Analyzing Customer Issues and Operational Management Challenges in the Retail Industry: A Case Study of Sainsbury Plc

Introduction

Operation management can be defined as transformation process of input into output in order to provide value-added goods and services to the customers. For growth and expansion, business entities are required to maximise the quality of transformation process in order enhance the level of customer satisfaction (Hill and Hill, 2012).The present study is focused on customer issues of the retail industry. For a better understanding of subject matter Sainsbury Plc. has been considered. The report will include background information on selected company. Further, detailed analysis has been done to ascertain industrial challenges faced by the company in order to provide suitable recommendations to management in order to cope up with the same. For this aspect, operation management issues relating to retail industry are considered for analysing its impact on Sainsbury.

Background Information

Sainsbury is second largest UK retail store after Tesco with the market share of 16.9%. Sainsbury was founded by John James in 1869. The organisation is comprised of Sainsbury's Bank Sainsbury's supermarkets and convenience stores. Along with this, they also provide internet based shopping service to enhance customer convenience. Headquarter of entity is in Holborn, London and presently they are working with approximately 161000 workers (Sainsbury, 2016). The company recorded revenues of £23.775 billion and operating income of £81 million. This figure shows growth of twelve percent. At present, the company is serving to all customer from higher class to lower low, middle class by providing a wide range of products and services. Business plans of the company are designed by considering modern needs and expectations of customers.

Management of company aims to provide quality products and services at fair prices in a convenient manner. The company had developed their image as a multi-channel business with the fastest delivery networks (Levesque, 2010). The vision of company becomes the most trusted retailer where customer loves to shop, and employees enjoy to work. They do not work solely for maximising profit but also to deliver enhanced value to human resources. Thus, they have a goal to offer commendable services at reasonable prices in the manner they want it. In accordance with their strategy, they understand customer needs in a better manner. They will be there to offer their services by their business values.

In the present era, business entities are required to meet up expectations of customers as they are considered to be king of the market. This approach had increased competition in the market and enhanced the expectations of customers (Goetsch and Davis, 2014). Due to this aspect, organisations are required to resolve their customer issues to strengthen their market position and in order to develop a better reputation. A team of Sainsbury is engaged on working on it in order to maintain their leading position in the market.

Identified issues

Operation management is considered to be a dynamic field which assists business entities in accomplishing their operational activities in an effective manner in order to attain goals of business. Business organisations formulate plans and strategies to deal with the challenges and opportunities in the market (Slack and Lewis, 2011). For this purpose, they are required to design that it capable of providing quality services and goods in accordance with the demand and expectations of customers in a timely manner. Everyday management of the business has to deal with the new issues. One of such major issue is “managing supply chain”. With the increasing globalisation, it is difficult for business entities to manage global supplier, production and distribution networks.

I This issue needs to be highlighted in business strategies for the purpose of an efficient production and operation management. The complex relation of good and services in the retail industry are not dealt in a proper manner then in such case it can lead to appreciable adverse results (Goetsch and Davis, 2014). Furthermore, it makes customer dissatisfied and switches over to the competitive firm. In accordance with the study of Goetsch and Davis (2013), the following are common errors and issues are faced in managing supply chain inventories:

Variance in operational goals

Enterprises are required to operate in a collaborative manner in scattered sites they face the issue that operational goals of each site are not in accordance with overall supply chain goals (Simchi-Levi, Schmidt and Wei, 2014). Due to this aspect, there is not alignment in overall in business strategy and performance is adversely affected. In businesses are able to tackle it properly then in such case there will be inefficiency in the overall supply chain.

Inappropriate deliveries

Another issue regarding supply chain in operation management in providing miscalculated deliveries to the customers. In the retail industry, customers expect the timely arrival of good and services with the changing market conditions (Kasturi, Chaseand Karim, 2015). Business operating in the retail industry are required to assure that all necessary goods and services are available in a timely manner (Chick, Huchzermeier and Netessine, 2014). This aspect enhances customer loyalty, but inappropriate deliveries result in a negative image of business.

