SOM Project Report Group 9

SOM Project Report

Table of ContentsIntroduction...................................................................................................................................3

Executive summary........................................................................................................................3

Overview........................................................................................................................................3

Service Strategic Vision..................................................................................................................3

Service Profit Chain........................................................................................................................4

Service Blueprint............................................................................................................................6

Supply Chain..................................................................................................................................7

Walk Through Audit.......................................................................................................................8

Store Layout...................................................................................................................................9

Site Selection Yard Sticks..............................................................................................................10

Service facility location offerings...............................................................................................10

Recommendations........................................................................................................................13

Reference:....................................................................................................................................14

SOM Project: Reliance Fresh @ Kunnamangalam Page 2

IntroductionService sector takes a lion’s share in India’s total GDP, contributing 55.2 percent share in GDP and accounted for close to 23% employability in the total workforce. Add to it, service sector is growing by 10% annually and have a high share in FDI and export market. If service sector plays a key role in India and central to its growth, retail itself claims a big stake in service and it can be arguably better understood now than any time before and after when the recent FDI policy of the government has made a news headline from BBC to DD national to pink news papers to the public discussion. This is the first time in Indian history where the corporate has directly voiced their opinion which is a rarity in Indian Industry which generally prefers to duck when political battles send missiles back and forth. This accentuates the importance of retail which has a direct impact of the 650 million rural populations and has a huge lure of about USD 450 billion. It would be sheer premature to write the obituary note on the FDI in retail but the government first flips and then flops and this flip-flop underlines the pressing importance of retail in solving a lot of issues from balancing ‘farm-fork’ price imbalances to the satisfactory result for the producers and the consumers both and so on and so forth.

Executive summaryIt really assumes a great significance to study on a retail shop like Reliance Fresh and an in-depth analysis of this has delivered more insights into the various aspects of the Service Operations Management(SOM) and has also helped us to look into its various service nitty-gritty by combining our class learnings with the Reliance Fresh shop’s day-to-day activities. We have judged where the shop stands using various framework of SOM. SOM is a very vast subject, so this piece of work has careened through some of the cardinal aspects of SOM and tried to analyse in depth from that template. We have touched upon topics including service profit chain, service strategic vision, supply chain management, site selection criteria et al in addition to briefing about the Reliance Fresh. The work ends with the recommendation having a spectrum of pros and cons. The questionnaires used in the WTA have been enclosed herewith.

Overview Reliance Fresh Kunnamangalam was started in 2006, with 6 other stores in Calicut. It was located opposite to the Bus Stand of Kunnamangalam. It is spread in area of 5,000 square feet. Its total employee strength is 15 and has 1 Assistant Store Manager, 10 Customer Service Associates along with 3 Cleaning Staffs


and 1 Guard. Its timing is from 7:30 AM to 9:30 PM. It has 3 shifts and average footfall per day is 350-400 persons. It is found in our survey that the Peak hour is 5:00 PM to 7:30 PM.

Service Strategic VisionThe service strategic vision is formulated to address the unmet needs of a particular customer segment. The basic categories of this vision include target market segment, service concept, operating strategy and the service delivery system. These categories are then integrated using the integrating elements such as positioning, value/cost leveraging and strategy/system integration. The primary target segment for the kunnamangalam reliance fresh is the White collar job holders and local well-to-do families of the surrounding area, students, faculties and staff of IIMK.

Service Profit Chain


The service profit chain links the profitability, customer loyalty and service value to employee satisfaction, capability and productivity. The environment consisting of workplace design (e.g. facility rooms for employees), job design (clear job descriptions), employee selection & development (proper training is given), rewards system (Star of the month award, certificates) etc drives the employee satisfaction which in turn drives the retention and productivity. This quality and productivity improvements yield higher service quality and lower cost. This attractive value drives customer loyalty which results in profitability and growth.


