Operational Management Strategies for Convenience Stores

The profitability and efficiency of service-providing companies, such as family shopper convenience stores, depend on optimal operational management. The operational manager faces challenges in managing different dimensions, but by using certain methods, they can enhance their performance significantly.

SERVICE AND OPERATIONAL EXCELLENCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Analysis of the operational challenges........................................................................................2
Customer Objective and Expectation..........................................................................................4
Different Types of Layout...........................................................................................................5
Recommendations........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The success of the companies depends on its functional competence. The operative
processes keep the foundation stone for the different aspects of the company's performance such
as the speed, quality standards and cost incurred in all the areas of working and the value
creation chain. The three fundamental components of the operational excellence are operation's
strategy, operations processes & organization and operations performance management
(Heikkilä, 2002). Operations strategy deals with the area of framing the policies and strategies
with respect to the production, technologies, logistics, locations and customer requirements. The
operation's process implements the strategy formed and to check and monitor the efficiency and
execution of the performance is undertaken by the operation's management together with the
corresponding reporting system (Bruccoleri, Pasek and Koren, 2006). This report elucidates the
operation of the small convenience store. It outlines different elements of the organization such
as its location and type of customers it targets. It details the products and services offered by the
store along with the number of customers visiting the place. An analysis is done with respect t
the various challenges faced by it by using 4V's model and its performance by keeping in
consideration their customer's objectives and expectations. Report also throws light on different
processes and lay out used by the selected organization by discussing its pros and cons. Further,
based on the study some suggestions are made to enhance the productivity and efficiency of sales
and operations of the store. For the purpose small convenience store in Lanarkshire, UK Family
shopper, is taken into account. The store is located in the posh area of the city Glasgow in
Scotland.
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The store is known for the attractive discount offers, low prices and great quality. With
the frequent promotional programs and the distinguished offerings the store becomes successful
in capturing the attention and customers and increasing the footfall. The store stocks the wide
product lines in different sections of food and non-food products and the round pound pricing is
the key marketing strategy. The weekly customer count is about 8000 and the turnover is up to
30000 pounds in the space of 20000 sq ft (Family shoppers, 2015). External graphics drives the
customers to enter the store. The environment of the store is surrounded by products on shelves
aisle ends and floor with the display of multibuy, price marking or any special offer with the red
and white dominant colors. Its products are supplied by Booker and Kerry foods. Number of
workers at the store are around 70 serving their customers from 9 am to 10 pm everyday.
Analysis of the operational challenges
The efficient operational management brings the lucrative results to the convenience
store by the management of the goods and services at the highest level of efficiency to maximize
the profit. For the purpose 4 V model is used by the mangers to handle the slew of operations. It
comprises of four components that are volume, variation in demand, variety and visibility. This
enables the mangers of family shoppers to understand the operations in different dimensions in
the precise and effectual manner and execute all the tasks efficiently.
Volume: Family shopper is the high volume low cost convenience store stocks 1700
products of food and the non-food range (Link and Marxt, 2004). Die to the wide stream of the
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product line the efficient management to operate it systematically is the most challenging task for
the manager.
The high volume of output, more labor, more systematization and each member staff
completes the variety of duties and responsibilities which results in lower unit cost. In each part
the systematization of work, the standard and the procedure to carry out drives the smoothness in
the operations and the increases the profitability (Spector and McCarthy, 2012). Specifying the
number of products manufactured and served in the particular time-frame is referred as volume
of any store or outlet. Family shoppers is running store with the footfall of around 200 people
daily, among them 70% of them make purchasing. To handle the customer in better way there is
two shifts from them in a day. Limited number of employees are doing number of tasks to
reduces the cost of operation. In that respect there is the need of increase in the volume of
workers.
Variety: Being the best of both the worlds the discounter and Convenience store has been
successful in capturing the attention of the customers and visitor due to the wide range of
varieties such as 1200 lines of food products and 500 of range of non food products. The
availability of the products of different needs under the one roof has made the store to establish
its prominent position in the section. Bread and milk for a pound makes up the central part of the
proposition (Pitt and Hinks, 2001).
