Introduction to Operations Management
Sainsbury is a supermarket chain owing its existence in the year of 1869 toJohn James Sainsbury in UK. The organization pioneered the concept of self service retailing in UK with its operations in more than 1200 stores divided into supermarkets, convenience stores and Sainsbury bank. The company has gathered over 16 percent market share in the country’s retail industry (Cle
In terms of handling operations of the company, it was firm and strong crediting family ownership and control. Contributing to the ladder of success, the organization formed a joint ventures with British Home Stores in the year of 1977. With the swift operations, Sainsbury saw huge rise in scanning checkouts from 1% to 99% with the investment in technology (J Sainsbury PLC, 2014).
They expanded its operations in the north-east of England, Scotland, and north Wales and NorthernIreland.Sainsbury saw its fall in profits in 1992 with the change in top management. The new management did not match with the corporate beliefs of the earlier leaders. Their quest between quality and value results in huge criticism from suppliers and consumers. The management was rigid into diversifying its product range into other retail items (Logistic & Our operations, 2014). Several other failures such as unsuccessful advertising campaign and price cuts of popular products contributed to the fall of Sainsbury and made Tesco rise to no. 1 position. The brand re launched its identity in 1998 replacing the decade old slogans and logo but that did not pay well. With the appointment of CEO Justin King, Sainsbury saw its rise again. King planned a three year recovery plan for the company. He started with asking for business reviews from customers and identified weak points and areas of improvement.
Emphasis was laid on quality service and stock availability. The flawed IT systems were upgraded through IBM's electronic point of sale systems. The success of the King's recovery programmer results in nine consecutive quarters of sales growth.
a) Introduction of organization and its operations department
As discussed above, Sainsbury is one of the top-notch organizations, and in order to grab the eyeballs of the customers aims to cater high-quality services to them with a fair price. The organization is very clear with a vision of standing at number one trusted retailer where customer would prefer to shop and also work.
Operations Management is considered as the backbone of any organization. Basically, it can be defined as a process wherein optimum utilization of organizational resources are done so as to meet the market in turn customer needs. It looks into the planning, controlling, improving and finally making a strategic move. One of the major responsibilities of the operation department of Sainsbury is to provide the products in a way that gives maximum satisfaction to the customers or clients.
Sainsbury adopts this operational service model to cater services of high-quality to its customer. Customers are mainly concerned with the provenance of the goods they buy and the integrity of the company they spend their money with. There are different objectives of all their operations and Sainsbury thus has a chance to easily improve their productivity with effective control of the conversion process of input and output (Solansky, 2008). It can be critically evaluated that if Sainsbury works towards maintaining a proper operation management then they can target the clients better than their competitors. However, the need in this area is that management of Sainsbury must be in a position to meet customer needs. Operation managers are responsible for providing quality management and control and scheduling. It plays an important role in satisfying consumer's needs. They can further maintain a database for recording all the information of their clients and it helps them in gaining high customer loyalty.
In order to gain the operation excellence, organization mainly works in the five areas (Mahadevan, 2009). According to the above figure, it can be said that objectives of operations of Sainsbury include providing great food to the customers, growing space and creating property value, developing new businesses. This also includes adding complementary channels and services along with introduction of compelling of general merchandise and clothing. Thus, the main objective of Sainsbury is to the fulfill requirement of customers by understanding their needs and thus making efforts in doing so.
One of the most important models of operations management is Performance gap analysis which aids in understanding the priorities, a business needs by identifying the loopholes which need to be addressed properly. By performing the gap analysis of Sainsbury it is known that operations management of the company is making its best efforts in making its functions successful but still there are some gaps found. These sometimes prove to be hindrance for the company. After the evaluation of the operations of Sainsbury under the leadership of Roger Burnley, it was embarked that food and drink supply chain is causing environmental impacts. Most of the greenhouse gases are related to the production and consumption of food. In addition to this, there are gaps found in the operation of IT department of the company as its e-commerce website was not able to take orders for some specific period of time. At Sainsbury, operation management model is adopted in order to provide high quality service to all their customers. In addition to this, customers also have complaints related to its site as it does not work properly. Customers have complaint that whenever they try to log into the website it does not responds in a positive manner. Hence it is only by carrying out a gap analysis operation department will know about the working of the various internal functions. With this, it will also help management of Sainsbury in determining to ensure that all required resources are available with the workers and all are working efficiently. Gap analysis also helps in establishing of priorities for the organization. However, it can be critically evaluated that performance gap analysis is always not effective for Sainsbury. The management team of Sainsbury has a viewpoint that gap analysis is responsible for increasing both costs and time for the company. This is because for conducting the gap analysis, there is need of experts which increases the costs for it. In addition to thus, it can also be said that managers and directors also engage in the evaluation of results and so as result lot of time of the firm is consumed.
