Case Study – Operations Management
1. 0 Introduction
Operations direction is defined as “the activity of pull offing the resources which produce and present merchandises and services” ( Slack et al. 2010 p4 ) . This encompasses the full activity carried out within the organisation. With increasing force per unit area on organisations to present optimally at reduced cost. the function of operations has been transformed from that of scheme implementer to one of scheme driver. Operationss scheme looks at the forms of strategic determinations and actions in a command to put the functions. aims and activities of the operations ( Slack et al. 2010 ) . An apprehension of these schemes is of import in guaranting that organisations are good cognizant of the demands needed to run into the corporate aims set about by direction.
The study looks at a instance survey of Concept design services ( CDS ) ; a merchandise based fabrication company looking to interrupt into service operations. It seeks to place current scheme types evidenced in the organisation and the function operations play in the execution of this schemes. Besides considered is the relationship between the nucleus maps foregrounding possible struggles. current patterns and sensed strengths and failings. Issues such as servitization and growing schemes are considered in relation to the companies push for development in line with its desire to go a service supplier. An analysis of the impact it will hold on the company’s fabrication and service sections is besides considered. Finally. recommendations that will guarantee operations develop with the new growing program is presented to direction.
2. 0 STRATEGIES IN CONCEPT DESIGN
Within CDS. there is grounds of an merger of schemes. With a variegation of the company’s portfolio. the corporate scheme of the organisation had to be reflecting the altering scenario of the concern environment. To place the different scheme types within CDS. there is foremost a demand to understand what scheme is.
Scheme can be defined has “the entire form of determinations and actions that place the organisation in its environment and that are intended to accomplish its long-run goals” ( Slack et al. 2010 P79 ) . Strategy has besides been described as the long term way an organisation intends to travel ( Johnson et al. 2011 ) . In accomplishing an over curving scheme. three degrees of schemes have to be considered ; corporate degree. concern degree and operational degree. The preparation of these schemes will find how the different organisational schemes will interact with one another ( Zanon et al. 2013 )
While corporate degree scheme trades with the overall intent and range of an organisation such as where to turn up the concern. what type of concern to prosecute in ; concern degree scheme is more concerned with the assorted ways the concern can vie successfully against other rivals in its section. Functional scheme looks at ways in which single maps can lend to the overall aim of the organisation.
Operationss scheme is concerned with the strategic determination and actions that set functions. aims and activities of the operations ( Slack et al. 2010 ) . It focuses more on how the different parts of the organisation can present on set schemes through the direction of resources. procedures and people. Operations strategy’s primary function is to implement scheme. but with uninterrupted concern growing. operations is expected to back up and drive the organisations scheme. This will see it lending to the competitory advantage of the house ( Slack et al. 2010 ) . This is competently captured in Hayes and wheelers four phase theoretical account of operations part.
Figure 1. Hayes and Wheelwrights four-stage theoretical account of operations part. Adapted from Slack et Al. 2010
Slack et Al. ( 2010 ) . identified four different position to operations scheme ; Top-down. bottom up. market demand position and resource based position. He noted though that all four positions are required for proper apprehension of operations scheme.
Although the schemes employed by organisations may differ. it remains of import to accommodate the demands of the market with operational resources ( Slack and Lewis 2008 ) . Hence. it is of import to analyze the procedure through which market demands are aligned with operational worlds. thereby guaranting that operation can present what it is being asked of them and that this alliance will digest over clip ( Zanon et al. 2013 ) .
Evidenced in CDS operations is the execution of two of the identified positions ; Market demand and Operations resource position.
2. 1MARKET REQUIREMENT PERSPECTIVE ANALYSIS
A market demand position focuses on what market place requires of operations ( Slack et al. 2010 ) . Its focal point is non merely on the industry. but it considers where the organisation intends to vie every bit good as the nature of competition ( Lowson 2002 ) . Hill ( 1985 ) . suggested that to win orders in the market topographic point. organisations operations scheme and the selling scheme need to be in sync. CDS Marketing map identified a tendency that seems to hold worked for retail merchants in the cosmetic merchandise industry. They realised the importance of manner tendencies and its entreaty to people. This market demand led to the creative activity of a whole new industry.
