This report examines the characteristics, layout, flow, process technology and strategic objectives of Morrisons in Aberdeen, Scotland. It finds that Morrisons is a high volume mass service food retail operation with medium process variety.
The recommendations of this report are that Morrisons devote several checkouts solely to customers with ten items or less, and/or implement the use of RFID technology to increase the throughput rate of the checkout process.
Introduction
Morrisons is the fourth largest supermarket chain in the United Kingdom with a market share of 11%. It has over 400 stores, each employing around 300 staff and specialises in the manufacturing and retail of food.
This report will describe the main characteristics of Morrisons’ service operation in Aberdeen, Scotland, which was visited on February 21st 2010.
It will examine the layout of the operation, the flow of materials and the performance objectives of Morrisons.
The report shall conclude with a recommendation of changes that could be implemented to improve the effectiveness and efficiency of the operation.
Characteristics of the Operation
Morrisons is a high volume mass service operation serving 20,000 to 25,000 customers each week. By comparison, smaller stores such as Lidl serve 5,000 to 8,000 customers each week.
Variety
Morrisons has a product range of 30,000 to 35,000 items. Although this may be considered high variety when compared to Lidl which offers around 1,000 product lines, in actuality Morrisons has medium process variety due to its limited flexibility in the products and services that are offered.
For example, the range of fish on display is limited to Morrisons standardised product line. In this sense, Morrisons is inflexible and offers low variety because it can not cater to individual customer demands.
However, the presence of an in store fishmonger allows Morrisons to increase its level of customer contact whilst also increasing the flexibility, variety and visibility of the operation as fish can be customised (e.g. deboning or removal of fish head and tail) in accordance with the customer’s wishes.
Morrisons is able to further increase process variety from low to medium via an in store butcher, baker, delicatessen and restaurant, all of which provide the customer with a greater variety of products and services.
Variation
Morrisons has a fairly predictable variation in daily, weekly and seasonal demand. Typically, the busiest trading periods are lunch time, during the evening, weekends and holiday periods such as Easter and Christmas.
As a result, Morrisons varies the number of staff in store at any one time in order to accommodate these variations in demand.
Since Morrisons employs a lot of part time local staff, it is also able to respond to any unexpected variations in demand with minimal lag time as staff can be called in to work at short notice.
Visibility
Slack et al (2007) defines visibility as the level of operational exposure the customer experiences. Using this definition, Morrisons could be said to have a high level of visibility, as customers are exposed to all front end operations of the business.
However, if one considers visibility in terms of the extent to which customers can customise products and services, then visibility could be said to be low to medium.
Low visibility, or customer customisation, is needed for a high volume operation. As a result, the large majority of the products and services Morrisons offers are standardised and can not be customised.
However, since quality of service is related to customer satisfaction, Morrisons attempts to increase visibility by allowing some food items to be customised in their fresh food counters and restaurant.
Although due to the high volume nature of the operation, the degree of customisation is fairly limited as it has also been standardised. For example, when ordering food in the restaurant, Morrisons offers a standardised choice of either peas or baked beans as a side dish. Some services however, allow for a greater degree of customisation.
For example, a customer may ask a staff member where an item is and then be taken to that item’s location. This exhibits both a high degree of visibility and variety, as a transforming resource (staff) is being customised to meet the exact requirements of a transformed resource (customer).
Layout and Flow
Figure 1 shows the layout of Morrisons’ operation. It is a functional layout because similar products are grouped together in the same area.
Besides being convenient for the customer, having a functional layout improves the overall efficiency of the operation as goods are laid out in a manner which complements the functions of the transforming resources which make up the process.
For example, alcoholic beverages are grouped together as this makes it easy for staff to restock them, and frozen goods are grouped together because these items share a common technology in the form of freezers.
At the very front and back of the store Morrisons offers a variety of additional services such as dry cleaning, a pharmacy and freshly prepared food counters arranged in a cell layout.
The advantage of having such a layout is that it allows transformed resources (customers) to move directly to the transforming resources which meet their needs, as shown by the flow pattern of two customers in figure 2.
Customer one (pink) who wishes only to eat lunch can go directly to the restaurant without having to wander through the entire store. The positioning of the restaurant makes this flow pattern very predictable.
In comparison, customer two (green) who requires both fresh food and prepackaged food exhibits a much more erratic and unpredictable flow pattern.
Figure 1: Layout of Morrisons’ service operation
The layout at the back of the store is arranged in a functional layout with similar food products grouped together. This makes it convenient for the transforming resources within each cell, as raw materials can be brought in from the back office without disturbing customers.
Such a layout also helps to increase the variety of processes at Morrisons, as each fresh food counter is located next to its prepackaged shelved equivalent thus giving customer’s added choice as to what they can purchase.
In addition, this layout also allows customers to customise the service they receive from staff in an effective manner.