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The products with variety of pricing can be seen on shelves and aisle ends. The variety of
choice of brand and pack size is offered. The management faces challenges in processing the
orders. The store does not possess the effective data base management process to access and
process the information with ease and efficiency. Challenges faced by the store is that due to
wide variety of food and non food items some food get waste. In that respect cost of operation
get continued with it and loss of items of inventory does not add on to the income of the store.
Variation: Variation in the offerings is the locus of attractions for the customers. The
store is recognized for the promotional activities and the discount offers on the frequent basis.
With the multiple discount chains Family shopper brings variation in its service to become the
first choice of the customers (Haimes, 2005). Further, it is intended to expand its services by
opening smart office counter, lottery play-station, cash machine and dry cleaning service. The
management of such varied range of services requires the skilled and knowledgeable labor. The
manager has hired the employees who possess the intimate knowledge of the related field and
also supervise to maintain the consistency and perfection. Variation refers to the change in
demand occurs with the occurrence of different situation in market or time. Store experiences
fluctuations in demand on regular basis such as in week days average customer's footfall is 200
but it increases to 250 per day at weekends. Further, it changes significantly at seasons with high
at some times and considerably low at recession of financial downturn. Hence, it necessitates the
management of family shoppers to adopt measures to predict customer's demand and provide he
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supply accordingly by bringing changes I number of workers. That is increasing number of
workers at weekends and time of high sales.
Visibility: The key dimension to assess the customer satisfaction level. The customer's
ability to check their orders and the transparency maintained in the services provided connects
the customer with the organization for the longer duration of time. With the availability of the 18
customer associates the customer can easily convey their needs and requirements and the
services are provided without any delays with the good disruption management process. The
store also has the separate customer service section to seek the preferences and choices of the
customers (Niknam and et. al, 2011).
Availability of high level of transparency in the service makes the convenience store
affable and approachable. The full service and communication store has the optimum level of
efficiency to redress the complaints of the customers and also offers them the distinguished
services. Following is the image that displays the payment counter at the mentioned store. It
offers convenience to customers as there are series of counters for the same. Among the four V's,
last V states the visibility of the store that is the degree of transparency level shown in the
operations to their customers. In case of Family Shopper's, visibility is moderate in nature. Some
are executed n the internal basis whereas others such as transaction process is in front of the
customer itself. With the existence of considerable amount of visibility approachable and quality
services are offered.
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Customer Objective and Expectation
The customer visiting the store enters with the slew to objectives and expectations in
regard with the products and services the stores offers. Realizing the needs and requirements of
the customers the management of the store makes the strategic steps and implements the steps by
keeping the minimum flaws (Four v's of Operation Management, 2015).
Customers’ expectations and objectives are assessed in comparison with the performance
in these three aspects:
Quality: The store intends to give their customers the experience of being treating
professionally and kindly. For that they provide the quality services at every stage and
department. The store intends the customer to reach the satisfactory resolution. External
graphics, the systematic arrangement of all the product lines with the precise servicing gives the
pleasure of comfort shopping just after entering the store (Tan and Benbasat, 2009). The
management has organized the certain groups who possess the specific qualities to process the
duties and responsibilities in the assigned field. The manager supervises all the team with the
continuous monitoring and assessment. Customer expects to do the cost effective shopping.
Keeping that in mind, the store offers wide range of regular discounts along with the attractive
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seasonal and festive offers. Milk and bread at 1 pound are the key attraction of the store. The
packaging and the other aspects such as the expiring of the product, authenticity of the product is
also taken care (Higdon and Topaz, 2009). There are two parameters on which quality is
measured that is infrastructural and operational. With reference to infrastructure the environment
of store is very apt due to the effective and systematic display of products. It is well bifurcated
between variety and prices such as products with same prices that is 1£, 3 £, 4£ or 5£ are
displayed at aisles and shelves respectively.
Speed: In this face pace competitive world, the customer expects the fast and precise
service from the store. The speed in all the working areas matters be it addressing the customers
in servicing, the delivering the products, listening the complaints of the customers, redressing the
issues & concerns of the customers and at the time of payments. In the context of speed it is seen
that some of employees complies with the objective of providing prompt and accurate service
whereas the rest lags behind he professional standards such as time of delivery is slow due to
lack of knowledge about the exact position of products placed. Further, engaging in other
activities apart from work such as accessing mobiles and other equipment hinders them in
providing precise services.