The demand for premium. high quality family merchandise characterised by the many different coloring materials scope became a market measure uping standards that drove marketing’s scheme. This scheme was in line with the overall organisations scheme that saw a displacement in the focal point of its production of industrial injection-mould plastics to popular family points. In a command to run into markets demand. supply services had to upscale its machineries by securing extra big injection modeling machines to provide for the quickly turning volume of merchandises. Besides. the design squad had to be one measure in front of the competition by guaranting that they had a scope of merchandises that will maintain clients engaged. Hence. the instance survey has shown that Cadmiums have been able to develop its operations scheme by leting operations run into the public presentation standards required by the market ( Slack et al. 2004 ) .
2. 2OPERATIONS RESOURCE PERSPECTIVE ANALYSIS
In the instance of operation resource position or resource based position ( RBV ) . focal point is on the organisations operation resources. competences and capablenesss ( Lowson 2002 ) . It focuses on the cardinal strengths of the organisation. looking at internal resources that can non be purchased externally. therefore supplying the house with competitory advantage through superior public presentation ( Clulow et al. 2007 ; Fahey and Smithee 1999 ; Barney 1991 ) . With operations-led. scheme is developed through sound apprehension of current operational capablenesss and an analysis of how it can be developed in the hereafter ( Slack et al. 2004 ) .
An apprehension of the organisations strength will so act upon the determination as to which markets should be considered for the deployment of current or future capablenesss. and which rivals can present a menace or can be taken advantage of ( Hayes et al. 2005 ) . Cadmiums have clearly shown the strength of their operations over the old ages. Early experience gained from the fabrication of industrial merchandises have set them stat mis in front of competition. This is evidenced in the quality of their merchandise which drove gross revenues to enter highs and resulted in retail mercantile establishments subscribing up for the organisations merchandise.
The company prides itself on its proficient abilities which has been achieved non merely from old ages of experience but by puting in machineries. Cadmiums have acquired latest preciseness equipment’s with the best quality moulds available. The proficient cognition of the employees besides provides the company a alone advantage. Another country of operations that provides competitory advantage for the organisation is its design expertness. Cadmiums have in its employ professionally respected interior decorators with the know-how of interpreting hard proficient designs into manufacturable salable merchandises. This has provided the organisation purchase when covering with design houses. The company is clearly leveraging on its operations resources. competences and capablenesss to obtain competitory advantage.
3. 0AN ANALYSIS OF THE RELATIONSHIP BETWEEN THE CORE FUNCTIONS
Within the context of any organisation. there are 3 maps that must be for the organisation to recognize its ends of meeting clients need. They are ;
1 ) The selling map
2 ) The product/service development map
3 ) The operations map
The selling map which besides comprises of the gross revenues unit is chiefly responsible for pass oning what product/services the organisation has to offer to consumers in a command to bring forth customers’ petitions for the service. The merchandise development functions’ duty is to make new and modified merchandises and services in order to bring forth future client petition for services. And in conclusion. the operations map is responsible for carry throughing clients request for service through the production and bringing of merchandises and services ( Slack et al. 2010 ) .
The ability to efficaciously work with other maps in the organisation is a cardinal duty for the operation map ( Slack et al. 2010 ; Zanon et Al. 2013 ) . Research as shown that in most organisations. different maps within the organisation normally employ their ain schemes to help them in recognizing their functional aims. This unluckily is a footing for corporate misinterpretation. inter-functional differences and competition ( Hill 2005 ) . While the aim of the operations map remains the production of goods and services whilst pull offing resources. it has to besides pull off its relationship with other maps of the organisation. Due to the nature of its strategic importance. the operations map normally has struggles with other maps.
In finding an organisations strategic nonsubjective. operations and selling normally follow different attacks. While marketing tends to underscore improved service characteristics that appeal to clients. operations focus more on efficiency and cost control ( Nie and Young 1997 ) . Erickson ( 2010 ) . stated that the chief ground operations and selling maps in an organisation have struggle is due to their perceived differing aims. Largely. tradeoffs are responsible for the struggles between these maps as they attempt to equilibrate viing precedences ( Tang 2010 ) .
It is hence of import that organisations manage tradeoffs in a mode that will guarantee that they don’t compromise the over-arching organisational scheme for deriving competitory advantage. Zanon et Al. ( 2013 ) in their research identified certain paradigm that organisations needed to implement for the successful coaction of the two maps. They argued that there is a demand for alliance between market demands and operational worlds. The aim here is to fulfill market demands while utilizing appropriate operational resources and jointly developing those resources so that the operations section can get new capablenesss and supply the house with sustainable competitory advantage.
