Operations Management

Slack (2007) introduced the concept of 'The Five Performance Objectives', which are Quality, Speed, Dependability, Flexibility and Cost, which can be used to assess customer satisfaction. Quality is defined as "providing error-free goods and services which are 'fit for their purpose'. " (Slack et al, 2007, pg. 39). Speed looks at how fast you can get the product or service to the customer. Dependability refers to delivering the goods and services to customers in time. Flexibility means changing and improving the product or service to give it more range.

Cost means producing and selling the product or service to consumers as cheap as possible, generating more consumer demand, while cutting down production costs. All these factors increase consumer demand and satisfaction for the products and services and creates competitive advantage for the company. For a supermarket I think that the main performance objective would be cost and dependability. The supermarket has to be able to maximise profits but keep production costs low, and pass on added value to customers in the form of cheaper goods.

Since food prices and the cost of living have rapidly increased, consumers are looking for ways to save money and are therefore demanding low-priced goods. The lower the price of the goods, the more customer demand there is, resulting in profits, customer satisfaction and loyalty for the supermarket. Lower costs can be achieved by bulk-buying products from suppliers, especially products with a long shelf-life. Dependability is another important performance objective as customers rely on supermarkets to consistently stock the products they want.

Supermarkets can lose customers if they run out of stock for certain goods as customers will perceive the supermarket to be unreliable. Supermarkets, therefore, need to implement fast delivery procedures with no delays and order from reliable suppliers who will make sure the goods arrive on time, giving a sense of stability and routine. Dependability can also refer to the supermarket's opening hours. Most supermarkets are open 24 hours Monday-Friday, making it more convenient for customers to visit at times that suit them since the majority of them work during the day. For a bank I think that the main performance objective would be speed.

Speed can refer to the time taken to process a cash transaction or to clear a cheque, the time it takes to ask a question and get a response or the time it takes to open an account. The faster these processes occur, the more customers the bank is likely to get. There is a time lag of 3-5 working days for a cheque to clear, and if this is reduced more people are likely to join the bank as they can get their money faster. Customers have the option of calling, emailing or going to the bank to ask questions. Whilst face-to-face will give an immediate response, some customers have to wait days to receive an answer by email.

By reducing this time lag to receiving a response in the same day, customers will be relieved of their concerns quicker and be more satisfied with the level of service. Some banks in the US have even introduced Instant Messaging (IM) as a means of communication between staff and customer, which has proven to be successful. To open a new bank account most banks still require customers to fill in a lengthy application form, which can be time-consuming. This information is then inputted into the database to be processed creating a greater time delay.

By removing the paper form and entering the details directly into the bank's database while the customer answers each question, the process is more efficient and quick. Appendix 1 shows a polar representation of the performance objectives for a supermarket and bank. To measure performance in a supermarket I would look at the total profits generated. The greater the profits generated, the greater the performance, as there are more customers entering. To maintain the large customer inflow I would ask for their feedback in regards to our strengths and weaknesses and things we could improve on. This could be done as a questionnaire.

I would also assess the quality of the workforce and how well they are working by asking customers to assess the friendliness and helpfulness of staff. I would find ways to motivate staff to work harder, thereby increasing efficiency and productivity, by giving them incentives and more job diversity. This would create a friendlier environment which the customers would value more. For a bank I would assess performance based on customer feedback. I would ask them to rate the attitude and behaviour of the employees, how fast they were able to perform the task, the appearance and cleanliness of the bank, and changes will be made accordingly.

I would also look at the sales generated to see if the bank is performing financially by comparing this year's sales to last year and against competitors' sales. Quality is important for both supermarkets and banks. Both have to provide high quality services and the supermarket has to make sure it stocks high quality goods, otherwise customers will not purchase them. Speed: Speed is very important for banks as they have to make sure they can process transactions quickly, so not to delay customers so they can get their money quickly.

They have to answer customers' queries as quickly as possible to relieve customers' concerns. Supermarkets have to decrease queuing time for the checkouts as customers can often become impatient. They can do this by opening out more check-out counters during peak hours. Dependability: This is extremely important for supermarkets as customers expect the products to be stock, and they can easily lose customers if they have run out. Customers will always perceive a supermarket to be unreliable if they do not stock the product when they demand it.

Dependability is quite important for banks as customers rely on banks to keep their money safe. Flexibility: Banks will try and be flexible for their customers and introduce special terms for their accounts depending on their needs, but most accounts are standard, giving some flexibility. Supermarkets have relatively low flexibility as the order and sell the same products daily. There may be some changes when ordering seasonal goods e. g. Pumpkins and Easter Eggs. Cost: It is important for a supermarket to keep production costs down and pass on this benefit to customers in the form of cheaper goods.

Customers demand more of a product when price is low and by using this strategy, supermarkets can generate enormous profits. Banks have fairly low production costs and will try and get the customer the best deal available against competitors. Although both the bank and the supermarket overlap on the natural diagonal as both mass service and service shops, (businesses with front and back operations but also with low customer contact,) we can see that they have completely different objectives and they are on opposites on Slack's 4 Vs.

This means that although they are both service shops, they both rely on different objectives to be successful. They are two businesses with huge customer inflows who rely heavily on the public to be successful, and so you might think that they would be similar in the way that they are run and the way in which they operate, but from this report, we can see that they are not. They both deal with customers on a face-to-face basis and they both provide a service to the consumer, but it can be seen that they are both successful whilst performing their duties on the complete opposite ends of the spectrum of Slack's 4 Vs.

It might be believed that there is only one correct way for a business to be run according to the 4 Vs model, but in the case of the bank and the supermarket, it is obvious that different businesses, even with similarities, operate in different ways. The more important question is whether or not the business agrees with its position on the model and if not, does it know how to change its processes to move itself to a position it would like to be in?

Bibliography:

Akamavi, Rapha�l K. (2005), Re-engineering service quality process mapping: e-banking process , International Journal of Bank Marketing [online] Vol 23 (Issue1) p. 28-53. Available at www.emeraldinsight.com/10.1108/02652320510577357 (Accessed on 29 November 2008)

Burton, R., (2001), Business Process Management: Profiting From Process, Sams Publishing

Heizer, J., Render, B. (2001) Operations Management, 6th Edition, Prentice Hall

Slack, N., Chambers, S., Johnston, R. (2007) Operations Management, 5th Edition, London: FT Prentice Hall