Business Process Management

Introduction:

Process mapping is defined as “describing processes in terms of how the activities within the process relate to each other.” (Slack et al, 2007, pg. 102). The group decided to map the process of stocking up shelves in a supermarket and opening a new bank account. The speed and efficiency of how these two processes occur can bring substantial value to customers and thereby give the company a competitive advantage. This potential success is recognised from analysing process maps, which is one significant advantage of implementing them in businesses. Process mapping helps establish goals and the standard level operations should run at in a business. By employing this strategy, managers can gain a greater understanding of what the company is and what it stands for and forecast what is needed to become successful. This will allow greater productivity and output and lower costs.

The process of stocking up shelves in a supermarket:

The aims of the supermarket when they are planning to stock up the shelves are to ensure that they have enough of a product to meet customer demand. This is possibly the most important factor in the process as they want the customer to have an enjoyable experience whilst shopping and to have faith in the supermarket that they will be able to enter and buy the exact product that they went in for. The supermarket must make sure however, that they do not order too much of a particular product so that it goes out of date before it can be sold and so is wasted causing the company unnecessary costs. They must order to the customer demand and not to what they believe will sell. This will involve the company looking at the different buying habits of consumers and seeing exactly how many of a particular product is sold either daily, or weekly so they can order accordingly. This can be done quite simply by looking at the sales transactions on the till systems and product information systems.

In order to meet these aims, the company needs objectives. To ensure that the process runs smoothly, there must be some computerised elements to stock taking and order taking. As a supermarket can sell thousands of different brands and products, it would be very costly and time consuming to have someone who goes around the store counting exactly how much of a particular product there is in the store. There would have to be an electronic device that scans the barcode of the individual product which would then co-operate with the sales transactions so that they can work out how many they have sold, and how many are left in store. This would result in an answer for how many the supermarket would need to order for the following week to meet demand. The supermarket should also have an electronic ordering system that allows the company to only amend the orders according to seasonal products, e.g. Christmas puddings or pumpkins, or if they are planning on doing a promotion (3 for the price of 2 etc) so that they can ensure that the store is well prepared for the influx of consumers purchasing this product. As many items either sell at a constant rate, (e.g. bread, eggs) or if they have a long shelf life, they are less likely to need to amend these orders frequently. The automatic ordering system would always have a ‘base’ order that wouldn’t need to be touched unless amendments were required.

The boundaries of ensuring that the shelves are constantly filled to the correct amount rely on good communication between staff and managers. The employees are the people who are in direct contact with the products and if they can see that the product is running low, then they need to tell their manager so that they can act accordingly. Also, stock taking using both a hand held computerised system and sales reports does not factor in theft from the shop. If people are stealing and getting away with it, then the company will not know unless an actual count of stock has been done. Theft, if occurring on a regular basis could leave the store short on popular products even though careful stock appears to have taken place. It is also time consuming to count every individual product available in a supermarket, so many companies might not even check their inventory and simply send off the ‘base’ stock requirements which again could lead to them running out of products which leads to dissatisfied customers and possible loss of business.

The process a person has to undergo to open a bank account:

The bank will have in place a process that customers must have to follow to enable them open an account. This process involves various activities that the application must have to go through before a decision can be made to open an account.

The initial process starts once the customer enters the Bank and speaks to a Customer Service Adviser about opening a new bank account. The adviser will asks the customer various questions in order to establish the customer’s banking needs. This enables the adviser to clarify what kind of account is more suitable for the customer. Since the customer does not know what kinds of bank accounts are available, the Customer Service Adviser enables this process to take place. Without the support of the adviser, the process of opening the account might have been more difficult and time consuming. The customer is also advised on the time duration it might take in the process of opening the account.

The customer then has to fill in an application form which enables the process to move to the next stage. The customer can call on the adviser for assistance in filling out the form at any point in time. Once the form has been properly filled in, it is processed by the bank staff (using processing software on the computer by sending the information to a referencing agent to check if the applicant details are correct and for a credit check to find out if the customer has any adverse credit history. These are guides used by the bank to determine whether the information given by the applicant is true and to decide on credit facilities that might come with certain bank accounts). The information sent off is then verified and sent back to the bank. All the information sent are assigned scores using guides (software) that the bank has installed to make the process more efficient. Depending on the customer’s score, a suitable account would be recommended.

