Business Operation and Management of Tesco - Report Example

?Running Head: Business Operations & Management Business Operations & Management [Institute’s Table of Contents Table of Contents 2 Introduction 3 Business of Choice 3 Essential Components for Effective Business Operations Management 5 Internal & External Interactions 7 Importance & Significance 8 Environmental Changes & Responses 9 Technological Changes & Responses 10 Management Challenges 11 Methodological Tools 12 Conclusion 14 References 15 Introduction Since few decades, there have been enormous developments in almost every sector of human society that has resulted in significant alterations in the field of business as well. In addition, in this era of globalization, almost every organization is now putting efforts to survive in this competitive environment by reducing costs, enhancing quality of products, and expanding business activities and processes. In this process of competition, one aspect of business that has evolved significantly is operations management that has now become the focus of business executives due to its huge impact on success and failure of business organizations globally. Contrary to few decades ago, nowadays, operations managers are enjoying a noteworthy status and importance in the companies; however, at the same time, they are confronting the pressure of ensuring efficiency and efficacy in different processes of the business. In particular, this report is an attempt to identify and examine different aspects of operations management while utilizing case study of an organization that will enable a comprehensive understanding of different strategies and techniques of operations management that will be beneficial for huge number of organizations globally. Business of Choice As mentioned earlier, the report includes a case study that will make it easier to understand the importance of operations management in an organization. For this reason, the researcher has selected ‘Tesco’ (Humby, Hunt & Phillips, pp. 11-12, 2007) as the business of choice for this specific report. In the late 1910s, Jack Cohen (Humby, Hunt & Phillips, pp. 14-17, 2007) put efforts to establish Tesco that passed through various difficult phases; however, now stands as one of the biggest retailer in the British retail market in terms of market shares, and second most successful after Wal-Mart in the British market in terms of profits. Contrary to other organizations, Tesco has not only been able to tolerate the adverse impact of global recessions and economic booms but one can observe significant expansion and development in its outlets and centres that is one of the major reasons of its success in the British, as well as global market. For this reason, the Tesco has been the choice of this report that will include its different processes, infrastructure, and activities to carry out the process of scrutiny in the context of operations management. (System Diagram of Tesco’s Retail Store) From this introduction of Tesco, the company does not stand less than a legend in its field as it has been successful in surviving with success for so many years since its establishment in the year 1919. Due to such long success story, Tesco has remained in focus of critics and business experts (Humby, Hunt & Phillips, pp. 15-46, 2007) since a long time, and everyone is always looking for the magic formula of Tesco that has enabled the company to survive, as well as achieve success during recessions as well. Once again, contrary to usual organizations, Tesco has put no efforts in hiding its magic approach, and has been discussing it everywhere, calling it ‘Tesco’s way’ (Humby, Hunt & Phillips, pp. 41-77, 2007). While analyzing Tesco’s way, it is an observation that it is nothing but an efficient application and implementation of operations management’s strategies and methodologies that have facilitated the organization to achieve success in the field. In particular, integration of technology with trained staff, and amalgamation of infrastructure with efficient planning in different departments under a single vision, all showing the significant influences of effective operations management in Tesco that will be under focus during this report. Essential Components for Effective Business Operations Management Although operations management (Anupindi et. al., pp. 40-69, 2008) used to be a task during its early stages, however, it is an observation that it has now evolved as a complete field or sub-field due to its significant impact. Some experts believe that it is not appropriate to define essential components of business operations management as it will then limit its range and potential, as such experts (Anupindi et. al., pp. 40-69, 2008) argue that operations management relates with every single department and aspect of a business organization. Still, while analyzing different resources to identify its essential components, studies (Simons, pp. 56-61, 2011) have indicated that from distribution until the distribution of a product, it is the responsibility of operations managers to take care of everything. Thus, operations management includes all the processes that begin from the manufacturing or production of a product and end with the distribution of a particular product in the market. While examining Tesco, it is an understanding that the company’ executives are completely aware of importance of the operations management, and as Tesco is involved in the dealing of huge number of products, as well as service, the operations managers are responsible for ensuring both efficiency in products’ quality, as well as effectiveness in customer service at the same time. One of the significant traits of Tesco