Case Study Chapter 1

OPERATIONS MANAGEMENT
Case study – Chapter 1

Hollywood Group
Members
Nguyễn Kim Thạch
Đinh Nguyễn Hoài Phương
Trần Thị Thu Hiền
Đặng Khánh Linh
Lê Đình Khanh
CASE ANSWERS
QUESTION 1: Draw and describe the customer benefit package that Zappos
provides. Identify and describe one primary value creation, one support, and
one general management process you might encounter at Zappos.
Peripheral Goods
Handbags
Electronics
Apparel
Primary Good
Sunglasses
365 day Shoes
return
policy
Watches
Free
Shipping
Customers
surprise
Call
upgrades
center
Peripheral Services Peripheral Goods

 Primary Value Creation:
o Focused on delivering primary goods (Shoes), such as delivering and
free shipping a customer’s order.
 Support processes:
o This includes an order entry, purchasing, warehouse management,
inventory, shipping, and e-commerce system.
o It tracks inventory so closely that customers can check online how
many pairs of size 12 Clarks Desert boots are available in the color
sand.
 General Management Processes:
o For employees, it automatically sends daily e-mail reminders to call a
customer back, coordinates the warehouse robot system, and
produces reports that can specifically assess the impact on margins of
putting a particular item on sale.
QUESTION 2: Explain the role of service encounters and service

management skills at Zappos. How does Zappos create superior customer
experiences?
ANSWERS 2:
* Role of service encounters and service management skills at Zappos.
- Service encounters skill:
+ They're trained to encourage callers to order more than one size or color.
+ They refer shoppers to competitors when a product is out of stock.
- Service management skill:
+ They use a sophisticated computer system known as Genghis to manage its
operations.
* Zappos creates superior customer experiences by:
- It provides free shipping in both directions on all purchases.
- It often gives customers surprise upgrades for faster shipping.
- It has a 365-day return policy.
QUESTION 3: Describe how any three of the OM activities in the box “What
Do Operations Managers Do?” impact the management of both the goods that
Zappos sells and the services that it provides.  
 Technology selection: Zappos adopted a highly sophisticated computer

system called Genghis. Gengis manages the operations of the company. It
manages the following key areas of operations: order entry, warehouse
management, e-commerce system, and inventory (Zappos.com). If a
customer wants a certain size of a particular shoe, he can be able to check its
availability and the total number of shoes in the store of that size and their
colors.
The system also reminds employees to call back customers and also
coordinates reboot system of the warehouse. The management gets reports on
profit contribution of selling a certain product in their online store. This way,
the management can be able to assess whether it’s profitable to sell a certain
product or not before stocking.
 OM Inventory management: Zappos it was with fulfillment out of their

hands, faced with problems of control over service quality and began to hold
inventory while suppliers became more comfortable with the idea of online
retail. They continued to adapt this internal fulfillment model. By 2003, all
shipments were made from their own inventory. Additionally, their
inventory management system has developed into an extremely automated
process, allowing them to more easily sacle the company up to the size it is
to day.
 Resourcess and capacity management: Democratic or participative

management style is suitable for employee motivation because they feel
appreciated and part of the organization.
They also feel that they own the final decision reached, and this inspires them
to cooperate towards the realization of what has been decided. This type of
management style is best when working as a team. It is the best where quality
of what will be produced is more essential than speed.
Zappos developed a work environment where employees work as a team all

committed to offering delightful service to customers. One of the decisions
Tony, together with his employees, made at Zappos was to adopt casual
dressing style (DiJulius, 2008). Also, during the early days of the company,
the whole team collectively developed organizational culture and key values.
The company invests so much on training new employees.
QUESTION 4: Explain how this case illustrates each of the seven major
differences between goods-producing and service-providing businesses.
 FACILITY LAYOUT AND DESIGN: The customer can complain about
the quality of service to the company, in case of Zappos, Minnesota
customer complained that her boots had begun leaking after almost a year of
use.
 PROCESS DESIGN: To prepare for the unpredictable demand of the
customers, the company's leaders have prepared the knowledge and skills for
employees in customer service and sales. For Zappos, CEO Tony Hsieh
never outsourced his call center because he considers the function too
important; They're trained to encourage callers to order more than one size
or color, because shipping is free in both directions, and to refer shoppers to
competitors when a product is out of stock.
 SERVICE ENCOUNTER DESIGN: The company used a sophisticated
system to manage its operations, Customer can check online, interact easily
and know their demand, beside it can support to remind the employee to take
care the customer and produces reports.
 FACILITY LOCATION: For the sourcing the goods, the company find the
location nearly major manufacturer . For the customer service, the company
choose the area have abundant call center workers to easily make a call for
the customer.
 INVENTORY: capacity of the goods of Zappos nearly manufacturer,
shipping and customer service always upgraded & improved.
 THE GOODS ARE VISIBLE AND THE SERVICE IS INVISIBLE:
Zappos is the e-commerce company, selling products about shoes, handbags,
apparel, watches… and shipping the goods to the customer at their home.
 TECHNOLOGY: Zappos uses a sophisticated computer system known as
Genghis to manage its operations. This includes an order entry, purchasing,
warehouse management, inventory, shipping, and e-commerce system.

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OPERATIONS MANAGEMENT

Case study – Chapter 1

Peripheral Services Peripheral Goods

QUESTION 2: Explain the role of service encounters and service

 Technology selection: Zappos adopted a highly sophisticated computer

 OM Inventory management: Zappos it was with fulfillment out of their

 Resourcess and capacity management: Democratic or participative

Zappos developed a work environment where employees work as a team all

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