Combining Service Blueprint and FMEA for Service Design

Combining Service Blueprint and FMEA for Service Design PAO-TIAO CHUANG1

This paper aims at combining the service blueprint and Failure Modes and Effects Analysis (FMEA) to assist the service designers in designing a failure-free service system. In the proposed approach, a service blueprint of a service system should be, first, developed to identify the potential fail points and failure modes for both the front office and the back office service activities. Based on the blueprint, the FMEA tool is, then, applied to prioritize the critical potential failure modes of the service system and take the required actions to ensure the service design performance. An example regarding to a hypermarket service system was used to demonstrate the proposed approach. The example not only identifies the most potential failure modes but also provides the effects and possible causes for each of the most critical failure modes. This implies that the preventive actions for these failure modes from occurring should be the top focus in the service design stage of the example company. Some managerial implications are also provided. Key words: Service Design; Service Failure; Service Blueprint; Failure Modes and Effects Analysis. 1. INTRODUCTION Service industries have been the source of economic leadership for most developed and developing countries in the past two decades. According to Verma [2000: 8-25], as the post-industrial economy evolves, the service sector continues to increase in importance, both in terms of its contribution to the gross domestic product (GDP) of all advanced economies and in terms of the percentage of workforce employed in services. By all accounts, more than half of the developed countries’ gross domestic product (GDP) is in the service sector [Menor et al., 2002: 135-57; Pilat, 2000: 52-54]. And by the statistics data from the Department of Statistics, Ministry of Economic Affairs, R.O.C. [2005], service related industries account about seventy percent of the nation’s total GDP in Taiwan. Service industries often provide social/personal services, transportation, finance, advertising, repair, distribution, or communication support for manufacturing industries [Ma et al., 2002: 15-39]. Concurrent to the economic growth, Ma et al. [2002: 15-39] addressed 1

Pao-Tiao Chuang is Professor of Department of Asia-Pacific Industrial and Business Management, National University of Kaohsiung, Taiwan. No. 700, Kaohsiung University Road, Nan-Tzu District, Kaohsiung 811, Taiwan. 1

that economic development and the change in the standards of living have caused changes in human consumption patterns. Human needs are satisfied with not only physical goods but also invisible services. Therefore, the management of new service development becomes an important competitive concern in many service industries [Fitzsimmons and Fitzsimmons, 2001]. And from the service organization’s perspective, designing a service means defining an appropriate mix of physical and non-physical components [Goldstein et al., 2002: 121-34] and the service systems should be designed for the realization of customer processes and achieving the service performance. In the mean time, service assurance and service quality should be embodied in the service design stage to ensure the abilities of service offerings. Service design is an upstream management from the origin. The idea of service design is to design high quality into the service system from the outset, to consider and respond to customers’ expectations in designing each element of the service [Edvardsson, 1997: 31-46]. The goal of service design can be described in terms of attracting and keeping customers who are satisfied, loyal and speak well of the company, but who are also profitable. Thus, the service sector aims at optimally allocate the limited resources in designing the service system that can satisfy customers’ needs and accrue high productivity for the service firms. In this regard, most of the existing research considered the effects of process factors, such as customers, employees, and suppliers, to the service results [e.g., Brentani, 1995: 93-103; Ma et al., 2002: 15-39]. Others suggested the role of service concept, in service design and development, to define the how and what of service design and help linking the customer needs and an organization’s strategic intent [e.g., Edvardsson, 1997: 31-46; Goldstein et al., 2002: 121-34]. Though existing research proposed the paradigm model for designing service systems, an effective service system should also be designed to prevent the failures from occurring and reduce the risk of service failures.