Information of external environment

Study of Monden (2012) shows that mismanagement of information in demand of products and services on multiple operating sites can lead to severe losses to business (Monden, 2012). Generally, inefficient information system leads to poor inventory or backlog status and future strategies of the business (Parnell, 2014). It is because information is not synchronised and it leads to inaccurate retrieval process. As a consequence, it will lead to reduced sales and profitability.

Risk management by considering future uncertainties

For success and growth of business, it is essential to consider present as well as future factors in business strategies. Future factors have huge uncertainty and wrong predictions enhances the risk of forming inappropriate policies of the business (Waber, Magnolfi and Lindsay, 2014). Thus, ignoring uncertainties enhances business risk and lead to drastic operational hindrances in operational activities.

Other issues

Other customer issues related to supply chain management are mismanagement of internal customer which results in a delay of delivering times by which demand cannot be met up (Slack, 2010). In addition to this, poor coordination between different departments as it enhances the cost of capital, storage and warehousing (Goetsch and Davis, 2014). It is because inefficient operations management leads to an increase in the cost of obsolescence and reworking.

According to the research of Kasturi, Chase and Karim,(2015), businesses are required to consider above described issues in their business strategies in order to operate in an effective manner and to keep their customers satisfied (Kasturi, Chase and Karim, 2015).

Challenges faced by company

Sainsbury operates in the global market. Thus they are required to consider needs of wide range of customer to maintain their position (Monden, 2012). However, this is not a tranquil task because the demand of customers is frequently changing and operations management of retail industry is getting complex day by day. Due to this aspect, management of company faces difficulty in balancing customer demand and provided supply.

Sainsbury is typical operational based company therefore for them supply chain management is vital in order to assure smooth run of business. For effective management of such supermarket require to plan and supervise products, services, procedures and supply chain (Parnell, 2014). These factors will assist business in growth and utilisation of resources in an optimum manner and to provide products and services to customers in the manner they want it.

Management of organisation serves to all customers inclusive of lower middle class as well. Due to this aspect, they are required to provide a wide range of products in order to serve to serve all kind of customers (Waber, Magnolfi and Lindsay, 2014). Retail sector of UK is always affected by global rivalry, alteration in plans, price wars and corporate presentation. Sainsbury is considered to be reputed name in the retail segment but with the increasing operation management issues is imposing an adverse impact on the performance of business. The company had a diverse range of product offering with cross-selling opportunities (Simchi-Levi, Schmidt and Wei, 2014). However, due to minimum wage rate, there is continuous increasing in overall costs that is lowering overall margin of the business. Furthermore, the company is facing issues in forming integrated policies for overall business (Hitt, Xu and Carnes, 2016). In order to cope up with this issue, there supply chain management have been designed based on the aspects of procurement, information technology, warehousing and logistics. Although, coordinated management is still the complex task of business due to increasing complexity of the industry.

Organization is designing their marketing strategies by considering increasing awareness of consumers regarding environmental and health issues. For this aspect, they had taken the step of increasing resistance towards food products that genetically modified and increase the production of organic food (Kasturi, Chase and Karim, 2015). For this step, they had to modify their supply strategies and develop altered supply chain. In addition to this, Sainsbury supermarket is required to make use of Kral JIC procurement matrix in order to manage to identify operations involved in inbound logistics, procurement, outbound logistics, services and design.

Retail market of UK is characterised by heterogeneous consumer taste, buying habits and preferences. Thus, Sainsbury is required to consider taste and preferences of consumers in each geographical locations to retain their value-conscious customers (Slackand Johnston, 2011). For this purpose, there is required to improve operational effectiveness and emphasis of innovation and continuous improvement. Although, determination of varying needs of the customer is a challenge for business in a present dynamic era (Slack and Lewis, 2011). It is because; there is continuous change in the needs and there is an increasing number of suppliers which enhance competition in the sector.

Conclusion

In accordance with the present study, the conclusion can be drawn that effective operation management assists the business entity in attaining competitive advantage along with establishing a strong position in the market. However, if issues relating to the customer are not dealt in a proper way, then there will be severe issues in managing a business in a proper manner. Henceforth, management of Sainsbury is required to consider these issues appropriately by considering provided recommendations. Further, the present study shows that for successful future in the retailing sector, there should be an optimisation in the business plan by building trust among human resources as well as customers. For this aspect, operations management is considered to be the vehicle that reliably and constantly delivers these necessities to the end customer. This will persuade them to return to the retail outlet in order to motivate them for subsequent purchase.

