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02/07/2012

Case Study On Operational Improvement For Costa Coffee Shop


Operational Improvement for Costa Coffee Shop

 

 

Introduction

Small businesses are mighty minnows, reflecting the competitive spirit that a market economy needs for efficiency; they provide an outlet for entrepreneurial talents, a wider range and services, a check to monopoly inefficiency a source of innovation, and a seedbed for new industries; they allow an economy to be more adaptable to structural change through continuous initiatives embodying new technologies, skills, processes, or products (Ibielski 1997, p. 1).

In this context, it is important to analyze the role of quality practices that can enable Costa Coffee Shop to pursue competitive priorities, such as flexibility and quality of services and goods. Andreichuk (1992) stated, "It's a common misconception that big firms with extensive human and financial resources can do a better job of educating and motivating their workers to make quality improvements. The truth is that smaller companies can be even more successful at soliciting employee support and involvement because there are fewer management layers to permeate and fewer people to convince of the benefits" (p.29).

Higgins (1994) suggests that there are specific transactions or activities that are involved in managing operations in small businesses. The process of managing a business consists of four major functions occurring in an overlapping cycle and directed toward achieving the particular organization's objectives. These functions are planning, organizing, leading and controlling. Planning entails setting objectives; organizing encompasses preparation of resources necessary for placing the plans into effect; leading is the function of channeling employees' and other individuals' behavior to accomplish objectives; and controlling is evaluating whether the objectives have been met and devising alternatives for improving the chances of achieving those objectives.

From this framework, three research questions can be framed to guide this essay on the issue of devising an operational management strategies for Costa Coffee Shop: (1) what are the improvements that can be suggested on the operations management at Costa Coffee Shop?; (2) what are the operations management common in the coffee shop industry particularly those who have succeeded? And; (3) taking into consideration the resources and location of Costa Coffee Shop, what is the most appropriate operational management strategy?

Gaskill, Van Auken, and Kim's (1994) research on small business success has suggested that the development of management strategies contributed to firm continuance and growth. Because key components of strategic management as applied to the family business remain difficult to identify the purpose of this essay is to identify the operation management problems and issues faced by Costa Coffee Shop and identify possible strategies to address these issues. Furthermore, improvements on the operations of Costa Coffee Shop shall also be propose operational strategies to solve the problems and increase efficiency and profit. The recommendations shall take into consideration the socio-cultural dynamics within the community where Costa is located.

Research Method

            This article conducted interviews on the customers and some of the staff of Costa Coffee Shop, a survey of the location of the shop and frequented the store to take note of the operations, the quality of services and goods offered at the shop. Furthermore, my observations were confirmed by conducting an interview with the management and some of its loyal customers (or as they claim to be). Consequently, some of the people within the area who does not frequent the store were also asked on the reasons why they do not patronize the shop. From this take off point, a survey of literature was conducted.

Analysis

There are several approaches that can be taken in planning effective operational strategies, but practitioners suggest a comprehensive approach that deals with cost, industry structure, market preferences, and internal capabilities(Mcleod, Miller, and Oh, 2001). Internal capabilities involve aspects of the management process such as the organizational configuration and environment and managerial characteristics. Merz and Sauber (1995) suggest that there has been a tendency to limit the study of business management to the broad functions of planning, organizing, staffing, and controlling.

Efficient and effective processes require integrated tasks from product/service design to post-sale customer service. Quality has historically taken a process-focus at the front end, with programs like quality function deployment which turns the interfacing of customers and product design into a manageable system (Goodale, Hornsby, and Kuratko, 2001). Just-in-time (JIT) operating systems, albeit much less sophisticated than typical material requirements planning (MRP) systems, are consistent with rigorously raising quality levels by minimizing waste. In addition, JIT systems may be appropriate for small and entrepreneurial firms by focusing process improvement on increasing flexibility. One promising innovation is JIT II (Pragman 1996), where suppliers provide representatives of the supplying firm (called in-plants) inside the buying firm in order to facilitate efficient and effective management of the relationship (that is, interfacing product design and management of inbound logistics).

