B&M stores Business Operations Management
In any business, operations management is significant in ensuring there is efficiency. The success of a business lies in the efficiency in operations and management. For B&M, efficiency is very pivotal in its success given the tight competition in the UK market. A business strategy is created by the strategic plan, which is a long-range plan that ensures a business achieves its vision (Cummings and Worley, 2014 p 90). Business has different functions, and each function plays a significant role in supporting the success of the business (Barnes, 2001). The operations strategy adopted by a company develops the processes that will enable the business to deliver the products and services effectively to the customers. This involves undertaking different activities in consideration of the available resources leading to an efficient business processes model. The essential operation components include location and layout of the stores, capacity planning, handling of materials, products selection, process and product planning, inventory control, cost and quality control (Checkland 1999 p 20). All these components give a business a competitive advantage in the market.
B&M has three main objectives, which are low costs, quality products, and strategic sourcing. The comp nay sells grocery and non-grocery goods. The strategic plan of the company is using the grocery as the traffic driver. Customers are attracted by the low prices for grocery and in the process end up purchasing more than the grocery (Slack et al, 2004 p 34). The main objective of the B&M Company is to sell quality products at low prices. The company has a low price policy and manages to maintain it through high sourcing capabilities, low rent high traffic locations, and minimal investments. The company stores are not the most pleasing, but they offer customers the pricing policy they need.
B&M utilizes the ‘one in one out’ policy to minimize the storage level while at the same time allowing the company to concentrate on the highest demanded products. This allows the company to manage stock and reduce the warehouse costs. B&M sources grocery products from local firms. The company specializes in offering better terms to the suppliers as opposed to their competitors. The company pays suppliers in cash for larger volumes enabling it to get the best prices as opposed to payment terms. The non-grocery products are sourced through the design and purchasing team. B&M designs the products and then sourced directly from factories in China. With no intermediaries, the company can secure the best prices.
B&M utilizes two store formats, which are small high street locations and larger big box locations. This allows the company to target customers in the streets and the parks. With the weak economic environment experienced in the UK in the years 2007-2011, B&M took the opportunity to seize space. With the decline in incomes, many stores were closed, and property owners were desperate to rent their stores. B&M was able to acquire attractive stores in high street locations at extremely low rents and favorable terms. Further, the company did not just concentrate on the high street locations rather it also looked to take their business out of town in big box sites, which were vacated over the low economic period (BBC, 2014). To maintain a high quality in products, the company sources grocery mainly from local suppliers and pay them cash on delivery. In addition, the non-grocery products are sourced directly from the manufacturer. This keeps the company ahead of its competitors in the industry.
Soft Systems Methodology (SSM)
Developed in the year 1991 by Peter Checkland, SSM is a tool for problem solving where issues can be complex in nature. SSM helps in formulating and structuring problems in human situations together with how the situation can be improved mostly in the management of change. Just like other systems approaches, the major objective of SSM is to compare the real world and the conceptual world. Such a comparison results in a better understanding of the world improvement ideas are discovered. SSM has seven stages, which tackle both the real world and conceptual world (Burge, 2015 p 15). The first stage is the problem situation, which tackles the real world.
The Problem Situation
Within the UK market, the grocery retail market is very competitive. Companies such as TESCO, Sainsbury’s, ASDA, and Morrison’s dominate the sector. Though B&M does not primarily concentrate with groceries alone, groceries are the traffic drivers in the company stores. Its major competitive advantage is high-quality groceries at low prices, which allows customers to utilize the discount policy in purchasing other non-grocery products in the stores. Most of these retailers in the grocery sector are increasingly adopting the internet as a tool of operations (Econsultancy, 2014). There is a shift in the purchasing patterns among the consumers in the UK. With the development of tablets and smart phones, more consumers have access to online shopping which has increased the trend of online grocery shopping.
