Operations Management and Service Excellence at Cafe Nero Ltd

This report provides a comprehensive analysis of Cafe Nero Ltd's operations management and service excellence. It begins with an overview of the company, its location, capacity, layout, and services offered. The report then delves into the operational management process, including quality maintenance, waste management, and the application of the 4V's operational model (volume, variety, velocity, and value). The report identifies and discusses five key performance objectives: meeting customer expectations, quality improvement, cost control, speed of delivery, and staff retention. The analysis extends to the supply chain of Cafe Nero Ltd and concludes with a comparison of its quality processes with those of Starbucks. The report utilizes academic sources to support its findings and provide a detailed understanding of Cafe Nero's operational strategies and challenges.

OPERATIONS MANAGEMENT AND
SERVICE EXCELLENCE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of Cafe Nero Ltd....................................................................................................1
Operational management process of Cafe Nero Ltd..............................................................3
Five performance objective....................................................................................................7
Supply chain of Cafe Nero Ltd...............................................................................................9
Compare and contract quality process of Cafe Nero Ltd with Starbucks............................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Operation Management is one of the essential aspect of business unit which main concern
is to produce goods and services efficiently. It plays transforming role and convert inputs into
quality finished goods. Operation manager ensures that material, labour any other essential input
utilize by entity effectively so that best results can come out (Kim, Ha and Shin, 2013). For the
present report Cafe Nero Ltd has been selected which is small sized cafe that operates in London.
Current assignment will describe overview of the organization and operational process will be
discussed in this respect. Furthermore, study will illustrate five performance objective of entity
and improvement that are needed to be made will be described in this report. Critical discussion
on supply chain of Cafe Nero Ltd will be done in this assignment. In addition, quality process of
the cited firm will be investigated in this study (Carballa, Regueiro and Lema, 2015).
MAIN BODY
Overview of Cafe Nero Ltd
Location
Cafe Nero Ltd is small sized independent coffee house which is operating in middle of
London. The coffee shop was founded by Gerry Ford in the year 1997. Its main focus on
satisfying the need of consumers and offer them quality coffee products (Hayes and Prodanovic,
2016). In the modern era students and young people like to spend time with friends in such type
of places. Cited firm is operating its business in the same direction and providing them services
as per their need and requirement. That is why profit of the company is increasing day by day. It
concentrates on quality of the products thus, it purchases raw material from good suppliers those
who can give them quality raw material at low cost. Consumers have given positive feedback on
Cafe Nero Ltd website (Chanda and et.al., 2016).
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Different type of customers visit this place; business professionals, students, women etc.
But mainly students come to this place mostly because cited firm is located near the university so
many of the learners come to her for spending quality time and getting relax with their friends.
Capacity
One of the major ability of Cafe Nero Ltd is its quality products. All its coffee products
have unique quality and they are able to satisfy needs of consumers (Badescu and et.al, 2015). Its
staff members are very talented and they are very experienced. This is another capability of the
cited firm. With the help of this workforce entity become able to run its operations well. Though
it is operating at small scale but still it has sufficient financial resources that support the
organization in conducting operations in effective manner. It utilizes its resources well that
supports the Cafe Nero Ltd in reducing its operational cost and make effective control over its
unnecessary expenditure (Armstrong and Taylor, 2014). This capability of coffee shop has
helped the corporation in increasing its profit and sustaining in the market for longer duration.
Layout
Layout of Cafe Nero Ltd is good, it has designed its shop effectively. Designing has been
done by considering thinking of population and requirement of consumers. There is proper space
for the sitting that helps in attracting more people towards the brand. People come to this place
for party purpose because there is full space so they can enjoy in this place (García and et.al,
2017). Furthermore, poor door arrangement creates problem for clients and that make them feel
congested. There is parking problem also, as cited firm spend less amount in rent so it has not
taken permission of car parking out of its shop for its guest from the concern authorities.
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Illustration 1: layout of Cafe Nero Ltd.