Firm flexibility can take different forms (Goodale, Hornsby, and Kuratko, 2001). Product flexibility addresses the firm's ability to handle difficult, nonstandard orders; to meet special customer specifications; and to produce products characterized by numerous features, options, sizes, and/or colors. Process flexibility (product mix flexibility) addresses the firm's ability to produce small quantities of products cost efficiently so that changes in product mix are easy to accommodate. Tangential to these two types of flexibility, volume flexibility addresses the firm's ability to rapidly adjust capacity in order to accelerate or decelerate production in response to changes in customer demand. Chaganti, Chaganti, and Mahajan (1989) identified product scope as the relative breadth of the firm's product line. Thus, product flexibility clearly maps well to their product scope, and process flexibility has some overlap with product scope. It could be argued that small business managers that compete with flexibility would employ q quality strategies and tools that facilitate the ability to design and produce a variety of items. Therefore the main exploratory proposition is:

Of the quality strategies and tools considered by smaller entrepreneurial firms, the most used and most useful strategies and tools will include ones that promote flexibility in product, process, and volume in order to facilitate competition with strategies that focus on product and service scope.

The customer is at the center of quality strategies and is linked to many quality tools (Rucci, Kirn, and Quinn 1998; Anderson and Narus 1998). This category spans a large domain, beginning with developing knowledge about the customer, to examining the performance of companies through complaint resolution. Understanding the customer and the marketplace involves listening to customers and studying customer satisfaction data (Beckett-Camarata, Camarata, and Barker 1998). Businesses that are effective in this will have processes set up to communicate with, and receive communication from, customers. The systems that serve as customer interfaces are key.

Creating a high-performance workplace and developing employees that embrace change are important responsibilities of the human resource management (HRM) function (Burk 1997). HRM should be integrated with the operations of the firm and aligned with the strategic objectives of the firm. Research suggests that smaller entrepreneurial firms generally have key challenges with HRM because the small size of the firm often does not warrant hiring professionals exclusively dedicated to HRM activities (Bacon et al. 1996). Critical to the viability of smaller entrepreneurial firms is fostering the climate of embracing change and making change work to the firm's advantage (Duberley and Walley 1995). Examples of quality strategies and tools in this category include training and education programs (Niehoff and Whitney-Bammerlin 1995), employee involvement programs (Lawler 1994), and employee empowerment (Goodale, Koerner, and Roney 1997).

Proposed Operations Management Plan for Costa Coffee Shop

Here is a list of things the operation management at Costa Coffee Shop should include.

Personnel. In addition to listing the company principals, managers and other key employees, this section should explain the qualifications (degrees, certifications, etc.) of every individual. Also include a biography or resume. The information can be discussed in narrative form, but for larger firms, it must include an organizational chart. In this section, Costa must also discuss hiring policies (physicals, drug testing, background checks, recruitment, aptitude testing, etc.).

 Planning. Describes or references the processes) including roles, responsibilities, and authorities of management and staff for planning operations using a systematic planning process which includes: Identification and involvement of the project manager, staff and suppliers. Description of Costa Coffee Shop’s goal, objectives, and questions and issues to be addressed. Furthermore, the identification of project schedule, resources, milestones, and any applicable requirements. Identification of the type and quality of raw materials needed Specifications of performance criteria for measuring quality service and products.

Implementation of Work Processes. Describes or references the processes), including roles, responsibilities, and authorities of management and staff for: Ensuring that work is performed according to approved planning. The identification of operations needing procedures, preparation, review, approval, revision, and withdrawal of these procedures; and policy for use. Controlling and documenting products and services.

Assessment and Response. Describes or references the processes) including roles, responsibilities, and authorities of management and staff for: Assesses the adequacy of the quality system at least annually. Plans, implements, and documents assessments and reporting assessment results to management including how to select an assessment tool, the expected frequency of their application to customer service programs and the roles and responsibilities of the staff on the customers.

Determines the level of competence, experience, and training necessary to ensure that personnel conducting assessments are technically knowledgeable, have no real or perceived conflict of interest, and have no direct involvement or responsibility for the work being assessed. Ensures that personnel conducting assessments have sufficient access to programs, manager, documents, and records.

Managements review and response to assessment. Identifies how and when corrective actions are to be taken in response to the findings of the assessment, ensuring corrective actions are made promptly, confirming the implementation and effectiveness of any corrective action, and documenting such actions. Addresses any disputes encountered as a result of assessments  

Quality Improvement. Identify who (organizationally) is responsible for identifying, planning, implementing, and evaluating the effectiveness of quality improvement activities and describes the process to ensure continuous quality improvement, including the roles and responsibilities of management and staff. Ensures that conditions adverse to quality are: Prevented Identified promptly including a determination of the nature and extent of the problem. Corrected as soon as practical, including implementing appropriate corrective actions and actions to prevent reoccurrence. Documenting all corrective actions. Tracking such actions to closure. Encourages staff at all levels to establish communications between customers and suppliers, identify process improvement opportunities, and identify and offer solutions to problems.