Online grocery has emerged due to consumer’s habits and time convenience. With online shopping, a consumer can shop from the comfort of her/his house or in the office. In today’s economic environment, convenience is the key attribute to consumers. Consumers have tight schedules and have no time to visit stores to shop physically. In addition, physical shopping takes time and resources. Home delivery through online shopping is more convenient to the consumer. Currently, almost all the industries have adopted the online model of business. From selling of products to an offering of services, online business is the revolutionary competitive advantage being utilized by companies in this century.
The analysis above highlights why it is significant for B&M to introduce the online shopping service. The company had 450 outlets in the UK alone and targeted to reach 850 outlets. With its low prices, consumers have moved from the big supermarkets to the company’s stores. However, competition in the retail industry is very stiff, and the company has to indulge in online business for it to maintain its competitive advantage (Ocado Media Information, 2010). However, B&M faces many challenges in line with taking operations online. These challenges pose a complex problem when it comes to system management. The company has to consider the components that are involved in its operations model as it introduces the online operations.
Online Retail Sector models
When indulging in the online operations, the company should consider the factors that may affect them in taking a centralized or decentralized approach to managing stock, value chain, delivery chain and cost implications. There are different solutions within the sector that can be evaluated. Major retailer in the UK is the Tesco Company. Tesco is one of the retailers operating online. Tesco succeeded in its online efforts by utilizing the already available assets as opposed to new investments in warehouses. Employees pick products from the local stores and deliver them to customers. This reduced the investment level while minimizing risk. Other retailers such as Sainsbury and Asda followed the same model as Tesco and succeeded in increasing customer satisfaction. Morrison and Ocado, however, adopted the “dark room” model. Both companies collaborated in entering the online market. In their model, orders from Morrison are picked from customers fulfillment center owned by Ocado and the product delivered through the Morrison fleet. Ocado has a specific time of delivery giving customers the flexibility and saving time.
Operation Strategy Priorities Model
Operations in online retail can be complex. Several factors affect both the retailer and the customers. These factors are compared with the operations model for B&M, and they include costs, dependability, speed, quality, and flexibility.
B&M has a low price policy through efficient sourcing. Introducing an online service however increase the cost due to the increased investment, cost of delivery, warehouses requirement and the extra cost of managing the orders. The company has to employ more employees to manage the online platform. The company adopts the one put one in model of stock management, which may not be proper for online operations where anticipating demand is hard.
B&M has a policy to provide their customers with high-quality products at low prices. Introducing the online model of business may affect the quality of that product delivered to the customer may be of lower quality than the company standards. The increased cost may also have an impact on the quality of products. This will have a negative impact on the credibility of the company.
For customers who shop online, convenience is a key aspect. The company has to consider the delivery methods, cost and time taken. Speed is thus very vital in running an online business.
Dependability is another significant factor to consider. The retailer must be able to deliver products in line with the promise made to the customer’s failure to which dependability to deliver will fall. Aspects to include here are products delivered, time, and return policy if the customer is unsatisfied.
Introducing an online platform will affect the flexibility of B&M operations. B&M focus on a wide range of products, and to be successful in the online arena, it has to focus on different designs of a similar product so that the customers can have a wide range of products to make an informed choice.
Proposed solution for B&M online operations
Considering the factors above, outlined below is a solution for B&M online shopping platform. Currently, the company operates under a decentralized approach of operations management. It would be appropriate for the company to continue using the same approach for its online operations. The grocery products are sourced from local suppliers and the non-grocery from factories mainly in China. This product goes directly to the warehouses, which serves the stores on demand (Krajewski et al., 2013 p 78). As opposed to a decentralized approach, a centralized approach will ultimately create a complex in an efficient structure for the company to manage the suppliers. This will also lead to an increase in costs. Other retailers have been successful with the centralized approach such as Tesco and Asda.
