Business Service Operations - Essay Example

Business Service Operations Summary Service concept plays a vital part in an organisation for delivering services according to the requirements or preferences of customers. Service, in any organisation can appear in several forms like retail services, consulting services and charity services among others. These services determine the satisfaction level of the customers and ultimately lead towards enhanced business performance. The assignment is based on understanding the service concept of a supermarket retailer in the UK named Tesco PLC. Throughout the assignment, the different business operations and how these business operations contribute and support the service concept of Tesco have been described. The assignment also portrays the layout of services and service delivery network of Tesco. Furthermore, it also illustrates certain important suggestions for developing the service concept and the delivery system of the organisation. Table of Contents Summary 2 Introduction 4 Description of Service Concept 4 Service Concept of Tesco 5 How Operations of Tesco Contribute To the Functioning of Service Concept 7 How Well the Operations of Tesco Implement the Service Concept 10 Conclusion 13 Recommendations for Improving Service Concept and Delivery System 14 References 16 Appendices 19 Appendix 1: Service Operation Layout of Tesco 19 Appendix 2: Distribution Channel of Tesco 20 Appendix 3: Supply Chain Manageemnt of Tesco 21 21 Appendix 4: Phases of Physical Movement of Products of Tesco 22 Introduction Services can generally appear on the basis of different shapes and forms. For instance, in business to consumer organisation, service can arrive in the form of retail services. Moreover, in business to business organisation, services can arrive from consulting services and in non-profit organisations, services can arrive from charity services. Any kind of service can produce additional value for the customer’s at large (Berry, 1995). With this concern, the assignment is based on understanding the service concept of an UK based supermarket retailer named Tesco and recommending effective strategies to develop its various services. Description of Service Concept Service is fundamentally considered to be an activity or set of procedures that is used for maintaining smooth interrelation with the customers and enhancing the overall business performance. Service concept is a vital method of apprehending the nature of services so that the customers comprehend about what they are receiving and employees also understand about what they are delivering. It is a shared understanding of nature of service which encapsulates information about classifying thoughts, customers’ experience and service outcomes. Service concept is a core task in managing different service operations. It can be used as a central tool in the design, distribution and improvement of services of a particular organisation. Service concept concentrates on a particular market segment and provides limited range of services for both customers and business operations (Fitzsimmons & Fitzsimmons, 2000). According to Johnston & Clark (2007), service concept for an organisation signifies: The organising knowledge which denotes the core service accepted or used by the customers, The service experience, representing customer’s direct understanding of service procedure which concerns dealing effectually with the customers,, The service consequence which signify the assessment of the outcomes of the customers about the services provided, The service operation, representing the method in which services are provided and The value of services which denotes the advantages that customers observe to be intrinsic value of the service against the cost (Johnston & Clark, 2007). In order to be effective, service concept must deliver adequate information in order to make it clear about what organisation is selling or delivering and what customers are purchasing and receiving. Hence, the service concept signifies the characteristics of service offering that directs the service operational employees of different organisations. Service concept is a mechanism which connects business operations and marketing. Therefore, it is vital for an organisation to define the services effectively so that customers’ expectations are fulfilled and employees are satisfied. Furthermore, well defined service concept can reduce different arising tensions between different departments within a specific organisation. Thus, service concept is therefore can be regarded as a vital tool for various organisations that can communicate the set of advantages to the customers for representing the worth of services. An organisation can only provide effective services after making substantial investments in several areas like assets, procedures, human resources and materials (Goldstein & et. al., 2002). Service Concept of Tesco Tesco is a leading supermarket retailer in the UK and is considered as one of the top three retailers internationally, operating in thirteen different nations apart from the UK. Tesco has started its business as grocery retail and has first opened its retail store in the year 1929 in London (Mukerjee, 2007). The service concept of Tesco can be classified into two broad categories that have been described hereunder. Possible Access to Extensive Diversity of Markets Tesco provides possible access to extensive diversity of markets that allows the establishment of new products and services. For example, Tesco has developed itself successfully in food retailing segment. The core capabilities that allowed Tesco to establish itself especially in food market segment are clear distinct brand proposition and clear concentration on properly defined services. Tesco has developed itself as providing the most customised and efficient services to the customers by following the approach of customer relationship management (CRM). By recognising the trend of customers towards accessing internet, Tesco has started to undertake online initiatives. In this similar context, it has been apparently observed that in the year 1996, Tesco has introduced eCRM approach. This approach resulted in enhancing the experiences of the customers towards internet shopping (Mukerjee, 2007). Tesco intends to attain greater value from the customers by enhancing its service delivery system. In this regard, the service delivery system of Tesco is designed by keeping in mind the value of customers so that they can acquire a good shopping experience. For instance, Tesco has made Tesco.com in order to enhance the service delivery and to ensure better relationship management (Ma & et. al., 2010). In the year 2000, Tesco.com was made as a single subsidiary that allowed the organisation to acquire additional motivation and make full concentration on different eCRM advantages (Mukerjee, 2007). Substantial Involvement to the Perceived Customer Advantages Tesco makes substantial involvement to the perceived