For example, a person looking in the meat section can ask the staff at the butcher counter for assistance should they have a meat specific query. This is likely to be far more effective in terms of response received, than had the customer asked staff at the cake shop.
Figure 2: Flow patterns for two customers with different needs
Strategic Performance Objectives
The five performance objectives which are common to all operations are quality, dependability, speed, flexibility and cost as identified by Greasley (2009).
Quality
The perceived quality of products and services offered at Morrisons is directly tied to a customer’s level of satisfaction.
Should a customer become dissatisfied, they may choose to shop elsewhere and Morrisons will experience a decrease in revenue.
Quality is therefore an extremely important performance objective, and can be seen in the fresh food on display and the neatness/cleanliness of the entire store.
However, the level of quality offered at Morrisons varies and can be reduced both intentionally and unintentionally as a result of balancing quality with cost and flexibility.
For example, food which is nearing its sell by date or food packaging which has become damaged, is offered to customers at a lower price in a reduced section.
Quality can also vary in the level of customer service provided, as service quality tends to be lower with part time student staff and higher with full time adult staff.
Dependability
Morrisons has regular opening and closing times so customers are fully aware of the hours in which they can shop. Dependability can also be seen in the constant replenishment of shelved goods.
This is largely due to the presence of stored inventory in the back office which allows Morrisons to absorb fluctuations in demand, as it waits for new inventory to arrive from its nearby distribution center.
Speed
The main process for which speed is an issue (see recommendations) occurs at the checkout tills. Since Morrisons is a highly visible operation with customers who have a short waiting tolerance, the store attempts to reduce customer waiting, in the form of queuing and paying for goods, by having a large number of checkout tills to cope with random variations in demand.
Flexibility
As Morrisons offers its customers a fairly standardised product line, flexibility is less important as a performance objective.
Some examples of flexibility include options to customise food, such as with the self serve salad bar which allows customers to make their own salad with the ingredients they choose.
Flexibility can also be found in the products offered for sale which may vary seasonally. For example, figure 1 shows an isle devoted entirely to Easter eggs for the lead up to Easter.
Interestingly, this was the only isle in store which was not labeled, suggesting that Morrisons uses this isle to accommodate seasonal items. Flexibility of product line can also be found at the end of each isle in the form of movable store displays for new promotional items.
An example of staff flexibility was found at the customer service desk and dry cleaning service, both of which were run by only one staff member.
Cost
In today’s economic climate, cost has become an increasingly important order qualifier and winner for supermarkets.
Just how important this objective is can be found with the market leader Tesco’s slogan “Every little helps” and the rise of low cost food shops such as Lidl. Morrisons may therefore be able to increase sales by placing greater emphasis on this performance objective.
Recommendations
Long queuing times can lead to a lack of customer satisfaction, and this is one area in which Morrisons could improve their operation.
Currently, Morrisons use a barcode reader to manually scan each item at the checkout. This creates a delay because each barcode must be positioned correctly in order to be read by the scanner, and only one item can be scanned at a time.
A further delay in the checkout process, as shown in figure 3, occurs during the bagging process as most customers will bag their items first before making payment.
This in turn leads to an under utilisation of the transforming resources (staff & checkout equipment), as until the customer makes their payment, there will be no flow through the process resulting in both the equipment and staff sitting idle.
Figure 3: Checkout process map
To help decrease throughput time, cycle time and increase throughput rate, Morrisons could adopt one or both of the following recommendations.
Limit the number of items that a checkout deals with to ten or less for a select number of tills as practiced by Asda. This will help to increase the utilisation of the transforming resources and increase unit flow as there will be less delay during the bagging process.
Some customers with only one or two items may not require a bag, thereby eliminating the bagging process entirely. In addition, faster throughput time will serve to increase customer satisfaction and perceived quality of service.
A second approach Morrisons could adopt would be to implement the use of radio frequency identification (RFID) tags instead of barcodes. This would allow multiple items to be processed (i.e. “scanned”) at once (Michael et al 2005), and if the technology was combined into the transportation process (i.e. the conveyor belt) the reading of the RFID tags could occur automatically.
The cashier would then be free to assist with the bagging process, or alternatively, Morrisons could remove the cashier from the checkout entirely and create a “self serve” checkout process. If this later suggestion were implemented, Morrisons could save on cost of labour.
This would help to offset the cost of the RFID technology in the short run, and increase overall profitability in the long run. The result would be a modified process map as shown in figure 4.
Figure 4: Modified checkout process map using RFID technology
References
Greasley, A. (2009) Operations Management, 2nd edition, Wiley.
Michael, K. and McCathie, L. (2005) The pros and cons of RFID in supply
chain management. Proceedings of the International Conference on Mobile Business (ICMB), pp. 623-629.
Slack, N., Chambers, S. and Johnston, R. (2007) Operations Management, 5th edition, Prentice Hall.