Implementing Retail Service Layout Approach at USPS [pic] Individual Case Assignment MGT 6355 Operations & Supply Management Jun-Yeon Lee Shahzado A Wahocho July 26, 2009 Table of Contents Abstract3 Background Information3 Problem Description4 OM Concepts/Tools5 Application of OM Concepts/ToolsError! Bookmark not defined.
Analysis of Expected Results10 Conclusion 12 References 13 Abstract I often visit a local post office that is about a block away from my residence. I often find this post office crowded with customers but very under staffed.If I have to mail a letter and need a stamp I have to stay in the line for at least 30 minutes. The post office really needs improvement in its operation performance. The average time a customer spends can vary from 15 minutes to 45 minutes. Luckily the case assignment requires finding a real problem and then finding its solution, hence I find this problem very right one for this paper. I would like to find a solution that people who come to post office for stamps or money orders don’t have to stay in the line for that much time.
To achieve this goal, I have employed some OM concepts of retail service layout to redesign the facility to reduce the wait time for stamp and money order customers. The tools that can be used to achieve the goal of reducing wait time are redesigning the facility layout and self-service approach. After the facility is redesigned the wait time for stamp and money order customers will be reduced significantly to a minimum depending upon how many customers are in the line. Background informationUS Postal Service or USPS is a $68 billion organization (USPS 2009); it processes on average 24 million pieces of mail every day and employs 596000 employees (USPS 200). I selected this local facility because I have personal experience with that facility and I often get frustrated in waiting long lines. The number of staff is usually small and numbers of customers is usually big. Problem Description The main problem that this paper will try to find a solution is to reduce the wait time of customers who wait in the line for stamps and money orders.
The post office opens from 9:30 AM till 4:30 PM. On an average 100 customers visit the post office each day. Out of those nearly 25% or 25 are the customers for postage stamps and money orders. If we take an average 3 minute for each customer to spend at the counter, the stamp and money order customers will be spending 75 minutes in the post office. Assuming there are total 8 customers in a line at a given time, and out of those 8 customers 2 are for stamps, then the first stamp customer will be in the line for 6 minutes and the second customer for 12 minutes.
Below is the diagram of the current line and current facility layout. [pic] Figure 1: USPS facility’s current layout OM concept and tools that can be used The main focus of our paper is to provide a facility layout that best fits the needs of customers who only want stamps or money orders. Let’s take a look at the current facility layout to see if its meets our needs. Customers enter through main entrance and make a line by the island. The island provides customers facility to arrange their shipping materials, labels etc before they arrive at the front desk counters.
The white colored ovals represent regular customers who are in the line to ship parcels or other types of mails that require more services than just placing stamps. The green colored ovals represent customers who are in the line specifically for purchasing stamps or money orders. Assuming there are 8 customers in a line at a given time and two customers, customer # 4 and customer # 8 are in the line for stamps or money orders. Assuming there are only two staff members at the front desk counters and assuming each customer will spend 3 minutes with each front desk staff member.The table should look like the following: |Old Lay out | | |Time in minutes —> | | | | | | | | |3 |6 |9 |12 | |Staff #1 |Cust#1 |Cust#3 |Cust#5 |Cust#7 | |Staff #2 |Cust#2 |Cust#4 |Cust#6 |Cust#8 | | | | | | | |Total time spent by Cust#4 |6 | | | |Total time spent by Cust#8 |12 | | | The OM concepts that can best be utilized would be Retail Service Layout.
The objective is to maximize the net profit per square feet of the store space. In our example, the USPS can maximize the profit by quickly dealing with customer 4 and 8 and making room for additional customers in the line. Many times, customers will walk out and go to a different station if they find long lines. A good facility layout can enhance employee’s work life.
For playing out an effective service counter, a good service layout can be and effective stage.The Self-service approach, which is an approach to deliver onsite services, can also be used to facilitate stamp buying process. Application of OM concepts/tools The above mentioned Operational management tools and concepts can be used to design a new facility to achieve our goal. The new design of facility will require will simple changes and very minimum investment will be required to achieve the new operational facility design.
We will make sure that while developing and existing service is a fit with existing facility environment. Following points when designing the new facility: The three factors that we will consider when evaluating our decision are: • The service experience fit—it should fit into current service experience for the customer.The new facility will be same as the older facility and will not require separation of existing desks or counters. • The operational fit— Even the greatest service ideas require operational support to execute.
The new layout will fit well within existing layout as customers are already familiar with existing layout and they will not have any problems in adapting to the new layout. • The financial impact— Designing and implementing a new service is costly and should be financially justified. There will be very minimum cost to hang few signs over a counter that will be dedicated for stamp and money order customers. In the absence of these customers, the counter can still accept regular customers.Following are the steps that can be carried out to redesign the existing facility: a) Dedicate a service desk counter for stamps and money order customers utilizing retail service layout approach. We call it stamps counter for the ease of our discussion. b) Install signs above the stamps counter to let stamps and customers know that they can skip the line go to that counter directly.
We will hence be utilizing the signs, symbols and artifacts approach. c) The same stamps counter will also accept regular customers if there are no stamps and money order customers in the line in a given time. d) The self-service approach can be used to install an automatic stamp dispatcher machine.But for now we will not go further into its details as our goal is to reduce wait time with minimum investment. After we have carried out our facility redesign steps, the new facility layout should look like the following: [pic] Figure 1: USPS facility’s new layout Analysis of expected results The new facility design could be achieved with a simple investment of $50-$100 sign above the stamps desk.
Let’s analyze the operational fit for the facility redesign to see if the proposed facility change would fit with current process. a) The number of front desk counters will still be same, i. e. -e 4. b) The number of staff members will still be same, i. e. -e 2.
c) There will be two lines now, one for regular customers and other for stamps. ) In a given time, if there are no stamp customers, then the stamps desk will accept regular customers, hence having no work load on other staff members. e) The stamps desk clerk will often announce to draw the attention of the stamps customers that they can directly come to the stamps desk and skip the regular line.f) The amount of hours spent by staff will still be same; hence no change in labor costs. g) The number of expected customers will increase and hence will increase the revenue for the post office h) We will make sure that while developing and existing service is a fit with existing facility environment. Following points when designing the new facility: New Lay out | | |Time in minutes —> | | | | | | | | |3 |6 |9 | | |Staff #1 |Cust#1 |Cust#3 |Cust#5 |Ready for Cust#7 | | |2 |4 |6 | | |Staff #2 |Cust#4 |Cust#8 |Cust#6 |Ready for Cust#7 | | | | | | |Total time spent by Cust#4 |2 | | | |Total time spent by Cust#8 |4 | | | Note regarding the self-service approach: The self service approach will help off-load work on the staff because customers can utilize automatic stamp dispatcher. This change would be the experience fit for the customers and operational fit for the daily production and would justify the investment. But we will keep this solution as an option because this requires major investment, creation of a separate and secured area to place the machine and hence we keep it off our topic.
Conclusion: The OM concepts and tools such as retail service layout, the concept of self-service approach can be used to achieve operational excellence.With the use of these tools and concepts we can make the USPS facility achieve better performance in terms if revenue and lower wait times for the customers. The customer would like to visit this post office again if they know that they will be in and out in no time.
The customers will be encouraged to buy stamps and money orders from this post office as opposed to those that do not have separate counters for stamps and money orders. This change fits the facility’s daily operations, provides experience fit for the customers and is financially suitable. References: Jacobs, F. J.
, R. B. Chase, & N.
J. Aquilano (2009). Operations & Supply Management.
New York, NY: McGraw-Hill. [pic]