Strategic Operations Management - Essay Example

Strategic Operation Management

Introduction

The basic idea of operation management is connected with designing processes which is helpful in converting raw materials into finished goods or services which is directly associated with maximization of business profits (Shavarini et al., 2013). Organizations across business industries need to design and upgrade its operational model in order to ensure that it is able to not only achieve competitive advantage in the market, but at the same time, it can ensure ultimate utilization of available resources (Marry, Enyinna and Franca, 2015). At present, organization needs to focus on some of the key aspects such as quality of the products or services, matching supply with demand in the market, using available resources effectively, cost control etc. and strategic operation management is helpful in achieving business success by controlling and managing all the above factors effectively.When an organization is able to meet the quality standard of the target market, it is helpful for the firm to achieve profitability as well (Markgraf, nd). Therefore, this discussion is a clear representation of the fact that a well-organized operation management process is helpful in make or break of a business process. If the operational activities are well planned and coordination is existing among all the above mentioned factors then organization can achieve business success else there are tough challenges for the firm to compete in the market and eventually organization might fail to survive as well.

Strategic Operation Management

Definition

The ideology of operation management is considered as profit generating engine for any organization and it is necessary for the organization to implement higher level of business process (Schroeder et al., 2011). According to Voss, Tsikriktsis and Frohlich (2002), operation management is a methodological solution followed by most of the organisations which is helpful in the process of improving the efficiency level of the production and at the same time ensure high quality logistics method.

Significance of Operation Management

As the definition of the operation management suggest, a proper coordination establishment is the key ideology behind operation management of any organization where all the raw materials are converted to finished goods (Oltra and Flor, 2009). The key significance are

• Operation management helps in establishing strategic correlation between various functional departments and converts raw materials into output.
• A well-organized operation management process is helpful in managing cost leadership activities within an organization.
• A well-organized strategic operation management is helpful in goods or service differentiation within an organization.
• Operation management is helpful in improvement of productivity of the organization which in the long run improves the financial status of the firm.
• A well-organized operation management process is helpful for the organization to evaluate and improve its cost management, time and quality management activities which are to meet customers’ competitive priorities.
• The idea of operation management is helpful for the organization to increase its competitive abilities within operative market and at the same time helps in improving the overall productivity and profitability of the organization (Kumar and Suresh, 2009).

Effects of Operation in Business Performance

According to the analysis of Manghani (2011), one of the key significance associated with operation management is ensuring quality control and inventory management within an organization. Quality control helps the firm to fulfil the requirement of its customer base, satisfy their needs which helps in improving profitability, whereas, inventory management assists in managing overall production cost of the business operation so that firm can deliver high quality product/service at low and competitive price.

In addition to above, Matsui (2007) in his review has mentioned that effective operation management is also helpful in improving SCM process which assists in improving the organisation performance. Chin et al. (2013) has also pointed out that an effective supply chain process is helpful in the development of sustainable and professional relationship with suppliers to make sure that overall process is achieving sustainability and excellence compare to its rivals in the industry

When researchers considers the ideology of TQM, it is very clear that this operational strategy is helpful in improvement of general performance of any organisation with better financial outcome. The ideology of TQM is helpful in optimal utilization of economic assets and of human capital in the manufacturing sector (Das et al., 2000). Kaynak (2003) in his review has mentioned that some of the key TQM practices such as quality management of suppliers, process management etc. have positive impact on the overall performance of the organisation as these factors affect financial as well as marketing performance of the firm as well. Recent survey conducted by Sila (2007) also reveals the fact that TQM has a direct relationship with efficiency of the firm, whereas on financial and marketing performance, TQM has an indirect impact.

Another key aspects associated with understanding significance of operation management on business performance is JIT or just in time business approach. Successful implementation of JIT approach is helpful for the organisation to achieve waste reduction, improving business efficiency and ensure continuous improvement of the firm by reducing overall production times, improving product quality to a large extent, reducing overall business stocks and work in progress and implement flexibility in the operation processes (Matsui, 2007).

Battistoni et al. (2013) in their review have mentioned that an effective operation management process always helps the business firm to add value in the overall activities, increase the speed of production and/or business performance which helps in improving the client satisfaction, ensures flexibility in the operation process and most importantly add the ideology of innovation with the processes.