is its integration of operations management in almost every department, such as finance, HR, marketing, etc that relate with operations managers in the organization. (Organizational Chart of Tesco’s Retail Store - Google) Still, in particular, operations managers at Tesco are responsible for the effective management of manufacturing and distribution processes of products and services. Some of the major activities of operations managers include “managing purchases, inventory control, quality control, storage, logistics, substantial measurement, and evaluations of processes” (Mahadevan, pp. 29-37, 2010). In addition, one should understand that due to role of operations management in almost every department of the organization, the nature and components of operations management might differ in different types of organizations. As the report has selected Tesco as case study, and as it is a retail organization, the essential components of operations management at Tesco are as follows: “Purchasing Control and Coordinating Function of Management Product and Service Management Quality Management Inventory Management Supply Chain Management Logistics and Transportation Management Facilities Management Configuration Management Distribution Channels Enterprise Resource Planning” (Gaither & Frazier, pp. 17-49, 2002) Internal & External Interactions Analysis of the literature (Burtonshaw-Gunn, pp. 70-88, 2010) on operations management, as well as scrutiny of Tesco’s different departments has indicated that integration of departments and processes in an organization is as important as water for human survival. It is an observation that a significant number of organizations have been confronting issues of survival and downfall due to lack of coordination in their different business processes. In this regard, besides creating a long-term relationship with customers and consumers, it is very imperative that departments create relationships with each other, as organization is a system and when different components of a system do not exist in interrelationship with each other, there is a huge possibility of failure to the whole system. From this perspective of organization as a system (Haines, pp. 30-41, 2007), it becomes very important for operations managers to ensure coordination of production department with marketing personnel, and distribution department with purchasing people. In this regard, internally, operations managers is nothing but a job of ensuring coordination between different departments of an organization that are involved in any process from manufacturing/production to distribution/service, and this is observable in the case study of Tesco that has been successful in ensuring successful and continuous coordination among its different stakeholders at the internal level. One of the major differences in Tesco and other organizations is that Tesco focuses on uninterrupted interrelationship of different departments, whereas, a huge number of organizations focus on individual achievements of different departments regardless of their relationships with each other that is against the principle of operations management, and thus, causing problems for the organizations as a system. Importance & Significance Until now, the report has already included description and range of business operations management that indicates the importance and significance of this aspect of business. Still, this section will now discuss different aspects of business operations management that is playing a crucial role in the success of Tesco and similar various other organizations globally. Nowadays, business experts (Brown, pp. 49-59, 2000) believe that besides other factors, effective business operations is one of the major causes of success of any organization, and thus, operations managers play the role of backbone holders in every organization, and the case is similar at Tesco as well. At Tesco, it is an observation that business executives have given huge importance to operations managers by involving them in the process of decision-making, which signifies their importance. In addition, Tesco put efforts to ensure sustainable growth and development of its products and services by training operations managers in the same context who subsequently endeavor to ensure delivery of high quality products on time at different retail outlets of Tesco. In particular, the participation of operations managers is “present from strategic to tactical and operational levels. In addition, their activities include site location, layout, and structure, inventory management, traffic and materials handling, equipment selection and maintenance, designing technology supply chains, etc” (Metz, 1998). Environmental Changes & Responses One can observe drastic alteration in the globe that has resulted in expansion of organizations from one region to another that has created the environment of international business. In the result, business organizations are no longer working in isolation and a huge number of environment alterations and factors (Lippmann, pp. 1-3, 1999) play a crucial role in the success or failure of the organization. In this regard, it has now become very imperative to respond efficiently to these environment changes, and in this process, effective business operations once again seems contributive. Experts (Webb, pp. 1-5, 2000) have indicated that in recognition of significant environment alterations, advocates of business operations have been putting efforts to integrate the notion of sustainability management (Moore, pp. 20-31, 2008) to ensure a balance between human wants and prolonging of natural environment. In the result, Tesco and several other organizations are