OPERATIONS MANAGEMENT

Table of Contents
Introduction:................................................................................................2

1.0 Brief of the firm:......................................................................................4

2.0 Analysing how the operation management process supports the coffee shop:...6

3.0 Critical discussions regarding how the 5 performance objectives are applied to
the coffee shop:............................................................................................9

3.1 Recommendations for the improvement:...................................................11

4.0 Supply Chain for the Coffee shop:............................................................12

5.0 Compare and contrast the quality processes of the coffee shop with Starbucks:
.................................................................................................................14

Conclusion:.................................................................................................16

References:................................................................................................17

Bibliography:..............................................................................................20

Appendix:...................................................................................................21

1
Table of Figures:
Fig 1: Cafe Capacity.....................................................................................21
Fig 2: Cafe layout........................................................................................21
Fig 3: Cafe ambience plan.............................................................................22
Fig 4: Informative ambience..........................................................................22
Fig 5: Coffee Offering...................................................................................23
Fig 6: Beverage offerings..............................................................................23
Fig 7: Food presentation...............................................................................24
Fig 8: Supply chain process of Starbucks........................................................24
Fig 9: Kaizen Model......................................................................................25
Fig 10: Breakdown of cafe types in the market of UK........................................25
Fig 11: Small industry Coffee Shop revenue statistic in UK................................26
Fig 12: leading 10 coffee shop chain in the UK.................................................26
Fig 13: Biggest Coffee Shop Chains in the UK..................................................27
Fig 14: Percentage of Coffee lovers in the UK..................................................27

2
Introduction:
A greater product quality, operational management and service reliability are
considered as the key factors in the business growth of an emerging coffee shop. It
is a proven fact that reliable products, store ambience and variety of services have
influenced the market share of the large coffee shops like Costa Coffee, Strabucks,
etc. The current market competition and the success story of the pre established
coffee shops indicate that the operational management involves flexible work
environment, applying a highest standard of service excellence to the coffee bin
purchasing, roasting and delivery freshness of the coffee. On the other hand,
Mahobia and Jain (2015) also argued that operation management not only includes
the in store operations, it also includes the positive contribution to the communities
and the business environment of the coffee shop. Thus, floor spacing and its
planning and front office services are to be well designed to generate unique
service identity and attract more customers towards an independent coffee shop.

3
1.0 Brief of the firm:
Considering all these parameters as a critical part of the operational mix, the
current study has been focused on how the operation of a small independent coffee
shop experiences greater business growth in the UK. The JAVA Lounge coffee shop
has been chosen and visited by the current researcher to identify its operational
plan and the uniqueness behind its success in the UK coffee shop market
(www.independent-birmingham.co.uk/java-lounge, 2016). The JAVA Lounge is
famous for the friendly, laid back offerings and it is specialised in serving the tasty
single origin filter coffees.

The operational principle of the JAVA Lounge coffee shop is to offer one cup of
coffee at a time to a single customer, so that the greatest quality benchmark can
be delivered in its service. Additionally, Stevenson (2009) mentioned that JAVA
Lounge’s operational management starts with the importing of the coffee beans
from the plantation in the Yemen. The operational strategy is focused on generating
uniqueness and innovation for every different coffee menu so that distinct taste and
texture can be offered to individual customers. The operational management
process also includes importing of single origin filter coffees, which is imported from
different corners of the world, so that the customers can enjoy a taste of exotic
lands.

Location of the business:

The store is located in the 115 Alcester Road, Moseley, and Birmingham, B13 8DD.
One more JAVA Lounge is located near 124 Colmore Row, Birmingham.

Capacity of the cafe:

The cafe offers more than 30 seats per branch. Each table has accommodation of
three persons and if additional arrangements are required, the tables are joined to
accumulate numbers of guests as and when required (refer to appendix, exhibit
1).

4
Type of customer it serves:

Mixed cultural customers are served in the JAVA Lounge. Different store ambience
has been made for mainly adults and old age groups, followed by young adults,
business professionals and other communities as well.