Employees come in 3 shifts & Jobs divided as billing section, customer care, floor manager, items arrangement and cleaning staff

Facilities for employee: Rest rooms, changing

Employees recruited from Calicut and nearby places, they are trained to handle the billing and customer care part

“Star of the month”

Parameters: Punctuality, Discipline, customer delight, product knowledge

Reward: Certificate, badge, gift voucher

China cloth bag is provided

SAP billing software

Customer care desk

Service Blueprint

Customer Arrives

Search for items on

shelf

Pick the items

required

Billing Counter

Customer collect items

and bill

Customer Exits

Greet and take the bag

Take basket/trolley from the

counter

Place the bag in shelf

Customercarrying abag

Basket ortrolley reqd?

ItemFound

Ask the staff for help

No No

Yes Yes No

Yes

Itemlocated

Yes

Paymentusing cash?

Payment using

credit/debit card

Yes

No

Customer signs on the payment slip

Bill payment made

RelianceOnecard holder?

Update points in

card

Paymentclearance from bank

Updation of Reliancedatabase

Customer collects the

card

Customer collects bag from shelf

Order for items

Inventory/warehouse

Perishable items from

DC

Non-perishable

items-Bangalore DC

Check for items in

inventory

No

Check for availablity of

items onshelf

Entrance Shelf for bags

baskets/trolley

Items on shelf

Bill counter

Bill counter

Shelf for bags

Exit gatePhysical Evidence

Customer action

On Stage contact person

Back Stage contact person

SupportProcess

Line of visibility

Line of internal interaction

Line of external interaction

No

Yes

Cust carried a

bag @start?

No

No

Yes


Good shopping experience

Value for money goods

One stop shop

The shop is equipped with centralized A/C

The items are placed in order and in

Reliance One card:

Customers can redeem the points collected during next visit

Supply Chain

There are 6 Reliance Fresh stores in Kozhikode city, each stores gets its supplies from the Distribution Centre (DC) located in Trichur, Kerala. The fruits and vegetables requirements are met by Warehouse in Palakkad, Kerala. Each day 2 trucks leave from the warehouse in Palakkad and refill all the stores in Kozhikode. Other items like FMCG, groceries are ordered from Trichur DC.

Reliance Fresh store at Kunnamangalam is equipped with Point of Sale (POS) terminal; it manages the selling process by a salesperson accessible interface. The same system allows the creation and printing of the receipt. Each terminal is equipped with Electronic Data Interchange (EDI), which is connected to the main server in Trichur. The inventory level is automatically counted and the order is placed by the system. Usually the items are replenished twice in a week in all stores in Kozhikode.

The items ordered from all the Reliance Fresh stores in Kerala are handled by Trichur DC, which gets its supply from the Bangalore DC. The store follows cross docking methodology, in which the items are transported from different locations to Trichur DC, and from there it is transported to all the Reliance Fresh stores in Kerala.


Walk Through Audit

A walk-through audit was conducted at Reliance fresh outlet, to capture what actually happens when people interact within and between processes in Reliance Fresh store. A sample of 10 members were selected to fill the questionnaire, the sample consisted of 6 customers, 3 employees and 1 store manager. The responses were filled by the respondents on various heads like

Information Facilities Experience Satisfaction

The ratings for each questions was taken on a 5 point scale. (Strongly disagree, disagree, neutral, agree and strongly agree). The responses from the various stakeholders were mapped on a graph to identify the areas which needs improvement.

The graph plotted for “Information” is plotted below

12345

CustomersEmployeesManager

The graph plotted for questions related to “Experience”, “Facilities” and “Satisfaction” is plotted below:


1

2

3

4

5

CustomersEmployeesManager

Store LayoutIn service nothing should go unnoticed: from molehills to mountain head everything should be given utmost care and consciousness. And when it comes to deal with retail service very few can match with ‘all are important’ features of a retail shop. Unlike manufacturing and many other services, the retail store layout wields a very prominent role in easing customer efforts in searching for goods and thus facilitates in satisfying the customer needs and necessities. Our study on the Reliance Fresh has also strengthened this notion except a few slight niggles. All the goods kept on the shelves are, to a good extent, to meet the customer requirements and help them in finding out the right items bearing in mind customer cardinal satisfaction.