Recommendation

In order to cope up cited issues following recommendations are required to be complied by the management of Sainsbury:

Market Research

Management of Sainsbury is required to form business strategies by considering external and internal environment factors. For this aspect, they are required to do market research in order to understand demand and requirements of customers. With this approach supply of business will be in corresponding to expectations of customers (Parnell, 2014). As a consequence, there will be an escalation in sales and profitability in order to assure growth and success. Market research can be done by using tools such as PESTLE analysis, survey through making a questionnaire and using blogs and social networks (Monden, 2012). These tools will assist in collecting information related to feedback, ideas and opinions of customers.

Use of new technologies

Sainsbury can adopt new technologies for inventory management for effective operational activities. For this purpose, they can use techniques such as SKU (Stock Keeping Unit). This technique will provide a unique code to each product for stock keeping and tracking and to reduce unnecessary time in searching (Min, 2015). In order to manage New old Stock (NOS) and Stock out, the demand of customers can be fulfilled in a better manner. As it will resolve the issue of lack of merchandise and to keep stock as per demand in the market. Using of updated technologies enhances efficiency and make a reduction in operational costs as well. ERM can be used in order to coordinate all business departments and develop better plans for the business.

Integrated strategies and consideration of geographical factors

The success of a business depends on of strategies formulated by management as it determines their future. Due to this aspect, strategies are required to be formed in an appropriate manner by considering internal as well as external factors. Management of Sainsbury should formulate integrated strategies to achieve common goals and growth (Levesque, 2010). The company is operating in the global market, so they are required to consider domestic factors in the particular country in order to meet up expectations of customers. This approach will assist maintaining the better supply chain. It is because cautious supply chain management is essential in order to make a reduction in lead times and to attain quick response for emphasising the need to use an approach as agility.

Effective contracts are required to be formed with the players of logistics sector for the maintaining better supply chain. By these contracts, they can mitigate and share the risk the reduce possibility of loss and damage to business (Hill and Hill, 2012). This strategy will mainly be beneficial during festive seasons such as Christmas and New Year. The success of Sainsbury in an effective logistics will be attained by a proper rail linking its warehouse to flight terminals for effective management throughout the supply chain. Along with this, convenient depots can be developed for inventory management.

Warehousing is another crucial issues in the inventory management as storage is required to the optimum to balance demand and supply with minimum cost (Heizer and Render, 2014). In order to operate with efficiency, business is required to develop large warehouses for storage of products.

Other factors

In order to manage supplier relation, Sainsbury can make use of tool Lean retailing-apparel supplier relations. This tool will assist business in dealing with issues related to culture, volatility and distance in terms of supply and demand.

Role of Accounting and Financial Management in Health Care

Organizations

• Evaluation and Planning: The first and foremost role of financial management is determining the efficiency of current activities and planning for future. It is essential for all the organizations to measure the effectiveness of its operations so as to decide whether to continue with the existing plans or devise new strategies. This can be done with the help of ratio analysis. On the basis of this, management and investors can compare the financial position of the organizations and can corrective measure if required (Crawshaw, Allen and Roberts, 2000).
• Long Term Investment Decision: Decisions related to capital investment are more important from the senior level perspective. Although, it is the senior management that takes decisions related to investing in any projects, managers at all levels must also give important to it. Investment decision can be related to the acquisition of new equipment, facilities, and land. In this regards, capital budgeting proves to be effective tools for the health care organizations as through it management can select between the two projects and can determine the feasibility and viability of the project (River, 2001).
• Finance Decisions: Health care organizations need to invest frequently in new equipment and modern technologies. For this purpose, they need to raise funds for supporting their operations. Thus, they need to determine whether to make use of internal funds or should borrow funds from outside. Thus, organizations need to make decisions on the basis of their debt and equity capital and capital structure (Gapenski, 2012).
• Working Capital Management: To ensure operational effectiveness and to reduce the cost of operations, it is essential for the health care organizations to manage their short-term assets such as cash, inventories, receivables, securities and so on. This can be achieved by the management by determining the liquidity of the organization (Frosheiser and Kleiner, 1992).
• Contract Management: it is necessary for the health care organizations to monitor, sign and negotiate contracts with third-party players and managed care organizations. Although, this is the responsibility of the manager of the finance department, yet managers of all the levels must also involve in such activities so as to implement effective operating decisions (Chua and Preston, 1994).
• Financial Risk Management: Any transaction that involves the transfer of money part to other is prone to several kinds of risks. Thus, financial management plays a significant role in managing such risks in health care organizations.