A decision will then be taken in regards to the opening of the account and details of the account are entered into the computer. At this point of processing the account, some delays would be experienced while the adviser inputs the details of the new account into the computer. While this is being facilitated, the customer then receives details of his/her account. The customer leaves now as their input into the process of opening the bank account has been completed. The account details and customer information relevant to operating the account is then sent for printing to the card manufacturing company. The machinery, plastic and paper used in the process of manufacturing the relevant items for the bank enables the process of opening the account to be completed. The cheque book, card and pin number for use with the account are then mailed by the printing company to the bank’s customer or sent to their local branch for collection. Once the cheque book, card and pin are received by the customer, it enables the use of the bank account and without this, the operation of the account would be made more problematic.

Slack and the 4V’s

Slack developed his ‘4Vs’Profile of two operations to allow two businesses to be compared directly against each other.

The 4Vs stand for Variety, Variation (in demand), Volume and Visibility.

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Slack and the 4V’s

Slack developed his ‘4Vs’Profile of two operations to allow two businesses to be compared directly against each other.

The 4Vs stand for Variety, Variation (in demand), Volume and Visibility.

Volume looks at how many different jobs one person performs in the business. In a supermarket, each person works one station on a shift and rarely swaps during it unless it is extremely necessary. In some cases, there are enough people employed in the supermarket so that they only ever have to perform one duty during their time employed there. In the supermarket, there are sometimes 20 people working on the tills during the busy periods but often there are not this many people working in a bank at any one time. By having this high Volume, you will find that the each person will find their job extremely repetitive as it is all they perform all day long. In some cases, people will work behind a till for 8 hours a day, 5 days a week for several years. This high repeatability often isn’t appealing to a lot of people though. However, since people are performing the same tasks day in and day out, they become an expert in their area. This leads to highly specialized people in the supermarket which is good for the business. In a bank, there are normally two or three people who deal with the individual’s bank accounts, and processing cash transactions, and then there is one person who deals with opening bank accounts, another working on loans, and someone possibly dealing with mortgages. This low volume of staff means that if anyone is sick, then the other staff will be required to cover the area for the duration. If you work in a bank, your position is often changed to where you are required most so you need to be multi-skilled and have good knowledge of the job.

Variety looks at the degree in which the business responds to different customer requirements. A supermarket would have high variety as they order in a wide variety of products, made by different brands and sometimes of different ethnic origin to appeal to a wide variety of tastes. This means that the supermarket is flexible about what it orders, in order to meet the needs of the customer. A bank has very low variety in terms of the accounts they offer. They have their standard set of accounts such as ‘Flex account’ ‘Savings’ and ‘ISA’ but there are few variations off the standard model. 90% of people who go into the bank to open up a savings account will leave with the same account. These standardised accounts make the whole process of opening up a bank account very routine and so the staff working there could do it with their eyes closed.

Variation In Demand is how much demand changes over a period of time. In a bank, the accounts very rarely change. The main changes to them are the interest rates but this is usually determined by the government and so changes are infrequent. This keeps the bank in a routine, and also proves them to be very predictable in what they offer to the customer. This means that it doesn’t matter when an individual opens a bank account as it will almost always be the same. In a supermarket however, there are seasonal changes constantly. They cater for all of the holidays that occur over the year, Christmas, Valentine’s Day, Easter, Summer Holidays and Halloween. They need to order in the seasonal goods in advance to the holiday so that it entices people to buy them early. They can also adjust their ordering to meet customer demand, i.e. if the store holds a Buy One Get One Free offer on a particular popular product, then they know that they are going to sell a lot of it therefore they will adjust their ordering accordingly. After the promotion finishes, it is highly unlikely that they will continue to sell the same numbers so they will reduce the amount ordered.

Visibility relates to where the process is carried out. In a bank, you see very little of the processes being carried out in front of you therefore there is low visibility. Credit Checks are done online by an independent company, cards and chequebooks are manufactured in another place altogether, Money is taken from you and put into a till and your account credited electronically. Sometimes, especially if you are paying in a cheque, there is a time lag between processing your transaction and seeing the results. It can take up to a week to send out new cards, new chequebooks, or new PIN numbers if you lose them and so this could be problematic for the consumer, as they may not have access to any money during that period of time. In a supermarket though, you see quite a few processes occurring in front of you. You can see people continuously stacking up shelves to ensure there is food available for the customer and you see your food being processed through the tills. This leads to low waiting tolerance however, and the consumer always wants their product immediately and often voices their dissatisfaction if they are unable to get exactly what they want. On the Deli counter, you can see your choice of meat being cut exactly how you want it to be and wrapped for you, and in some supermarkets, you can even choose for someone to make your own personal pizza for you. In order to offer these services, there needs to be good customer service skills in place so that any questions regarding anything in the store can be answered if needed. Company success relies heavily on consumer satisfaction and so the store must ensure that the shelves are full, that there are a wide range of products on offer, and that customer service skills are excellent. By offering all of these things, the supermarket can ensure good satisfaction and repeat business.

