To compete in today’s global markets, organizations strive to deliver their products and services in both an efficient and effective manner. A critical component in this effort is the design and coordination of the supply and distribution strategies in supply chain companies and the service quality in the service industry. Based on a site visit to the IGA Distribution Centre, below are be comparisons between the IGA National Distribution Centre and the well known popular Hard Rock Cafe. TRANSFORMATION PROCESS
Both companies follow the same traditional Production System model with inputs relating to money and labour with the same outputs resulting in producing a good or service. However if we compare the transformation processes, both companies have different objectives especially in the output result as IGA’s output is based on tangible goods and Hard Rock Cafe is based on service being an intangible good. IGA Transformation Process focuses on a ‘locational’ transformation which refers to transportation and delivering items to its destination. INPUTS •Money– capital •Staff – staff to service customers and cook food Ingredients – Food items to be prepared •Machine – Kitchens and food machines •Method – cooking the food and serving the customer TRANSFORMATION PROCESS •This part of the process is where the inputs will be utilised to create the output. In IGA’s case, the products will be picked using either the automated picking system or the manual voice picking system. The products are then picked and put into their coded boxes ready to be scanned and dispatched. The boxes are then loaded onto the trucks ready for delivery to its destination. OUTPUT •Goods are delivered to IGA stores on time.
Hard Rock Cafe Transformation Process focuses on an ‘exchange’ transformation with refers to a service and experience being provided. INPUTS •Money– capital •Staff – staff to service customers and cook food •Ingredients – Food items to be prepared •Machine – Kitchens and food machines •Method – cooking the food and serving the customer TRANSFORMATION PROCESS •This part of the process is where the inputs will be utilised to create the output. In Hard Rock Cafe’s case, waiter takes the customer’s order, Chef prepares and cooks food and waiter then delivers the meal to the customer.
OUTPUT •Meals on the table on time. MEASURING CUSTOMER SATISFACTION Hard Rock Cafe has existed for the past 37 years and has grown from a modest London pub to an international phenomenon in the service industry with a market share of 121 cafes across the world with 5 hotels and casinos. As time has changed and higher demands, chef’s at Hard Rock Cafe are modifying the classic menu from American Burgers and chicken wings to include higher end meals such as stuffed veal chops and lobster tails. They’ve also adjusted their menus along with layouts, memorabilia, services and strategies.
With amount of meals they serve per day, to keep up the operational requirements and customer satisfaction Hard Rock Cafe conducts surveys on a regular basis to evaluate quality of food and service at the cafe. Scores are rated on a scale of 1 to 7, and according to management if the score is not a 7, the food or service is a failure. This can be done within the restaurant of online at their website www. hardrock. com which receives over 100,000 hits per week. In contrast to IGA there any major differences as one company specialises in the service industry and the other transportation and logistics.
IGA national supermarket chain that currently has 1,349 stores Australia wide and the largest banner group of independent retailers, which include FoodWorks and Ritchies. IGA currently holds a market share of 35% including FoodWorks and Ritchies (2,140 stores). Customer satisfaction is an essential part of IGA’s operational strategy as it measures productivity and efficiency. Like Hard Rock Cafe, IGA conducts surveys on a regular basis with customer’s (stores) and also has meetings with the operational managers who seek feedback from the store managers.
After the site visit, at the reception area was a Customer Service Level Board with sites and stores listed and statistics separated into three categories Grocery, Perishable and General Merchandise. This data highlighted their service level agreements with stores and it also illustrated their achievements in meeting those targets. According Roy Morgan Research Company, 85% of IGA customers were satisfied for the 6 months average leading up to January 2010. Roy Morgan Single Source (Australia): September 2004 – January 2010.
FORECASTING With the growth of Hard Rock Cafe of more than 110 restaurants in more than 40 countries, it was imperative that better forecasting techniques be implemented. Hard Rock Cafe uses all three types of forecasting methods. •Long range – setting a capacity plan •Intermediate term – locking in contracts for leather goods e. g leather jackets and food items such as beef, chicken and pork. •Short term – sales forecasts conducted on a monthly basis by the cafe and then sent to headquarters for analysis.