Two Live Example of How Operation Management Helps in Improving Business

With the help of successful implementation of different form of operation management activities such as JIT, Lean management etc., Toyota is able to address all the three key parameter of business operation namely delivering high quality product (quality management), cost management and time management (Lombardo, 2017). A well planned operation management helped the organisation to maintain quality of its product and at the same time mange a proper balance between production and business operation both internally and externally. The operation system of the firm, which is well known as TPS (Toyota Production System) helped the organisation to deliver high quality product at lowest possible time with shortest lead time by reducing waste and storage of raw materials. Reduction of waste from production line helps the firm at a large scale to become more effective, competitive and efficient (Anderson, Healey and Locke, 2005). McDonald’s operation management process is another example of how effective operation process helps to achieve success. As a fast food organisation, one of the key factors that determines the success of the firm is the quality of the product and services. The operation management plan of the firm helps it greatly to maintain the quality of product and service within all constrains such as production cost, price and time limits for delivery. Various operation management strategies such as process and capacity designing, layout management approach in operation management helps the firm to a large extent in improving its capacity designing and maximise the space utilisation in its business units to serve more number of customers in a proper manner (Gregory, 2017).

Comparison of Operation Management Model of Easy Jet and KLM: An analysis based on Four Perspective of Operation Management

Operational Model of Easy Jet

The operation model of Easy Jet is designned for two types of customers- business customer and loyal frequent flyers. The low cost operating model followed by the organisation helping it to achieve higher level of success in terms of business revenue, profitability and service offerings (Quinn and Right, 2014). The market oriented operation management model would apply to Easy Jet as the organisation is looking to customise its operation process keeping in mind the requirement in the market. A great example of Top Down approach implemented in operation of Easy Jet is the decision of not targeting German market as the majority of low cost airline market in the country was captured by Air Berlin and German wings (Quinn and Right, 2014). Easy Jet can implement the resource oriented operation approach as well when the top management start considering employee safety, security in the workplace, ensure their family protection so that it can increase the level of job satisfaction and get better performance from the employees as well.

Operation Model of KLM Airline

Initially there was a strategic alliance between KLM and NWA which was implemented based on the hub and spoke model of business operation. NWA used to carry passenger from various parts of USA and drop them in few hub airports like Detroit and from there, KLM take those passengers to different parts of the Europe. This model of operation management ensured high quality services as passengers were able to reach various destination with lesser wait time (Man, 2013). Market oriented operation model and top down approach - both would be apply in the operation model of KLM as the organisation is looking for improving its market share. To compete with other organisations, the KLM has signed a deal with Air France, and launch a new business model where economy fare standardise is the key for the organisation to achieve operational efficiency (Otley, 2016). The organisation is also giving importance to the opinion of the employees in order to improve the customer service and business efficiencies which is helpful for the firm to achieve competitive edge over others. Therefore, the bottom up approach would also apply in the operation model of KLM. When implementing the bottom up approach, the organization needs to consider resource oriented approach where organization often focuses on employee safety, job satisfaction etc.

Similarities and Differences in Operation Model

Similarities: Both KLM and Easy Jet organizations are following a well-organized operational model considering the market and demand of the customers (Market Requirement Approach of Operation Management) and based on that ensure that it can deliver high quality outputs. All the decisions related to operation management are taken by the top management after considering all the situations and they make it sure that employees are implementing all the decision taken at the highest level to achieve competitive success (Top Down Approach of Operation Management).

Differences: The major difference in the operation model of these organizations are their openness to business expansion and incorporate versatility in the business model. Easy Jet is not only operating in the low cost small hub segments, it started to operate from some of the large hub segment as well in order to expand its business without changing its core business operation strategy of providing low cost service and all the decisions are taken by top authorities (EasyJet Plc, 2016). However, KLM in order to expand its operation sign a deal with Air France and this alliance was implemented by KLM after taking into consideration the opinion of the employees as well which is a clear indication that organization would implement bottom up operational approach as well for the improvement of operation management activities.

KLM’s top management is looking to develop an organisation model “that has a transparent culture, open communication and committed staff that are good at what they do” (KLM 2015 Annual Report, 2015). A balance between top down and bottom up approach helps the firm to achieve competitive advantage and this is one of the key difference with the EasyJet’s business operation where top down operational model is holding the key behind entire business operation model.

Conclusion

Modern era of business management requires operational model which not only focusses on production of goods and/or services, but at the same time must act as the coordinator among all the functional business units to help achieving sustainability and increase business value. Depending on the market scenario, stage based model of operation management is the key for any organization to achieve success in the long run which helps the firm to get accustomed with the changing ecosystem of the business sector (Nair and Boulton, 2008). Overall, operation management model is the backbone of the success for any organization and regular review and modification is necessary from organization perspective to achieve supremacy.

Reference List

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