2. RESEARCH MOTIVATION Even zero defects is the desired objective for most firms, it is unlikely organizations will achieve this goal. This is particularly true of service industries where the multi-dimensional nature of the service encounter creates an environment where service failure is almost inevitable [Mueller et al., 2003: 395-418). A Service failure occurs when customers’ expectations are not met [Mueller et al., 2003: 395-418; Weber and Sparks, 2004: 361-67]. A service business must understand what customers really need and then delivered its service accordingly [Chiu and Lin, 2004: 187-204]. Similar to service quality and satisfaction, it is customers’ perception that determines whether a service failure occurred even if the 2

companies with the best strategic plans and the tightest quality control procedures and the service has been performed according to the blueprint established by the service provider [Goldstein et al., 2002: 121-34; Weber and Sparks, 2004: 361-67]. Therefore, combining service blueprint with service failure analysis that identifies critical potential failure modes and take the preventive actions in the design stage becomes a very important issue in the service industries. In this aspect, a service blueprint is a map or flowchart (called a process chart in manufacturing) that shows all transactions constituting the service delivery process [Shostack, 1984: 134; Fitzsimmons and Fitzsimmons, 2001]. In facilitating the service design, it enables the marketing manager to understand which parts in the operating system are visible to the consumer. The visible part of the operations process, with which the consumer interacts, must be supported by the invisible process [Hoffman and Bateson, 1997]. It is also a flow chart that isolates potential fail points in a service process [Shostack, 1984: 134]. Moreover, to compensate and alleviate the effects of the service failure, researches on service failure recovery strategies and actions were proposed in many literatures [e.g, Goldstein et al., 2002: 121-34; Hocutt and Stone, 1998: 117-32; Mattila and Patterson, 2004: 196-206; Maxham, 2001: 11-24; Miller et al., 2000: 387-400; Mueller et al., 2003: 395-418; Webster and Sundaram, 1998: 153-59; Wong, 2004: 957-63]. Whereas, Halstead et al. [1996: 107-15] mentioned that nothing is better than performing a service to a customer’s satisfaction the first time, nothing is worse than failing to detect a problem or failing to obtain information from a dissatisfied customer. Thus, a systematic approach that could identify and prioritize the potential service failure modes with the corresponding risks during the service design stage is very important and needed. In this regard, Failure Modes and Effects Analysis (FMEA) is a systemized group of activities that intent to recognize and evaluate the potential failure of a product or process, identify actions that could eliminate or reduce the likelihood of the potential failure occurrence and document the entire process [Johnson, 2002: 152]. The goal of FMEA is to predict how and where systems, that were designed to detect errors and alert staff, might fail. It is an important method of preventive quality assurance [Wirth et al., 1996: 219-29]. It can improve operational performance of the service system and reduces the overall risk level. Though FMEA is widely used in the manufacturing sector, literatures regarding to the FMEA in service industries are not widely found, with few on medical surgery, health related industries, or organizational artifacts [e.g., Busby et al., 2004: 1211-15; Cohen et al., 1994: 40; Hollick and Nelson, 1996: 539; Monti et al., 2005: e158; Radermacher et al., 2004: 824-29; 3

Scipioni et al., 2005: 569-78; Tellefsen, 2005: e162-e163].

3. RESEARCH GOALS This paper aims at combining the uses of service blueprint and failure analysis in a service company to prevent the critical failures from occurring and reduce the risk of service failures. The proposed failure-free service design model is shown in Figure 1. In the model, a service blueprint needs to be developed, first, to identify the potential fail points and failure modes for both the front office and the back office activities. Based on the blueprint, the FMEA tool was applied to prioritize the critical potential failure modes. To demonstrate the proposed approach, an example regarding to the hypermarket store was used. The required data regarding to the severity degree, the occurrence probability, and the detection ability are achieved from a questionnaire survey on the employees and managers of a chain hypermarket store with four branches in Taiwan. Then, a service failure criticality analysis is performed according to the Risk Priority Number (RPN) of each potential failure modes. The RPN’s are used to determine the risk of potential failures and prioritize the needed preventive actions and the resource allocations before the service is delivered. This would ensure the service quality before the service is delivered. [take in Figure 1]

4. SERVICE BLUEPRINT A service blueprint is a map or flowchart (called a process chart in manufacturing) of all transactions constituting the service delivery process [Shostack, 1984: 134; Fitzsimmons and Fitzsimmons, 2001]. It is a flow chart that isolates potential fail points in a service process [Shostack, 1984: 134]. Haksever et al. [2000] further explains that it is a visualization of the designer’s concept of the product/process together with its dimensions and tolerances. Service blueprint is a useful tool not only for the operations manager but for the marketing manager as well [Hoffman and Bateson, 1997]. It enables the marketing manager to understand which parts in the operating system are visible to the consumer---the fundamental building blocks of consumer perceptions. The visible part of the operations process, with which the consumer interacts, must be supported by the invisible process [Hoffman and Nateson, 1997].

