There are number of suppliers within the store’s service management chain however Kodak is the sole supplier of printing papers as the machines are all Kodak, the other main supplier is Champions which provides most of chemical ingredients and so on. The supply chain is pretty much a simple one as most of orders would deliver directly by currier the morning after order requests. And the pattern of such ordering is mostly fixed as the orders take place once a month and due to physical storage limitation it can not be changed.
Methodology
In investigating the operations procedures and methods of Snappy Snaps we used the following approach for our methodology. We focused our research on the Snappy Snaps shop on Baker Street, London NW1. In order to collect information about its operations and services we relied on primary data and secondary data. Our primary data research involved interviews with the manager of the shop - to gather mainly supply side information – and field observations for gathering demand side information, i.e. number of customers. In respect to secondary data we used academic literature for the theory and useful internet websites for further additional information on the industry and the suppliers.
Supply chain management is an increasingly critical business process for many companies, since they seek to meet ever more demanding customer requirements, at lower cost, more quickly and with a growing supplier base. One of the key issues is how to manage the company’s relationship with their immediate suppliers and customers. It is important to have some framework which helps to understand the different ways in which supply chain management can be developed. In general there are four different relationship models within this framework, called “the business/consumer relationship matrix”:
- Business to business (B2B)
- Business to consumer (B2C)
- Consumer to business (C2B)
- Customer to customer (C2C)
For our analysis the B2C Relationship is of primary importance. The manager of the shop told us in the interview that they use – to a certain extent - the traditional market supply relationship – seeking the ‘best’ supplier every time it is necessary to order stock. The relationship between buyer and seller can be very short-term, which has the following advantages:
- To maintain competition between alternative suppliers
- Inherent flexibility in outsourced supplies
- Innovations can be exploited no matter where they originate
On the other hand, the disadvantage of choosing different suppliers whenever an order is placed takes time and effort. Since Snappy Snaps does order its main supply stock, e.g. printing rolls always from Kodak and other necessary chemical substances for the machines from Champions, and only a small portion of its stock from suppliers according to the traditional market supply relationship they seem to have established a balanced combination to ensure a flexible and efficient supply chain.
Matching supply and demand at Snappy Snaps
The Snappy Snaps shop provides an extensive range of photo & digital services. Regarding the service aspect, this is an intangible personal experience which cannot be transferred from one person to another. Further, the services provided at Snappy Snaps are produced and consumed simultaneous.
The demand for services at Snappy Snaps fluctuates, depending on i.e. the time of the day. These variations imply some periods where the demand for photo or digital services falls short of the capacity to serve, which results in unoccupied servers and some times of waiting customers.
The aim of this paper is to increase the capacity utilization at Snappy Snaps by better matching the supply and demand for the services provided. There are two alternative ways to consider the problem. One approach focuses on smoothing the demand another on the supply side of the problem. In view of the fact that it is difficult to influence the demand for photo and digital services, we believe that the best solution for Snappy Snaps is to adjust the service capacity to match the demand. In order to investigate and find optima in the allocation of human resources in Snappy Snaps, an analytic and numerical method will be applied.
Adjustment of the service capacity
There are some appropriated approaches regarding the adjustment of the service capacity. On the one hand side, Snappy Snaps can elaborate procedures for workshift scheduling, by increasing the numbers of employees in peak periods and reduce in off peak. One the other hand, Snappy Snaps can increase customer participation in the service process, by shifting some tasks to the consumers.
Increasing customer participation in the service process
By increasing the number of customers at Snappy Snaps participation in the service process, Snappy Snap will be able to reduce the time of servicing the customers. For instance, customers can fill in forms and upload digital pictures themselves, as it will lead to a reduction of the burden during Snappy Snaps’ peak-demand periods and decrease waiting time.
Using daily workshift scheduling at Snappy Snaps
If Snappy Snaps manage to schedule the workshift during the day, it is possible to adjust the service supply to the demand for photo and digital services.
As a part of our primary research the first step dealt with the observation of the number of people entering the Snappy Snaps shop during the opening hours, which enable us to forecast the demand by hour.
