Pizza Hut, Yum! Essay

The operations standards are the key path defining elements in any business. Without set procedures optimal results cannot be obtained. The operations standards at pizza hut have multifaceted challenges and opportunities. The standards and procedures for doing business are well defined but some of the possible factors can cause to the deviations and variances. Those possible factors can be eradicated through extra efforts into the process. However the small chances of variance will remain the same because the real business scenarios may vary sometimes than the forecasted one. This report is an attempt to investigate the operational standards and the possible causes of variance in standards and how does it affect customer satisfaction. Introduction Operations management Traditionally it is believed that the operations management is as a transformation process that takes set of inputs and transforms them into the out put. The output can be the goods or services. This includes the effective planning, scheduling and control of the activities that produce the required outcomes. (Cecil C. Bozarth, Robert B. Handfield, 2008). Operations management plays a key role in determining the success or failure of an organization. To carry forwards the inputs of each unit all together and getting turned it into the outputs is the real synergy, which helps organization to set the directions towards climbing the heights of success. According to the William J. Stevenson as he state in his operations management book ‘Operations management is the management of the system or process that create goods and/or provide services’ this involves various inputs, he add, ‘ the creation of goods or services involves the transformation or conversion of inputs into outputs. Such as capital, labour and information are used to create goods or services using one or more transformation processes’. Although the goods and services go hand in hand, there are some very basic differences between the two. This can be determined through its nature of the business. Some organizations can have higher degree of tangibility or intangibility. This can be determined through its nature of business. For instance, if the organization is selling goods, it can be determined high level of tangibility and otherwise if its selling services then level of intangibility will be high. (William J.Stevenson 2005). Operation standards at Pizza Hut Functional Units The activities of business organizations are mostly divided according to the functionality, the management of the personnel and the responsibilities. (Joseph S. Martinich, 1997) The operations at Pizza hut can not be highlighted for any of the single functional unit. Rather it is the collection of several set of the activities that take place with in the unit and make things possible by turning customer expectations into the reality. The success or the failure of the product depends on the performance of several functional units. Those functional units operate separately but connected with each other through the job activities. The unit’s operation standards are discussed further down. The taste and the quality highly determine on the freshness of the ingredients, and the resultant the happiness of the customers. According to the Deputy Manager of Pizza hut, ‘If, there is variance observed in the product quality that will overall affect productivity and finally the customer satisfaction level. This is not acceptable at all’. He added, ‘if company is spending a huge amount of money on the product promotions and marketing activities that is for the business. And also company provides the training to the employee to how to maintain the product quality. So every single person should have to ensure the quality of the product and happy customer makes more return in the future’. In this regard, company has got set procedures and guideline to maintain the standards for the specified interactions between the employees and customers. If the deviations occur that will likely to lead to the unhappy customers. Food temperatures To keep products safe storage the temperature of freezers should be in between -18 to + or – 5 degree centigrade. The seals must be intact so that the temperature can be maintained. Quality Assurance The quality throughout the supply chain rests with the overall team. This is done by setting rigorous standards during product development. In order to ensure the standards, there is regular auditing and monitoring system in place. The one of the regular system to check quality is CHAMPS Excellence Review. Quality assurance is achieved through the complaints monitoring system and their corrections through available remedial methods. Core Competence. Organizational strength or abilities, developed over a long period, that customers find valuable and competitors find difficult or even impossible to copy. (Cecil C. Bozarth, Robert B. Handfield, 2008) The pizza hut has got high degree of core competence in the basic product. The pizza hut’s dough is treated as core competence of the business. This makes pizza hut different then the competitors. Cost & variance The cost of sales and the sales revenue are the actual things that support the managers to run the business on track. If the numbers seems going out of the track they need be highlighted and called as variance. The variance is the difference between the Actual cost and Theoretical Cost. Head office set forecast and provide targets to the business stores. The targets are set with the help of previous year business performance and the expected events. That is called as theoretical cost. On the other hand the cost occurred in the business dates is the actual cost. So if there is any difference occurs that will be treate as variance. The cost of sales of the store for the current period shows the variance of 36. 38. * The theoretical cost set by management was ? 