Layout:

The outdoor seating, the basement lounge promotes a quieter atmosphere and
looks perfect for making gossip with the friends, family members of business
professionals. The patrons are hit by the vibrant decor and it is accentuated by the
natural light flooding by a large front window. Each service also indicates
informative offerings to the customers as well (www.independent-
birmingham.co.uk/java-lounge/.com, 2016). The overall operational strategy is
based upon a few factors like inventory management, layout plan, process
orientation, quality offerings and competitive features (refer to appendix, exhibit
2, 3 and 4).

Services offered:

It offers coffees (flat white, cappuccino or latte, etc.) and beverages (refer to
appendix 5, 6 and 7).

5
2.0 Analysing how the operation management process supports the coffee
shop:
The operational management process of a coffee shop starts with planning the
initial budget wisely, followed by identifying the required cost of opening an
independent coffee shop in a specific location (Stevenson, 2009). In the next step,
the operational management process enables the marketers to identify a suitable
location, where the customer gathering is optimum. In the third step, a business
plan is established by the marketers as a part of the operational management
process. Below mentioned processes support the operation of the beverage industry
operating in the global platform.

Market segmentation:

Target market segmentation is considered as one of the vital parameters in the

operational management process of the beverage industry. The market survey in
the UK beverage industry revealed the fact that the coffee market is going to
experience another 25% growth in the next 10 years (Mahobia and Jain, 2015).
Thus, adequate market positioning is required to grab the opportunity of higher
market attractiveness, by offering premium quality services in a low price scenario.
Hence, the right operation management process could help the small coffee shops
identifying the potential market segment to attain greater competitiveness in the
global coffee market.

Early supply chain:

The quality of the coffee can be ruined by the instability in the supply chain
process. As a result, the organisations need to maintain own supply chain process.
Supporting to this fact, Evers et al. (2014) stated that the operational process of
beverage industry helps to mitigate the inventory issue, which increases the
operational flexibility as well. This scenario is more crucial to the individual coffee
shop, as the franchising or any other mode of business operation can reduce the
quality of coffee bean. Hence, the brand will fail to offer the value-added services to

6
the customers. As the JAVA Lounge offers dark roast coffee, high quality coffee
beans would be necessary to differentiate its products from the other market
players (Carter and Jones-Evans, 2012). The operational process has also focused
on the flexible supply chain process to offer a fantastic coffee experience to its
customers.

Finance:

The operational process of JAVA Lounge includes a better investment of the profits
into the coffee making machinery, so that the organisational output can be
improved. Michelli (2007) supported the fact and stated that the operational
management process prioritises on adequate financing so that the short term and
long term business goals can be achieved by the firm. Thus, the potential
operational process could help the new cafe shop to control the monetary flow for
ensuring both short term and long term business goals.

Quality control:

The operational process flow chart employs an analysis of the customer

requirements, the type of CSR followed in that area and identifying the solutions
provided by the other market players (Stevenson, 2009). For example, the quality
control parameter of JAVA Lounge has prioritised more on the ‘fresh-coffee’
requirement and it is not prepared until a customer demand for the product. Thus,
the product quality automatically rises and greater numbers of customers are
attracted towards the brand. However, Hawkins and Holden (2013) stated that
another supporting factor is the service delivery system, which is employed by
the beverage operational system. Right investment in the machinery purchase has
helped the current firm brewing fresh coffee every hour. This same concept is given
to the hot coffee requirement, where the customer burns the finger while holding
the cup. Thus, employing an operations management, quality control table could
help the current emerging coffee brand to achieve greater sustainability in the
global market.

Store location and layout evaluation:

7
Location decision is closely tied to the strategy of the current coffee shop and the
low cost; convenience factor has helped the firm attracting more customers
towards the shop. In the words of Cho (2014), the individual coffee shop needs to
have own real-estate strategy for locating the company owned stores. The greater
the density, higher will be the chances of improving footfall in the store. However,
the store layout evaluation, work centre, equipment, customers or materials,
combination of the layout, cellular layout, etc. is another valuable factor that is
controlled by the operational management system (Jason and Kim, 2013).
Additionally, the lesser acceptance of credit card or debit card by JAVA Lounge
helps to keep the customer lines moving towards the order counter. The ambience,
posters, seating arrangements, power outlets for plugging in the laptops is
thoroughly checked by the operational manager, which creates higher customer
satisfaction and brings the brands towards higher profitability. The tables are
checked in each ten minutes for the cleanliness and refilling of the sugar and water
in each table (Mahobia and Jain, 2015). Thus, the potential operational
management system could extensively support the customer service flexibility of a
small independent coffee shop.

