Management of Service Operations

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Last but not least, stores can use walking around management. Smith (2002) stated that management by walking is a technique that satisfies the demands of organizations and employees. Managers take a walk to their stores, it can help mangers get the direct problems about their staff and customers in order to help employees deal with the work dilemma. In general, if customers want to get a refund, sales assistants need to tell their supervisors. It will take some times. Therefore, the customers will be unsatisfied and feel angry. If the managers can walk around, the problem can be solved in time.

Deal with return policy discrepancy

Griffin and Herres (2002) pointed out that over a cross-section of industries, the longer a company retains a loyal customer, the more profit that customer generates. A company can boost profits 25-85 percent through increasing retention by as little as 5 percent. If The North Face want to conquer Columbia, they need to keep loyal customers since regarding to the survey about Columbia we did a few months ago, we found that a large amount of customer about Columbia is tourists. It means that a part of customers cannot go back the same store to purchase. And I do the survey in The North Face which located in Four Season Macau (Figure 2). The result showed that more than half of customers in The North Face is Macanese and foreigners who live in Macau. Therefore, as The North Face, it is easy to keeping their customers.

Firstly, The North Face can offer incentives for patronizing your business on a regular basis because the price of The North Face is a little bit high. The North Face can give their royal customer discounts every so often. For example, customers can get 10% off on every fifth purchase. Additionally, like Bank of China, if you use the Bank of China’s credit card to buy the ticket of music opera such as Cat and Beauty and Beast which are held by Venetian, you can get 10 % discount. Therefore, The North Face can cooperate which the specific bank such as Bank of China or Tai Fung Bank. If customers use these designated bank’s credit card to pay, they can have the discount as well. Last but not least, the retailer also can offer discounted or free upgrades to your loyal customers.

Furthermore, According to Carbone (2010), retailers need to give customers a reason to come back. Therefore, if customers purchase something now, they'll get a coupon to use on their next purchase from the same store. Like The Body Shop in Macau, if customers buy more than 250 MOP products at one time, they will give customers 50 HK Dollar’s coupon (figure 2). Customers can use it on next time. In addition, company can set up a referral program so that your existing customers will get a discount when they refer a new customer to stores.

Last but not least, if it is available, after purchasing the products, the sales assistants can ask customers whether they want to leave their phone number or email address to receive company’s the newest information about promotion. Like The Body Shop, if a customer buy more than 300 MOP products at one time, the sales assistants will ask this customer whether they want to get the VIP card (figure 3) and leave their email address to receive the newest promotional information or holiday cards. This will encourage repeat business and give customers a positive perception of this company.

Deal with increase product varieties and assortments

The North Face has the limited space to display’s problem as well. As Columbia, it plans to rent a large area to put more counter to display more different varieties and assortments of products. However, the rental fee in Macau is too high to afford. If the store cannot make more profit, they will not be able to pay this rent. Therefore, The North Face can use online shop to provide a part of service. Although The North Face has the official website to introduce their products, they do not have the online shopping feature. The company can use online shop to sell some products such as backpack, wallet since these kinds of products do not need to know more professional knowledge, customers can buy it if they like this style. It can save some space to display other kinds of products. In addition, they can established the official page on Facebook or Instagram since nowadays, more and more people like to get information on this social software. If people like your page or follow you, and then their friends will see this page as well. It will lead to have a large number of human traffic with lower or no cost.

Furthermore, The North Face can decrease some unnecessary configuration such as warehouse. For example, the duty free store called The Nuance Watson Macau in Venetian, they do not have the larger shopping area like DFS. However, it still has a lot of different varieties about fashion, makeup products, watches, glasses and electricity products. However, they only have a little warehouse. The replenishment happens twice a week which delivers from Hong Kong Company. First time is on Tuesday, next is on Thursday since from Tuesday to Thursday, there is not a lot of customers to visit and purchase. The store can use this relatively free time to restock. The shortage of products will not happen frequently.

The North Face’s products in Macau are delivered from Hong Kong as well. Therefore, the managers in The North Face can use the daily sales data and daily human traffic data to find out which day is relatively free on one week. And then, they can do the replenishment on that day instead of getting a larger warehouse to put the inventory.

Deal with improve replenishment speed

For improving inventory replenishment speed. Columbia has two choices. First is establish continuous replenishment program. For example, Wal-Mart have the specific replenishment strategy, for each commodity, Wal-Mart stores have developed a safety stock level, once existing stocks below this level, Wal-Mart's computer system through computer networks to automatic supplier orders. But the cost of establishing this system is too high. Therefore, the Columbia Company decided to outsource the replenishment system. However, there are some problems about outsourcing. First of all, it will lead to a low margin but high turnover, such as H&M. Although H&M is very successful, if the company cannot get more profit to cover this cost, this program will give the negative impact to the company.

In order to solve this problem, The North Face can increase the transportation time to restock as well. Compared transportation fee with establishing a new delivering system fee, the cost of transportation is much lower.