Operation Management at Fenwick of Bond Street Company - Case Study Example

Introduction

Slack et al. (2012, p.1) defines operation management as the administrative process in which the company creates the highest level of efficiency by conversion of materials and labor into goods and services necessary for the maintenance and improving the profits of the company. In today’s very competitive business environment, every business enterprise achieve the highest level of efficiency to remain relevant in the marketplace. To achieve this, businesses have to use the various methods of planning and control to enable its business not only competitive but also responsive to the needs and demands of the customers. The gap in the effective use of resource planning and control can be a source of inefficiency such as the case of Fenwick of Bond Street Company where necessary improvement in its resource planning is identified to make it more responsive to customers.

Background information of the company

Fenwick of Bond Street Company is an independent business store in Britain. The company was founded in 1882 by Fenwick family in Newcastle and as of today, the company boasts of its main branch in London. The company is reported to be valued at approximately $500 million. Originally, the company sold only silk goods, dresses, mantles, fabrics and trimming. The company continues to expand its operation and its products including hair accessories to various parts of the country and gained global recognition (Fenwick, nd). Effective operation management in the company has promoted the supply and delivery of hair accessories to various parts of the world. Furthermore, hair accessories offered by the company comply with the customer’s needs which in turn have improved their profit.

Process map of Fenwick Hair Accessories Company as it Relates to Customers

Operation management of the company

The operation of Fenwick of Bond Street Company’s hairdressing accessories is similar to its other department retail stores where it consists of an assemblage of various operational processes to be able to provide the product in the department store. It too suffer from wastage due to its less than ideal resource planning and control which costs the company money and (Huang, 2009). The process of operation of Fenwick of Bond Street Company’s hairdressing accessories begins with a customer making a purchase where operations department headed by its front line manager attends to the customer. Since the purchase affects the inventory, the front line managers then record and report periodically the level of inventory to the to its Enterprise Resource Planning where it make the purchases to the suppliers. Purchases are then stored in the company’s inventory. Suppliers on the other hand contact its manufacturers to make the products. They then warehouse it and subsequently delivered to the suppliers which would also deliver the made products to Fenwick of Bond Street Company. Fenwick of Bond Street Company’s purchasing decisions however differ from other business organizations because unlike in other business organizations where goods are made and bought, Fenwick of Bond Street Company’s hairdressing accessories solely buy their products because they are a retailer.

Operation management of hair accessories at Fenwick Company is concerned with the planning, organization, and controlling of all the activities which affect the profits of the company through a requirement planning (RP) system and enterprise requirement planning (ERP) model. Planning and control of the hair accessories are concerned with managing the ongoing allocating goods, services and activities and is supposed to ensure that course and operation process are efficient and reflects the demand of customers in term of good and service delivery. Such however is not the case as planning is erroneous causing the unresponsive allocation of goods and services to the disservice of the customer and the company.

Operation ensures that the objective of the hair accessory company is redefined, and objectives and goals for achieving the goals are followed. This stage includes setting up a proper supply chain management system which examines the relationship between individual process and operations. Supply chain management classifies the roles of the workers into capacity management, inventory management, and resource planning and control system and learns synchronization. These systematic operative roles in Fenwick hair accessory company ensures that the operation and management are focused on the resources, system transformation, and value added activities, (Southern, 2014).

Resource planning and control contributes to the increase of the capital in the form of assets, stock, and taxes which are crucial for the running of the business. The system approaches the operation of the company by and recognizes the management hierarchical responsibilities, (Operation Centurion fortifies Philips, 2014). These approaches can be attained by prioritization, sequencing, monitoring and control of all operations to meet both customers and supply interface. Fenwick hair Accessories Company approaches its problems by utilizing system and information control channels which enhance the decision mechanism of planning and control are adhered to avoid the same problem in future. This however is not applied to its entire purchasing decision as some units particularly the hair accessories in Fenwick are bought by fixed schedule.

The overall objectives of Fenwick hair accessories company operational management is to provide capabilities in attaining the goals and strategies of the company. These objectives include; process scheduling, goods and service loading, quality product and services, efficiency and effective employee’s relation and control cost of labor, customer services and adaptability for future survival. Scheduling and loading in the company ensure the needs and demand of the customers, stakeholders and workers are met which enhances the operation and management of the goods and services offered by the company. Scheduling involves initial speculation, pre-coding, coding, compact check and final test of the goods and services. It is done within a speculated period of time or period which favors both the company and the customers, and it ensures the efficiency of the services. Fenwick hair accessories company enhances strategic planning by the inclusion of the current mission of the company and current environmental conditions to face competition in the business world. According to Anderson et al., (2015), strategic planning is built on the current decisions which are based on the future conditions and results.