A single website with all the products will be introduced, and employees placed to manage it. Employees can be placed in different warehouses to monitor stock and update the website appropriately. Once a customer makes an order, the order will be directed to the local store for delivery. In store, picking would be the most appropriate delivery method, but with most of the retailers choosing to do home delivery, it may have an impact on competition. However, it might be costly with fewer products, home delivery from the local store will be appropriate. The logistical infrastructure used to make deliveries to the stores from the warehouses will be utilized in making deliveries. This will enable the company to manage costs while still maintaining the quality of the products.
To ensure customer satisfaction, the company has to consider value chain management. This includes marketing, reducing costs, customer feedback and a well set up a website. A badly set up website can negatively affect the company through online platforms where customers share ideas. To manage the quality of the products, the company should continue to offer the same products as before and focus on quality control. Online offers will be communicated through the website. Upon delivery of the service, the customer should have a platform to give some feedback on the overall process. With feedback, B&M will be able to manage any issues arising at any stage. As mentioned earlier, convenience is significant to the customer. B&M should thus offer competitive delivery fees and have specific time slots for delivery. Failure to charge the delivery fee will lead to increased cost on the part of the company. Since other competitors charge a delivery fee. B&M can also introduce a competitive delivery fee.
With an online business, the delivery chain is the major consideration aspect. The parcel conundrum gives rise to many issues including inconvenienced customers and increased cost to the companies. For B&M to manage arising issues, measures will be put into place. One of the measures is to use an in-house delivery model. This allows the company to be in command of the quality of service thus safeguarding its reputation (Wood, 2011). It is significant to consider the environmental and cost implications of many delivery attempts. Not only will this be expensive but also contributes to carbon dioxide emissions into the atmosphere (Edwards et al., 2009 p18).
The company can also consider on customer collection service (Bomford, 2012). This is where the customers collect the product from the nearest store. If both the home delivery and the customer collection service are run together, unreachable customers can collect their products from stores and safe on costs. An important element is customer feedback. The company can collect feedback from customers about the delivery service and use the feedbacks to continuously make improvements and manage any arising issues. Online surveys would be very effective in collecting customer feedback.
Analyzing the rich picture together with the several aspects discussed in part 1 above reveals the following root definition for B&M.
“An online shopping platform operated and owned by B&M with the aim to provide an efficient shopping service, by providing both customer collection and home delivery of quality products at a low cost to customers while maintaining a positive relationship with the suppliers with an aim of increasing profits and market share in the retail sector. “
B&M customers include all the existing and new customers. It is imperative to consider how the online platform will benefit the customers since its success or failure lies with the customers. This can be addressed through a convenient delivery of high-quality products at low prices to encourage customers to embrace the new system.
These include the employees and the management of the company. It is important for the employees handling the online system to be well trained. In addition, the company should set aside enough resources to manage the orders. Additional employees may be required to manage delivery and feedback collection.
In the transformation process, the customers will be ordering products online. The company will then be processing the order and making a home delivery or customer collection. It is crucial to think about customer satisfaction, cost, and ecological implications of this process.
B&M is known for its low prices and high-quality products. The company should maintain this reputation since these factors are significant in making purchasing decisions.
The new system will be owned and managed by B&M. The company will have control over all departments including delivery and customer collection. In addition, the company will also have the power to make any necessary changes to the system.
B&M has a social responsibility to keep the environment safe. Due to the home delivery service, the company has to consider the negative impacts it may have on the environment (Edwards et al., 2009 p59). This can be managed by effective and timely deliveries to reduce redeliveries.
B&M Process Map “AS IS”
B&M Process Map “TO BE”
B&M Process Map “AS IS.”
The process involves customers viewing the available offers on the website and then traveling to the store to purchase an item. The customer picks an item and then pays for it after which the customer leaves. Within the store, the approach is used to manage inventory is just in time. Local suppliers deliver products to the local stores, and the international suppliers distribute products to the warehouses when orders are received. Local stores orders from the warehouses as need arise. The warehouses process and deliver the orders accordingly.
B&M Process Map “TO BE”.
