BUSINESS OPERATIONS AND SYSTEMS ASSIGNMENT
The assignment is about business operations and Systems management in which B&M group is been discussed which is a variety retailer in UK and wants to move its business online. By using various models, the challenges of moving the grocery business o online platform will be discussed in the report. Although, the usage of internet is increasing year by year, grocery business at online platform is not as profitable as other businesses are. A rich picture diagram will be discussed in the assignment for the business issue and business process plans are made which will help the business to achieve its targets.(Bandmretail, 2016)
About B&M Home Store UK Online
B&M is one of the biggest variety retailers in United Kingdom and is formed in the year 1978. Its first store was in Blackpool and now the no of stores increased to more than 500 and it also provides employment to around 22500 employees. It sells the products which are of big brands which include FMCG and non-grocery products. The products are provided at discounted prices which attract more and more customers. Word of mouth is the main advertisement technique of B&M which increases the no of transactions o the stores. (Bandmretail, 2016)
The brand has over 500 stores in UK and around 50 stores in Germany. The supermarket is doing quite well in the industry. The company is continuously earning high revenues and achieving sales growth. B&M follows multi price model which makes it different from the rest of the supermarkets of the industry in UK. The company has limited product lines which are increased to increase the interests of the customers. The company invests in its infrastructure which includes transport, warehouse, distribution activities to minimise the future costs. The group also has important IT systems which are helpful in maintaining data, protecting data and risk management. (Bandmretail, 2016)
The approach of B&M is “keep it simple” because what the group believe is that everyone loves to bargain. The group opened its 500th store in the year 2016 and aims to deliver best products at best prices to its customers so that they can have excellent shopping experience at its stores.
Challenges/ Issues in moving the business online
B&M group is no doubt growing at a good speed in the supermarket industry. It has its own customers and own speciality but B&M might face some issues or challenges if it decide to introduce online platform for its customers so that they can make purchases online and the products get delivered to them at their doorstep. Some of them are:
Tough competition from existing online players: There are lots of online players which exist in the market. B&M group will have to face really tough and stiff competition from these players.
Customers are not yet so familiar with online grocery shopping: The customers who belong to the older generations are not yet familiar with online purchasing of groceries. They still believe in buying the products in their physical presence and some of them do not know the processes or methods of buying the groceries online so, B&M will have to face these issues at a large scale. (Pathak, 2012)
Incomplete understanding of an online customer: The customers who are active online are differentand have differentexpectations from the business. So, B&M will have to gain complete understanding of the customer who are purchasing online.
Logistics incapability: B&M is still unable to manage its inventory, data and much other type of transactions which are the core functions of any business. So, it will create problems when the business will be started online. (Pathak, 2012)
The face of retail is changing and now internet drives the behaviour of consumers.
Different models for online business
There are different models which can be used by B&M for going online. Every model satisfied different needs of the business. Different models are:
Advertising: This model involves the display of the content on the website of the business with the advertisement messages.
Merchant: In this model there are retailers and wholesalers involved which provides goods or services. Here, sales are made on list prices.
Manufacturer model: This model is the direct model where the manufacturer directly reaches consumer so that the distribution channel can be made more simplified and costs may be minimized. In this model, the design and development of sites are done by the business itself which reduces costs.
Subscription model: Here, the users/ customers are asked for charges to be paid to use the subscribed services by them. The charges can be monthly or annually.
Outsource: here the services of design and development are outsourced by some other company and they are paid in return for the services taken. Here the expert services can be gained by paying a pre decided amount.
Impact of operations management on organisation’s performance
Sustainability refers to the designs and operations of the organisation which reduces the harmful impact of the operations of the organisation on the future generations and generate higher rate of return for the business. It consists of three elements Planet, People and Profit which aretogether known as Triple Bottom Line.
Planet refers to the environmental practices which aims at providing least harm to the environment and maximum growth to the planet like introduction of GPS systems to reduce the usage of fuel and emission of CO2 in case of multiple rounds for single delivery of products to customer.
People refer to the responsibility of organisation towards its people so that well-structured and fair treatment is given to the employees.
Profit refers to the profit and loss account of the business. It means how much economic value has been created by the company through its operations after deducting all the costs.
In short this approach aims to measure the performance of business by three aspects people, planet and profit.