Flexibility: At the time of operating the convenience store there are sudden requirements
and needs of the customers and many other areas. The store possesses the quality to adapt itself
as per the change and requirement. There is the separate team that deals with these issues. For
instance, the requirement of the customer for which the store is not prepared, in that case also the
staff manages it efficiently with prompt addressing of the issues and concerns (Liang, Chen and
Turban, 2009). In terms of flexibility, store maintain the high degree of flexibility to fulfill the
demands and requirements of customers. Such as at the time of economic downturn when
disposable income is not high, discounts and offers are made to retain he customers. Further,
range of products are installed as per the requirements.
Different Types of Layout
The operational structure of the convenience store is very complex. The manager has to
undergo various types of jobs in different departments and area such as the managing the raw
material and inventory, employees and staff members, taking into consideration the marketing
scenarios and the implementation of all these tasks and in the optimum level. For that purposes
the convenience store adopt certain lay outs and models. This helps in the smooth functioning of
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the operation. There are fundamentally different types of lay outs used in organizations that are
process layout, product layout and cellular lay out.
Process lay out: In this lay out operations of the organization are divided on the basis of
similarity of the functions. This enables the organization to run properly. Such as all the
functions are separated and are entitled to the expertise and specialist in the field. In the selected
organization that is family shopper's on dividing operations on the basis of their functions,
divisions are management which is responsible to manage all the working, marketing which
brings innovative and creative ways such as preparing posters etc to attract customers, finances
which takes care about accounting details of family shopper's and one is to take care about the
inventory management.
Product lay out: This lay out is useful for the process of arrangement of different kinds of
products. As he cited organization is the place to sell wide range of products, it uses this kind of
lay for the management of internal operations. It enables family shopper's to generate large
volumes and operate the working in the cost effective manner.
Cellular lay out: It is the combination of of the above two lay outs which includes the
features of both the types. That is on the structural basis it states the use of process lay out.
Which divides the operations on the basis of functionality whereas filtering down to the internal
operations, product lay out is used. Where division is based on the similarity of products and its
features. In family shopper's combination of both the lay out is used. There are many advantages
of using cellular lay out such as it is the most cost effective lay out by reducing the cost of
operation significantly. It provides the high degree of flexibility to the operations which requires
change as per the suitability.
Total Quality Management: Total quality management is the systematic and constructed
way of the operational management used widely in the organization of the different industries. It
has the perfect applicability in the management of the convenience store too (Hugos, 2011). This
method seeks improvements in the quality of the goods and services through the well-defined
approach in which the flaws and obstacles are identified and then removed by research and
feedback. According to this lay out quality is the locus of any business organization. The
management has the key focus in improvement of the quality of the goods as well as the services.
Top management is directly responsible for this. Family shoppers has conducted the systematic
analysis through market research and customer survey and made improvement in the process.
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Further, it has continued this effort to retain and increase the same. A family shopper has
organized the counseling and the mentoring of the staff members to provide the better services
with more politeness and preciseness (Li, Yang and Wu, 2008).
With the active participation in the management the quality standards are improved to the
great extent. Issues such as attending the customers to meet their needs, the management of the
inventories, the logistic management in which the products are brought to the stores on time and
with accuracy, the operations at the stores that is the payment systems and other related are
improved in the proper manner. Above is the layout of the store of the mentioned retailers that
displays systematic arrangement of counter and shelves. This helps in displaying the products so
that customer can grabs them with ease.
Lean: The lay out Lean is used to minimize the waste. The store has the wide range of
products in different sections such as food items, lime grocery, beverages, frozen and nonfood
items as well. The high degree of domain of the products increases the probability of wastage
and wear outs. To address that issue, Family shopper uses the model Lean. Through this the
convenience store systematically eliminates the wastage. It identifies that the waste occurs due to
overburden and unevenness in the work (Steffek, Kissling and Nanz, 2007). This synchronizes
the pull system in supply chains and the value system.