The “to be” process plan demonstrates future process once the online service is launched. The process starts when the customer visiting the websites, views a product, makes an order, and chooses a delivery method. The delivery options include home delivery or customer collection. The order is sent to the online processing warehouse where it is processed, and the customer receives a notification. The order is then sent to the nearest local store for delivery or collection. The store notifies the customer about a home delivery or a store collection. Once the customer receives the product, the process is complete. The supply chain remains as it is currently.
B&M adopts a decentralized approach where managers hold power over local stores. For effective implementation, store managers need to consider the costs, flexibility, dependability, and the quality of service. Cost involves the resources required to complete the whole process from ordering to customer delivery. The flexibility in the system can be defined in the several delivery methods available and the services offered. In addition, it is important for the stores to deliver the right product to avoid complaints and product rejections. This will ensure there is dependability and customer satisfaction. To achieve the above priorities, effective change management is significant. There are two levels of change management. These include the upper level and the lower level. The upper levels include time, cost, and quality. The lower level covers beliefs, attitudes, and acceptance (Kruger, 1996).
For effective implementation, the managers need to focus on the acceptance by the staff. Employees need to be trained and communication made frequent. In addition, the managers should clarify on the measures and the objectives of the system (Keyes, 2016). This calls for effective planning for the managers. Keeping in mind that the managers will be ensuring that the orders reach the customers, proper planning should be installed in the stores. Business priorities should be organized. Adopting these approaches will ensure that B&M not only support the employees but also makes the new system a success.
B&M Balanced Scorecard
|Increase turnover||Profits||90%||Launching the online platform and provide quality products and services at low prices.|
|Increase market share||Market share||8%||Launch the online platform and provide a convenient method of delivery to the customers.|
|To obtain retail market share||Online market share||5%||Effective marketing through all the communication channels available|
|Customer||Increase satisfaction||Customer ratings||90%||Obtain customer feedback and integrate the customer views in to the processes and operations
Employees to be trained on customer service
Efficient running of the website
|Increase online customer base||Market share||3%||Launch a user friendly website with a friendly user interface
Offer efficient delivery methods
|Retain existing customers||Market share||95%||Offer the promotions online
Focus on high quality products
|Internal process||Maintain high quality||Total quality management||97%||Maintain the high quality standards in the delivery of services
Work closely with suppliers to improve on quality
|Reduce operating costs||Operating costs||3%||Train employees to increase productivity|
|Reduce environmental impacts||Environmental indicators||20%||Offer customer collection as the delivery method.
Ensuring products are timely delivered to prevent redelivering
|Learning and growth||Customer service training||% of trained employee||2%||Come up with training programs to enable employees deal with customer complains|
|IT system training||% of trained employee||5%||Provide training on the available training systems|
|Increase employee retention||Retention rate||95%||Maintain a transparency culture to promote diversity and openness.|
Balanced Score Card Perspectives
B&M has proposed its financial objectives in line with its current financial reports. The company experienced an increase in revenue of 29.7% in 2014, 29.5% in 2015 and interim reports indicate 25.8% in 2016. The financial objectives are to increase profits by 90% and market share by 8% in the retail sector. Though its low prices, the company has a competitive advantage which when integrated with the online system will yield good results. However, effective marketing efforts need to be installed to ensure that the system is a success given that other competitors have already launched successful online systems.
The major objective is to increase customer satisfaction by 90%. Competitors such as Tesco have achieved a customer satisfaction of 79%. B&M targets a high percentage since customers’ satisfaction is emphasized in its strategy. Another objective is retaining the existing customers by 95%. Customers can be retained by ensuring that the new system is efficient and operational. In addition, resolving customer related issues is significant in retaining them. When customers are pleased with the services, they will then accept the system. Customer feedback will play a pivotal role in this case.