The techniques used is regression analysis and weighted moving averages which is conducted in a time p of 3 years and the weights applied are 20, 40, 40 from the earliest year to the latest year. Hard Rock Cafe forecasts are based on previous years such as finding out which foods were preferred in the previous years and add them to the menu. Hard Rock’s forecast for sales is mainly based on point-of-sale (POS) system which captures transaction data on nearly every person that walks through the door.
The entree sale represents one customer and the entree sales are then sent to headquarters database. From there the general managers of individual cafes access the database to prepare a daily forecast for their site. The cafe manager can also obtain data from prior years sales for that particular day and prepare for additional upcoming events such as major conventions or sporting events which will boost sales. The daily forecast can then be further broken down into an hourly forecast which allows for employee scheduling, Hard Rock Cafe does not limit its use of forecasting tools to sales.
Information obtained from the site visit at IGA’s National Distribution Centre was quite limited in terms of forecasting. IGA also adopts three types of forecasting methods. •Long range – setting a capacity plan •Intermediate term – locking in contracts with the truck drivers to deliver goods •Short term – delivery and sales forecasts conducted on a daily and monthly basis IGA’s NDC forecast is mainly based on the data obtained from the Miniload (automated storage and retrieval system). This system holds 11,000 conventional reserve locations with 60,000 totes to hold items with an hourly pick rate of 350+ picks.
However data is also obtained from the conventional voice system which holds 5,500 SKU’s and 11,000 reserves with a pick rate of 100 cartons per hour. The automated system will hold up to 8 days of stock and when levels reach 4 days of stock, a notification will be sent to computer system. IGA forecasts demand by looking at data history from previous years based on people’s habits, trends and seasonal times of the year. Organisational Chart Inventory holdings Managing Inventory is a crucial aspect for both the IGA DC and the Hard Rock Cafe.
When it comes to inventory holding there are two main types we think of; •Just In Time (JIT) •Material Requirement Planning(MRP) MRP has been described by Heizer and Render (2010) a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements. This is commonly used in the manufacturing industry as for their constant need of materials arriving when they are needed and reduce the holding of excess inventory. JIT on the other time is said to be a Heizer and Render (2010) philosophy of continuing improvement and enforced problem solving.
JIT systems are designed to produce or deliver goods just as they are needed. JIT is related to quality in three ways •JIT cuts the cost of quality •JIT improves quality •Better quality means less inventory and a better; easier to employ a JIT system. The software management tool used for Inventory holdings at IGA DC is used on a dallas system Key features and functions include: •The purchase command centre which like the sales command centre provides the one screen view and summary of all the purchase order activities and their status. Automated purchase order generation utilising the re-order points set for each product •Full stock level and stock movement tracking •Simple and efficient stocktake procedures Where they run on a plan which is of an 8 day stock inventory and when stock reaches 50% they place the reorder, to maintain inventory levels. When looking at The Hard Rock Cafe we must remember that unlike IGA DC it deals with food and merchandise but also has 40 million dollars invested in rock n roll memorabilia, which is managed my Pete Beaudraul, CEO in Florida.
Management of quality The company’s commitment to its employees at every level, clear communication channels, regular briefings and an emphasis on training programs has reinforced the core values of the company and contributed to the rising status of the Metcash Group. The company policy with regards to product safety and quality is to provide safe and quality foods that exceed the consumer expectations and meet the legislative and regulatory requirements. Ensures product safety and quality by: approving suppliers based on the vendor assurance program generally HACCP certified suppliers •conducting regular supplier audits •conducting regular internal audits •conducting product assessments (including microbiological, chemical testing, shelf life validation) •ensuring that all staff have the required training to perform their tasks •reviewing product performance- i. e. customer complaints, trends analysis •conducting regular management reviews Menu review Surveys Kitchen, bar, retail shop layout and equipment maintenance Supply chain interactions ( suppliers- manufacturer- dealers- retailers- customers) Supply Chain Management Hard Rock work with qualified suppliers to ensure fresh, quality meals Menu item selection depends on supplying right amount of ingredients from qualified suppliers on time References •Operations Management, 9th Edition Heizer and Render •Operations Management Chapter 1, Lecture Notes •IGA Distribution Centre notes and site visit •http://www. roymorganonlinestore. com/News/1030—Coles-improve-in-Customer-Satisfaction-whil. aspx •www. hardrock. com
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