Operations Management of Energy Station

Z Service Station Operation Analysis

Executive summary

In this paper we will find the application of operation management in the flow of service of a Z Energy Station, the aim is to analyze how they structure their supply customer operation and the most important will be the incidence of Lean Manufacturing model in their chain supply. However, behind of this, there are numerous processes. For instance, in a Z service station, you can see around six pumps and almost 20 hoses approximately, which are able to pump between 300 and 350,000 liters per month of fuel.

1.    Introduction

The beginning of Z service station comes when the giant Shell decided to sell its New Zealand retail assets in 2001. Cato Partners, who was in charge of reorganizing the products and letter Z comes from the initial of the second word of the country.

Nowadays this company manage the main market of fossil fuels in New Zealand and looking forward to investing in renewable and sustainable energy. Likewise, they have worked with others participants of the industry such oil refineries, pipelines, trailers, transportation, fleets and storage infrastructure, which has been a brilliant labour especially for the development of the country and the relevant impact in the population (Z Service Station, 2018).

2.    The balance between Customer Service and Resources utilization

Even though Z Station is not the best one accepted in New Zealand according to Canstar Blue (Canstar , 2016), is the second one overall. This company (CANSTAR BLUE) rates customer satisfaction across a wide range of products and services in this case, the most representatives services stations among the country, with the general purpose of helping customers make better purchase decisions. In this sample, they compared the value of money, service, the range of other items, appearance and cleanliness, facilities and overall satisfaction.

In addition, Z station was the third one in terms of customer services, all of this based on a formal survey responded from 2,500 people across a broad cross-section of the New Zealand population. They only included results from people who have used services in Z and the factors mentioned within are very interesting.

Surprisingly, most of New Zealand drivers always go to the same service station and in spite of they look for quality and good facilities, one key factor is having an attendant to help them. This makes the process faster and easier instead of doing it by them. 

2.1 Capacity Management

In this case, the observation was focused in two services station, one, was Z Newton Service Station and the other one, was Z Ponsoby Station, whereby result essential to mention the philosophy of Z Service Station, which is based on full-service instead of self-service. It was noticed that in Z Newton and Z Ponsoby Station there is always a staff willing to help drivers to fill up their tanks. This worker stays on duty from 7 am to 7 pm and during 1 hour observing the flow of customer supply the result was as following:

There are 4 pumps available to fill up and the flow of customers average are in between 3 or 4 per pump and subsequently was possible to notice that 3 of each 4 clients use the credit card as a payment method and only 1 of them uses cash. On one other hand, we could see this 75% of customers who use their own card, spend 6 minutes and 35 seconds approximately and in the other hand; it was possible evidence that the other 25% (1 client) took 9 minutes completing the process.

2.2 General Process of Pumping

1. Come into the Service Station and park in front of the available pump
2. Get out from the car and select the payment method

At this point, either can pay at the pump or can pre-pay inside the shop

3. Remove the gas cap from the vehicle
4. Remove the nozzle and insert it securely into the gas tank opening
5. Select sort of gas
6. Make your choice by pressing the corresponding button on the pump
7. Press start

Once you are pumping gas

8. Pull the trigger on the pump to activate the gasoline
9. Consider cutting off the gas before completely filling the thank
10. Remove and replace the nozzle
11. Recap your gas tank
12. Accept or decline a receipt

2.3 High–Level Flowchart for an Filling Gas Process in Z Service Station

Resource: own design

2.4  Detailed Flowchart

See addendum No. 1.

3.    Analysis of Flowchart

In this flowchart, we can see the whole process mentioned previously in detail, including those two payment options: using a credit card in the pump and cash in the shop. Both with its respective times in each step. alike, we notice the frequency of use each payment system, concluding that undoubtedly almost 85% of people rather use a credit card. Obviously, this scenario based on medium demand periods in Ponsonby Z Station that is important to clarify it due to the change of flow of customer in certain hours, especially when a large number of clients come over and generate high demand.