8
3.0 Critical discussions regarding how the 5 performance objectives are
applied to the coffee shop:
The five performance objectives generally apply across all industry types, as it
helps to improve the quality of the services along with the delivery time and the
overall operational flexibility. In the words of Jagan Mohan Rao (2009), the five
performance objectives are quality, speed, dependability, flexibility and the cost.
Through this internal process, the current coffee shop has configured the operating
environment, so that one or more of the five performance objectives can be met.

Quality:

As the global beverage and coffee industry is experiencing increased market

competition, the degree of excellence measurement has become common to the
global customers (Tucker and Stoja, 2011). The service and product quality of the
existing market players are identified, depending on which, the customer loyalty
gets influenced. Thus, the current firm could employ a strong quality management
program such as TQM, Six Sigma, to identify the brand performance, reliability of
the coffee products and the durability of its services. It could help the firm
improving the existing operational services.

Speed:

A speed factor can be applied to a coffee shop irrespective of the volume and the
areas of operation. As it helps to reduce the operational cost of allocating right
resources to deliver speedy and quality services to the customers. Cunha and
Salazar (2013) also stated that the relative success of speed creates higher benefits
like early maintenance of the dependability factor. Hence, the speed objective
needs to be applied to the coffee shop, in order to attain higher service
competitiveness in its business operation.

Dependability:

9
The dependability is a parameter which identifies how a firm is serving the
customers, in accordance with the promises kept by the coffee shop. After placing
an order, the customers judge the performance of individual units and decide the
reliability value accordingly. Firms like Costa Coffee, Starbucks, etc. identify the
dependability, value, so that the firm’s performance can be improved and a
sustainable competitiveness can be attained. Azad et al. (2013) also stated that
dependability generates greater stability by saving time, and money. Thus, the
dependability factors can be excessively applied to the individual coffee shops,
irrespective of the size and brand expansion.

Flexibility:

The flexibility refers to the organisations’ ability to get changed in its operational
process, as and when required. In the words of Wackwitz and Lehmann (2007),
flexibility can be of varied types such as product or service flexibility, mix flexibility,
delivery flexibility and the volume flexibility. Costa Coffee one of the leading coffee
brand in the UK, adopted different flexibility parameter and the firm has improved
its sales ratio in the global market. However, one of the leading coffee brand
Starbucks has introduced a change in its supply chain management process by
forming a total systems approach, in order to manage the overall flow of
information (refer to exhibit 8). This strategy has enabled Starbucks creating a
balance between the supply and demand of the customers belongs to the beverage
industry. Thus, flexibility can be applied to the modern coffee shop marketers, to
improve the information flow of the process, thereby improving the business
sustainability.

Cost:

One major operational objective of the small coffee shop could be the cost factor,
where the market competitiveness is specially based upon the cost effectiveness
parameter (Wijaya Ibr and Zailani, 2010). The appropriate cost can be identified for
producing goods and services and it could help the firm receiving a moderate return
on investment. The application of this method could create a unique identity and
the increased market competitiveness could help the firm attracting more

10
customers towards the brand. The cost of producing the services and products can
be influenced by the volume of production, variety, variation and visibility as well.
The management of all these factors could help the current coffee shop improving
the quality, speed, dependability and the flexibility as well. Eventually, the firm
could gain external rewards and the same could also save the operational cost,
thereby meeting higher ROI in the global operation.

3.1 Recommendations for the improvement:

Considering the view of Kaewmungkoon and Ussahawanitchakit (2014), as the JAVA
Lounge coffee shop is a small and a new coffee shop company in the beverage
industry. So, the company profiles initially needs to be modified with improved
culture and higher education of the employees. The coffee shop has to be
technologically savvy and keep interest in the arts to design the outlet. This shop
needs to improve its housekeeping industry during the busy schedule of customer
arrival. According to the opinion of Divakar et al. (2009), offering more types of
roasted coffee in the afternoon session would be more significant to attract the
customers. Incorporating the lighter taste coffee in place of bitter taste coffee
would be beneficial to get the attention of those customers who avoids the
Starbucks for its bitter taste of the coffee items. Making something for children like
wifi zone or play zone can attract the more customer group towards the brand. In
addition, healthy pastries and light sandwiches in the menu list would be
advantageous for the JAVA Lounge coffee shop to draw the attention of the
customers.