TBL- Triple Bottom Line approach (People, Profit, Planet)
Four V’s business model
Four V’s business model is considered to support the decision of B&M for moving online. The four V’s stands for Volume, Variety, Variation in demand and Visibility. These are explained below:
Volume: B&M may have to face the volume problems in online business. The volume of sales in online business will be low as compared to the sales made in stores. It may increase in future but initially, this hit in volume is sales will have to be borne by B&M. But in future, the volumes will be much higher than the sales made at physical stores because the users of internet are increasing day by day and it will also increase the no of buyers in the sector. (PWC, 2016)
Variety: the variety of products which can be sold online is wide. The percentage of online retail is increasing year by year. A retailer can offer wide variety of products to the customers on online platform which cannot be offered in physical stores due to many reasons like shortage of space, shortage of work force, etc. Online sales do not need any extra labour or workforce for displaying extra products or do not need any extra space. At online platform, different products can be sold. Also the used products can be sold to the consumers who are in search of the used products. (Ingene, 2014)
Variation in Demand: B&M will face huge variation in demand when the business will be shifted online. Customers, as already discussed are not yet familiar with the purchases made online that too groceries. Some of the customers are unaware of the processes or the payment methods which have to be adopted while making purchases online. So, the online demand is far less than the demand of customers for the products in physical stores. It will take time for the consumers to get familiar with the same but it willbeachieved soon. (PWC, 2016).Online shopping is very convenient because a consumer can purchase any product at any time and from anywhere if he has access to internet. Now a day’s people do not have time to visit market and look for a single item at different shops to compare between them but this is made possible to them at a single platform, sitting at home and getting access to wide variety of products. So, the demand of online shopping is increasing at a good speed. (Ingene, 2014)
Visibility: Customers still feel that they need to buy the products by touching and feeling them at first and then they can decide for buying them. This is the major drawback for online shopping because customers have to see or check the products virtually in online shopping and then they can actually feel theproducts when they are delivered to the consumer while in physical stores, customers first feel the product, check them and then buy them which decreases dissatisfaction in them regarding shopping. (PWC, 2016)
As it is clear that online sales of grocery is very slow in United Kingdom. The total online sales are online 4-7 per cent of total grocery sales of supermarkets. The main operations models for discussing the problems of moving the business of supermarket online are given below:
Demand problem: Demand problems startwiththe consumer’s end. The consumers do not like to pay charges for delivery of products to their doorstep. Sometimes the deliveries of products are made very late, and this causes inconvenience for the shoppers. The perishable items are not delivered as fresh as they were ordered, which is also a big issue. In order to influence customers for making purchases online and to increase demand for online business, the businesses have to concentrate on making the customers satisfied. (Tiwari, 2009)
Supply problem: The main problem of supply side is from the end of businesses. Online grocery sales are not much profitable for the businesses. This is because for designing and creating an online platform, latest technology is to be adopted which needs maintenance and cost for technology which costs millions for the business. The supply chains for online business are not as easy as it seems to be. The doorstep delivery of different products to theconsumers costs too much to the business. The delivery is to be made at different areas with different temperatures and different types of products which may include perishable goods or fragile products for which extra care have to be taken care of. The businesses have to maintain huge warehouses and assembly of products have to be done which takes lot of time and efforts. (Tiwari, 2009)
Operations strategies at B&M
Quality in the supermarket refers to the quality of goods and services which are sold to consumers at a reasonable price. Quality is something with satisfies the customers of the supermarket according to their received standards. B&M should try to achieve the expected standards of the customers so that they can achieve higher customer satisfaction and higher revenue. (Zhang, 2014)
Speed in the supermarket refers to the speed of delivery at which supermarkets provide goods and services to theconsumers. Timelydelivery is very important to satisfy the consumers and to bring them again for repeat sales.(PWC, 2016)
Flexibility refers to that power or feature of business which enables it to change itself according to the demand of the consumers. Flexibility may be achieved in pries of products, quality of products, delivery of products, etc. B&M can achieve flexibility to bring in more customers for the business. (Zhang, 2014)
Dependability refers to the power of business to deliver services on time so that it can develop its positive image among the customers and increase the no of customers on the basis of its goodwill.
