Veranda_Club_Bar_Operations

Operations Management Project Winter Session 2011 Table of Contents General Information about the Company …………………………… 3 Order winners and qualifiers ……………………………………………….4 Key Processes ……………………………………………………………………..6 Service Design Matrix ………………………………………………………….9 Performance Measurement ……………………………………………….10 Service Approach ……………………………………………………………….12 Blueprint of Service ……………………………………………………………15 Points of View (System and Customer) ………………………………17 Quality Function Deployment …………………………………………… 19 Conclusion ……………………………………………………………………….. 20 Bibliography …………………………………………………………………….. 21 Appendix …………………………………………………………………………. 22 General Information about the Company The company is a bar called “Veranda Club” and is located in “Mikri Venetia” in Mykonos. It is operating seasonally (6 months a year) and the services offered are as follows : - Alcoholic (Whisky, vodka and cocktails etc.) and Non-Alcoholic Beverages (fruit juices, coffee etc.) - Snacks (Toast, Sandwiches etc.) Moreover, the target market is young people composed mainly of tourists coming from abroad as well as Greek tourists. “Mikri Venetia” is the place attracting the majority, if not all, of the incoming tourists. Hence, there are many other bars that serve the existing demand. As a consequence, competition is harsh. We will analyze in the forthcoming section the order winners and order qualifiers to get a better insight into the key drivers of the bar’s operations. Order winners and qualifiers Order winners are the dimensions that differentiate our bar from other bars nearby. They are as follows : - Price/Cost : We use quality ingredients for whatever we serve to the customer and this increases our overall cost per product served (orange juice for example) and decreases our profit margin. However, we still conduct a strategy of charging lower prices than our competitors (0.95 x their prices). This enables us to attract substantially more customers as we offer higher quality for less money. - Product Quality : o Cocktails : In the preparation of cocktails, competitors’ bars use fruit powder instead of juice obtained from fresh fruits as our bar does. Since our fruits have not sustained any industrial processing (they are not in powder), they give a better taste to our cocktails. Our customers are made aware of this practice by our waiters and waitresses at the time they take the order from them. Customers in their turn, appreciate our practice by ordering more, and choosing “Veranda Club” instead of its competitors. o Snacks : We always use biological products in our toasts and sandwiches. By and large, the main reason why we are able to buy quality raw materials and charge 5% less than our competitors, is because we own the premises of the bar and we don’t pay rent (most of our competitors rent their premises). - Image : In view of creating and keeping a good image of our bar, we spend around 8500 euros for a single-page advertisement in “Mykonos Confidential” which is a magazine distributed all over Greece. Moreover, we allocate a budget of about 5000 euros to advertise our bar in a local (in Mykonos) radio station called “Venus FM”. Very few of our competitors are able to do that. Order qualifiers are the dimensions of our bar that help customers qualify it as a place to go to. They are as follows : - Location of the Premises : A nice corner right above sea level where the sunset can be watched. - Outer and Inner design : Designed to evoke nostalgic and romantic feelings to the customer. The most important requirements of our customers is being entertained and kept happy with good drinks and snacks. Our order winners and qualifiers constitute the means through which we meet the aforementioned requirements. Key Processes Our key processes are : 1. Wide Customer Service 2. Low Waiting Time 3. More Quality for Less Money Our customer service is composed of : • First and foremost, orders are taken by our waiters and waitresses who are trained in such a manner to make the customer feel welcome and comfortable. They are polite at all instances and customers’ problems are theirs. • Our beverages and snacks are of big variety. Furthermore, they can be tailored to customers’ wants. • We have 9 employees at our disposal who prepare the food as well as the beverages and 6 waiters/resses that take orders. A total of 15 employees are working in coordination to serve the customer as fast as possible. We keep our waiting time low thanks to : • The coordination of our 15 employees that serve the customer the fastest possible. That is, if the customer is served promptly his chances of ordering more and leaving earlier are bigger. Once he leaves, there is room for more customers. This way we attain a substantial amount of customers as well as profit. We offer higher quality for less money : • The ingredients we use in our snacks (sandwiches and toasts) are always biological. Besides that, the fruits used in our cocktails are fresh (not in powder). • We charge 5 percent less than whatever our competitors do by keeping a close watch on their prices and adjusting our prices accordingly (0.95 x competitor price). • The premises of our bar (the building) are owned by us. We don’t pay rent compared to the majority of our competitors. This allows us to operate with a 5 percent lower profit margin than them by also being able to keep the quality (and thus the cost) of our ingredients high. All of our key processes are designed to create value for customers and attract them. Activity System Map Service Design Matrix Our bar is a service with full customer contact since customers and waiters need to communicate. It can be qualified as a reactive system where production efficiency is low because it would be impossible for example to use less than the required amount of ingredients to make a sandwich or a cocktail. Sales opportunity is high as snacks and beverages are consumed shortly after the time they are prepared. Competitors are in the same position on the service design matrix acknowledging that they are bars as well. Performance Measurement Each employee in our bar is specialized in one area of tasks. This means that there are several employees for example preparing the snacks and sandwiches. They need to know by heart the good order of placement of ingredients for each of the choices available in the menu. The same applies for the employees specialized in preparing the beverages and cocktails. We may thus qualify this type of work as “highly detailed and repetitive” which “usually calls for time study” (quoted from the book p191). When operating at full capacity (around 300 customers), in order to keep waiting time at a low level, the time standard defined by the owner (Mr. Vigliaris) is as follows : • 4 minutes for beverages (alcoholic and non-alcoholic) • 8 minutes for cocktails • 12 minutes for snacks These durations start by the time the order is taken and include the