Source : (Brandenburg and et.al, 2014)
Service offered
It offers variety of drinking products to the customers such as Latte, cappuccino, hot
chocolate etc. Hot chocolate was first introduced by the Cafe Nero Ltd in the year 2007 in
London. Furthermore, it offers tea and other simple breakfast to the guests. Cited firm try to
identify need of users and accordingly it offers them products and services (de la Huerga, Silvera
and Turoff, 2015). Students demand for hot and cold coffee so company fulfil their desire and
provide them range of items at affordable rates. Apart from this organisation give them facility of
reward system in which if they come with group then they will get 30% discount on drinks. It
arranges events for professional meetings and parties etc (Abdel-Maksoud, Cheffi and Ghoudi,
2016).
Operational management process of Cafe Nero Ltd
One of the main agenda of operation management is to convert raw material into quality
output. For that Cafe Nero Ltd has skilled employees and experienced staff members those who
utilize resources well and serve quality products to its valuable consumers (Maltamo Næsset. and
Vauhkonen, 2014). Cited firm focuses on quality management and it ensures that it offer quality
products to its valuable consumers.
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Illustration 2: Operational process
Source: (Xiaomin, Fangfan and Yinghui, 2015)
Quality maintenance
Cafe Nero Ltd follows ISO 8402-1986 in order to produce satisfactory goods and
services for its guests. Managers of cited firm supervise the activities of production department
so that they follow instruction and produce food as per the requirements (Cotton and et.al, 2016).
It purchases quality raw materiel and preserve them effectively so hat life of this material can be
increased. Management concentrates on keeping the place clean and they ensure hygiene factor
as well. That is why it has set benchmark in the field of cafe industry.
It conducts internal and external audit time to time so that it can supervise the quality
standards of the cited firm. Staff uses advanced machineries, quality equipments so that they can
maintain the quality and can offer good cafe products to end users (Sharifi and et.al, 20160.
Waste management
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It can be defined as managing wastage well in order to reduce cost of the company. It
includes collection, purchasing of raw material, transportation, production etc. Cafe Nero Ltd
follow the principle of waste hierarchy and it focuses on reduce, reuse and recycle the material.
In this, cited firm extract the benefits from products and try to minimize wastage (Nir and et.al,
2016
Plagányi and et.al,).
On other hand it works on the principle of resource efficiency in which company
concentrates on global, economic position of the entity. According to its resource efficiency it
products so that it can sustain in the market for longer duration. It helps the cited firm in utilizing
the resources well and to minimize wastage (Plagányi and et.al, 2014). In addition, it follows
lean manufacturing process that supports the Cafe Nero Ltd in enhancing moral of employees
and they put their best efforts in order to achieve goal of the entity.
4V's operational model of Cafe Nero Ltd
Cafe Nero Ltd follows the 4V's model of operation management. It consists of four V's:
Volume, variety, velocity and value. All these elements are necessary that help in shaping
business effectively (Top 5 – The Four V’s of Operations Management, 2013).
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Illustration 3: Wastage management hierarchy
Source: (Top 5 – The Four V’s of Operations
Management, 2013)

 Volume is the key element in the operational process that helps in organize the business
in effective manner. It is good to have high volume because it reduces overall operational
cost. But being a small size company Cafe Nero Ltd keeps volume as per the demand of
customers. That supports the entity in managing its resources well and reducing wastage.
Effective management of volume assist the cited firm in reducing the issue of over or
under production. It produces products as per the demand of consumers (HOW AN
OPERATIONS MANAGER CAN IMPROVE SUPPLY CHAIN MANAGEMENT, 2017).
 Variety is another important element that defines range of products that are needed to be
produced by the organization. Cafe Nero Ltd has simple operational process but still cited
firm offers range of products and services to its consumers. It identifies their need and
offers them products accordingly (Sharifi and et.al, 2016). That is why clients of cited
firm are satisfied with the cafe.