Internal Process Perspective
The internal objective is to stay updated with the current trends in the retail sector. The current trend is to indulge in online retail. However, this requires other objectives. One of the objectives is quality management. Customer satisfaction will depend on the quality of the product and services. If the service delivery is efficient, but the product is of low quality, the customers will reject the company. In addition, the services delivery needs to be efficient and sustainable. This calls for resource allocation to ensure the whole process runs smoothly. Again, the environmental impacts need to be assessed to make the system socially acceptable.
Learning and Growth Perspective
This perspective deals with the growth and performance of the employees. In accordance with the trends in the sector, employees need to be trained on customer service and IT systems usage. The target is to increase the number of trained employees on customer service by 5%. This is to ensure that the employees’ are able to handle the customer complains. Another objective is to increase the number of trained employees on IT by 5%. This will be achieved through training programs. Another objective is to increase employee retention to 95%. Employing new employees is cost ineffective and it is thus profitable to retain the employees. Retention will be done through maintaining a transparent culture with diversity and openness.
Barnes, D. 2001. Operations management: An international perspective. [e-book]Available at : CWS Cengage http://cws.cengage.co.uk/barnes/students/sample_ch/ch2.pdf [Accessed: 26th Oct 2016]
BBC News. 2014. UK economy to ‘bounce back’ in 2014. [Online] Available at: hht://www.bbc.co.uk/news/business-25345249 [Accessed: 26 Oct 2016]
Bomford, A. (2012). The parcel conundrum – BBC News. [online] BBC News. Available at: http://www.bbc.co.uk/news/magazine-18709348 [Accessed 26 Oct. 2016].
Burge, S., 2015. An Overview of the Soft Systems Methodology.
Checkland, P.1999. Systems thinking, systems practice. Chichester, England: John Wiley.
Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning.
Econsultancy. 2014. What can retailers do to improve online delivery?. [online] Available at:https://econsultancy.com/blog/61816-what-can-retailers-do-to-improve-online-delivery [Accessed: 2 Apr 2014].
Edwards, J.B., McKinnon, A.C. and Cullinane, S.L., 2009. Carbon auditing the ‘last mile’: modelling the environmental impacts of conventional and online non-food shopping. Green Logistics Report, Heriot-Watt University.
Edwards, J., McKinnon, A., Cherrett, T., McLeod, F., Song, L., Edwards, J., McKinnon, A., Cherrett, T., McLeod, F. and Song, L., 2009. The impact of failed home deliveries on carbon emissions: Are collection/delivery points environmentally-friendly alternatives?. Proceedings of the Logistics Research Network.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.
Krajewski, L.J., Ritzman, L.P. and Malhotra, M.K., 2013. Operations management: processes and supply chains. New York: Pearson.
Kruger, W. 1996. SUmary of Change iceberg. Abstract. [online] Available at: http://www.valuebasedmanagement.net/methods_change_management_iceberg.html [Accesed: 26 Oct 2016]
Maltzman., R. and Epstein., D. (2013). Project Workflow Management. USA: J. Ross Publishing.
Melis, K., Campo, K., Breugelmans, E. and Lamey, L., 2015. The impact of the multi-channel retail mix on online store choice: Does online experience matter?. Journal of Retailing, 91(2), pp.272-288.
Ocado Media Information. 2010. [e-book] Ocado. Available through: Ocado http://www.ocado.com/theocadoway/pdfs/OcadoMediapack2010Apr.pdf [Accessed: 26 Oct 2016]
Pak, S., 2016, January. In line with going online: using e-commerce to tap new markets. In International Trade Forum (No. 2, p. 30). International Trade Centre.
Slack, N., Chambers, S. and Johnston, R. 2004. Operations management. 4th ed. Harlow, England:Pearson Education.
Wood, Z. (2011). Click and collect takes off as shoppers buy online and pick up in person. [online] the Guardian. Available at: https://www.theguardian.com/business/2011/jun/08/click-and-collect-takes-off [Accessed 21 Oct. 2016].
Do you need an Original High Quality Academic Custom Essay?