As an example in the very entrance the customer care desk is decorated with shelves for leaving the personal belongings like helmets, any carrying bags, etc. The daily necessities like vegetables, fruits, grains are kept in the very first block and both the shelves, right and left, are filled with these items that find everyday purchase. Then strategically are kept the FMCG products like shampoo, soap, detergents in the last blocks. The other comparatively less frequently purchased items like footwear, plastic bottles are kept on the last racks. Candy and chocolates are kept in front of the cash counter and fulfils the dual purposes, one is to woo the kids and others who are fond of these stuffs and the second is to sell the products in exchange of the lower denominated rupees e.g.- Re 1, Rs 2 etc, as


there may be a paucity of these lower denominations. The store room, changing room and the rest room are also kept at the end or the side for the employee convenience.

Confectionaries

Processed Foodsvegetables

Fruits

Open Chiller Frui

ts &

Veg

Entr

ance

Exit

Shel

f

Cutomer Care

Rest Room Offi ce Space

Dini

ngSp

ace

Stor

e Ro

om

Changing Room

Processed FoodsStaplesStaples

BeveragesSnacks

Towells etcBeverages

FMCGFMCG

DetergentsSoap, Shampoo, Deo

Footwear, plastic items Plastic bottles, jars etcFM

CGFM

CG

Exit

Chiller

Chiller

Oil, Ghee & Spices

Chiller

Free

zer

Exit

Loose Staples

Site Selection Yard SticksSelecting a site is a very important aspect of any business. It is a gateway to receive a cabal of customers. Whenever it comes to deliver service in retail business, the paramount importance of a location is sui generis. A proper strategic location can augur as well as a wrong location can spell doom for the service business. The yardstick of locating a service site is primarily based on the fact that it should be as convenient as possible to the customers, also be easily accessible without much trouble, be an entry barrier and generating demand. In addition to the above, it should also proffer the wide spectrum of flexibility, competitive positioning, demand management and focus.

Flexibility refers to the extent the service can react to the changing economic situations.

Competitive positioning deals with methods by dint of which a shop can establish itself relative to its competitors.

Demand management is the ability of a shop or a firm to maintain quality, quantity and timing of demand irrespective of the sapping or flourishing economy, the day of the week or the season.

Service facility location offerings


Keeping this in mind we have pointed out the following criteria and judged Reliance Fresh to see where it stands in those considerations.


Convenience

Entry barrier

Demand Management

Flexibility

Focus

Reliance Shop

Access:-Easily accessible-Freeway exit & entrance space

Visibility: -Not visible from

road side-Special banner &

placard can be used

Traffic:-Traffic isn’t all an

hindrance-Can be easily

accessible without any traffic snarls

Parking:-Parking space isn’t adequate-Enough space not available

Expansion:Further expansion

isn’t possibleEnvironment:

Surrounding atmosphere conducive to business

Competition:-Unorganized

shops -Kirana stores

Government:No such adverse

rules

Access:

The shop is located at the hub of Kunnamangalam and it is well connected by road. Main bus stand is just few metres away and two big institutes are nearby. So, all the customers can easily make an access to the place. All kind of personal vehicles like cars, bikes can easily pass through and enter and exit the place.

Visibility:

Situated behind the other cluster of shops, it’s not visible from the main road. So for a new comers its poor visibility is a cause of concern. No special banner or placard has been put up to increase its visibility.

Traffic:

This is an added advantage for this shop. Where so many retail stores are suffering from the traffic snarls and it’s not uncommon that customers now and then distance themselves for the fear of traffic congestion, this location is all together staunch itself from the curse of traffic volume.

Parking:

The parking lot is a deterrent factor. Very few vehicles can be parked at a time and thus customers may be away from shopping as changing lifestyle has made people to drop into for shopping with their personal vehicle. Lack of facility to park cars may keep aloof the customers.

Expansion:

Now-a-days when a site is considered to a place of business, much care is taken for the possibility of its future expansion. In this regard, Reliance Fresh scores dismally low.

Environment:

The old cliché runs “Our environment, the world in which we live and work, is a mirror of our attitudes and expectations”. If this holds true, Reliance Fresh scores high in this regard. It is located in such a place that many other shops, kiranas environ it and help to form a perfect congenial atmosphere for business.