delivery of the order to the customer. They make up the performance criteria for employees other than waiters and waitresses. Concerning waiters and waitresses, their performance criteria is related to customer satisfaction : • Good communication skills • Polite attitude • Responsiveness The achievement of these criteria is measured by the frequency of visit of a certain satisfied customer. Although we have well defined performance measurement standards, we are not in possession of past data. We are unable to measure at present the performance of employees with a stopwatch due to the remoteness of the bar located in Mykonos. Service Approach The service approach used is the Personal Attention Approach since the subject matter service is a bar where face to face contact is high and full customization of orders is possible. This is the appropriate approach since other approaches would not be applicable to a bar because phone or mail orders for example are not possible. Some advantages are : • Customer/Server interaction is direct and continuous so there are no communication delays • Satisfaction can be expressed on the spot and dissatisfaction can be dealt with immediately as customer feedback is instantaneous • It is a pleasant environment where customers who don’t know each other may establish new friendships Whereas some disadvantages are : • High inventory costs • Physical and mental burden for employees because of the considerable level of involvement with different needs and wishes of a plethora of customers (Constructed with the help of the Ritz Carlton Approach on page 266 in the book) The overall design supports the service approach taking into account that once the customer decides to stay and his need or wish is fulfilled, he gives immediate feedback (face to face contact). He may either be satisfied and leave without complaints or be dissatisfied. In the latter case, we will try to eliminate his cause of dissatisfaction until he is satisfied. If however, he still is dissatisfied he will unfortunately leave. Blueprint of Veranda Club Some poka-yokes that we identified : 1. Sometimes an order may be served to the wrong customer. To avoid this we have the layout of the tables on an electronic screen. Waiters and waitresses are also asked to learn it by heart in order not to lose time. 2. In case the power goes down, we have at our disposal a generator that turns on automatically. This helps us avoid the loss of customers. 3. From time to time, a specific supply may be depleted (when we run out of coffee for instance) we buy what the customer asks for from nearby bars and serve it to him/her. Points of View (System and Customer) System POVs : 1. Consistent with focus : Our bar’s operations are consistent with our main focus which is to entertain and satisfy customers acknowledging that each step in our process helps us achieve this goal. 2. User friendly : Yes, our service is user friendly indeed since by the time the customer enters the bar, our employees do whatever it takes to meet his needs and keep him happy and satisfied. 3. Cost effectiveness : We previously mentioned that we use quality ingredients (biological products for snacks, and premium quality ingredients for drinks) for whatever we serve. Hence, we cannot further diminish the cost of these ingredients as our overall quality would drop and this would result in a loss of customers. On the other hand, there’s no waste of time as every employee strives to be in coordination with its colleagues. 4. Robust : Our service is robust since we have a generator for backup in case power goes down. 5. Effective communication links : There is no need for a bar to have very developed communication links. A phone and an internet connection are enough to carry on business. 6. Visible quality : Customers appreciate the quality of our services by tasting our drinks and snacks, and seeing the interior and exterior design of our premises which reflect a pleasant atmosphere. 7. Easily maintained : Required tasks of the workers are easily executable. Employees don’t need to exert much effort to accomplish them. Moreover, supporting technologies (a palmtop for each waiter/ress and a screen for the queued orders list for kitchen and bar workers) are reliable. Customer POVs : 1. Reliability : Customers can easily rely on our services as we are more than eager to fulfill their wishes at all times. 2. Responsiveness : All the personnel is trained so as to promptly respond to a customer’s need and/or wish. 3. Assurance : The managing team as well as the front-line employees are committed to keeping the service quality of our bar at a very high level. 4. Empathy : Our waiters and waitresses are told to always be understanding and caring towards the customer. 5. Tangible : The quality of our service is tangible in the way that customers can fully experience an entertaining environment along with good food and nice drinks. Quality Function Deployment Our bar’s reason of existence is the satisfaction of customer expectations in every way possible. This means that, if a customer’s primary aim is to spend a splendid night with his friends, we are ready to accomplish his wish by working as a well-trained and strong team. How do we know that we are successful in achieving this' Well, we are operating for about 20 years with the amount of customers considerably increasing each year. Our service quality along with our well-established image, make it possible for us to still be among the leaders of the competition. Thus, we believe that our service delivery system creates experiences that exceed customer expectations. Our customers can voice their opinion (Voice Of Customer) personally to the store manager and/or owner without any delays and long lasting bureaucratic processes (customer surveys etc.). This way, if there’s demand from customers to develop for example an entirely new drink or snack, our team will consider this demand and come up with the new product within a reasonable time and without much hassle. This is possible mainly because the decision makers and front-line employees get constantly involved in each other’s work. Conclusion We believe that Veranda Club’s operations are adequately designed so as to create value for customers and satisfy their wishes. On the other hand, we still continue doing business by attracting more and more customers each year and making profit. Thus, both customer and stakeholder needs are met. However, taking into account that there’s always room for improvement, we may appoint a professional to consult our operations and make suggestions as to what should be altered, introduced or completely removed. Bibliography (MLA style) - Jacobs, Chase, Aquilano. Operations & Supply Management. 12th ed. China: McGraw-Hill/Irwin. Print. - Interview of Mr. Vigliaris (owner of Veranda Club) - "3 Steps to Finding Your Key Processes." Baldrige.com. Web. 07 Feb. 2011. . Appendix [pic]