SUPERMARKET BANK

With Slack’s model, this enables the different businesses to make direct comparisons with each other and decide whether or not they are in the position they want to be in. This will then allow them to make the decisions needed to change if they so wish to.

There are five main performance objectives according to Slack (2001). These are Speed, Flexibility, Reliability, Quality and Cost. For a supermarket I think that the most important performance objective for them would be the reliability objective. Although they are required to get products on the shelves quickly and only supply the best quality food, I think that the customer is more likely to come back and offer their loyalty to a company if they have all of the products available that they want to buy at all times. Reliability relies on processes being performed as they should be without any disruption along the way. If the company can provide for the consumer, then they are guaranteeing repeat business for themselves.

For the bank, I believe that speed is the most important objective as people want their money as soon as possible so, the quicker a bank can clear a cheque or transfer money, the more people might decide to bank with them. Some banks take a minimum of ten days to clear a cheque whereas others can credit your account instantly. As the money you are placing in the bank’s trust belongs solely to you then it should be up to you when you take it out and how much you take out at any one time also. The notion of keeping the speed of the processes up between transactions will keep customers using the bank’s services and possibly recommending the services to others. It also set you apart from other banks so you can advertise this fact.

If I were in charge of the supermarket, I would monitor our performance on customer satisfaction. From feedback, I could establish what we were doing well, and what needed improving, if anything. The customer is quick to complain but often reluctant to say what you are doing well. They are the people who deal with the processes first-hand and so they are the people who know which areas need attention. They would be able to tell us if we needed more tills open during busy times (therefore needing to hire more staff or train some existing staff), if we keep selling out of a popular product then they will also inform us of this and so we can adjust our ordering sheets accordingly. I would also expect the staff to help inform us of any problems with processes by communicating well with their supervisors and managers.

Within the bank, I would monitor performance on how many new bank accounts were being opened a week compared to competitors. If the competing company were opening several more bank accounts a week than we were then they obviously have something that we don’t. It would be necessary as well in a bank to be aware of all of the new technologies becoming available on the market so that the customer service assistants can offer their expertise to the customer. It would be necessary to often be one step ahead of the competitor so knowledge could prove to be a first-mover advantage in most cases.

Both supermarkets and banks are similar in the fact that they are customer focused operations which provide services with an aim of making a profit. They do, however, differ in terms of their characteristics. Using Slack’s ‘Four Vs’ analysis of processes, we can compare the bank and supermarket process in terms of Volume, Variety, Variation in demand and Visibility.

Volume:

There is a high volume in the number of goods stacked on supermarket shelves, as there are many different products available. Supermarkets have to stock enough products so that they do not run out which would disappoint customers. They experience mass inflows of customers, especially during peak times, e.g. weekends, and may have to stock up multiple times during the day, making the task highly repetitive. The process of stocking up shelves is a standardised one as staff just has to make sure they fill the shelves with the right product in the right place. Supermarkets have to account for the fact that special promotions such as ‘Buy One Get One Free’ attract higher volumes of customers and so they would need to order more of the products to meet demand.

Banks, however undergo a low volume process for opening new accounts. Opening a bank account is not a daily operation, whereas going to the supermarket might be. Therefore, there is a lower customer inflow. A bank may only open 5 accounts per day, indicating a low volume output.

Variety:

There is a high variety of goods readily available at supermarkets where customers can choose from several varieties of the same item, e.g. crisps. Supermarkets stock many different brands such as Walkers, Pringles, Kettle Chips, and also their own self-brand, giving customers more selection and flexibility. Supermarkets have numerous suppliers so that all customers’ needs and tastes are catered for, leaving them satisfied with their service. Therefore, depending on the number of suppliers a supermarket has, the more variety of goods that are available.

A bank, however has a low variety level in the amount of different types of accounts it can offer to customers. The most common include: savings, business, pensions and current accounts, causing the process to be standardised as they are frequently requested, giving staff competitive advantage in processing them quicker. If banks offered more accounts it would be hard to manage all of them, and it would require more specialised technology and staff, causing costs to rise.