Competition:

Unlike other big cities’ retail shops, RF runs the race with other unorganized shops, kirana stores, carting vendors, etc. These are the competitors against whom it will have to vie for a big pie of customers.

Government:

No as such rules and regulations by the government are proved to be a hindrance for burgeoning its business.


Recommendations

1. Employees, who are from nearby places of Kunnamangalam, should be placed in the

morning shift only.

Pros

o The operating hours would be convenient for all both customers and

employees also

Cons

o Some dissatisfaction might show up in those employees who have to

come early always

2. Regular maintenance of the card swiping machines to ensure proper working.

Pros

o Convenient for customers who generally use credit/debit cards

Cons

o Maintenance cost will increase

3. Employees should regularly check the shelves for proper arrangements of the SKUs

Pros

o Visual impact would be better.

o Convenient for customers to search for desired items

Cons

o Workload on employees will increase

4. The FMCG items should be directly sourced from Bangalore DC instead of Thrissur

DC.

Pros

o The distance travelled will be less, hence will save on cost.

o It will cater to all the 6 stores in Calicut.

Cons

o Requirement of new trucks for transportation is also there.

o The road condition between Bangalore and Calicut is not good.

5. Separate dining area and a new store room should be built by Reliance Fresh on its

premises.


Pros

o Increase hygiene for employees.

o Increase employee satisfaction.

o Easy access and traceability of items.

o Avoid hindrance and congestion for item movements in store.

Cons

o High capital requirement for Reliance Fresh

6. Banners and placards should be used to increase the shop’s visibility.

Pros

o Shops can be easily found out for the newcomers and can be a means

to attract other buyers.

o Sales are likely to go up.

Cons

o A meager investment is required

Reference:1. Service Operation Management Handbook

2. James A. Fitzsimmons & Mona J. Fitzsimmons, Service Management

3. The Economic Times

Questionnaire for Reliance Fresh

Hello, we are from the Indian Institute of Management, Kozhikode and we are conducting this survey to find out what do people think about the service experience when visiting this Reliance Fresh. Please answer the following questions:

All information in this questionnaire is strictly confidential!

1. Was it easy getting to Reliance Fresh?o Yes o No

2. Are RF’s opening hours acceptable?o Yes o No

3. Did you arrive alone or with others? o Alone o Others


4. Where did you hear about this RF?o Newspaper o Magazine o Friends o Impulse Buying o Regular Customer

5. Did you come here for? o Monthly shopping o Weekly shopping o Daily shopping

6. How much time did you spend in RF?O Less than 15 min o 15-30 min o 30-45 min O 45-60 min o More than 1 houro More than 2 hrs

7. Informationa. Signs gave clear information about products’ location

o Strongly disagree o Disagree o Neutral o Agree o Strongly agree

b. The information provided was in your languageo Strongly disagree o Disagree o Neutral o Agree o Strongly agree

c. Keeps its records accuratelyo Strongly disagree o Disagree o Neutral o Agree o Strongly agree

d. Employee knows what your needs areo Strongly disagree o Disagree o Neutral o Agree o Strongly agree

8. Experience

a. The products were of good value for the moneyo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

b. Employees are always willing to help customerso Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

c. Employees are politeo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

d. RF gives you individual personal attentiono Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

e. Convenient operating hours



f. Satisfied with the billing processo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

9. Facilities

a. Appearance of physical facilities is in keeping with type of services providedo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

b. Billing counters in place and workingo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

c. Card swiping machines were working properlyo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

d. Lighting was adequateo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

e. Proper ventilation or AC was workingo Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

f. The objects on display were adequately spaced aparto Strongly disagree o Disagree o Neutral o Agree o Strongly

agree

10. Satisfactiona. Met your expectations


b. You would visit againo Strongly disagree o Disagree o Neutral o Agree o Strongly agree

c. The services met my needso Strongly disagree o Disagree o Neutral o Agree o Strongly agree


d. I found the overall service outstandingo Strongly disagree o Disagree o Neutral o Agree o Strongly agree

e. I would recommend this Reliance Fresh to my friendso Strongly disagree o Disagree o Neutral o Agree o Strongly agree


SOM Project Report Group 9

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