In a service blueprint, some activities are processing information, others are interactions 4

with customers, and still others are decision points. The decision points are shown as diamonds to highlight these important steps, such as providing protocols to avoid mistakes, for special consideration. Studying the service blueprint could suggest opportunities for improvement and also the need for further definition of certain processes [Fitzsimmons and Fitzsimmons, 2001]. The line of visibility separates activities of the front office, where customers obtain tangible evidence of the service, from those of the back office, which is out of the customers’ view. This separation highlights the need to give special attention to operations above the line of visibility, where customer perceptions of the service’s effectiveness are formed. The blueprinting exercise also gives managers the opportunity to identify potential fail points and to design foolproof procedures to avoid their occurrence, thus ensuring the delivery of high-quality service. In summary, a blueprint is a precise definition of the service delivery system that allows management to test the service concept on paper before final commitments are made. The blueprint also facilitates problem solving and creative thinking by identifying potential points of failure and highlighting opportunities to enhance customers’ perceptions of the service.

5. FAILURE MODES AND EFFECTS ANALYSIS Failure Modes and Effects Analysis (FMEA) is a reliability analysis tool widely used in the manufacturing sectors, such as automotive, aerospace, and electronics industries, to identify, prioritize, and eliminate known potential failures, problems, and errors from systems under design before the product is released [e.g., Guimarães and Lapa, 2004a: 191-213; Guimarães and Lapa, 2004b: 107-15; Nakajima et al., 2002: 511-21; Price and Taylor, 2002: 1-10; Rhee and Ishii, 2003: 179-88; Sankar and Prabhu, 2001: 1987-94; Scipioni et al., 2002: 495-501; Toeh and Case, 2004a: 289-300; Toeh and Case, 2004b: 253-60; Xu et al., 2002: 17-29]. According to Pillay and Wang [2003: 69-85], FMEA is intended to provide information for making risk management decisions. The goal of FMEA is to predict how and where systems, that were designed to detect errors and alert staff, might fail. It is an important method of preventive quality assurance [Wirth et al., 1996: 219-29]. If the potential effects of the errors are intolerable, action is taken to eliminate the possibility of errors or to minimize their consequences [Cohen et al., 1994: 40]. The FMEA procedure can be summarized as follows [Cotnareanu, 1999: 48-52; Johnson, 2002: 152; Lore, 1998: 144; Pillay and Wang, 2003: 69-85; Vandenbrande, 1998: 97-100]: (1) Identify all potential failure modes of the service system.

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(2) Relate the possible causes, effects, and hazards of each of failure. (3) Prioritize the failure modes relative to their probabilities of occurrence, failure criticality (or severity), and detection capability. (4) Provide suitable follow-up or corrective actions for each type of failure mode.

6. DEMONSTRATED EXAMPLE This section will apply the proposed approach in the hypermarket store that assist the service design. A service blueprint of a service system was, first, developed to identify the potential fail points and failure modes for both the front office and the back office service activities. Based on the blueprint, the FMEA tool was, then, applied to prioritize the critical potential failure modes of the service system and take the required actions to ensure the service design performance. 6.1 Service Blueprint for Hypermarket Example In this section, the research provides the service blueprint for a hypermarket Store, as shown in Figure 2, by conducting the hypermarket practices. The hypermarket service process starts from customers arriving at the store and getting the shopping cart. Followed by entering the sales floor, the customers go through the procurement activities of choosing goods/merchandise. After cashiering all the purchased goods/merchandise, the customers leave the store, where the hypermarket store activates its post-service activities. The front office activities involve customer arrival, getting shopping cart, entering sales floor, choosing goods/merchandise, weighing those items that priced by its weights, cashiering the goods/merchandise, leaving the store, and experiencing the post-service from the service provider. The back office activities involve the inbound and replenishment logistics that support the front office activities. They involve procurement/purchase activity, receiving and inspecting the incoming goods/merchandise, goods/merchandise warehousing and inventory activities, and replenishing goods/merchandise to the shelf of sales floor. The possible fail points and the potential failure modes for each of the activities are also provided in the service blueprint. We can also see, from Figure 2, that there are three possible waiting points that customers might experience: looking for vehicle parking space and shopping cart, waiting for weighing goods/merchandise pounds, as well as waiting in the cashier line. [take in Figure 2]