11
4.0 Supply Chain for the Coffee shop:
The company JAVA Lounge Coffee Shop is introducing its stores in the different part
of the globe. So the company has to follow a unique supply chain management
process focusing on the expansion process of the company. The first two things that
need to be considered to construct a good supply chain model is that the serving
stores and the costs for the products and operation. The company would adopt the
technique of Supply chain model of Starbucks for its significant improvement.
According to the opinion of Tabar and Charkhgard (2013), the employee’s suggestion
needs to be taken for the improvement of the JAVA Lounge Coffee Shop like the
company Starbucks. Taking the advantages of Kaizen model the company needs to
separate the area that is essential for the brand improvement. The Kaizen model
(refer to Appendix Exhibit 9) of supply chain reflects that the company needs to
identify its strength point. It means it would separate the most demanding products
for easier use and huge availability. A cost revealed analysis is necessary to
outsource the agreements for transportation, contract manufacturing and third
party logistics. In the opinion of Golicic and Sebastiao (2011), outsourcing has been
used to permit the supply chain to enlarge swiftly to keep up with store openings,
but outsourcing had also led to major cost inflation. Plan, source, make and deliver
is the basic supply chain factors which needs to developed by the management of
the JAVA Lounge Coffee Shop to obtain a good supply chain management process.
The company needs to hire different people for the different segment of these four
factors. For an instance, anybody involved in the planning would only focus on the
production planning, new product launches and replenishment. As stated by
Carmignani (2009), sourcing policies can be categorised into two domains like
coffee and non-coffee procurement. Eventually, more customers could be attracted
towards the coffee shop (refer to Appendix Exhibit 14).The amount of
purchasing of other items like dairy products, baked goods and store furniture and
paper goods required to be rigid in the yearly basis. It would minimise the extra
operational costs of the company. The manufacturing products need to be assigned
to the make functional unit of the company. Moreover, the manufacturing group of

12
the company needs to develop more competent model of supply chain for delivering
the coffee beans to its processing plants. The Kaizen model is one of the best to
make a good partnership with the other third parties related to the business of the
company. According to the Kaizen model, the coffee shop needs to clean the work
area and required equipment in a regular basis in order to maintain its standards.
The management of the JAVA Lounge Coffee Shop would maintain the rules and
standard by taking the assistance of Kaizen model to prolong the development
process in a regular basis. Finally, the revolution effort to build a prospective supply
chain management process helps the company JAVA Lounge Coffee Shop to ensure
a future flow of good productivity in the global marketplace.

13
5.0 Compare and contrast the quality processes of the coffee shop with
Starbucks:
Over the past few years, the coffee industry has seen so much activity in terms of
enormous changes in the scenery of coffee brewing companies (refer to Appendix
Exhibit 10). The change of taste in consumer preferences and the different
branding strategies of the leading companies may continue the improvement in the
coffee market.

The JAVA Longue Coffee shop has the products to establish the company as a very
powerful retail. It has a reputation for the giving value of money. According to the
view of Sandberg and Holmlund (2015) proper convenience to reach the coffee
shop and a wide variety of products is the prime component of the JAVA Lounge
Coffee Shop. As a new company in the beverage industry taking over the strategic
alliances with other coffee companies bring the addition advantages for the
company. The harder try of global expansion creates a competitive advantage to
the coffee shop (refer to Appendix Exhibit 11). The continuous expanding
approach and product diversification strategy enhances the process of improvement
of The JAVA Lounge Coffee Shop. In the contrast, lack of flexibility is the major
weakness of the company. It also requires more IT (information technology)
amenities to develop its empire. The JAVA Lounge Coffee Shop targets upper
middle class and privileged class like students, families and professionals. The
brand name and the theme of the new brand highlight its excellence in the
worldwide market. The perfect service is another warm tone of the business of the
JAVA Lounge Coffee Shop. The prices of the product are comparatively cheaper for
the JAVA Lounge Coffee Shop rather than Starbucks. The company needs to
introduce a variety of products to reach different groups of people belonging from
the different culture. Considering the view of Chan et al. (2009), the inventory and
easy transport facilities are the appreciable part of the coffee shop. The mobile
coffee ordering facility is the one most lucrative segment of the new brand.
However, the company needs to improve its mobile ordering and online ordering
system. Improvement in knowledge management tools is also essential for the

14
brand for getting better employee performances. Regarding this context,
Schoenecker and Cooper (2010) added that the company would adopt a charitable
programme to promote the brand in the new marketplace like its rival brand
Starbucks. Moreover, this analysis of certain points enhances the brand value of the
company in the beverage market.