Variation in demand:

The level of variation is quite high in supermarkets and the products they stock. Consumer demand changes daily and the supermarket has to account for these changes quickly, otherwise it will lose customers and start generating losses. There is a constant demand for high-marginal goods such as bread, milk and eggs, so supermarkets have to make sure they stock enough of these on a daily basis. However, some days, consumers’ preferences may change and they would demand more of one product than another. There are also seasonal changes where the supermarkets will stock certain goods for certain holidays during the year e.g. pumpkins for Halloween and Easter Eggs for Easter. These variations affect the order supply and the delivery times, which must be amended so that they are received before the holiday for customers to buy. With increased food prices, some people may cut back on luxury items such as organic food and demand cheaper goods instead. This shows that supermarkets have to monitor and anticipate external changes such as people’s disposable income, and respond accordingly. In-store promotions such as ‘Buy One Get One Free’ would cause demand to rise on the products on offer as it is cheaper than usual. The demand for the product will eventually decrease once the offer has gone, causing more variation in demand.

Bank accounts are varied rarely, unless interest rates change and the value of the pound declines, in which case the accounts automatically adjust with the current rate, making the process very stable and predictable. The bank may occasionally tailor specific terms for customer’s accounts depending on their needs. For example, in business accounts, depending on the size of your business, banks will customise special packages for the account. Each customer can have either a standard account or add special terms, giving the process a little more variation.

Visibility:

There is no direct customer contact for stocking up supermarket shelves. This is mainly because it is a ‘back-room’ operation, when the goods are delivered and then stacked on the shelves during closed hours, which the customers are not exposed to. Customers do not have any contact with the suppliers or witness stock rotation in the warehouse. However, if staff were to stock up during opening hours, customers may witness the process but they are not engaged in it.

On the other hand, opening a bank account has a high level of customer contact, as there is direct face-to-face communication between staff advising the customers which account would be suitable for them. This process is a front-room process with high visibility and interaction as the customer can see what is happening. This means that staff at the bank have to have good communication skills, be friendly and courteous and pay attention to the customer. However, the process of opening a bank account also has a back-room operation which is not visible to customers. Customers cannot see how the process of credit checks is undergone, nor can they witness their cards and cheque books being manufactured, implying low visibility. The service is removed from the customer’s control and there is little or no interaction. Therefore, the bank has a high and low visibility operation.

Supermarket Bank

Volume

Low High

High Variety Low

High Low

Slack (2007) introduced the concept of ‘The Five Performance Objectives’, which are Quality, Speed, Dependability, Flexibility and Cost, which can be used to assess customer satisfaction. Quality is defined as “providing error-free goods and services which are ‘fit for their purpose’.” (Slack et al, 2007, pg.39). Speed looks at how fast you can get the product or service to the customer. Dependability refers to delivering the goods and services to customers in time. Flexibility means changing and improving the product or service to give it more range. Cost means producing and selling the product or service to consumers as cheap as possible, generating more consumer demand, while cutting down production costs. All these factors increase consumer demand and satisfaction for the products and services and creates competitive advantage for the company.

For a supermarket I think that the main performance objective would be cost and dependability. The supermarket has to be able to maximise profits but keep production costs low, and pass on added value to customers in the form of cheaper goods. Since food prices and the cost of living have rapidly increased, consumers are looking for ways to save money and are therefore demanding low-priced goods. The lower the price of the goods, the more customer demand there is, resulting in profits, customer satisfaction and loyalty for the supermarket. Lower costs can be achieved by bulk-buying products from suppliers, especially products with a long shelf-life.

Dependability is another important performance objective as customers rely on supermarkets to consistently stock the products they want. Supermarkets can lose customers if they run out of stock for certain goods as customers will perceive the supermarket to be unreliable. Supermarkets, therefore, need to implement fast delivery procedures with no delays and order from reliable suppliers who will make sure the goods arrive on time, giving a sense of stability and routine. Dependability can also refer to the supermarket’s opening hours. Most supermarkets are open 24 hours Monday-Friday, making it more convenient for customers to visit at times that suit them since the majority of them work during the day.