Solutions for making easier online shopping
It is seen that although Internet and its usage is increasing at a rapid rate, Online shopping is still not so convenient and easy for the shoppers and this is because of many reasons which are discussed above. The supermarkets have to adopt various solutions which make shopping easier and more convenient for the shoppers to buy with the help of fully integrated mobile applications. The recommended solutions are:
Improved delivery chain:
The delivery chain in case of online retail should be improved. The managers of B&M should invest in people who lead to the success of the operations. The shipping costs should be minimized by exploring different alternatives. The products should be delivered to the customer on the promised dates. (Haber, 2013)
Starting online retail business includes huge amount of costs in form of website development costs, logistics and shipping costs, warehousing costs, etc. These can be reduced when B&M adopts certain methods like charging shipping costs from the customers up to a certain amount and free shipping after a certain amount. More no of orders will enable the store to deliver the products directly from warehouse to the customer which reduces the inventory and distribution costs. It will also reduce the final prices charged from the consumers.
Online retailing is a sustainable opportunity for the business. This makes the shopping experience more personalised and accessible for the customers. It brings sustainability for the consumers as they will get more personalised offers and the geographical or physical boundaries for them will be reduced. Customers will be able to make decisions from more choices available to them and will become more sustainable. (Madden, 2012)
Proper and efficient marketing is necessary for making online shopping interesting for the consumers. Discount codes or coupons can be offered which delivers value to the customers and they begin to purchase online, free shipping can also be used to make online shopping lucrative. Other methods of promotion or marketing can include introducing gift cards, loyalty points, Integration with the social media like Face book, Instagram, Twitter, etc. or mailing the customers regarding new products or services offered at the online website of store. (Tiwari, 2009)
Parcel conundrum refers to the situation where the delivery of the parcels is not successfully made to the shoppers. (Bomford, 2012) This increases the costs for the company and also irritates the customers. In UK almost 12% of the deliveries fail in the first place and then the parcels are redelivered. The customers, who wait for their packages, do not get timely delivery and they agitate. But it is also difficult for the courier companies as they had to wait for long hours when the customer is not at home. There is a solution for B&M to this; a GPS tracker can be made available to the customer through which they can track their orders. It will save the environment by less emissions of CO2 as less rounds of delivery will be made and less fuel will be used.
Rich Picture is used to explore a situation by following diagrams which are created like models of the situations. This is the part of Soft Systems Technology (SSM) and used for analysis of the situation.
The above rich picture shows that the company B&M supermarket wants to move its business to the online platform for which it needs to cover several activities like Market research from where the data will be collected which will give an idea of the requirements of the markets and will show whether the idea is feasible or not. The data will then be evaluated by the director of the supermarket and the team and the whole administration together will analyse the resources required to fulfil the objective of the organisation. The project teams will be formed to carry out the tasks. Web development teams and web analysts will be hired for the development of the website. Marketing is required to make people aware of the website of the supermarket so that they can make purchases and spread information further. Marketing strategies will also be used to analyse and fight the competition in the industry. The current and potential clients will be approached for the success of the business and further market research will help in making the business better.(Berg, Pooley, 2013)
It is the first step in the soft systems methodology and it involves analysing and designing of the main problem. The root definition of the report is to find out and analyse the issues B&M might face if they decide to introduce facilities to enable their customers to order goods online and have them delivered to the door.(Haber, 2013)
CATWOE Model formulates the root definition. It is an acronym which stands for:
C- Clients, A-Actors, T- Transformation, W- World View, O- Owner, E- Environmental limitations
This is the tool which checks the root definition. The CATWOE analysis of B&M and its root definition is as follows:
Clients- These are the beneficiaries of the system i.e. B&M’s customers in this case who care the ultimate beneficiaries of online business idea of the company
Actors- These are the people who carry out the activities and bring transformation like the operations managers of B&M who carry out operations for online business of the company
Transformation Process- It means the activities which are taken place to bring transformation. In this case, B&M is developing websitesand attracting customers for the success of its online business.
World View- It is theview that brings root definition meaningful. Online retail business of B&M will increase the scope of capturing more markets and wide variety will be made available to the customers.(Haber, 2013)
Owners-Owners are the persons who have ultimate power to carry the system. In this case, the owners of B&M have the ultimate power to take all the decisions to carry the online retail business.
