The purpose of this task is to explore, analyse and evaluate subways operational strategy and composition, with particular emphasis on the individual shop floor, and to offer recommendations that might give it a competitive edge in the foreseeable future. Focus on operation, not finances
Section 1
Subway has one main goal to create income, It can this by giving the client with the best quality product using an operational structure which allows it to keep up low costs. This difference between performance and cost is how exactly we determine value. Subway is handled as a franchise, and has grown rapidly as a result. It looks to locate in regions of high footfall, such as shopping centres and high roadways. Due to its corporate strategy, which suggests at least two subways per twelve thousand people, a strong cohesive brand has been built on the "Eat Fresh" slogan despite a small marketing budget[i]. Subway looks to utilise staff capacity and low cost technology to offer customers a valued product at a low cost.
Para 1
In order to achiev high income Subway must reconcile market requirements with functional costs, obtaining a fit between your two and steering clear of any possible threat of misalignment. Subway is an interesting case study because, of the method by which the strategy is created.
(Diagram - Show 4 views of strategy, Slack. N)
Different authors perceive that need for different facets in the forming of firm's operational strategy. This is confirmed in Nigel Slacks diagram, the four views of strategy (see fig 1). We imagine Subway has used market requirement perspective to adopt an appropriate functional strategy. They have also used a bottom up perspective, whereby the operational processes have improved from the shop floor, in turn affecting company large change.
The junk food market was increasingly demanding better food options. In order to corner this extending market, subway wanted to maintain this healthy customer image and criteria while simultaneously cutting control times and reducing costs to make it competitive against traditional competitors McDonalds. In 2007, as downturn hit the UK, Subway looked for to capitalise on the loss of business suffered by other food shops[ii]. It started offering more ethnic foods and food deals. However, scheduled to reduced consumer spending and inflation of food prices it was becoming more and more harder to maintain income whilst offering good value to its customers. Essentially the market wanted a wholesome cheaper option, that managed the variety and convenience of traditional fast food outlets, this market led perspective meant that a revision of functional strategy was needed.
In addition to the market based perspective subways functional strategy is affected from underneath up i. e. from the shop floor. That is evident in the case of Stuart Frankel, a franchisee owner from Florida, who over time of sluggish business and losses created a $5 Foot or so long to great success, a whole lot so that it was rolled out US wide[iii]. Probably, Subway is successful because of the affect that its surface procedures have in commercial strategy. Whilst Subway offers advice to their franchisees their merchants still retain a exceptional amount of preference in the way they operate[iv]. The strength of a lower part up strategy is clearly shown in Hayes in Wheelwrights Four stage model of operation contribution[v].
(Put in Diagram - Four stage model)
Subways operational capabilities are externally supportive of company strategy, putting it in stage four of the model. This points out Subways leading market positon, where its increased contribution has led to a redefinition of industry objectives. In 2010 2010 Subway overtook McDonalds to be the major restaurant chain in the world, in 2011 there have been 33, 749 subway franchise compared to 32737 McDonalds restaurants[vi].
Contribution to competitive priorities
In a great world subway can offer top quality, delivery, flexibility and service at an affordable price, whilst retaining industry leading profits. In reality it must prioritise to be able to best achieve market requirements. In order to evaluate Subways current prioritisation efficiency we have collated an importance performance matrix from a review of. . people (see physique 3). The rates a number of factors on a scale from 9-1, comparing critical, qualifying and less important customer expectations to actual performance. This will show a best fit between consumer goals and present company delivery. This can help Subway prioritise their resources most effectively.