For a bank I think that the main performance objective would be speed. Speed can refer to the time taken to process a cash transaction or to clear a cheque, the time it takes to ask a question and get a response or the time it takes to open an account. The faster these processes occur, the more customers the bank is likely to get. There is a time lag of 3-5 working days for a cheque to clear, and if this is reduced more people are likely to join the bank as they can get their money faster. Customers have the option of calling, emailing or going to the bank to ask questions. Whilst face-to-face will give an immediate response, some customers have to wait days to receive an answer by email. By reducing this time lag to receiving a response in the same day, customers will be relieved of their concerns quicker and be more satisfied with the level of service. Some banks in the US have even introduced Instant Messaging (IM) as a means of communication between staff and customer, which has proven to be successful. To open a new bank account most banks still require customers to fill in a lengthy application form, which can be time-consuming. This information is then inputted into the database to be processed creating a greater time delay. By removing the paper form and entering the details directly into the bank’s database while the customer answers each question, the process is more efficient and quick.

Appendix 1 shows a polar representation of the performance objectives for a supermarket and bank.

To measure performance in a supermarket I would look at the total profits generated. The greater the profits generated, the greater the performance, as there are more customers entering. To maintain the large customer inflow I would ask for their feedback in regards to our strengths and weaknesses and things we could improve on. This could be done as a questionnaire. I would also assess the quality of the workforce and how well they are working by asking customers to assess the friendliness and helpfulness of staff. I would find ways to motivate staff to work harder, thereby increasing efficiency and productivity, by giving them incentives and more job diversity. This would create a friendlier environment which the customers would value more.

For a bank I would assess performance based on customer feedback. I would ask them to rate the attitude and behaviour of the employees, how fast they were able to perform the task, the appearance and cleanliness of the bank, and changes will be made accordingly. I would also look at the sales generated to see if the bank is performing financially by comparing this year’s sales to last year and against competitors’ sales.

Appendix 1: Polar representation of performance objectives:

Cost

Dependability

Speed

Flexibility

Quality

Quality: Quality is important for both supermarkets and banks. Both have to provide high quality services and the supermarket has to make sure it stocks high quality goods, otherwise customers will not purchase them.

Speed: Speed is very important for banks as they have to make sure they can process transactions quickly, so not to delay customers so they can get their money quickly. They have to answer customers’ queries as quickly as possible to relieve customers’ concerns. Supermarkets have to decrease queuing time for the checkouts as customers can often become impatient. They can do this by opening out more check-out counters during peak hours.

Dependability: This is extremely important for supermarkets as customers expect the products to be stock, and they can easily lose customers if they have run out. Customers will always perceive a supermarket to be unreliable if they do not stock the product when they demand it. Dependability is quite important for banks as customers rely on banks to keep their money safe.

Flexibility: Banks will try and be flexible for their customers and introduce special terms for their accounts depending on their needs, but most accounts are standard, giving some flexibility. Supermarkets have relatively low flexibility as the order and sell the same products daily. There may be some changes when ordering seasonal goods e.g. Pumpkins and Easter Eggs.

Cost: It is important for a supermarket to keep production costs down and pass on this benefit to customers in the form of cheaper goods. Customers demand more of a product when price is low and by using this strategy, supermarkets can generate enormous profits. Banks have fairly low production costs and will try and get the customer the best deal available against competitors.

Executive Summary:

Although both the bank and the supermarket overlap on the natural diagonal as both mass service and service shops, (businesses with front and back operations but also with low customer contact,) we can see that they have completely different objectives and they are on opposites on Slack’s 4 Vs. This means that although they are both service shops, they both rely on different objectives to be successful. They are two businesses with huge customer inflows who rely heavily on the public to be successful, and so you might think that they would be similar in the way that they are run and the way in which they operate, but from this report, we can see that they are not.

They both deal with customers on a face-to-face basis and they both provide a service to the consumer, but it can be seen that they are both successful whilst performing their duties on the complete opposite ends of the spectrum of Slack’s 4 Vs. It might be believed that there is only one correct way for a business to be run according to the 4 Vs model, but in the case of the bank and the supermarket, it is obvious that different businesses, even with similarities, operate in different ways. The more important question is whether or not the business agrees with its position on the model and if not, does it know how to change its processes to move itself to a position it would like to be in?

Bibliography:

Akamavi, Raphaël K. (2005), Re-engineering service quality process mapping: e-banking process , International Journal of Bank Marketing [online] Vol 23 (Issue1) p. 28-53. Available at (Accessed on 29 November 2008)

Burton, R., (2001), Business Process Management: Profiting From Process, Sams Publishing

Heizer, J., Render, B. (2001) Operations Management, 6th Edition, Prentice Hall

Slack, N., Chambers, S., Johnston, R. (2007) Operations Management, 5th Edition, London: FT Prentice Hall