Recommendations
The major problem which is being faced by Starbucks is the increasing fuel cost which
somewhat hinders their supply chain a swell as their customer base. Due to the rising fuel cost,
Starbucks generally encounters a great expense along with the high tax and excise duty when the
raw material are required to be exported to different countries. For overcoming this, in addition
to using fuel efficient vehicles, Starbucks should adopt the the vehicular weight strategy. The
fuel cost is not only affected by the fleets but the weight which is being added also impacts the
fuel economy. Starbucks during long haul should avoid overloading vehicle as this will reduce
the mpg and will eventually. Instead of loading the products in one go, management of Starbucks
should periodically check the carrying weight along with fleet lean to have an appropriate fuel
budget (Kerzner, 2018).
Another problem being encountered by Starbucks is enhanced customers service as the
expectations of customers for transparency has increased. In order to fulfil this expectation of
customers and provide quality services to them, Starbucks should in addition to improving its
mobile application should make use of advanced technology like RFID which will help them to
track the location of supplier and the ordered product. Besides this, company should incorporate
digital system in its supply chain for greater accuracy (Lee and BAKER, 2017).

CONCLUSION
It has been summarized that four Vs analysis helps the organisation to determine the
various aspects to deliver efficient services to the customers. Each and every company has some
performance objectives which helps them to manage their overall performance and ensure the
quality services to customers. These four Vs and the performance objectives are highly
influenced by design of customer services process as well as store layout and thus helps to
integrate core operations and performance in their strategic view. An effective Supply chain
management plays an important role in an organization which helps them to shape the
organizational performance. It is a wider field which is highly affected by macro environment
like political factors, economical factors and thus faces a wide range of challenges like increased
fuel cost etc.

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Online
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<https://www.managersdoor.com/topic/top-5-the-four-vs-of-operations-management/>
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<http://www.thomholland.com/customer-service-guide/>
Store Layout Design: 9 Tips for Arranging Your Retail Shop. 2018. [Online] Available through:
<https://www.vendhq.com/blog/store-layout-design/>