nowadays endeavoring to create business operations policies that exist in line with environmental concerns and principles (Saturn, 7-8, 1999). In other words, business organizations are now trying to create a softer image by portraying itself as environment-friendly organizations (OECD, 1999) that is ensuring technological developments. At the same time, they are ensuring negligible damage to the natural environment that is one of the major significant and efficient responses to the environment alterations that is evident in the processes of business operations management. Besides responding to changes in the natural environment, analysis (Cumming, pp. 53-62, 2004) has identified a usual change that is always constant in the context of business environment, increment in material costs. A huge number of organizations are confronting this issue due to external environmental factors, and to respond, organizations are utilizing the methodological tools of business operations to endeavor to save costs and expenses as much as possible with the help of different tools and approaches discussed earlier in the report. Experts (Burtonshaw-Gunn, pp. 30-55, 2010) believe that although such tools play a significant role, however, it is very imperative that organizations employ appropriate tools of the business operations depending on the environmental change, as application of unsuitable tools may often result in unproductive outcomes. One can avoid such occurrences by ensuring constant coordination of departments that may reduce the possibilities of a failure. Technological Changes & Responses Besides environment change, business organizations confront several other alterations and challenges, and technology is one of the sectors that have been causing noteworthy alterations due to rapid advancement in the field of information and technology. Thus, organizations now confront the challenge to deal this technological change and respond to it effectively in the context of business operations (Gharajedaghi, pp. 46-59, 2006). One of the major responses evident in the case study of Tesco is recognition and acknowledgment of superiority of innovation and technology in policies and strategies of business operations that has enabled the organization to grow significantly in the market. It is an observation that rapid advancement of information and technology has resulted in alteration in attitudes and perspectives of customers and employees, and thus, abovementioned acknowledgment in business operations policies can be an effective response to flow with the alteration. For instance, analysis of Tesco’s business operations indicated introduction of “HHTO stock management system, labour management system of Denver, Damage Control Asset Management System (DCAMS) for goods in scanning, DCOTA which remotely controls the movement of reserved pallets of stock via FLT terminals” (Humby, Hunt & Phillips, pp. 23-24, 2007). Moreover, “paperless picking that remotely controls assembly of store orders via AMT’s, LPH Loading that remotely manages loading of store orders via AMT’s and ISOTRACK that keeps track of fleet on the road and turnaround, delivery time” (Humby, Hunt & Phillips, pp. 26-35, 2007). In addition, Tesco responded to the technological change by placing an ISOTRACK system in all the vehicles that plays the role of an emergency service in case of any problem. Furthermore, Tesco endeavored to create a computer-based scheduling and routing system that enabled the organization to make the most of available vehicles, thus, increasing profitability, and enhancing efficiency. Management Challenges Although report has indicated evident benefits of business operations, however, still, analysis has indicated that operations managers in the organizations confront challenges in terms of management while putting efforts to implement a change in different departments or processes of the organization. One of the major issues comes at the decision-making level (Plenert, pp. 67-78, 2002) because as discussed, operations management relates with every department, and thus, when operations managers identify an issue or defect in a department and endeavor to resolve it, they confront the challenge when executives do not acknowledge their decision-making power and consider change as an inappropriate decision. In such situation, it is very important that business operations utilize their communication abilities to the greater extent, as effective communication can be a possible way of convincing management of a particular department to bring a change in the organization. Another issue in terms of management occurs when there is a contradiction in the vision of operations managers and owners of the organization (Shaw, pp. 66-81, 2000). For instance, it is an observation that a huge number of owners consider companies as moneymaking machines that have nothing to do with environmental sustainability or human communities. In this situation, it becomes very problematic for operations managers or executives to bring a change in different business processes. Methodological Tools Besides recognition of importance of operations management, it is very imperative that business organizations should employ proper tools and strategies (Thompson & Martin, pp. 36-64, 2005) to understand business processes as part of a system, and subsequently, to improve such processes effectively. For instance, scrutiny of Tesco’s different processes indicated utilization of one of the major components of business operations, quality management. Tesco has been continuously using the tools of quality management to manage performance of organization in terms of development, designing, and distribution of products and