 Demand of users get changed time to time, it is essential for the organization to meet with
their expectation and make changes in its operational process as well. Variation in demand creates problem for the Cafe Nero Ltd but cited firm continuously
monitor market trends and make necessary changes in its operational process so that it
can meet with expectation of consumers. Visibility of cited firm is good and that is why
cafe is able to attract more consumers towards the brand (de la Huerga, Silvera and
Turoff, 2015).
Controlling
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Illustration 4: 4 V's of operation management
Source: (Top 5 – The Four V’s of Operations Management, 2013)

Cafe Nero Ltd makes effective control over its operational process, in order to reduce
errors it takes support of highly advanced technologies. That helps the cited firm in running its
business smoothly. It uses POS system so that billing errors and other issues can be minimized
effectively. JIT approach is another tool which is used by Cafe Nero Ltd (García and et.al, 2017).
It has been found in the investigation that earlier many clients were complaining for its faulty
billing system but after using this approach company has resolved issues of consumers that has
helped in increasing satisfaction level of consumers.
Five performance objective
Performance objectives are those aims which company wants to achieve within specified
time duration. Planning and operations are done on the bases of these objectives (de la Huerga,
Silvera and Turoff, 2015). Performance objective of Cafe Nero Ltd are as following:
Meet customer expectation
Cafe Nero Ltd always focus on meeting the needs of consumers for that it produces
products as per their requirements. Main target population of cited firm are students so for those
organization offers them cafe products at affordable rates so that number of customers of entity
can be increased (Sharifi and et.al, 2016). One of the major performance objective of Cafe Nero
Ltd is to meet customer expectation and enhance their satisfaction level to great extent.
Quality improvement
It is another performance objective of Cafe Nero Ltd, company aims to offer quality
products to consumers so that they feel good whenever they come to the cafe shop. There are
many competitors of cited firm those who offer range of cafe items to the clients. But still people
prefer for quality products (Nir and et.al, 2016). Cited firm wants to enhance its quality standard
and wants to set benchmark. That is why it is trying so hard so that it can give good competition
to its big competitors.
Control cost
It is another major performance objective of Cafe Nero Ltd, cited firm wants to make
effective control over its cost for that it is utilizing its resources well so that wastage can be
minimized soon. It is fact that if company raise the quality and use advanced equipment for
producing quality food and drinks then it will enhance its cost as well. But Cafe Nero Ltd wants
to make effective control over its cost (Armstrong and Taylor, 2014). For that cited firm making
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strong strategies and it is continuously improving its operational process so that unnecessary
expenditure of the firm can be minimized soon.
Speed delivery
It is another performance objective of Cafe Nero Ltd, cited firm wants to provide speed
delivery to its valuable customers. Its main objective is to satisfy consumers and now days
people want fast services. Currently cafe is providing them good services but due to lack of staff
members it unable to provide them speed delivery (García and et.al, 2017).
Staff retention
Being a small sized company Cafe Nero Ltd is unable to offer high salaries to its
employees. That is why most of its workers leave job and join any other company. Due to this
cited firm has shortage of skilled persons. Cafe Nero Ltd wants to retain nits talented employees
in the workplace for longer duration so that it can improve its performance level and can sustain
in the market for longer duration (Abdel-Maksoud, Cheffi and Ghoudi, 2016).
Improvements require for enhancing operational effectiveness
 Insufficient space in the workplace is the major issue in the Cafe Nero Ltd. That is why
sometime people feel congested and they think to go any other cafe for spending time.
Cited should improve its layout and should provide proper parking facility to its guests
(Badescu and et.al, 2015). That would make them feel comfortable and they will come
frequently in the cafe shop. Layout improve also involves proper arrangement of table
and chairs, clean environment etc. By making such changes cited firm will be able to
accomplish its performance objective.
 Staff retention is the major problem in the cited firm, for reducing this problem company
is required to give reward and recognition to them. It will motivate them and they will
like the workplace environment (García and et.al, 2017). It is the great strategy that will
help in increasing retention rate of employees in the Cafe Nero Ltd.