In addition to this importance performance matrix, which signifies a model of 'best fit', Subway must sustain its competitive benefit in the long run. By analysing the critical, qualifying and less important targets we can identify which factors "directly and significantly contribute to a winning business"[vii]. These, 'order winners' and 'order qualifiers' are what maintain competitive profit in the long term. In Shower Subways case the 'order victor' is the BMT sandwich, which based on the Deputy Supervisor is significantly typically the most popular 'sub' available[viii]. People constantly purchase other products using their BMT sandwiches, and new custom is enticed by their reputation, further adding to outlet profits. Subway competes with other fast food 'order winners' by regularly launching services and ranges, in the hope of 'delighting' customers. These delighting factors, if successful, can become new 'order winners' pulling in clients. Subway also has a number of order qualifiers, like the cookies, wraps, salads and customisable sandwiches. The lack of drink variety suggests that it's of less competitive advantages, permitting them to prioritise on the order winners and qualifiers.
Sacrificing a very important factor for the benefit for another can lead to various trade-offs and uncertainty. This can be showed in Subways differing staff levels. Subway must make a determined risk, whereby they balance a greater utilisation of capacity with higher queue measures; which as shown on the importance performance matrix is a key customer expectation. Subway Shower mostly mange staffing levels at store level, howver franchising requirements require a the least four personnel to be working on the sandwich line from 12 o'clock to four o'clock[ix]. Subway would rather not reach 100% capacity, instead maintain their brand image as an easy, convenient restaurant.
(place diagram 4 businesses triangle)
Nevertheless, despite an underutilisation of staff, subway has been able to fulfil company aims to maintain profits while simultaneously maintaining customer anticipations. It has done this by following market requirement and bottom level up operational strategies. Throughout the rest of this statement we will format and analyse the efficiency of Subways operations to deliver its company aims.
Observations
In order to examine the process where the company sought to stick to its key objectives, we observed a number of factors. By observing the operation's efficiency at maximum and off peak times and saving order composition and customer cost, we could actually complete an functional analysis, that we can bring lots of tips and conclusions.
Peak and off peak process mapping:
A surface examination of the procedure map indicates an focus on decision making operations. Although this aligns with Subway's brand strategy of increasing awareness and variety for the client, this adds inefficiency to the otherwise trim process. The individual factor is Subway's biggest varying, conversely, its emphasis on variety is its ideal competitive advantage. Additionally, there is a huge variety of value adding procedures, indicating that Subway's current operational equipment is relatively effective, reducing costs in development in order to keep low consumer prices, whilst keeping variety and success.
By comparing optimum and off-peak functional process maps (Amount 5 and 6), we can easily see a distinctive difference in total throughput time. Average peak throughput time was noted as 474 a few moments compared to an off-peak average of 337 a few moments. [x] However, when removing average queue time, which is significantly (P<0. 0001) increased for top than off-peak, we can see that operational time is actually higher for the off-peak process than for the peak process. This infers that whenever time presents a constraint, the merchandise is produced typically 72 a few moments quicker. This suggests that there is an underutilisation of personnel capacity during off-peak times.
Further evaluation of the process timings reveal that this seemingly useful system is significantly slowed by customer decision making, non-value adding activities and delays. This is demonstrated by deviation in the common value added time between optimum and off-peak times. In peak times, 26% of energy is allocated to value adding activities, whereas in off-peak, this is more than doubled to 54%. This reiterates our theory that in peak times, a proportionally longer time period is spent in non-value adding activities, such as queuing and waiting, than in off-peak intervals.
When sketching conclusions from our data it's important to consider the fantastic variant in customer decision-making time which we detected. Data ranged from a conclusion making time of 0 a few moments to 330 secs. This suggests that some customers are usually more acquainted with Subway, their products and the operational process. These customers order faster than other customers with little understanding of these areas. Results can be specifically pronounced when you combine new customers with long queues that normally happen in peak-periods. Tie up this into market led point of view of procedures strategy.
However, even when considering customer focused inefficiencies, there remains process inefficiencies that require to be described. These functional inefficiencies cause bottlenecks along the way that may be reduced. With regards to Results 7, if we exclude queuing which is the effect of a combination of functional inefficiency and customer demand, we can observe two operational bottlenecks, specifically toasting the product and adding salad. Additionally, when considering the process map, we can see that these techniques occur in collection, increasing the detrimental effect of the process as a whole. If we were to split up also mention staff number fluctuation, hyperlink back to subway enforced staff levels. Physique 7, with ghosting oohoohoho
Line-layout, number 8, connect to visibility and variety.