services. Analysis (Juran, pp. 89-95, 2001) has indicated that modern quality management has evolved as a new methodological tool for business organizations by bringing modifications in not only production and distribution processes but by altering almost every organizational activity in the business that would have been influencing the production of products and services even at a minimal level. Due to such advantage of quality management, business experts and critics have been encouraging the utilization of methodological tools, such as “total quality management, modern quality management, etc” (Juran, pp. 29-33, 2001). In particular, quality management usually involves approaches of statistics and team involvement that enable the operations managers to improve business processes quantitatively, as well as qualitatively. In addition, the methodological approach of TQM has a number of sub-tools from which quite a few have been evident at Tesco. For instance, TQM allows business organizations to utilize the tool of check sheet to ensure direct interpretation of results from the data form itself that makes the process easier for the managers (Burtonshaw-Gunn, pp. 55-71, 2010). Another example is histogram that has been in utilization in a number of business organizations, as it provides a graphical summary of disparities in collected/recorded data, and thus, facilitates managers in understanding different patterns in the process to make efficient decisions. Modern Quality Management (Fitzsimmons & Fitzsimmons, pp. 17-49, 2007) provides another tool of Six Sigma to the organizations for identification of defects and their elimination as well. In particular, in this methodological approach, managers identify a preferred target, and subsequently, put efforts to create six different divergences that allow them to eliminate defects in products and services effectively. Thus, it is evident that methodological tools of the operations management (Anupindi et. al., pp. 30-79, 2008) have been playing an effective role in ensuring efficient understanding and improvement of different business processes in Tesco and similar other organizations around the globe. In this regard, from the appropriate selection and application of abovementioned methodological tools and approaches of business operations management, executives and operations managers can confront management challenges effectively by indicating defects in graphical manner (Burtonshaw-Gunn, pp. 60-89, 2010). In addition, managers can relate profitability with the environment alterations to convince executives and owners of the organizations, and subsequently, ensuring constant and successful change in the organization to guarantee achievement. Conclusion Conclusively, the report included description and discussion of different aspects of business operations management while indicating its components that are essential and play a significant role in ensuring success of the organizations by identifying defects and eliminating them in the most efficient manner. The report discussed the importance of business operations management and indicated significance of its application in all the departments and areas of a business organization, as only coordination can enable the operations managers to bring successful change in the organization. Moreover, the report included identification of different environmental and technological alterations that require organizations to respond and the role business operations management can play in this process. Lastly, the report discussed different methodological tools that can be effective in facilitating operations managers in resolving issues and eliminate defects in the system. Finally, it is anticipation that the report will be beneficial for the students, experts, and nonprofessionals in the comprehensive understanding of the business operations management. References Anupindi, R. et al. 2008. Managing Business Process Flows: Principles of Operations Management. Harlow: Pearson Education. Brown, Steve. 2000. Strategic Operations Management. New York: Elsevier. Burtonshaw-Gunn, Simon. 2010. Essential Tools for Operations Management. London: John Wiley & Sons. Cumming, Thomas G. 2004. Organizational Development and Change. San Francisco: Southwestern Thomas Learning. Fitzsimmons, J., Fitzsimmons, M. 2007. Service Management: Operations, Strategy, Information Technology. London: McGraw-Hill. Gaither, N. & Frazier, G. 2002. Operations Management. Mason: Southwestern Thomas Learning. Gharajedaghi, J. 2006. Systems Thinking. London: Butterworth-Heinemann. Haines, Stephan. 2007. Strategic and Systems Thinking. New York: Systems Thinking Press. Humby, Clive, Hunt, Terry, & Phillips, Tim. 2007. Scoring points: how Tesco continues to win customer loyalty. London: Kogan Page Publishers. Juran, Joseph M. 2001. Total Quality Management. London: McGraw-Hill Professional. Lippmann, S. 1999. "Supply Chain Environmental Management." Corporate Environmental Strategy. Elsevier Science Inc., Volume 6, Issue 2. Mahadevan, B. 2010. Operations Management. New Delhi: Pearson Education India. Metz, P. 1998. "Demystifying Supply Chain Management." Supply Chain Management Review. Retrieved on March 12, 2011: www.manufacturing.net/scl/scmr/archives/1998/04myst.htm Moore, John A. 2008. Encyclopedia of the United Nations. New York: Infobase Publishing. OECD. 1999. "Trade Issues in the Greening of Public Purchasing." COM/TD/ENV (97)111/FINAL. Retrieved on March 12, 2011: www.oecd.org/dataoecd/17/7/39919037.pdf Plenert, Gerhard J. 2002. International Operations Management. Denmark: Copenhagen Business School Press. Saturn, U. T. 1999. 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