The selling map at Cadmiums have been able to efficaciously market/communicate the value of their merchandises to the market. this is evidenced in the phenomenal growing of the company. Through invention. extended advertizement – both on Television and in illustrated magazines. they have been able to drive gross revenues of CDS merchandises. The map have successfully carved a niche market for the organisation through the portraiture of its merchandises has been “classy” and for the upwards nomadic person. Product distinction. design partnership and extended research. combined with a selling director with tonss of experience and liberty working with an experient. technically sharp fabrication section has resulted in the success of the CDS merchandises. The map has besides been able to market itself and the value it can give to plan houses in Europe. Through its selling activities. CDS is traveling from being merely a maker of trade goods to a supplier of services.
Despite the advancement that have been recorded by CDS. there still seems to be a misalignment between the selling and operation maps. With the success of CDS merchandises and the uninterrupted invention thrust of the organisation. it would look that the selling map is neglecting to admit the restrictions of the company’s capacity. Cadmiums have a job with the storage of finished goods and this has impacted on the bringing of merchandise handiness from supply services. They are presently fighting to guarantee that they meet SKU stocking degrees.
Another job has been the issue of proper planning and effectual prediction by the selling squad. The seasonal nature of CDS merchandises requires that the selling map carries out comprehensive prediction to seek and anticipate demand. Currently. hapless prediction by the map is bing the organisation. Supply services have to cover invariably with issues of use. efficiency and turning scarp rates ; this is as a consequence of ad-hoc petitions for pressing production to run into with un-planned demand. To minimise wastage and guarantee proper alliance. selling and operations will hold to web and collaborate better ( Johansen and Riis 2005 ) to guarantee that the over corporate aims are met.
New PRODUCT DEVELOPMENT ( NPD )
“NPD is defined as the transmutation of a market chance into a merchandise available for sale. through a set of activities executed in a logical manner. consecutive and concurrently” ( Almeida and Miguel 2007 ) . It allows organisations to derive competitory advantage. pull new clients. retain bing clients. and beef up their ties with the distribution webs ( Kotler and Keller 2006 ) . Organizations that successfully introduce new merchandises do so through a well-developed procedure that leads from originative designs to a successful launch of the merchandise by concentrating on fulfilling specific client demands ( Chandra and Neelankavil 2008 ) . The attainment of this undertaking will necessitate NPD to join forces closely with both operations and selling. NPD. in comparing to other maps is normally characterised by a high grade of uncertainness. hazard and high cost to do alterations to initial determinations made ( Slack et al. 2010 ) .
For CDS. NPD is responsible for transforming designs from marketing into feasible design molds. Operationss so guarantee that the merchandises from the mold are standardized and tested suitably and expeditiously. The molds so have to be tested on the production machines. A great trade of inter-functional coaction is required to guarantee that proper programming is in topographic point to enable NDP transport out proving without interrupting production. Geting this right is easier said. The world is that there is normally a hold in acquiring the molds from the providers in South Korea. This will so ensue in a demand for an pressing trial of the molds. That said. CDSs’ NPD map are technically sound. They have managed to construct for themselves a repute of being able to get the better of jobs with designs irrespective of its nature. The NPD map contributes to the organisations alone operations resource.
4. 0 AN Evaluation OF THE IMPACT OF DEVELOPMENT ON THE OPERATION OF THE MANUFACTURING AND SERVICE DEPARTMENTS
Cadmiums like most fabrication organisations are get downing to appreciate the intrinsic value of following servitization as a pattern. Servitization have been described as the procedure of transforming makers to vie through product-service systems instead than merchandises entirely ( Baines et al. 2007 ) . The principle for this passage from ‘purely product’ to ‘product- service’ or ‘purely service’ can be viewed from three positions ( Oliva and Kallenberg 2003 ) . They identified the grounds as ; First. economic. Research has shown that significant gross can be generated from merchandises with a long life rhythm ; besides services in general have higher borders than merchandises and services besides provides a more stable beginning of gross as they are immune to the economic rhythms that drive investing and equipment purchases. Second. there is force per unit area on organisations from clients demanding more services.