Firstly, Lean Operating Model in simples term, is how to enhance the flow of customer supply in an specific process (Ferney & Sparks, 2009), in this case we focus at the moment when a client comes to the gas station, park his car, fill the tank, pay for the service and leave the place. This operational process sounds quite simple but it has a huge implication in the financial performance of the company. Stations such as Z Newton where it observed as well, we noticed that they lack pay at pump system, resulting in uncomfortable for those customers who rather faster service. However, Z station to mitigate this issue, it uses the additional staff to make the process more efficient and cozier.

4.    Conclusions and Recommendation

We have realized that customers usually prefer to use the same service station based on their conveniences such as location, prices, facilities etc., But as a result of this observation in Z Newton station, they should definitely work hard on improving the facilities, there are a large number of downsides when you as a client, come into and look around, noticing such an old infrastructure and no much cleanliness so the key is to restore the place overall, it is evident that try to enlarge the station would be complicated and not profitable due to the location, which is almost in the middle of the city But, just to painting, restoring as well as restocking the products in the shop would be enough to stand out from the competition (Dennis, 2015).

Z Station has demonstrated its intention of locating their stations with the necessary driver demand for fuel, which is very important to become more profitable. As the others gas stations in New Zealand, Z Station offers a range of fuel products such as petrol, diesel, liquid petroleum gas and now even electricity. In addition, they also offer a large number of products around the food market with its food store attached to the gas sales. They make money by selling:

• Pre-made food (e.g. pizza and hot dogs)
• Beverages (e.g. such as coffees, teas and sodas)
• Snacks (e.g. ice cream, candy and chips)
• Grocery staples (e.g. milk, bread and eggs)
• Basic automotive supplies (e.g. windshield washer fluid and tire pressure gauges)
• Beer and wine (if permitted by law)
• Tobacco products and lottery tickets

Nevertheless, Z station has implemented a new system using the Z App, it helps substantially to the customers and one of the greater benefits is the Fastlane system, which enable users past through the pump fast by using an specific aisle with a camera that recognizes the user through the plate number and these no need use the credit card because by using their funds booked in the Z App previously they will be able to fill up the tank and the payment will be registered at the end automatically (Anderson, Anderson, & Geoffrey, 2013).

The development of this payment method improves substantially the customer service and undoubtedly this will enhance the quality process as well, in contrast it has also some implications which are essential to the company ought to keep in mind, for example, this card has an extra fee for using and there are only 3 stations with this system which is yet a trial, nonetheless Z shows us the need to go always further by strengthening the chain customer supply with new technology.

5.    Word References

• Z Service Station. (2018, October 15). About Z. Retrieved October 28, 2018 from Z: https://z.co.nz/about-z/
• Canstar . (2016, September 29). Service Stations. Retrieved October 2018, 25 from Canstar Blue : https://www.canstarblue.co.nz/vehicles/service-stations/
• Ferney, J., & Sparks, L. (2009). Part 1. Concepts in retail logistics and supply chain management – Chapter 1. Retail logistics: changes and challenges. London, United Kingdom: Kogan Page Ltd.
• Dennis, P. (2015). Lean Production Simplified (Vol. 2). Beaverton, United States: Ringgold Inc.
• Anderson, M. A., Anderson, D., & Geoffrey, D. (2013). Operation Management for Dummies . New Jersey, United States: Jhon Wiley & Sons, Inc.

Arrive into the Z Service

Place the car in front of an available pump

15 Sec

   Select the payment method

10 sec

No

Credit Card?

No

No

Cash

Slide your card

Yes

Yes

5 min

1 min

1 min

• Remove gas cap

• Remove nozzle and insert it
• Select type of gas
• Fill up the tank
• Remove and replace the nozzle

Follow the machine Instructions

Yes

Go to the Shop

1 min

Order your request

No

Yes

Accept or Decline Receipt

1 min

No

Pay

30 sec

Call for assistant

Yes

Go back car

Wait

Go home

Solve it?

No

Yes

Go home