EnvironmentalLimitations- These are the limitations, constraints, etc.which limits the operations of the business. Like in this case, the competitors, legal requirements, taxes, technological constraints, etc. have to be taken care of while bringing retail business online. (Madden, 2012)
Business Process Plan
This is the planning process which tells about the actions which are to be taken while making a business plan for online retail business of B&M
||The business operations were running through physical stores
||Online business operations need a website which will be used to carry out sales of products and services by B&M
||Transportation cost is mainly for transferring goods from manufacturers to stores
||Transportation costs are mainly occurred on shipping products to the customers
||Rent is to be paid for stores
||Maintenance charges are to be paid to the website developer
||The variety of goods were less due to unavailability of space
||Variety of goods provided to customers is more because for providing more products, more space is not required. More products have to be displayed on the website for the purpose of sales.
||Human resources are needed for management of stores and assist customers who visit stores.
||Human resources are needed for management of website and to assist customers through telephones or emails.
Turning performance objectives into Operations priorities and resources necessary for implementation of new process
B&M has been successful in delivering strong numbers in sales by providing excellent services and great infrastructure to the stakeholders. The objectives of B&M are to providing exceeding shopping experience to the customers and to gain profits out of it. B&M wants to move its business to online platform which might face many challenges due to the volume, costs, delivery speed and many other factors. On the other hand it is also beneficial as more variety can be provided to customers, more market can be covered and market presence will be increased. The managers will achieve these objectives by using different models of online business like Manufacturer model in which the products are directly delivered to the customers from the manufacturer’s warehouse. It makes distribution channel simpler and it also helps in minimizing costs to a great level because the costs related to the distribution of products to different places like wholesaler and retailer will be eliminated.(PWC, 2016)
The new process is regarding the shift of the business of supermarket to online platform so that the purchase process and delivery of the products can be made easier for the customers. Easyprocesses will encourage customer to buy more from the particular supermarket and hence the sales of the supermarket will increase. There are certain resources which are necessary for the implementation of the plan of shifting the retail business into online business like:
Technical resources: Website is needed to be developed for successful retail operations. For the development of attractive website technological resources are needed. Latest technology is to be obtained for attractive features in the website to make the customer’s experiences better.(PWC, 2016)
Financial resources: For any operation of business, finance is required. It is required for website development, hiring technical staff, purchase of technology, etc. Contracts are signed with courier partners for making deliveries which need more funds.
Human resources: Website development team is needed for managing thesoftware’s and the customer acre staff is required for assisting the customers in placing orders and for other queries. Staffs are required for making deliveries to the customers. (PWC, 2016)
Business performance post implementation can be measured through a Balanced Scorecard. It is a tool which is used to measure the planning and management of business and to monitor the performance of the business activities. There are four different perspectives according to which the strategies are made into actions in the company. These perspectives are:
Financial perspectives: The financial perspectives includethe long and short term growth of B&M in terms of revenue, sales, return on capital, etc. Total revenue of the B&M group increased by 29.5% in the year 2015, netcash flow from operations also increased by 33.3% and also a final dividend of 2.5p per share. The growth opportunities are been grabbed by the company by taking the business to online platform. The cost structure will also improve by this because the cost of retail outlets and delivery chains will babe reduced. (bandmretail, Financial reports 2015, 2015)
Customer perspectives:Customers of B&M gave good response to the business because value is provided to the customers. A broad range of FMCG products and non-grocery products are provided to thecustomers which increases the customer base and satisfaction level of customers. The customers of B&M are created through word of mouth and very low level of advertising is done so that the burden of the advertising costs does not pass on to the customers. Quality products and services are been provided to the customers to achieve customer loyalty.(bandmretail, Financial reports 2015, 2015)
Internal business process perspectives: It shows how that management handles the micro environment of the company which includes the processes of management, supply chain, innovation and much more. These processes are main functions of any organisation. B&M critically evaluate the needs and demands of its customers to provide them the products and services of excellent quality. This increases the profits of the organisation and the management finds out that what they need further to develop the business. (B&M, 2015)
Learning and Growth perspectives: It includes formation of a good team which helps in achieving the objectives of the company. The team is motivated in B&M to work hard and achieve the goals and objectives of the organisation. Ethics and code of conduct is maintained at theorganisation. The capability of employees is enhanced so that they can provide good results.(B&M, 2015)
The report is about the supermarket B&M in UK which is planning to take a shift from the retail store business to the online business and he challenges during this shift is been discussed which can be the unacceptability by the customers, cost of website development, competition in the industry, etc. Also certain recommendations are been given for successful online business of supermarket. CATWOE analysis has been done to formulate the root definition and at last balance scorecard is been explained for measuring company’s performance.
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