Principles of Operation ManagementName, learner number, the unit number, and your Centre name. Executive summaryThe aim of the report is to explain briefly the role and the importance of operational management in the effective and efficient production of goods or services. It also illustrates the needs to produce n time, at a relevant cost, and with the right quality within the law. It explains the link between strategic planning and OM, and the three E’s (efficiency, effectiveness and economy) plan.
Moreover, it evaluates the importance of the five performance objectives that underpin operations management.IntroductionOperation Management is a process of planning, controlling, leading and organising recourses in small businesses with a main purpose of achieving company’s goals. In order to be efficient and profitable, Operation Management has to be capable of making the right decisions, and resolve problems which may occur. This management style allows managers to respond to all the factors which may influence the external or internal anticipations of the company.
Scenario“WH Smith is a major, well-known and publically-quoted book retailer and newsagent in the UK. Recently it was reported how Kate Swann, the former CEO for the last 10 years, has turned the company around from £135m losses to £106m profit in a decade”The nature of Operation ManagementThe nature of Operation Management refers to the way organisations produce goods and services. It is a transformation process of converting recourses into goods and services. The range of production involves procuring, construction, raw materials. The process is also connected with quality management, maintenance management, and production control.
OM is important for improving productivity which leads to improvement of the financial health of the organisation. It also helps for meeting customer’s competitive advantage.The need to produce goods or services on time and to cost, with the right quality and within the law Every company should look into the speed of its delivery, not because of the law side, but because every customer wants a good delivery and has a lot of expectation which is significant for the competitive advantage. The cost also plays an important part in running a business.
A company should look to reduce costs in order to ensure they are competitive compared to the other companies. According to “The Sale of Goods Act 1979” all products should be with satisfactory quality, fulfil customer’s purposes and justify their expectations, if any product does not fit it can be repaired or replaced. The suppliers and manufacturers are responsible to legal actions of damage over customer or company of unintended harms or side effect. It is very essential for companies to produce goods according to regulations. Design of the operations in WHSmith.
WHSmith PLC is the largest book and magazine retailer in the United Kingdom.” It is made of two core businesses-Travel and High Street.” (whsmithplc.co.uk) The Travel business covers 673 stores situated in railway stations, airports, workplaces, and hospitals mostly in UK.
The demand for the Travel business is mostly for food, drinks, and reading materials, because the customers are on their move. During the summer there is a passenger increasing which leads to summer peaks in sales. “The High Street business operates 615 stores with an extensive reach across the UK and a presence on nearly every significant UK high street.” (whsmithplc.co.
uk).The stores are quite bigger than in the travel business with a wide variety of products.WHSmith’s strategic plan is continuing its growth of high performance, improving its profitability and trade efficiency. The Travel business is concentrated on delivering returns to shareholders by the growth of its current outlets, ensuring new agreements, testing new formats.
The High Street strategic plan focuses on construction authority in its division, controlling value, and providing a retailing based delivery. WHSmith outsources the most of its IT functions, but there are also in-house driven System Analysts, Project Management, and Service Delivery teams liable for ensuring that the variety of supporting IT services are relevant for their objectives.They also determined new systems and new software, like Self-Scan Checkout to assure that WHSmith are on the foreground of technology development. Furthermore, Self-Scan Checkouts also helps customers buy products quickly and avoids queues. The running website offers detailed range of products such as magazines, books, electronics, PC’s, and also products for home delivery. The operational management is essential for following technology amendment.
The relationship between OM and strategic planning. Operational management concerns the current production of goods and services. It involves improving the efficiency of the business by using optimum recourses and meeting the market demand. It requires flexible and skillful planning.
Strategic planning is the process of determine organisation’s strategy, and making solutions on distributing recourses to follow this strategy or direction. It distributes the recourses as a whole. The original financial link between OM and strategic planning is the creation of the budget. OM is used to define the proper use of recourses such as facilities and equipment, whereas the strategic plan outlines the exact recourses needed for accomplishing the goals.In order to run an effective business, both operational management and strategic planning must be followed.
The difference between OM and strategic planning is the difference between how the organisation does with something and how actually it needs to be done. An operational management focuses on short-term task that needs to be done whereas the strategic plan focuses on long-term objectives and the general vision of the company.Explanation and implementation of the three E’s Implementing the 3E’s (efficiency, effectiveness and economy) model plays a very significant role in running a business. An understanding of the 3E’s idea can help managers to improve the performance of the business, and respond faster to future challenges.