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6.2 Failure Criticality Analysis for the Hypermarket Example and Discussions To perform the FMEA, the service system of a hypermarket store is decomposed into four sub-systems: service facility, pre-service, in-service, and post-service. Each sub-system involves several sub-processes or activities. In the service failure analysis, the potential failure modes for each sub-process/activity are developed and listed according to the service blueprint. To accomplish the service failure analysis systematically, the service system of a hypermarket store is decomposed into four sub-systems: service facility, prior-service, in-service, and post-service. Each sub-system involves several sub-processes or activities. Among these, service facility involves sales floor facility, sales floor security, and sales floor surroundings. Prior-service involves incoming goods/merchandise activity as well as warehousing and inventory activity. In-service involves customer choose/purchase flow and cashier flow. Post-service involves post-sale activity and warranty. The potential failure modes for each sub-process/activity are then explored and listed according to the service blueprint of the hypermarket store. In this regard, twenty three potential failure modes, in total, are structurally listed for further analysis. To compute the risk priority number (RPN) that differentiate the effect of each potential failure modes, the required data of severity rating, occurrence rating, and detection rating are collected by a questionnaire survey. This survey was assisted by a chain hypermarket store, which has four branch stores in Taiwan (We will call it T-store in the rest of the paper). By prior contact with the T-store and having their approvals, one hundred questionnaires were sent to the employees of the T-store. Among those, 6 are executive managers, 16 are middle/floor managers, and 78 are first-line servers. The respondents were asked to rate the degree of severity, the probability of occurrence, and the degree of detection ability of each failure modes. In the questionnaire, a five-scaled rating from 1 to 5 is used for each failure modes. That is, for the severity rating, 1 means the least severe it is if the corresponding failure mode occurs and 5 means the most severe; for the occurrence rating, 1 means the least likely it is for the corresponding failure mode to occur and 5 means the most likely; for the detection rating, 1 means that the store has the highest degree of control ability to prevent the corresponding failure mode from occurring and 5 means the lowest degree of control ability. The severity rating, the occurrence rating, and the detection rating for each failure mode in the FMEA analysis were computed by the arithmetic average of the surveyed data and shown on the fourth, the fifth, and the sixth columns, respectively, of Table 1. And the RPN for each failure mode was computed as Equation (1) and shown on the right-most column of 7

Table 1. RPN = S × O × D

(1)

Where, RPN=Risk priority number; S=Severity rating; O=Occurrence rating; D=Detection rating. The higher the RPN is the more preventive action needed for the failure mode from occurring is. In order to identify the more critical failure modes, these RPN values are ordered, from lowest to highest value, to find the third quartile (Q3) as the reference value.  (n + 1)  Q3 =  × 3 ranked value  4 

(2)

where, Q3 = third quartile value and represents that 25% of the RPN values are higher than the third quartile. n = number of RPN values in the data set (in this example, n=23). [take in Table 1] From Equation (2), the Q3 falls in the 18th ranked value, 23.28. Those RPN values higher than Q3, by priority order from the highest, are “Unstable supply of goods/merchandise”, “Air-conditioning malfunction”, “No goods/merchandise on designated shelf of the sales floor”, “Slowness of cashier speed”, “Warranty/repair failure in timeliness, items, charge”, and “Nonconforming quality of goods/merchandise”. In addition, because the RPN for the failure mode of “Unable to find first-line server in the sales floor” is 23.27, which is also close to the Q3. It also needs some preventive actions in advance. Therefore, these seven failure modes represent the most critical failure modes in the T-store. A further analysis regarding to the effects and possible causes for each of the seven most critical failure modes was also provided in Table 2. Thus, the preventive actions for these failure modes from occurring should be the top focus in the service design stage of the Tstore. In the mean time, the service recovery strategy and actions regarding to these failure modes should also attain the most attention and should be planned in advance in order to restore the service, immediately, if they do occur. [take in Table 2]