customer advantages for the purpose of developing its service concept. In this similar concern, the organisation provides fundamental benefits to the customers so that they willingly pay for any particular product or service. The success of Tesco in retail segment depicts that the organisation design as well as apply effective supply chain system and provide effective customer interface. For example, Tesco has started to generate value from the customers by introducing self-service concept. This self-service concept allowed customers to save time and also to minimise the labour related expenses (Tesco, 2013). Tesco has understood the importance of the important aspect i.e. customer retention and thus attempted to enhance its service concept. In the year 1995, Tesco introduced loyalty card that provided the customers with the opportunity of comparing the prices of the products with its chief business market competitors (Mukerjee, 2007). How Operations of Tesco Contribute To the Functioning of Service Concept The operations of Tesco can be classified into two major groups that include core functions and support functions. The core functions of Tesco include delivery of its products or services and support functions comprise other activities like business operational as well as marketing functions among others (Tesco, 2013). The operations of Tesco have been noted to occur in a decentralised manner. The strategic decisions of the organisation are generally made by several levels of managers. This operational system helps the management of Tesco to concentrate more on important operational as well as business areas and also to encourage the business managers to become more innovative towards smooth functioning of service concept. Due to these functions of the operational system, it can be affirmed that the service concept of Tesco is quite hard for others to imitate. The core competencies of Tesco with respect to service concept are completely unique. Tesco provides its customers with good corporate status and presents best quality products or services (Tesco, 2013). In Tesco, the line of communication between several levels of management has been noted to be quite simpler that makes it easier to deliver effective services to the customers. In this similar context, the task of service operation manager in Tesco is to control the business procedures, expenses, technologies, employees and different commercial activities. The service operation managers in any organisation faces numerous challenges in terms of investment concerning new technologies, management of databases, centralised operations, development of services and maintenance of interrelation with the customers. It has been viewed that Tesco manages the physical and the virtual network along with its supply chain effectively in order to deliver better services to its valuable customers. Appendix 3 will show one of the important operations models of Tesco i.e. its supply chain management (SCM) initiative. The operations of Tesco that contribute towards the functioning of the service concept can be better understood from the following four dimensions that have been described hereunder. Volume: Volume of service operation management depends on the deliverance of number of products or services by the organisations. Tesco has considerable number of customers in comparison with other smaller retail shops as the prices of products of the organisation are cheaper than similar retail outlets. Due to this reason, Tesco purchases products in bulk quantity that minimises changeover expenses by a greater degree. Besides, purchasing products in bulk quantity help the organisation to lower its operational unit cost. Due to this reason, the volume of products and services are higher in Tesco as compared to other smaller retail stores. Variety: Variety of service operation management deals with different kinds of products or services made by organisations. In Tesco, the operational procedures are standardised, therefore the variety of operations as well as services of the organisation are medium. Variation: Variation of services depends on the changes in demand as well as output over time. As, the retail outlets of Tesco generally situated in residential areas and the organisation mostly concentrates on food items, there is not heavy variation in demand. The reason is that every person requires purchasing foods regularly. However, there can be little fluctuation in demand in seasonal times such as in Christmas or Easter festival, but these fluctuations are forecasted easily. Therefore, as there lay little variation in demand, Tesco can effectively utilise the resources for providing consistent services to the customers. Visibility: Visibility of services denotes how much information about internal operational procedures is exposed to the customers. In Tesco, certain operational functions that perform by the front line employees are completely visible such as billing of products, assisting customers with different products and organising products in shelves among others. However, certain back office operations are not visible to the customers such as stock management, resource control and supply chain management among others (Trott, 2008). How Well the Operations of Tesco Implement the Service Concept The operation of Tesco has been viewed to utilise the service concept in an effective manner. For instance, Tesco use small stores rather than large warehouses in order to serve the online orders in an effective manner. The customers’ orders are well channelized to the nearest stores and serviced by using improved operational procedure. The wellness of operations of Tesco can be observed by the research undertaken by comScore Networks which stated that the market share of Tesco in the online shopping segment of the UK was almost 66% in the year 2006, where its competitors such as ASDA as well as Sainsbury had market share of only 16% and 14% respectively (Mukerjee, 2007). There are two major types of layout that the organisations can implement in order to provide valued services to the customers that encompass product layout and process layout. In this context, it can be stated that Tesco implemented the process layout as certain operations of the organisation includes different business transaction related processes (Hope & Muhlemann, 1997). Process layout is categorised into three portions like professional services, service workshops and mass services (Lockwood & et. al., 2001). Appendix 1 will show the service operation layout of Tesco. As Tesco involves with large number of business transactions and possess low interaction time, the services of the organisation have been noted to be quite standardised and its volume also quite high. The service type of Tesco comes beneath mass services that comprise low level of customisation. The services of Tesco are usually product oriented (Mukherjee, 2007). The distribution network of Tesco comprises numerous regional composite centres that can