2203. 22 and in percentage 22.46% where as the actual cost for the period occurred was ? 2239. 60 in percentage 22. 83%. The results indicate the variance remained ? 36. 38. The variance in costing is the actual indicator of the performance. Higher the variance depicts higher the concerns persist with in the business unit. In present case in hand, the above depicted variance treated to be normal. The business operations can not work on the absolute set tracks because the forecasted things can not happen on the absolute behaviours as predicted. Reasons of variances * Miscount The chance of miscounting always prevails during the operations. In the case of miscount the chances of wrong order increase and finally will increase the variance. * Wastage The several reasons for wastage may occur during the operations. However if forecast made is not effective then the chances of unexpected results may increase. That applies with the product forecast as well. If product is defrosted without realizing the demand for the product then this may cause to one of potential wastage. In other case the wastage can increase if no proper product forecast is being made and or staff make mistakes while making orders or at the time of dispatching orders. In any case if wrong delivered to customer the customer will complaint against it and in order to make customer happy the order is to be resent. This will certainly increase the cost. Higher the number of complaints more is the cost. These two factors are directly proportional. * Shrink The shrink may occur if inventory reduced without record. The variance shows the real picture of the business operations. Happy customers return back to business and become repeat customers and cause to increases in the sales revenue of the business. However, If sales revenue is running on the increasing trend or above of the forecasted track then it clearly indicates the successful operations of the business activities. And this will likely to decrease the percentage of variance as overall. Forecasting Forecasting the estimated demand is the real start of every single operational activity in the business unit. This involves every thing from human resource planning to the product planning. In this every single factor get into the touch of planning, organizing, and leading and control of the operational activities. This ultimately leads to the overall productivity of the unit. Forecasting product and customers demand is the most important activity for the b business organizations. (Derek L Waller 2003) Forecasting is very important element to carry forwards the business on the set line successfully up to the mark in efficient manners. (Joseph S. Martinich, 1997) The same goes true for the pizza hut business. According to the RGM ‘forecasting at pizza hut plays critical part for the success of the business’. The manager, prior to develop any plans for HR deployment or the food ordering, they observes the forecast of sales and expected upcoming events in the calendar. As per say, the usual shift requires two to three drivers and plus kitchen staff and the shift manager. Where as the number of drivers can increase on weekends, as high as 7 to 10 and 4 to 5 in store staff plus shift manager and support manager. This works fine when every thing works according to plans. However, if any of the external factors come into play then that can potentially affect the service delivery and the speed. This happens when for example the whether conditions. The road hazards in shape of blockades, accidents. All of these factors can slow down the serviceability. The unexpected orders can cause more demand of the product where as the availability of the ready to use product may be limited according to the expected demand for the shift. Therefore the variance in expected demand and actual demand can cause the shortage of the products and ultimately this can play around the one of the possible factors of the unhappy customer and can cause the variance in the productivity of the unit as over all. The demand can also increase because of the good weather, special occasions like sports, rituals, festivals, and purchasing power. According to the RGM of the unit, the demand for the food is high in the start of the month but that usually slow down in the end of the month due to the less availability of the funds with customers. Employee performance/training The training data base available at store and the views gathered from management team reveals the fact that the importance of the training in store is directly linked with the operations standards and productivity. The team member working on make table should have to be trained according to the specified requirements of the make table. The lack of training will cause the variances in operations activities. This directly results the variances in the customer satisfaction. Importance of Customer Experience Customer care is the core point of concentration behind the business. The business treats customers as king. The most important fact is to find out the ways through the customer want can be fulfilled effectively. Therefore there are some procedures and standards set by top management in order to interact with customer. Customers don’t really want relationships. At least not in the same way the brand does. They want to be treated well, respected, understood and to get what they want, when they want it. In other words, they simply want a good experience and the reassurance of knowing that they will have the same good experience every time they come into contact with the brand. So, if we the team get to the experience right, the opportunity to build meaningful relationships should follow. (Asbjorn Rolstadas, 1995 & Alan Mitchell Issue 5, Summer 1999) Pizza hut is selling pizzas but this is what other competitors have been doing. So what makes it really