It is important for the business to focus not only on profitability, but also on long term strategies. In order to accomplish the balance of the 3E’s the organisation needs to meet all the criteria such as providing good quality at a relevant price, matching the product with customer’s preferences and expectations. The efficiency relates to the right use of resources to achieve company’s goals. It is based on the inputs required to produce the outputs.
It is about the completion of the work, and also leads to maximization of the profit and shareholder’s value. The efficiency can be improved by consuming less resources but present the same amount of value, and also by reducing wasting recourses so that minimum input accomplish maximum output. WHSmith PLC is focusing on continuous improvements. Efficiency improvements planned to be made include trade improvements, more efficient distribution, and more self-service tills.
Effectiveness is based on what the company has accomplished. Effective performance covers delivery on expecting time.It is measured by setting the task clearly before the work starts and then meeting customer’s expectations. Managers are those who are responsible for meeting the criteria because working hard but not delivering the requested objective is ineffective. Furthermore, improving productivity provide better service and efficiency which leads to strategically successful organisation.
The last element of the E’s management is Economy. It covers the financial aspect of how the goals are achieved. Money plays a very significant role in running a business. It is very important to use the right recourses at a reasonable cost.
The right cost is a factor when there is an improvement of the value of the output delivered.The tension between cost minimisation and quality maximisation Operational Management is responsible of guaranteeing the cost reduction and quality maximisation. The significant provision of good quality depends on safety, sales service, customer need and satisfaction, reliability, besides the wastage, duration, and returns. The reasonability of OM consists of quality control, stock control and quality assurance.
Quality assurance ensures quality in the process of developing the product. Its purpose is to prevent future damages. Every person involved in making and developing the product is responsible for QA. Moreover, with accessibility, customer recruitment, regulation compliance, and bench marking, QA helps maximising the quality.
Quality control ensures product’s quality. Rather than prevent defects it is identifying defects in the actual product. The purpose is to correct an already existing problem on the final product. The ratio between cost and function is defined as value. Increasing the value is a consequence of improving the performance and reducing the cost, and removing the unnecessary expenditures.
“During the World War II, General Electric Co. started looking at aiming cost minimization and value maximization because of shortages of skilled labor, raw materials, and components experienced in the war aftermath. Lawrence Miles and Harry Erlicher at General Electric looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both.” (Articlesbase.
com) Difficulties in the economy are not a drawback for WHSmith’s team. They had increased the focus on the environmental efficiencies which helps cutting the operational costs.The assessment of the importance of the five performance objectives that underpin operations management Every organization should meet the five performance objectives: cost, quality, speed, dependability and flexibility. Those objectives allow the organization to measure its operation’s performance and achieve strategic goals. The cost refers to making a product for a price relevant to the market. The company has to ensure that the cost of the goods and services remains the lowest, which can be accomplished by lowering the material acquired by the company.
The quality refers to doing the things right. Good quality is very important for satisfying customers because if the product does not fit, or it does not meet customer’s expectation there is a risk of losing them. The speed relates to the time, doing things fast.The organisations should maintain the speed of the product’s delivery. The dependability mostly relates to time and quality.
It is about keeping promises to customers and suppliers. Maintaining the quality improves the dependability. The flexibility refers to matching customer’s needs despite of the changing technology and demand. Every organisation should be flexible, be able to introduce new products and services, and satisfy different tastes. A control process needs to be fulfilled to ensure that the operations run according to the plan that the firm has – for example: delivery deadlines, quality standard, budget, the required production level. Unfortunately, those factors for good control occur seldom because of disturbance or random influences which can ruin the firm’s plans.
The disturbance can be displayed by delay in the delivery of products, problems with the equipment, or staff retraction for some reasons.There are also environmental factors which can be both macro organisational operations (external factors) and micro (internal factors) such as weather conditions, governmental, competitor’s actions, etc. Most managers do not see the actual operations and they rely on information about the activities that can be found in computer print outs, goods received notes, on-screen information, etc. The process which relays on the information about past performances, and can affect future performances of the organisation is called feedback. Feedback loops, collect information about operation’s performance from the output side of the system.
This mutates future performances by rectifying the input side of the system.There are a number of elements in the feedback loop system. An operations manager (comparator) – the actual results or output (time taken, money spend, efficiency rating, units produced etc.) are compared to the specification or the planned output (feedback). A report (sensor) - is the recording and measuring device of an operation system, which monitors the outputs from the process.
It can be a form of computer printout or paperwork. An operation manager (actuator)-issues the regulation to be made to be either to transformation process or inputs, in order to change outputs in accordance to the plan.