When the word “customer” is referred, it can be external or internal – these are people who contribute in the operational excellence of the organization. Former are those who buy different products of vertical product line by entering into their retail stores. On the other hand, latter are those who are intrinisic part of organization may be in the form of sales representative who require assistance from a customer service representative in order to place the orders (Greasley, 2007). Satisfied external customers of Sainsbury have showcased a tendency to make repeat purchases that has helped the firm in gaining customer loyalty. If this clientele are satisfied with all their services they may refer business to other people such as friends and family. In terms of output, external customers of Sainsbury have demonstrated a tendency to expect high quality service and products. In addition to this, it is necessary to maintain good relationship with all their internal consumers plays a key role in business success. If the salesperson of Sainsbury does not work well with customer service then it may obtain a difficulty in placing orders. It results in a poor level of services thereby leading to a decreased market share and brand image in company. It is essential for company to properly communicate with their internal and external customers in order to gain success.
The models enumerated above should be adhered by the organization so as to gain customer loyalty and high market share. For instance, distributing gift vouchers to the customers can be an strategic operational step to generate high customer loyalty. This will lead to customer’s visit and repeat purchases by them which in turn will escalate the market share. As per the picture below, it can be depicted that Sainsubury still has a long way to grab the market share.
Sainsbury adopts mainly five performance objectives that can be used to measure the customer needs with the desired effectiveness of the business. The main performance objectives are quality, speed, dependability, flexibility and costs (Northouse, 2012). These are the most important objectives of the company that should be adopted by them in order to achieve higher market share.
As per the company's overview the process that must be followed by them is to recruit trained employees so they can provide accurate information to their customers. One of the most important objective of the company is to look at the current value of customers and provide them service according to their values (Operations management, 2010). From the above given flow chart it have been clearly represented that Sainsbury can achieve all its objectives after fulfilling these steps. They have set various operation management strategies that must support business strategies and objectives of organization. One of the most important processes that they need to follow is to quicker adaptability of change. It can be said that the process of quicker adaptability of change for operations department of Sainsbury will help it to archive the objectives of meeting the customer requirements. This is so as with accepting the change it will be able to cope with the dynamic change that take palace in the market at present. With this process it will also help in understanding the requirement of customers within less time and thus will put in efforts as soon as possible to fulfill their needs. However, on the other side, the process of quicker adpatibility of change can also hinder Sainsbury in achieving the objective of the company. This is so as it is possible that employees do not accept the changes so readily and they may resist towards it. The overall concept of the business is to deliver the quality service to the consumers which are nothing but the total quality management. According to the above given flow chart it is determine that all these steps should be followed by company in order to gain higher competitive advantage. Both the internal and external customers play an important role in achieving higher success. Further, they can motivate all their employees or staff members by feeling them valued (Akpolat and Pitinanondha, 2009). With this, it can be critically evaluated that meeting of objectives by Sainsbury is not an easy task as it is a very huge company with world wide operations’ and hence bringing changes all of a sudden is not feasible. In spite of this, Sainsbury has been able to manage its operations succesfuklyy. This is clear from the increased sales and pofit figures. The entire credit goes to the operations department of the company. They can include all their staff members in their decision making process which feels them that they are being valued by company. With this process all the employees feels happy and perform effectively. Market share of company and quality of products and services highly depends on the performance of employees. Displaying their products with all its features gives higher reliability to them. It helps them in meeting all their operational objectives as clients can easily search the manufacturing goods as per their requirements. It saves lot of time to the consumers and further can quickly search the products. By providing accurate information to the customers company can maintain its brand reputation. In addition to this they can easily gain the customer loyalty. Operation management mainly focuses on carefully managing all the processes to effectively distribute and produce the products and services. The main responsibility of the Sainsbury's operation management department is to go with the substantial measurement and analysis of internal process. It is essential to carry out all the operations very effectively as the nature of products and services highly dependent on this (Hunter, J2002). Further, Sainsbury can carry out their process effectively in order to fulfill all their operations objectives.