This has led to houses following a narrow definition of nucleus competences while increasing their dependance on engineering to assist in their command to specialise. Last. it is viewed as supplying competitory advantage. The less seeable a service is. and the more labour dependant it gets. the more the chance of imitation reduces ( Oliva and Kallenberg 2003 ) . Fabrication has long moved beyond production entirely and a combination of both merchandises and service concern theoretical account are now by and large accepted as playing a cardinal function in the success of any modern concern ( Baines et al. 2014 ) . Companies that have adopted the construct of servitization will likely non follow the product-service categorization. but will alternatively seek to separate on the footing of the value proposition with their clients ( Baines and Lightfoot 2013 ) . This is the instance in CDS. where the company hold had to follow differing service theoretical account while covering with the design houses and retail merchant service market.
While the design houses have adopted a proposition that sees both companies working together – that is the client wants the company to work with them ( Baines et al. 2014 ) . the retail merchants on the other manus. are happy to go forth the direction of the full operation to CDS. Baines et Al. ( 2014 ) have identified this differing signifiers of proposition has been ‘base’ . ‘intermediate’ and ‘advanced services’ . The relationship between the retail merchant services market and CDS can be classified as advanced. This classification of product-service offering is centred on the thought that due to the competences of the company. care and workability of the operations should be managed by the supplier of the service. A characteristic of this type of offering includes client support understandings. hazard and wages sharing contract. and gross through usage contact ( Baines and Lightfoot 2013 ) .
To run into with demand. and guarantee that customer’s demands are met in footings of merchandise handiness. CDS will hold to increase its production lines and increase keeping capacity. Storage installations will hold to be located closer to the location of their clients. Localised installations will guarantee that shop refilling lead times are reduced. CDS will besides hold to put in ICT. Puting up an endeavor resource planning ( ERP ) system will assist link the shops database with that of CDS. That manner. they can easy track stock list degrees and are able to react in a proactive mode. Besides. Oliva and Kallenberg ( 2003 ) argued that a good pattern will be to put up a new service section whose focal point will be to drive and better public presentation aims.
The consolidation of the service offered is normally accompanied by a strong enterprise to better the efficiency. quality and bringing clip of the services provided. and the creative activity of extra services to supplement the service offering. The consolidation of services besides comes with the development of a monitoring system to measure the effectivity and efficiency of the service bringing. This monitoring system allows directors realize the size of the service market and history for services’ part to the firm’s operations ( Oliva and Kallenberg 2003 ) . Internally. these alterations create the transparence of Numberss needed to acquire a clear sense of way and to supervise the success or failure of executed alterations ( Oliva and Kallenberg 2003 ) . Externally. the betterment of quality will set up CDS as a reputable service supplier among its clients.
CDS has seen steady and uninterrupted growing over the old ages. albeit its focal point had been centred on a individual merchandise type. With the recent way of the organisation. there are existent concerns environing it rapid growing and its variegation into services. Southard and Swenseth ( 2003 ) identified certain issues that germinating organisations encounter due to rapid growing. they include bottle-necks. back-orders. and decreased net incomes despite increased gross revenues. Some of these issues are evidenced in CDS. The rapid growing of the organisation has resulted in capacity related issues. There is one in every 12 opportunities of a merchandise non being available. uninterrupted scheduling break due to demand exceling supply and the popularity of its merchandise and broad credence normally leads to stock outs. The fabrication map seems to be stretched to the bound with support services every bit fighting. It would look that the organisation is presently unprepared for the alterations.
5. 0RECOMMENDATION TO MANAGEMENT
In line with the company’s aim for growing. it has become imperative to turn to the operational issues that can impede the organisations growing scheme. Using the product/service lifecycle to analyze the organisations current operations. it is obvious that the passage from being a strictly merchandise based fabricating company to a product-service based organisation is still in the babyhood province. This is characterised by uncertainness as customer’s demands are non good understood. Hence. operations direction will be required to develop flexibleness to get by with any alterations and be able to give the product/service public presentation that will guarantee quality is maintained ( Slack et al. 2010 ) . Other issues to be considered by direction includes ; the issue of capacity direction.
To run into with the demand of the market and its growing scheme. CDS will be required to acquire more warehouses and keep more stock lists. The plastic concern is clearly one of volume ; hence CDS has to guarantee that it maintains its position of been a dependable provider. It besides has to efficaciously operationalize it marketing scheme. The company is presently plagued by hapless prediction and planning. There is a demand to upscale the competences of the gross revenues representatives. This will enable them garner appropriate informations that can so be fed into the organisations planning to assist cut down scheduling related issues. stock outs and breaks. Besides required is an alliance between the schemes of the nucleus maps. Regular concern meetings. where issues associating to each map get tabled will assist construct better apprehension among the different maps.
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