The operation management and the large-scales retailers

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The Operation Management


The large-scales retailers



I) Notion of Quality

A) Definition

B) Applications to large-scale retailing

II) E-Commerce

A) Definition

B) Costs of E-Commerce



In France, large-scale retailers such as Leclerc,Auchan, or even Carrefour appeared in the middle of the 20th century. These stores are known for their low prices for food or even clothes. They are cheaper than the others grocery stores. We will apply theory that we saw during the course in order to explain how they did and how they do today.

We will try to explain how French large-scales retailers used Operations Management to develop themselves.We will also see how these retailers deal with the different evolutions of Operations Management. When I talk about large-scale retailers, I talk about the products sold in stores or even services proposed by these retailers.

I will not talk about each notions of the Operations Management because it would need me more than 2000 words and some theories are applicable to this type of business.That is why I focused on two notions which seemed important to talk about because their evolution had been very important for many years.

First we will see what quality is and how it is applied to this sector of activity. Then we will talk about the arrived of the E-Commerce and how it is used by large-scales retailers.

I) Notion of Quality

A) Definition

Qualityrepresents all the characteristics that a product or a service has. In this part, we focus on products because large-scale retailers are specialized in products sells. Most of the time, quality is synonymic of performance for the product.

Quality exists because of the identification and the satisfaction of customer needs. Indeed when we think that a product is a good quality product, it is becauseit responds to our expectations and our needs.

It is known that quality improves profitability: when you improve your quality, it makes you reduce you costs by increasing productivity or even reduce warranty costs. More, it gives you sales gains because quality rimes with price so you sell at higher prices, it improve your reputation and response. All of this makes your profits increasing.If a firm does not produce quality products, it will cost to the firm: it is called the Cost of Quality. These costs can be divided into four categories: Prevention costs (reducing defective parts), Appraisal costs (evaluation of products, processes, parts), Internal failure (result of the defective parts) and External costs (costs after delivery of defective parts). The last category, theExternal costs, is the most expensive for the firm.

In order to evaluate quality, there are International Quality Standards such as ISO 9000 or even ISO 14000. ISO 9000 is a set of quality standards developed by 91 member nations. In order to become ISO 9000 certified, a firm has to go through a 9-to-18-month process. ISO 14000 is an environmental management standard.

The total qualityManagement (TQM) deals with the quality process. It has been created in order to follow all the quality process of a product or a service. It is defined as the management of all the aspects of a product or a service that could be important for customers. It starts from the supplier to finish with the customer.

Total quality Management requires many tools for the quality process. We can divide thesetools into two parts: simple tools and complex tools

The particularity of the simple tools is the simplicity of use. They are made for everybody: anyone without any experience can use these tools. They were settled by the JUSE (Japanese Union of Scientists and Engineers) in1977. The JUSE listed these tools in seven ones which were called the “7M”:

➢ Diagram of Pareto