Conclusion

Based on the findings of this exploratory investigation, there are a number of interesting observations and implications about operation management and flexibility at Costa Coffee Shop. Systematic collection of business performance information (sales, costs, and net income), measurement of customer satisfaction, and training programs for quality can be used to improve the operations of Costa Coffee Shop.

Accordingly, these practices provide direction when employees are under shared management and require ambiguity absorption. This facilitates management of systemic flexibility (Covin and Slevin 1991) and therefore supports the attainment of the quality and flexibility we have earlier espoused.

In summary, the results of this essay provide a reflection of quality management practices at Costa Coffee Shop and the operational management practices in small firms participating in dynamic markets. Furthermore, this article proposes that Costa Coffee Shop can best attain quality of service and product and flexibility in its operation if it shall perform some changes in its operations specifically targeting human resource and process flexibility and improvements in quality of service and goods.

Recommendation

It is important to note that there are limitations to this exploratory study. Although there was an attempt to be as nearly comprehensive as possible in specifying quality strategies and tools for Costa Coffee Shop to consider, the instrument can never achieve complete specificity.

Future research in this area should focus on at least three questions. First, what impact do the various quality practices have on business success criteria such as sales growth, productivity, and profitability? Second, are there demographic differences such as geographic location, size, industry type, and age of the small business in the implementation of quality practices? Finally, what impact are larger client organizations having on smaller firms and their strategic focus relating to quality?

 

References

Anderson, J.C., and J.A. Narus (1998). "Business Marketing: Understand What Customers Value," Harvard Business Review 76(6), 53-65.

Andreichuk, B. (1992). "Getting Objective about Quality," Small Business Reports (March), 28-38.

Beckett-Camarata, E J., M.R. Camarata, and R.T. Barker (1998). "Integrating Internal and External Customer Relationships through Relationship Management: A Strategic Response to a Changing Global Environment," Journal of Business Research 41(1), 71-81.  

Burk, WW (1997). "What Human Resource Practitioners Need to Know for the Twenty-First Century," Human Resource Management 36(1), 71-79.

Chaganti, R., R. Chaganti, and V Mahajan (1989). "Profitable Small Business Strategies under Different Types of Competition," Entrepreneursbip: Theory and Practice 13(3), 21-35.

Duberley, J. P., and P Walley (1995). "Assessing the Adoption of HRM by Small and Medium-Sized Manufacturing Organizations," International Journal of Human Resource Management 6(4), 891-909.

Gaskill, L.R., H. Van Auken, and H.-S. Kim (1994). "Impact of Operational Planning on Small Business Retail Performance," Journal of Small Business Strategy 5(1), 21-35.

Goodale, J., Hornsby, J. and Kuratko, D. (2001) Quality Practices for a Competitive Advantage in Smaller Firms. Journal of Small Business Management, Vol. 39.

Goodale, J.C., M. Koerner, and J. Roney (1997). "Analyzing the Impact of Service Provider Empowerment on Perceptions of Service Quality inside an Organization," Journal of Quality Management 2(2), 191-215.

Higgins, James M. (1994). The Management Challenge, second edition. New York: Macmillan Publishing.

Ibielski, D. (1997). "So What about Small Business Productivity?" National Productivity Review 17(1), 1-4.

Lawler, III, E.E. (1994). "Total Quality Management and Employee Involvement: Are They Compatible?" Academy of Management Executive 8(1), 68-76.

Mcleod, H., Miller, N. and Oh, KY. (2001) Managing Family Businesses in Small Communities. Journal of Small Business Management, Vol. 39. 

Merz, G.R., and M.H. Sauber (1995). "Profiles of Managerial Activities in Small Firms," Strategic Management Journal 16, 551-564. 

Niehoff, B.P., and D.L. Whitney-Bammerlin (1995). "Don't Let Your Training Process Derail Your Journey to Total Quality Management," SAMAdvanced Management Journal 60(1), 39-48.

Pragman, C.H. (1996). "JIT II: A Purchasing Concept for Reducing Lead Times in Time-Based Competition," Business Horizons 39(4), 54-58.

Rucci, A.J., S.P Kim, and R.T. Quinn (1998). "The Employee-CustomerProfit Chain at Sears," Harvard Business Review 76(1), 83-97.

 

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