7. CONCLUSION A Service failure occurs when customers’ expectations are not met. It is very important for the service designer to identify the potential service failures and take the required action in 8

advance to prevent the failure from occurring. And because of the limited resource, the service designer should prioritize the potential service failure modes in order to take the preventive actions before the service is delivered. In addition, the service blueprint is a flow chart that isolates potential fail points in a service process. It facilitates problem solving and creative thinking by identifying potential points of failure and highlighting opportunities to enhance customers’ perceptions of the service. This paper combined the service blueprint and the failure criticality analysis in the service design stage to ensure that the service system can prevent the critical failures from occurring and reduce the risk of service failures. An example regarding to a hypermarket store was used to demonstrate the proposed approach. The results show that the most potential failure modes in the selected chain hypermarket example are: “Unstable supply of goods/merchandise”, “Air-conditioning malfunction”, “No goods/merchandise on designated shelf of the sales floor”, “Slowness of cashier speed”, and “Warranty failure in timeliness, items, charge”, “Nonconforming quality of goods/merchandise”, and “Unable to find first-line server in the sales floor”. The effects and possible causes for each of the most critical failure modes are also provided. Thus, the preventive action for these failure modes from occurring should be the top focus in the service design stage of the T-store. A further analysis regarding to the failure effects and the possible causes for these five failure modes is also provided. The research provides an approach that assists the service designer in understanding the potential service failure modes as well as knowing how and where to take the preventive actions for its service system. The results would not only assist the hypermarket service company to ensure its quality assurance of the service system, it can also provide other service industries an approach to arriving ideal service design by combining the service blueprint and the failure analysis.

ACKNOWLEDGEMENT The author gratefully acknowledges the National Science Council, Taiwan, for the sponsorship in this research under the grant (NSC 94-2213-E-390-001). I would also appreciate Eric I-Chen Lin, store manager of the T-store, for his kind assistance in this research.

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Failure Modes and Effects Analysis

Service Blueprint Review the service process

Determine potential failure modes

List potential effects of each failure mode Use schematics and flowcharts to identify components And relations among components

Identify operational and environmental stresses that affect the system

Determine the causes of each failure

List current control process Assign an occurrence rating for each failure mode

Assign a detection rating for each failure mode and effect

Calculate Risk Priority Number (RPN) for each effect

Design / Redesign actions

Prioritize failure modes for design action

Take actions to eliminate or reduce the high risk failure modes in design stage to ensure service design performance

Figure 1. Proposed Failure-Free Service Design Model

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Assign a severity rating for each effect

Customer arrival

Insufficient parking space F

Procurement/ Purchase

W

Forecasting error of goods F

Get shopping cart

Shopping cart malfunction F

Unstable supply of goods

Incoming goods/ merchandise activity

Air conditioning malfunction Escalator malfunction

Enter sales floor F

Tardiness of incoming goods F

Incoming inspection failure

Emergency alarm failure Inappropriate arrangement of sales floor

Choose goods/

Nonconforming quality of goods/merchandise

merchandise

No goods/merchandise on sales shelf F

Wrong location of warehousing goods

F

Unable to find first-line server

W

Replenish goods/ merchandise to sales shelf

Bad attitude of first-line server

Weigh pounds

Inconsistency between actual and book inventory

Goods/ merchandise Inventory

Weigh & stick price tag

Wrong replenishment of goods in sales shelf

Wrong price tag F Price tag not stick well

Yes

Yes No

F

Choose more goods

Symbolic Notation： ：

No W

F F

Slowness of cashier speed

Fail point

Bad attitude of cashier server

Cashier

Wrong cashier amount of money

Decision point Leave F

Inappropriate complaints adjustments

Customer wait W

Post-Service

Inappropriate returned/refund policy Warranty failure in time, items, charge

Front office activities (Seen by customers)

Back office activities (Not seen by customers)

Line of Visibility

Figure 2. Service Blueprint for the Hypermarket Example

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Table 1. Failure Analysis in the Hypermarket Example SubSystem

Service Facility

SubProcess/ Activity

Potential Failure Mode

Sales Floor Facility

Insufficient parking space Air-conditioning malfunction Escalator malfunction Shopping cart malfunction/damage/ impair

Sales Floor Security Sales Floor

Emergency, fire, and security alarm failure Inappropriate streamline arrangement of sales floor