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JIT (Just in time): This method is used to reduce the flow times between the suppliers
and the customers. This is the crucial factor in the efficiency of the operational management of
the organization. The time induced while bringing the inventory to the stores is minimized by
using this model. Family shoppers uses this model adopts certain methods such as the skill
diversification, balanced flow and workers involvement to minimize the times occur in the
process. Further by improving the level of control mechanism, enhancing the communication and
smoothing the inventories handling helps significantly in fulfilling the aim
Recommendations
Although the organization is working with the great efficiency but there is always the
scope of improvements in the operational management by adopting new and innovative methods.
There are certain recommendations and suggestions to bring the improvement in the activities
and task performed by the convenience store. From the analysis of operations of Family
shopper's inferences can be made that there is the requirement of certain improvements to
optimize the work.
Work force: The store revolves around the customer services and to meet the needs and
requirements of the customers by providing their desirable products at affordable prices and the
easiest possible way. To execute the same the workforce are required to be fully skilled in
dealing with the customers with politeness and preciseness (Kester, Kirschner and van
Merriënboer, 2006). The training must be organized by the manager collectively to make their
employees know every technical details of the processes happening the store, the details of the
products and offers so that they can explain to their customers in the accurate manner and about
the way to deal and address the customers with politeness and gentleness.
Market research: The better services can be given to the customers by being the
cognizant of all the needs and requirements of the customers. With the help of market research
customer survey the preferences and choices of the customers can be known and accordingly
making improvements. For instance the flaws in the service and operational management can be
identified.
Cost effectiveness: By increasing the cost effectiveness the operational management can
be improved. This encompasses the minimization of the expenditures incurred on while
operating the convenience store. By improving the supply chain management they can smooth
the transport system and reducing the cost. As the organization is service providing firm, there
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are no production and manufacturing cost, but the other areas such as supply chain management,
purchasing of the inventory and goods, the expenses incur while operating the store, the
maintenance cost are to be managed effectively to optimize the profit ratio (Tan and Benbasat,
2009). Using lean layout will reduce the waste and unused inventory by rationalizing the
operations. It will enable the optimization of resource utilization.
Marketing: To attract the customers in the wide stream and increase the footfall the
effective strategies need to be adopted. Though the store is been successful in reaching the
customers by External graphics, attractive schemes and offers, discounts but the other methods
can be adopted such as distributing templates, digital marketing that is promoting the services
and offers on social media platform, reaching more number of customers through online
customer service and telephonic calls. By endorsing the products and services to the larger
number of people increases the footfall and that leads to the increment in the profitability. With
the inculcation of different modes of marketing in operation foot falls and sales will be increases
to the significant extent. Projected growth of customers is from 200 to 270 on weekdays and 250
to 320 on weekends.
Data management: The convenience store Family shoppers use the conventional method
of data management. The manager has to deal with the large amount of data such as keeping the
record of all the purchases, the inventory in the store house, the number of units of products in
the convenience store, the employee’s related data and other related. To manage that with
efficiency the advanced data base management system is required. Family shoppers can increase
the efficiency by using the database management information system (Li, Yang and Wu, 2008).
This helps the store to handle the data in effective manner and access the information in the
prompt and easy way. By using the advanced data base management system the communication
and coordination in the supply chain can be enhanced and it can be made smoother and effective.
Further, to reduce the queue line, the convenience store can use the advanced software for the
payment options. The person who possesses intimate knowledge of theses software can use this
effectively and increase the productivity. By using tools such as total quality management to
manage the operations of Family shoppers, Lean to minimize wastes and JIT to provide prompt
services. Further, cellular layout enhances efficiency and productivity of operation to derive
large number of customers.
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CONCLUSION
The profitability and efficiency of the service providing companies depends on the
optimal level operational management. The convenience store, family shopper has the prominent
establishment in the market place due to its distinguished service and products. The operational
manager faces the challenges in the management in different dimensions and manages it
effectively. In some areas it lags behind the required standard but by using certain methods it can
be enhanced significantly.
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REFERENCES
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Tan, C. W. and Benbasat, I., 2009. IT mediated customer services in e-government: A citizen's
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