Difference between Non-Profit and For-Profit Accounting

As the names suggest, non-profit and for-profit organizations differ on the basis of their ultimate goals. For-profit organization's ultimate goal is profit maximization and passing those benefits to the company owners and shareholders in the form of profits and dividends, on the other hand, it is not the case with a non-profit organization. In the case of a non-profit organization, since the organization does not have any owner it does not go for profit maximization; rather its ultimate goal is maximizing revenues while minimizing costs. Thus, non-profit organizations ensure greater revenue than costs. This ensures that, by maximizing revenue, they can achieve their major objective of serving the society needs (Kurunmaki and Miller, 2008).

Tax Exemption

In the case of a for-profit organization, management needs to pay taxes out of their net income; however, it is not the case for the non-profit organizations. They are exempted from it. Since non-profit health care organization works with an aim of providing better facilities to the society at a lower price, it brings a difference in the accounting practice of the two types of organizations (Dong, 2015).

Balance Sheet

All for-profit health care organizations need to prepare a balance sheet showing owners equity, assets, and liabilities. However, it is not so for the non-profit organizations as they do not have any owner. Their balance sheet only consists of assets and liabilities section (Rivers and Glover, 2000).

Income Statement

Like balance sheet, a for-profit health care organization needs to prepare its income statement stating revenues, gains, expenses, and losses. It is done with an aim to evaluate the financial performance of the organization. This directly has its impact on the share price of the stock and company valuation. On the other hand, non-profit health care organizations do not need to prepare such statement. Instead of preparing a list of revenues, gains, expenses, and losses, non-profit organizations prepare a statement of activities performed in each year.

Challenges faced by Health Care Finance

• Current organizations are finding it difficult to develop a long-term business plan for the integration of their physician
• Organizations are not able to effectively implementing substantial and sustainable cost-containment strategies (Arnold et. al. 1994).
• To prepare a clear strategy for recruitment, retention, and training
• To align IT with alteration in care delivery structure and payment
• In redesigning its delivery system and care, process to bring sync between facility components of care and professionals
• Difficulties in micro financing approach, regional health initiatives and employer relationships
• To deliver online care services to the consumers (Kantola, 2014).
• To deliver better services and resources outside the traditional hospital settings
• Difficulty in seeking merger partners to increase size, improve efficiency and access to capital

Key to Success

• Software Application: Advanced accounting software must be use which has improved cost data integrity, minimize ongoing maintenance, wide access, and use
• Implementation Approach: Implementing accounting solution is an art. It must be flexible.
• Personnel: For successful implementation of accounting into health care organization, experience, and knowledge are essential for successful execution (Cleverly, 1989).

Conclusion

From the above discussion it can be concluded that for most of the organizations, the ultimate goal of financial management is still just wealth maximization and profit maximization. However, for health care organizations, profit making is not the ultimate goal, though they need to generate profit to ensure financial sustainability of the organization. Further, it can also be said that for both, for-profit health care organizations and non-profit organizations, there is a need for different accounting practice. This is because of the difference in their working. Finally, health care organizations are finding it bit difficult to implement accounting and financial management in all the aspects. However, proper knowledge and experience will help the management in overcoming this challenge.

Continue your exploration of Analysis of Phonological Features in a Transcribed Conversation with our related content.

References

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With the help of above discussion, I could mention that the patient within the health and social care not only face the physical problems but sometimes the mental and psychological level problems are also associated with them. It could create troubles for both patients and service providers. In such situation the fear and stress level of both the parties could be increased. To deal with such circumstances, the support is required from the nursing staff. The implementation of proper strategies could help immensely in eradicating the psychological problems. Overall this report is helpful in gaining the intellect related to managing the complex situations in health and social care.

References