Lean:
Subway manages a lean creation strategy that aims to create gain eliminating waste products and improving techniques. [xi] Subway prides itself on being a high variety food electric outlet, this supplies the customer more choice, but offers challenges to the business. In order to offer this variety whilst keeping value, Subway has adopted a lean procedure for development. The 'yank' system allows the customer to find the filling and sandwich they need on demand. You can find no ready-made sandwiches, and requests are made following 'just in time' basic principle. This reduces storage area costs, whilst retaining product quality and the level of production presence that characterises Subway's brand. The move system also impacts the process layout and mapping, in that the correct components are sequentially located in front of the appropriate staff member. In an effort to streamline the process, Subway Bath uses a self-service refreshments options, thereby getting rid of the opportunity of inefficiencies in the beverages level of the procedure. Lean draws its creativity from the making industry, which searched for to solve the challenge of overproduction of vehicles, increased storage area costs and reduced variety. By adopting a slim process, subway increases similar advantages in inventory management, variety and quality control. There are however, less slim procedures at Subway. Included in these are the preparation and baking of the bakery, which is stated in weighted batch operations that favour the popular bread types;[xii] this can be an example of a non-lean push system. One of the primary priorities of trim is reducing the seven types of misuse. [xiii] Through our observations we've observed that the waste produced through defectiveness is crucial, as the linear creation process struggles to cope. If the defect occurs, then the process must be repeated from the beginning, theoretically doubling the full total procedure time.
Order Winners and Qualifiers:
Figure 9 and 10 (pie chart)
According to J. Peggler, the order success for Subway Shower is the BMT sandwich. [xiv] When examining figures 9 and 10 we can easily see that not consistent with the data we have documented. In off peak durations the BMT signifies a 21% leading show, whereas in optimum intervals this drops to 8%, with the spicy Italian developing a 19% leading talk about. However the BMT is not constantly the best vendor through our observations, it is important to know that the spicy Italian has similar substances to the BMT. This shows that there is no single order winner, rather that it's cured meat products that customers favour. These treated meats are order winners, and are recognized by order qualifiers such as the beverages, cookies and wraps. As well as the Spicy Italian and BMT, we've identified Poultry Tikka and Meatball Mariana fillings as regular top-five sellers; the success of the Chicken breast Tikka option is indicative of Subway's mindful, strategic position with changing consumer behavior.
Additional order winners for subway include their meal package options (see number 10) which is specially popular during top service times. 75% opted to have a meal package during peak time, 32% opted during off-peak. We think that the acceptance of the food deal is due to all of the meal offer options which are available to the customer, its recognized value and the customers' demand with an accompaniment using their sandwich; our survey is complimentary to the theory. Singh, P. (2012) Subway and its Businesses, Interviewed by Agam Khanna [in person] Subway Bath tub, 25/11/12. [xv] During top lunch-hours 86% of customers choose to accompany their sandwich with a glass or two, this drops to 32% in off-peak periods. This is a good example of an order qualifier, ie the drink, becoming an order champion when combined in to the meal-deal during lunchtime. Subway has offered greater choice and flexibility, thereby stretching their range of order winners, so that it is a more attractive choice for changing consumer habits.
[i] D. Fertman website 26/11/12
[ii] Website 26/11/12 Oboulo
[iii] P133 Dennis Pitta Subway
[iv] D. Fertman website 26/11/12
[v] Hayes and Wheelwright
[vi] Website 26/11/12 Money. cnn
[vii] Slack et all
[viii] Interview Subway
[ix] Interview Subway
[x] See diagram 5 and 6
[xi] reference
[xii] Interview J. Pigglet
[xiii] textbook
[xiv] Peggler
[xv] Agam's survey