According to our observation and further, the interviews with the manager of Snappy Snaps, we assume that the average number of customers per hour on high-demand days (Monday and Tuesday) is 15 people, shown in figure I.
Figure I
Moreover, from Wednesday to Friday the average number of customers per hour reaches 9 people, shown in figure II.
Figure II
Finally, the weekend is generally lower in demand, which result in an average of almost 2 people per hour. Thus, by knowing the demand for services at Snappy Snaps it enables us to convert the information to service staffing requirements per hour, shown in Figure III.
Figure III
We will concentrate our further analysis on improvement in respect to actual service to the customer and try to evaluate their efficiency using the linear programming model, as we do not see any improvement possibilities in respect to Snappy Snaps supply chain. By using this method we are able to minimise the distance between Ri, which is the required number of employees during a day and Wi, representing the actual number of employees working at Snappy Snaps.
In our analysis we distinguished between the production and servicing calculation
Calculation (Production):
For the production calculation we used following parameters:
- Material cost per product
1 printing roll produces 2000 prints and costs £50
Therefore, material cost per print equals to
£50 / 2000 = £0.025
Determining the production cost was based on following assumptions:
For one, we made following asumptions for wages. The wage for a qualified worker was £10 per hour working 10.5 hours per day (including a 1.5 hour break). Our second assumption is that serving a customer takes 30 min, which in turn means that one employee can serve 18 customers per day. Based on the interviews with the manager we assume further that on average customers order 50 prints. Hence, one employee produces 18 * 50 prints = 900 prints per day.
Rate per hour * Hours worked
£10 per hour * 10.5 hours = £105
Customers served per day * No of prints per customer
18 * 50 = 900
- Production cost per product
Wage of employees / Items produced * Material cost
£105 / 900 * £0.025 = £ 0.29
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Selling price: £0.59 (see Appendix)
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Material cost per day: Xn = no of employees
Material cost * no of items produced per day
(0.25 * 900) = £22.50
Salaries + Materials
£105 + £22.5 = £127.50
This leads us to the following Objective Function F
Objective Function F
F = 105 *(X1+X2+X3) + 22.5*(X1+X2+X3)
F = 127.5 *(X1+X2+X3)
(siehe Excel Tabelle Snappy_production)
Calculation Servicing
As a second part of our calculations we focued on the servicing side.
From our primary research we know that there are a maximum of three employees at a time in the store. The average time of service is approximately 5 minutes.
We assumed that Demand is equal to Service since the employee only serves if there is demand for it.
D1 = 825min (167*5min) = P1
D2 = 495min ( 99*5min) = P2
D3 = 75min ( 15*5min) = P3
(Average wage per hour)*(working hours)
(£10 + £6) / 2 * 10.5 = £84
- Service capacity per day per employee;
Customers per hour: 60min/5min = 12 customers per hour
Services capacity per hour * 9 hours (working hours) = 108
- Redundancy cost = £84 (based on the assumption that due to labour law employees made redundant are to be paid one month ahead)
- Service per person per day
Daily salary / maximum capacity of customers
£84 / 167 = £0.50
Whioch gives us following Objective Function F for servicing:
Objective Function F:
F = 108 (X1+X2+X3) + 0.50 (X1+X2+X3)
F = 108.5 (X1+X2+X3)
(Excel Tabelle Snappy_service)
Conclusion
Analysing the Snappy Snaps store in Baker Street via Linear Programming method, we found out the production costs could be optimised by making number of staff redundant. The result from the productions in terms of developing and printing photos and on the other hand services in terms of serving the customers, suggest only one employee would be enough to meet the demand however the store requires a person for production and another one for serving the customers.
Our suggestion to this case obviously would be present only two employees at a time instead of three which is the current policy of the store. However we should consider that we assumed all customers would only come to the store looking for digital photo printing (as it is the main focus of the business) but in reality there is vast number of other services provided in the store that are mentioned in the introduction. Taking such a fact into account, the current policy of having three employees all the time makes more sense than only two.
The employees’ scheduling for the sore should follow the order of having a person in charge of machines, a person for serving customers and store manager for taking care of the business as well as serving customers if needed.
