Operations management and its role - Essay Example

?Table of Contents Operations management Introduction Targeting Factors: 2 Competitive Advantages and Priorities: 3 Opportunity and threats 4 Recommendations: 6 References: 7 Operations management Introduction Operations management can be defined as an art that covers the future forecasting, designing, redesigning and strategic planning for goods production and services delivery in the context of an organization (Richard and Colin 1992). It is briefed that the main role of adopting operations management strategies is to ensure that business operates efficiently by using minimal resources to satisfy customer’s needs and expectations. In any given process, operations management focuses on adding value to any good or service before its delivery to the customer. We can therefore conclusively say that operations management is normally involved in managing the physical functions of production department in an organization (Alan and Jack 2006). This study was carried out in two local food outlets in Singapore: a fast food outlet (Food for Thought) located along North Bridge Road and a sit in restaurant (Blooie’s Restaurant & pub) located Timah Road all offering the same product. The survey revealed the following observations. Targeting Factors: A fast food business has the ability to deliver a large quantity of food within a short duration of time. It also delivers the convenience of fast services and research shows that people are willing to forego quality for convenience. When a customer takes the food away it enables them to enjoy readymade food with comfort. Its market segment targets the middle and low class earners who contributes up to 70% of the population locally. This population includes university students, graduates and small sized businessmen. In struggling and development stage, they normally target the young and old-aged masses and since these age groups are present in largest population, they are able to develop and maintain a large market share. With all these competitive factors, they have managed to penetrate the local market successfully. A traditional sit in restaurant success can be attributed to the fact that it has two defined market segments. This is to say that their potential market is not differentiated. However they also compete against other market segments within the market environment with fast food outlets. They focus on high income families and business meetings to create a strong market and tap potential customers. (Richard & Colin 1992) Competitive Advantages and Priorities: In this regard, ( Irwin McGraw-Hill,2000 ) Terry Hill, a professor at London Business School presented the theory of Order winners and Order Qualifiers, which explains the process of how an internal functioning body designs its strategies to meet the competitive challenges and market success. Order winners and Order Qualifiers can be dealt separately if an investor has a low budget. According to theorists, Qualifier and winners have different aspects for business. If Qualifying is an objective, than a product has a quality of being considered by the customer which leads to the same standard of the product as your competitors have it. When it comes to Order Winning then a product must hold some extra ordinary specs than your competitor’s product to win the bid, which definitely requires more investment to maintain high standards. An investor must meet the requirement of Order Qualifier otherwise it can lead to a total loss. Whereas it is also required to keep a watch on the cost of production, otherwise it can lead to excessive increase in price, which again will divert the customers to an economical product. Research was carried out Sven Horte and Hakan Ylinenpa, which tells that unfortunately a wide gap is seen between product managers and customers which leads to a negative sales. When a product holds similar opinions between managers and customers, it is considered to be a “fit” product and ideal for sales growth. In relevance to our subject, a fast food outlet can get successful in either ways but a thorough research work is needed before deciding, that what kind of delivery should be carried out, either take-away outlet or a dine in place. Some areas or public are in desperate need of dine in place to relax and get rid of their usual environment. For this they sometimes let go higher prices and prefer dinning in. Whereas some area need no dine in places, in fact take away outlet can help people more. So this review needs to be done before an investor starts with his feasibility. Secondly, take-away outlet can just save one time investment but it is not must that it always will cost low on labor, because sometimes take away fast food chain requires more workers to save time and satisfy customer by providing in time delivery. Opportunity and threats A fast food provider can set up a take away outlet or a dine in place and can make it profitable if certain measures are taken seriously. Slack et al is an appropriate guide to refer to. It explains the procedure of making the most of your business and brings out the capital invested in a short period. This is only possible when correct policies are adopted while carrying out your services for customers. It is not referring to specific criteria like take away or dine in but for both because the ultimate goal is to satisfy customers and increase sales. Some of the reasons can be threatening for the growth of a business and some can lead to its promotion. Likewise, it is mentioned that speed matters