 Cafe Nero Ltd should enhance rage of products and should offer variety of drinks to
consumers (Carballa, Regueiro and Lema, 2015). This will help in attracting more people
towards the brand. It will make them satisfy and they will be attached with the entity for
longer duration.
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Supply chain of Cafe Nero Ltd
Supply chain is essential part of operational management. Effective supply chin
management can support in improving quality and reducing cost of the entity. It includes labour,
material, resources that are used by corporation in order to accomplish its objectives (Kim, Ha
and Shin, 2013).
Illustration 5: Supply chain management
Source: (HOW AN OPERATIONS MANAGER CAN IMPROVE SUPPLY CHAIN
MANAGEMENT, 2017)
Cafe Nero Ltd has strong chain of suppliers, it purchases raw material from different
suppliers. They provide them material at affordable rates. It supports the organization in making
control over its expenditures. Once raw material gets enters into the workplace then employees
store them effectively so that wastage can be minimized (Plagányi and et.al, 2014). This is
utilized by the production team well that is why cost of the entity is in control. After that
production of final goods is being done as per the need of consumers.
Supply of raw material is being done as per the forecasting of sales figure. Manager of
the company forecast future sales and accordingly they order material (Nir and et.al, 2016). So
that wastage can be minimized and volume can be maintained. After that finished goods is being
served by entity to end users. Due to strong chain of suppliers cited firm is able to offer quality
products to its consumers. That helps Cafe Nero Ltd is enhancing satisfaction level of its
consumers to great extent (Abdel-Maksoud, Cheffi and Ghoudi, 2016). There is problem in the
supply chain management of the cafe shop that, it orders material but no one is here who can
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cross check the quality of substantial. Due to this issue some times it gets poor quality raw
material and it has to order immediate the new material. It is one of the great risk for the cited
firm because in the absence of proper monitoring, it becomes unable to utilize its resources well
that creates trouble for the organization and company fails to accomplish its objective soon
(Kim, Ha and Shin, 2013).
Having more than two suppliers is beneficial for the Cafe Nero Ltd because if entity do
not like products of any suppliers than it can change its supplier immediately. It helps the cited
firm in saving its cost and getting quality raw material in the organization. With the help of
quality material corporation become able to serve quality drinks to its valuable consumers. There
is specific team those who identify the needs of target customers and inform the production team
members (Kim, Ha and Shin, 2013). By this way managers order raw material as per the demand
of guests so that it can satisfy them and can make the loyal towards the brand. Now-a-days
people are students are much more interested in parties and spending time with their friends. But
their expected budget of spending is low as compare to other earning people.
Cafe Nero Ltd is located near to university and its target audience are students of the
college. It is essential for the cited firm that to buy raw material from such supplier who can give
them quality material at lower cost (García and et.al, 2017). By this way cafe will be able to
make control over its cost and it will be able to offer cheaper drinks to valuable consumers. It
helps the cited firm in attracting more people towards the brand. That is why cafe is having huge
number of consumers and its sales volume is good as compare to any other small size
organization. Cafe Nero Ltd analysis situation of the market and then it orders raw material so
that wast age can be minimized and it can utilize its resources effectively. Cited firm follow
standard operating procedure in its supply chain management system, it follows the regulation
and maintain standards. Flow of information is very smooth in the cafe. It circulates necessary
information all supply chain partners on time so that they can coordinate well in the long term
planning of Cafe Nero Ltd (Abdel-Maksoud, Cheffi and Ghoudi, 2016).
Supply chain system of Cafe Nero Ltd is divided into three sections; production flow,
information flow and finance flow. Production flow includes movement of goods from suppliers
to consumers. Cited firm orders quality raw material so that it can produce quality drinks to
them, that will enhance their satisfaction level. In the information flow transmission of order and
information sharing are being done (Brandenburg and et.al, 2014). Company shares detail
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