effectively serve the entire nation. In order to enhance the delivery system, Tesco categorises its retail stores into six segments that encompass groceries item, crop foods item, bakery foods item, chilled foods, frozen foods and protected products (such as liquor and cigarettes). In every zone, at least one person is provided with the responsibility to load products in the rolling cart. The products are also scanned during the loading time in order to make sure that the process of scanning is not needed later. This process further helps Tesco to minimise the time for order fulfilment. Appendix 2 shows the distribution channel of Tesco (Mukerjee, 2007). Tesco also uses automation technology in order to enhance the service delivery process. For instance, Tesco uses Warehouse Management System (WMS) in order to effectively administer the task arrangements and physical movement of products. In WMS, each movement of products in considered as an assignment. The advantages of this new system comprise increased operational effectiveness, reduced inventory holding expenses and quicker access to management reports (Bell & Davison, n.d.). The physical movement of products to the customers goes through four simple phases that have been portrayed hereunder. Appendix 4 will depict a better understanding about the operational model concerning the phases of physical movement of products of Tesco. Goods-in: Good-in occur when supplier’s vehicle attain at the storehouse in order to deliver products or services. The goods vehicle is provided with a time slot and directed to a delivery bay. Put-away: In the second phase, the computerised system of Tesco instructs the fork lift trucks to collect products and also notifies to put-away into. In order to be efficient, the computerised system recognises the closest unoccupied reserve location to product line’s subsequent picking location. Let downs: As the picking location becomes occupied, the system generates let downs of products and fork lift trucks are again instructed to bring down the new inventory in order to restock the picking location. Goods-out: The operational system then generates assignments for delivering products or services on the basis of customers’ orders and transports the products required by the customers. The ultimate objective of operations of Tesco is obviously to acquire the right products to the right location at correct time and at correct expenses. The effective functioning of operations is critical for providing superior services to the customers. Using improved operational system facilitates the organisations to enhance the time apportioned for effectively dealing with service delivery procedures (Bell & Davison, n.d.). Conclusion Service concept is vital for every business within a particular organisation. It assists the organisations to understand the requirements of the customers and to provide them different services accordingly. Service concept is regarded as expectations of the customers about the services provided by an organisation to them and thus it determines about how the needs of the customers are considered. In relation to service concept, Tesco demonstrates that maintaining a simple and an effective approach of services can help to maintain better association with the customers. In this regard, Tesco uses mass service model for providing standardised services to the customers. This model also helps in maintaining a low product expense. Besides, the organisation also uses pioneering technological advancements in order to enhance the process of service delivery. The success of Tesco in the supermarket retail chain industry demonstrates that effective service delivery can help an organisation to satisfy the customers. In present day context, retailing business has become highly competitive since the customers have more alternatives to select products from different retail outlets. It is the core strategy of business to maintain profitable association with the customers that can be accomplished by generating superior customer value and satisfaction. Customer value in retail organisations is accomplished by better service delivery. Thus, it can be concluded that in today’s dynamic business context with growing stress from the accessibility of products and services of different competitors, Tesco needs to enhance its service concept and delivery system to maintain its dominant position in the business market. Recommendations for Improving Service Concept and Delivery System After acquiring a brief idea about the service concept and operations that utilises by Tesco, it can be stated that the organisation is performing quite well; yet, certain areas needs to be enhanced concerning service concept and delivery system. Development of network: In order to enhance the service delivery, Tesco can develop the physical network. For enhancing the physical network, location of each warehouse should be selected carefully in order to deliver the products quickly to the destinations of the customers. Information is regarded as vital part for service delivery; therefore information flow must be recognised, managed and improved to make sure that product flows are administered within identified service levels. The formation of network and selection of warehouse locations must allow for future geographical service extension and delivery paths as desirable. Improvement of supply chain procedure: Improvement of delivery system can be accomplished by enhancement in the supply chain procedure. Tesco can enhance the supply chain procedure by adopting better information sharing through entire business network. Furthermore, Tesco will require aligning the operational strategies with supply channel by utilising better demand forecasting methods and purchasing strategies. This can help to maintain the expenses of delivering services by a significant level. Tesco can also enhance its operational effectiveness through scheduling better as well as effectual strategies and making new product or service development. Continuous development in the present distribution system should be a major consideration for Tesco in order to enhance its service concept as well as operations. The organisation can emphasise on the aforementioned areas concerning the enhancement in its service concept along with delivery system. 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(2010). “Delivering customer value based on service process: the example of Tesco.com”. International Business Research, vol.3, no.2, pp.131-135. Trott, P. (2008) Innovation Management and New Product Development, 4/E, Pearson Education India. Tesco, 2013, Business Model, Investors, [Online] Available at: http://www.tescoplc.com/index.asp?pageid=257 [Accessed March 04, 2013]. Appendices Appendix 1: Service Operation Layout of Tesco Appendix 2: Distribution Channel of Tesco Appendix 3: Supply Chain Manageemnt of Tesco Source: (Master Writing Services, n.d.) Appendix 4: Phases of Physical Movement of Products of Tesco Read More