Sainsbury is the third largest retail chain store in UK and it holds a large pie in market share. But there is no denying that it has pioneered many business strategies and remained on no. 1 position for decades. In order to again reach the position there is a need for improvement in operations of the supermarket chain.
Changes to be done
Employee Engagement: Many surveys have revealed the fact that good relationship with employees is an important factor in sustaining confidence in a brand. The gap between the employee expectations and realities can be bridged through strong and inspiring leadership. Relying on the internal communications tool is not sufficient. The values and objectives of organizations are essential for its human resource to understand the personality of the organization (Salleh, Kasolang and Jaafar, 2012). An engaged employee feels aligned with the company and acts and thinks accordingly. This attachment makes an employee's productivity accelerate and perform beyond the expectations of its job description. Sainsbury followed this approach and asks for staff suggestions. A team of more than 150000 individual suggested 20000 improvements out of which only 10% i.e. 2000 were implemented. The suggestions may be small but made a huge impact in cost savings.
However, engagement is not limited to suggestions only and implementing changes. There could be many facets that top level and managers should take into consideration. The most important is it makes employees feel they are part of organization and that management is interested in them. Employee involvement is an idea that helps generate positive attitude in human resource and the organization (Bustle, Marksberry and Clevinger, 2011). It ensures that people attached to the organization will not hesitate to give their best even in tough times.
Reduction in operational waste – In order to reduce the waste that occurs because of production and consumption of food the company should establish a sound baseline. This baseline should be of information so that higher accuracy can be achieved. It is also important to have numerical reduction in target as well as aspirations around diversion from landfill and Sainsbury can form this as their key element.
In addition to this, Sainsbury should organize training of personnel related to treatment of wastes and its managers should ensure that all right things are being done in the proper order and all work instructions are given clearly to the worker so that all work is done effectively. It is further required to be understood that ensuring for all right things in a proper order entails for cost and time. Hence duties are required to be allocated for the same so as to avoid chaos and confusion.
Cost benefit analysis – It can be recmended that Sainsbury should carry on its operations in such manner that all resources a allocated in prop manner in a way that resources are allocated properly. This would help the colony in savin its costs to a sgnificnt extent.
However, it can be critically evaluated that cost benefit analysis should not be extent to that of the company’s meting of objectives and this should be done on basis of its goals.
Merchandising: A compelling merchandising is what attracts a customer at the first glance. Retail brands are focusing on visual merchandising which maximizes the product aesthetics and results in increased sales. A well followed approach of visual merchandising increase awareness and brand loyalty. The success factors of visual merchandising are store appearance, lightning, floor space optimization, window display, packaging etc. All these elements form an eye catching factor for a brand and delight a customer experience finishing in a sale. Sainsbury can implement a theme based strategy to showcase its different food brands. Themes itself tell a story and allows a brand to reinvent itself (Greasley, 2007). This strategy opens up a brand to the customer and creates a buy. It can be evaluated that above technique of merchandising can be beneficial for Sainsbury to position a brand in the minds of consumers.
Salesperson: In store salesperson makes a big impact on the sale of the product. A knowledgeable and helping salesperson respond in a very humble manner to any customer. Organizations focus a lot on training salespersons to communicate with customers and to make those customers feel empowered and happy. Sainsbury must take customer feedbacks of their store experience with salespersons. The feedback will help identify the areas of improvement and develop a training method.
Promotions: Usually retail chains offer huge discounts on occasions and holidays. Discounts and coupons are things that impress every consumer at any time of the day. The retail brands should focus on offering small discount schemes on everyday products (Logistic & Our operations, 2014). A small discount can even make a big impact daily and like for like sales.
From this report we came to know the successful survival of a 145 year old brand. It explains the early strategies adopted by the brand to stay in the market. A look at the various phases of success and failure the company has passed through and the changes in policies and strategies which gave support to meet the challenges. The failure to increase in product range has led to the negative growth of Sainsbury. The information on logistics department gives an overview how the supermarket chain is managing its huge inventory and stock availability in over 1200 stores. The organization modifies its whole logistics department to ensure that a right product reaches at right place in right time. The organization focuses both on its internal and external customers which are critical in presenting its brand image in the market. The second part demonstrates about the operations management of retail chain. The objectives and process of retail chain revolves around stock management and customer services. The third part of the study identifies the areas of improvements in business units. More importantly it lays emphasis that every area of business should be evaluated regularly and continuous improvements to be implemented. Overall the study gives an understanding of the how the company led through with changes in its operations management.
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