Severity Rating (1—5) 2.93

Occurrence Rating (1—5) 2.42

Detection Rating (1—5) 3.01

Risk Priority Number (RPN)

3.10

2.65

3.09

25.38*

2.58

2.00

2.77

14.29

2.40

2.01

3.03

14.62

2.85

1.91

3.01

16.38

3.09

2.48

2.79

21.38

3.54

3.00

2.57

27.29*

2.83

2.76

2.89

22.57

2.35

2.35

3.01

16.62

2.48

2.19

2.93

15.91

2.32

2.18

2.84

14.36

2.51

2.13

2.99

15.99

3.07

2.64

2.94

23.83*

3.29

2.67

2.65

23.28*

2.81

2.76

3.00

23.27*

2.84

2.45

3.10

21.57

2.68

2.50

2.78

18.63

2.94

2.74

2.94

23.68*

2.96

2.51

2.87

21.32

2.80

2.35

2.85

18.75

3.46

2.15

2.74

20.38

3.05

2.47

2.91

21.92

2.89

2.65

3.05

23.36*

21.34

Surroundings

Prior-Service

Incoming Goods/ Merchandis e Activity

Warehousing

and Inventory Activity

In-Service

Customer Choose/ Purchase Flow

Cashier Flow

Post-Service

Post-Sale Activity

Warranty

Unstable supply of goods/merchandise Tardiness of incoming goods/merchandise Incoming inspection failure of goods/merchandise Forecasting error of goods/merchandise Inconsistency between actual and book inventories Wrong location of warehousing goods/merchandise No goods/merchandise on designated shelf of the sales floor Nonconforming quality of goods/merchandise Unable to find first-line server in the sales floor Bad service attitude of first-line server Wrong price tag / price tag missing Slowness of cashier speed Bad attitude of cashier server Wrong cashier amount of money Inappropriate complaints/liability adjustments Inappropriate returned/refund policy Warranty/repair failure in timeliness, items, charge

* : the most critical failure modes

15

Table 2. Effects and Causes Analysis for the Seven Most Critical Failure Modes Criticality Priority 1

Failure Mode

Effects

Unstable supply of goods/merchandise

*Shortage of goods/merchandise *Lost sales *Decreasing customer loyalty *Customer complaints *Complicating job allocation replenishment activity *Adverse goodwill of store

2

Air-conditioning malfunction

*Deteriorate or spoilage foods *Customer complaints *Customers run away

3

No goods / merchandise on designated shelf of the sales floor

*Lost sales *customers can not find the goods *customer complaints*

4

Slowness of cashier speed

*Increasing customer waiting time *Customer impatient *customer complaints *Customers run away

5

Warranty / repair failure in timeliness,

*Increasing customer costs *Adverse goodwill of store *Lost customers

items, charge

6

Nonconforming quality of goods / merchandise

*Affect food safety *Against regulations/ Be fined *Facing lawsuit *Adverse goodwill of store *Increasing discard/scrap costs

7

Unable to find first-line server in the sales floor

*Lost sales *customer complaints

16

Possible Causes *Poor supplier evaluation and selection *Inappropriate supplier relationship management *Insufficient inventory of suppliers and *Inadequate marketing research *Lack of upward communication *Insufficient customer relationship focus *Failure to match supply and demand *Poor maintenance of air-conditioning *Aged air-conditioning *Fail to adjust the sales floor temperature based on number of customers in the sales floor *Poor electric power design *Insufficient replenishment of goods/merchandise in sales shelf *POS system failure *Goods/merchandise in wrong shelf *Unclear or wrong tag of goods/ merchandise *Failure to match supply and demand *Inadequate horizontal communication *Over promising in advertising *Mistakes in cashier system *Bar-code system failure *Deficiencies in human resource policies such as recruitment, training *Poor employee-job fit *Failure to plan number of cashiers that reflect peaks and valleys of demand *wrong price tag or price tag missing *Ineffective communication with customers *Poor design of warranty process *Poor management of maintenance/ repair contractors *Lack of empowerment *Over promising *Poor supplier evaluation and selection *Inspection failure for incoming goods/merchandise *Poor warehousing/storage conditions/activities *Ineffective examination/ checkout on goods/merchandise *Poor job allocation of employees *Failure to match supply and demand *Lack of empowerment *Dawdled employees