Supermarket Operational Analysis and Customer Service Effectiveness

Introduction

The well-functioning of any organization in general, and of retail operators that directly work with the customer in particular, depends on the efficiency and effectiveness of operations. Nowadays, customers are increasingly demanding regarding the quality of service they receive and pay for.

Given the strong competition in the retail market — where customers can easily switch from one retail operator to another if they do not receive the required product or service quality — it is very important for retail operators to create and maintain an efficient service system.

The operational structure, referring to production and concept, is defined by the number and content of operational units (in this case, the actual supermarket locations), their size and physical location, the internal organization, and the cooperation relationships established within these units in order to ensure that the company's core activity is directly accomplished (McNamara, 2008).

Situation Presentation

The following analysis focuses on examining the operational structure and its effectiveness for a high-profile supermarket retail branch. The competitive advantage created and maintained through the supermarket's activity on the market is represented by providing excellent customer service and products.

The company's managers have understood that in order to create a sustainable position in the market, it is imperative that the supermarket meet high quality standards regarding both the products delivered to customers and the services that create the distinctive identity of the supermarket.

However, it appears that the supermarket is beginning to lose ground to its competitors because the quality of service it provides to customers is in decline. If this situation continues on its current downward trajectory, the supermarket will most likely lose more and more customers, resulting in decreased market share and market value, which will further harm the supermarket's overall activity.

It is therefore imperative that the supermarket improves its situation. In order to achieve this objective, an operations analysis of the supermarket retail branch must be conducted.

Operational Analysis Necessity

As noted above, the decreasing level of service quality has prompted the supermarket's managers to seriously undertake an operational analysis process. Such an analysis should, in fact, be conducted even during periods when there is no apparent problem requiring investigation. The rationale behind this position is that operational analyses are not only designed to investigate and resolve existing problems, but also to forecast and prevent the emergence of future problems.

Operational analysis, regardless of the type of company or issues it addresses, should be considered a formal, periodic analysis conducted by "service teams on operational assets, or parts of assets, during in-service management" (FAA, 2007).

The necessity of conducting operational analyses periodically lies in the fact that such analyses are designed to discover whether the operational asset under review is making an effective and efficient contribution to the supermarket's performance, to cost and other financial objectives, and to the safety and needs of customers — who sit at the center of the company's strategy.

Furthermore, the operational analysis is intended to determine the cost and the efficiency — in other words, the performance — of the operational asset being analyzed. The findings of the analysis must be studied in comparison with the standards and objectives established by the company. The analysis will also allow for estimation of future costs, benefits, or possible shortfalls that might result from changes in the macro- or microenvironment, or from internal factors.

Operational Analysis Process and Timing

In order to conduct an efficient operational analysis, it is very important to clearly establish the duration of time within which the analysis will be performed. Given that the operational analysis will be a general one — encompassing all operations that compose the service activity delivered to customers — it is recommended that the analysis be performed during a period generally characterized by steady sales, unaffected by seasonal factors.

In other words, it is advisable to avoid the winter holidays, the summer season with special offers and promotions, or any other holidays, celebrations, or events of national importance. Such periods are characterized by increased customer demand, particularly for certain categories of products and services. During these times, the supermarket's service activity is subjected to increased pressure, which could negatively affect service quality for reasons unrelated to everyday operational performance.

Therefore, the results of an operational analysis conducted during such periods would not yield conclusive, objective findings suitable for further analysis, decision-making, and strategy development. As a consequence, it is recommended that the operational analysis of the supermarket branch's service activity be performed at the beginning of the spring or autumn season. It is estimated that such an analysis could be conducted over a one-month period in order to capture both weekend and weekday activity.

Factors Affecting Customer Service

In order to implement successful customer service strategies, it is vital to consider the factors that affect customer service — those that influence the efficiency, effectiveness, and productivity of operations addressing customer needs.

These factors can also be studied within the operational analysis. The results must be measured against quality standards previously set by the supermarket's managers in order to ensure the best possible service for existing and potential customers.

Generally, the most important factors affecting a company's customer service quality include people, process, and technology (Jones, 2000). Accordingly, the operational analysis should focus on these three areas.

Other general factors affecting a company's strategic direction regarding operations management include improving product quality and reducing product cost (Davig et al., 1991). More specific factors that derive from those previously mentioned include: improving product quality, reducing product cost, improving product design, improving service, improving inventory and control, reducing lead times, improving scheduling, and improving materials handling.

The supermarket in question has focused its strategy on improving product and service quality rather than on reducing costs. However, the declining level of service quality has revealed that either the quality improvement strategy has run its course, or the strategy was not flexible enough to adapt to changes produced by the external environment.