However, the company Starbucks is a famous and reliable brand with high quality
of products. The company has many outlets in high class location. The employees
are well trained and provide fastest device the customers. The consumer group is
always attracted by the products and services of the Starbucks (refer to Appendix
Exhibit 12). The major advantage of the company is it is developed in the high
street areas. On the other hand, Elrod et al. (2011) argued that the products of the
Starbucks are little unhealthy and costly. Therefore, it has always a threat from the
new entrants. The customer can switch the brand any time who offers cost effective
and healthy products. Despite of the disadvantages the company Starbucks target
different age group of people like youngsters, adults, and the middle age of people
with several products for the different age group. For the coffee lovers the company
provides fresh, trendy and high quality of products (refer to Appendix Exhibit
13). In the opinion of Hawkins and Holden (2013), the enlarged product item like
tea, juice, special coffees and hot chocolate is the attractive point of the customers
in case Starbucks. High productivity is beneficial for the products of Starbucks. The
children's corner in the food items signifies its concern for child's community. Free
wifi facility for the children is the most advantageous business approach of
Starbucks (Yoo, 2015). Fair trade and green coffee charity are the advanced
promotional strategy of the brand. The online or mobile coffee ordering facility
helps the busy people to stay attached to the brand. The theory of new coffee
evaluation enlarges the competitive advantages of the Starbucks in the global
marketplace. The analysis of activities of Starbucks gives a velar view of its long
term dominance in the brewing industry. Moreover, the comparative analysis
reflects that the new brand JAVA Lounge Coffee Shop requires developing in several
sectors to become a stable brand in the beverage industry.

15
Conclusion:
The primary assertion of the study indicates the product quality and service quality
of the coffee shop the Java Lounge Coffee. The company paid a premium price for
high quality foodie coffee beans and managed the supply chain from start to finish
without compromising the quality and reliability. The study analyses the Kaizen
model for the improvement of the supply chain model of the company. The
comparative analysis between the Starbucks and the Java Lounge Coffee shop has
been assessed in the research. Finally, a potential recommendation for continuing
the improvement of operations management process of the Java Lounge Coffee
shop maintaining the quality and reliability of the products and services is evaluated
in the research.

16
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Bibliography:
Independent Birmingham (2014) Java Lounge - Independent Birmingham [online]
Available at: http://independent-birmingham.co.uk/java-lounge/ [Accessed 4 Apr.
2016].

20
Appendix:
Exhibit 1:

Fig 1: Cafe Capacity

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 2:

Fig 2: Cafe layout

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

21
 Exhibit 3:

Fig 3: Cafe ambience plan

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 4:

Fig 4: Informative ambience

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

22
 Exhibit 5:

Fig 5: Coffee Offering

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 6:

Fig 6: Beverage offerings

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

23
 Exhibit 7:

Fig 7: Food presentation

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 8:

Fig 8: Supply chain process of Starbucks

(Source: Cho, 2014, pp 21)

24
 Exhibit 9:

Fig 9: Kaizen Model

(Source: Yoo, 2015, pp 38)

Exhibit 10:

Fig 10: Breakdown of cafe types in the market of UK

(Source: Tabar, A.A.Y. and Charkhgard, H., 2013, PP. 460 )

25
 Exhibit 11:

Fig 11: Small industry Coffee Shop revenue statistic in UK

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 12:

Fig 12: leading 10 coffee shop chain in the UK

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

26
 Exhibit 13:

Fig 13: Biggest Coffee Shop Chains in the UK

(Source: www.independent-birmingham.co.uk/java-lounge, 2016)

Exhibit 14:

Fig 14: Percentage of Coffee lovers in the UK

(Source: Yoo, 2015, pp 32)

27