special about it? Who recognise that product alone? The product alone is nothing but the service is also important. That is the factor which make customers as ‘repeat customers’ The attitudes, values make key differentiations. The operational standards, the quality of food all of them are key factors. (Mary Say et all 2003, Issue 440) In order to achieve desired results the team members at Pizza hut are provided with set guidelines for the interaction with customers. The guide line called ‘moment of truth’ or ‘customer mania plus’. Moment of Truth The most important key elements to are set in this guidelines. (See Appendix 8) * Order taker The order taker is the key person who works as a bridge between the company and the customer. If he/she makes customer happy, the business will likely to repeat other wise can drain to the competitors. This results not only the loss of customer but also the loss of several networks of the lost customer. CHAMPS Excellence The order delivered to the customer should followed by the set procedures. The delivery person has provided particular guideline that he/she will have to follow when interacting with customers. This results in increase customer satisfaction. The other most important factors that the management follows are; * Delivered on time * Delivered completely. * Invoiced correctly. * Undamaged However, If any of the above factors missing from the cycle process of order making, then it start again from the make table. This * Response. (repeat customer/happy customer) * Complaints Resolving complaint * Offering service delivery * Offering hot food delivery * Beat the phone capture in busy times. * Beat the web orders There should be every reason for the return of the customer. Without fulfilment of the expectation that will not be possible. However the team at Pizza hut follows the guidelines and makes customers happy, but there may be several factors that may cause to the dissatisfaction. In general, the possible factors may be for instance, rush of customers and not enough staff available to take orders or to pick up a phone, bad quality, late delivery or the rude attitude. According to the pizza hut manual almost 2/3 of unhappy customers never return because of poor service. The RGM at store revealed the fact as ‘Customers don’t come pizza hut just for the food, they can get food anywhere. What most customers want when they visit or call us is a good time’. He adds, ‘when they order on phone they expect order takers to treat them well and make their time great. How do you do this? By having a service attitude and making customers feel welcome and important’. Marketing The Marketing plays very important role for the business. The customers actually receive message through marketing, thus it become very critical that the company should highlight the customer expectations in the marketing message. There are several set standards that are to be followed for the marketing purposes. (Francis J.Mulhern, 2004). The company invest considerable resources to find out the exact wishes of customers. For the Pizza hut’s delivery branches the segment of customers includes from families, to the teens. According to the Pizza hut database the primary customer are teens and young adults. Product Development The pizza hut success is not the matter of isolated activities. But it is the company’s restless efforts to put innovations into the realities by turning needs and wants in to the shape of products. Product development team run focus group to study the consumer behaviours towards product choices. Some time products are launched after having selected study of the chosen sample, but it does not survive for long time. This may cause occurrence of cost or the wastages to the stores. For instance the four for all, cheesy bread, Bombay wings, Indian pizza are all the examples of failed products. However the company has launched successful products as well. For instance cheesy bite pizza, which has cause around 24% increases in pizza sales over all. Company Profile Pizza hut started on 1958. The dream of Frank and Dan Carney turned into the reality when he opened the first Hut in Wichita, Kansas. The website of pizza hut states that in very beginning the restaurant was as too small. It had just 25 seats available for customers. The inspirations for the name as ‘Hut’ came into thoughts through the design of the building. It looked like a hut. Therefore it geared the idea to carry on with name as ‘Pizza Hut’. The Pizza has superior place in the market, particularly for the Pizza business. Through the time it has scattered in to the markets of the world. The numbers of the growth depicts that it Pizza hut has more than 600 outlets in the UK only. The Pizza hut is a part of Yum, which is another big company. The Yum own several big companies like KFC, Long John Silver’s, A & W Taco Bell The Pizza hut was formerly owned by Whitbread and Yum as a joint venture. But in the year 2006 Whitbread sold out their shares to Yum. Presently the Pizza Hut UK Ltd is now 100% owned by Yum! Conclusion The operations management depicts the performance of each and individual unit that is participating in over all acceleration of the engine of business. The business may have some times low speed and high speeds. It highly depends on the strategies that the top management set for the business and the way the strategies are followed by the key components that run the actual business. The operations at Pizza hut have multifaceted situations. The each component working in the process cycle of business plays equally important role to win the customer. However, if any one of the units deviating from the set standards will cause a variance in the performances as overall. Thus it is concluded that the success of the business is possible through collections of inputs from all the units participating in the conversion process.