Challenges in the company

Albeit there is a system and information control channels which enhance the decision mechanism of planning and control in Fenwick of Bond Street Company’s hairdressing, there is a problem in the company’s scheduling and loading that is supposed to meet the needs and demand of the customers, stakeholders and workers which enhances the operation and management of the goods and services offered by the company. It has a problem with managing the inventory of its hair accessories where actual operation does not reflect efficiency and responsiveness. This causes damage to the company costing it resources and invaluable customers (Petrakis, 2004).

The problem in Fenwick of Bond Street Company’s hairdressing accessories department is that it makes it scheduling of its purchase of hairdressing accessories fixed despite the capacity of information control channels to forecast demands. The reason cited for fixing schedule purchases for hairdressing accessories is to achieve efficiency as the predictability of its orders will enable suppliers to contract manufacturers in advance where it can get discounted prices where the same discounted price can be passed on to Fenwick of Bond Street Company’s hairdressing accessories where the company can add a bigger mark-up. While this purchasing strategy makes sense to the suppliers as it enables them to have a relationship with manufacturers, this set-up however have a drawback on Fenwick of Bond Street Company’s hairdressing accessories inventory and makes the company less responsive to the needs of the customer. To be particular, scheduled purchase has a drawback on its planning and control mechanism that impairs the decision mechanism of Fenwick of Bond Street Company’s hairdressing accessories. The reason why the purchase of inventories are done on schedule with little consideration on the level of inventory is to procure them at lower prices hoping that marketing will caught up with inventory where products will be sold just in time when the new stocks will come. Usually, the level of purchase and loading is determined by prior forecasted data as generated by its information systems but this system is not used creating a disconnect between inventory and demand where lean synchronization to match the need of the customer with inventory is never achieved. As a result, waste and breakage is rampant resulting to additional cost and in unabated, to a possible loss.

Addressing the challenge

To address the issue, Fenwick of Bond Street Company’s hairdressing accessories must cease its scheduled purchase of the hairdressing accessories. It should also use its information system that would allow its monitoring and planning to work that would make the allocation of its goods efficient. Instead of scheduling a fix number of product to purchase over a given time, purchasing must be based on forecasted demand from customers. To effectively determine demand, the information system must be used for its planning and control mechanism. Also, purchasing decisions must receive an input from front line managers about the desired level of inventory that will dictate loading. While suppliers may complain about this new arrangement to be unpredictable on their end and increase its price, this can be defrayed easily by the savings on minimal waste, breakage and a lean and synchronized inventory. In short, Fenwick of Bond Street Company’s hairdressing accessories should improve its planning and control mechanism to make its inventory lean and synchronized, responsive, and cost effective. It should continuously improvement of the accessory selling so that it can improve the profit of the company (Dewhurst and Burns, 2012).

If purchases will be based on forecasted demand, purchases can now be made in advance where lead time is longer to keep the current price of inventory. In effect, Fenwick of Bond Street Company will trade scheduled purchase for longer lead time which is more favorable for the company for various reasons. First, it will minimized waste by having a synchronized inventory where loading is determined by demand and not by schedule. Second, Fenwick of Bond Street Company’s will save on cost (space, cost of goods) since the level of inventory will no longer be excessive. Third, the company will be more responsive to the customer’s demands by preventing products to go out of stock which is also a cost to the company in terms of “opportunity cost” (Spiller, 2011) and lost customer. Losing a customer should also be treated as a cost because it cost a lot in terms of marketing effort to entice new customers (Zhang, 2009).

Conclusion

Fenwick Company must not give up planning and control for the sake of purchasing inventories at a lower price. The information system available at Fenwick Company is not used as the company favors scheduled purchase of its hairdressing accessories to be able to get a discounted price from its suppliers. But price is not everything. The cost associated with high level of inventory due to incorrect loading, waste associated with breakage and lost opportunity due to unavailability of stock are also costs that must be considered. When these costs are quantified and considered, they could be more than the price that was saved by scheduled purchases. Having said this, it is more efficient for Fenwick Company to strive to be responsive with its customers than merely doing scheduled purchases whose convenience to supplier and its manufacturer provides them discounted prices.

The mission and goal of Fenwick Company are to become one of the most competitive global chains and stores offering different hair accessories and remain the strongest business partner that addresses the issues and challenges faced by the customers. This cannot be achieved by skimping on cost but rather by making its operations responsive to the needs and demands of the customers by using effective. The necessary change in purchasing decision may not be easily done as it requires the habit of using ERP but the company need to adapt quickly (Andersson, Manfredsson, and Lantz, 2015). if it intends to remain relevant in the retail industry.