a lot for a customer, sometimes prices are tolerated if delivery is firm on time with quality of food. In this Context, it is explained that Speed means the time when the product was ordered till customers get their receipt ( Slack 2007 ). Moreover it emphasized that what all matters for a business is customers’ opinion for a product because ultimately customers are our goal. “a major influence on customer satisfaction or dissatisfaction” (Slack et al., 2007). In short, ( Slack et al 2007 ) sorted that the faster the customer gets a product or a service, it is more likely they are to buy it. Thus, speed is an influential factor which can result in both aspects, positive or negative. The fast food outlets demand a low cost of franchisee investment since they do not have to use the traditional channels as compared to sit in restaurants which requires a high cost of investment. They, however face strong weaknesses like inconsistence service delivery. They also do not have access to their customers’ feedback and this limits their service delivery. They normally experience a very high employee turnover and this puts them at a disadvantage to lose trust with the customers. Many times they experience food contamination and sabotage during parking and delivery. They face tough competition from a pre established sit in restaurant and it is very difficult for them to develop public confidence due to the nature of the business. They normally operate in saturated and highly differentiated markets making it very difficult for them to establish a market share and steal customers from their competitors hence the only time they can expand their market is when customers lose interest of the alternative goods. To capture market, they use low pricing strategy which can be dangerous because low prices are associated with low quality and poor environment. Culture is also a big burrier to expansion leading to stagnated sales from fast food outlets. Both types of restaurants have an opportunity to expand if there is an improvement in economic trends and uplifting of families income which acts as a fuel for food production growth. Creation of chains is also a strategic plan to gain more public confidence and they should invest in it for a firm market base (Alan and Jack 2009) Recommendations: Use of marketing strategies which are very fundamental in fast food markets to establish their base market is essential. This is because they normally operate in much segmented markets. Sit in restaurants are also required to establish a very strong position among the competitors and expand their market potential by targeting innovators and early majority in their product development cycle. Both the production firms should set achievable goals and challenging but realistic objectives in order to develop a strong internal management which leads to effective production. The traditional sit in restaurants are normally threatened by saturated markets by the fast food outlets however they could overcome this by developing their markets in new geographic regions and re-branding their products. Market research has also been used by many to determine the demand for their products and for prices regulations in order to penetrate the market. The use of new technologies to improve efficiency and lower the cost of production should be a bottleneck in all organizations. Strategies have been involved in product differentiation and customizing their recipes to develop unique products from their competitors. (Esiner B L 2007) For any organization to succeed in their production, they should analyze their internal organizations like their management system and provide a conducive atmosphere for the employees to work peacefully and effectively. They should always focus on providing high quality food and provide first class services to their customers. Cleanliness is also a point to stress on in food processing and delivery. They should bear in mind the theory ‘customer is always right’ and listen to their needs and deliver what the customer is satisfied with or else the competitors will. Developing new products to match the markets trends should be their backbone in order to ‘steal customers’ as the market is all about stealing customers from your competitors. In the late stage of their PLC (Product Life cycle) they should close the non profitable outlets and concentrate their distribution on the profitable outlets. Innovation is a key factor as customers love to try new and more promising products over the old and usual products and also because customers have changing and diverse needs. Most importantly they should keep a keen eye on the competitors by snooping on them in order to protect their market share. References: Alan Pkington, Jack Meredit (2009); The evolution of the intellectual Structure of operations management, Vol.27, No 3,PP 185-202 Esiner B L (5th Ed) (2007) Strategic Management, New York; MCgraw-hill Richard Chase, F. Robert Jacobs, Nicholas Aquilano et al, . (2001); Operations Management for Competitive Advantage, ISBN 007250639 Richard W & Colin Gilligan, (1992) Strategic Marketing Management, Oxford; Oxford Press. Hill, Terry. Manufacturing Strategy: Text and Cases. 3rd ed. Boston: Irwin McGraw-Hill, 2000. Cheng, T., Lai, L., and Yeung, A. 2008. “The driving forces of customer loyalty: a study of internet service providers in Hong Kong?, International Journal of E-business Research, 4(4), pp. 26-42 David Bamford and Paul Forrestor, 2010, pages 224: Essential Guide to Operations Management: Concepts and Case Notes Read More