Operational Management - ASOS Online Clothing - Case Study Example

? Operational Management: ASOS Online Clothing Institute In any business enterprise, the job of an operations manager is to managethe procedures of converting inputs into the preferred outputs. The stated operations have been found to affect various organizations if not well planned. Therefore, this research has been prompted to find out problems in operations systems of ASOS Online Clothing Company and the possible solutions that may bring better impacts to its operational structures. The research design used was a survey of the various operational elements in ASOS online Clothing that included Supply Chain Management and the Connection Between Strategy and Operations of ASOS Online Clothing From the report, the researcher found out causes, effects and possible solutions for the peculiarities from an operational perspective. The findings showed that the performance of any company entirely depends on the Operation Management (OM) frameworks of that particular company therefore the researcher gave a way forward of improving the performance of ASOS considering OM Issues. Table of Contents Abstract 1 Table of Contents 2 ASOS Online Clothing 3 Introduction 4 1. SUPPLY CHAIN MANAGEMENT FOR ASOS 4 Problem with Positioning the Firm in the Supply Chain 4 Problem in the Environment of Supply Chain 5 Logistical Problems at ASOS 5 Unrelated Trade-off Elements 6 SOLUTION 1 6 2. CONNECTIONS BETWEEN STRATEGY AND OPERATIONS 8 Functional Areas for ASOS 8 SOLUTION 2 9 The ‘Operation’ at ASOS 9 The ‘Strategy’ for ASOS (Market Entry) 11 Beyond immediate boundaries of the firm are other parties with a direct connection with the businesses’ OM. Amongst these stakeholders, the most important of all are the customers. Customers have a number of interests in the activities of a business. These interests can only be enhanced by an effective operation system of the business. Service, Availability, Price, Reliability are some of the issues that are concerned with the operations management of every company. The supply chain elements affect customers directly and indirectly. Shareholders and employees also contribute and provide support to the company whenever called upon; therefore, in order for the ASOS Company to maintain good relations with them it should be able to meet stakeholder needs. This ability cannot be accomplished without an effective OM system that will implement strategic and tactical operations that will ensure stakeholders needs have been met (Ashman, & Vazquez, 2012, p.975 – 996). 12 Conclusion 12 Reference 13 Cooper, R.G. (1999), “The Invisible Success Factors in Product Innovation.” The Journal of Product Innovation Management, 6 p. 1–17 14 ASOS Online Clothing Introduction Founded June 2000, ASOS Online Clothing is one of the leading online-only fashions store in the UK. With revenue of ?753 million and a net income of ?29 million per annual, has kept ASOS on top of their game as the largest online fashion retailer. The company sells branded women and menswear including jewellery, footwear, and accessories. ASOS online clothing, just like any other industry, has adopted the various Operations Management (OM) characteristics for the sake of the smooth running of the business. This report seeks to investigate theoretical cases, problems and peculiarities in relation to the Operational activities of ASOS online clothing industry. 1. SUPPLY CHAIN MANAGEMENT FOR ASOS ASOS online clothing is an online store; it automatically qualifies as a global industry since the internet is accessible globally. The Company has adopted a few aspects regarding to logistics and its operations systems. As an international product distributor, it has embraced logistical activities that have gained them a global strategic supply chain advantage. However, there are peculiarities that hinder the operations supply chain as the industry grows (Inkpen, 1998, p.2–30). Problem with Positioning the Firm in the Supply Chain ASOS Company relies entirely on ‘in-house’ production and supply since it is an online company. The management has not seen the need to outsource their products since all products are centralized. However, Outsourcing enables a company to take advantage of the latest technology and cost advantage, thereby adding value to the product. In addition, outsourcing raises a company’s profile in the marketplace thus producing competitive products in the industry. Competition has outmaneuvered ASOS due to the lack of outsourcing (Inkpen, 1998, p.13–29). Problem in the Environment of Supply Chain Customers sourcing goods from less developed countries will find the supply chain very much under-developed. It is also expensive and slow compared with the logistic economies/analysis of fully developed economies such as the UK and North America. ASOS Company has not adopted the element of benchmarking; benchmarking provides a marked comparison between the developed world and developing countries. Furthermore, the supply chain environment will include political aspects, markets, customer profile, finance of cash flow, international regulations compliance of conventions, supplier profile, taxation, transportation, technology, EDI, software, cyber face, and the overall mechanism of the supply chain and degree of transparency. All these issues greatly vary from country to country, and this is a major problem for ASOS (Cooper, Lambert & Pagh, 1997, p.22–29). Logistical Problems at ASOS It is very important that the marketing and logistics sectors work closely together to accomplish the company global supply chain strategic focus. The decision-making in ASOS Company has been not been harmonized through objective analysis. Because of the lack of designing competitive supply chain has resulted in a less attractive product to the consumer. Since ASOS deals with fashion which is primarily a trending aspect that moves so fast with technology, the company is suffering because it did not put its foot on the ground in providing up-to-date analysis on the market of the cloth line product and understanding customer taste and preferences (Cooper, Lambert & Pagh, 1997, p.48–60). Unrelated Trade-off Elements The marketing department at ASOS online is often faced with a distant supply source with less sophisticated supply chain and a distant market involving extended lead times — longer supply chain times that lead to overall higher costs of supply and production. Dealing with this problem has become more difficult since ASOS Company has not embraced management of the mobile asset that is the global supply chain. ‘Trade-offs’ can be extended to a range of scenarios and the decision-making must be based on priorities, technology, cost, quality, and design. Labor force skills are an important factor in the ability to change and keep up with twenty-first century fashion industry. For example, London is renowned for its precision in fashion wear, Italy for quality fabric production, Germany for its high-tech heavy weaving machinery. Lack of the proper skills in the marketing department will lead to non-correspondence of Trade-offs between all the inter-related companies that should have created a competitive advantage for ASOS Company in cloth line production (Slack et al, 2012, p.22–35). SOLUTION 1 Outsourcing as a Business Concept: In an attempt to enhance their competitiveness, ASOS should increasingly turn to outsourcing. Not only is changes in the business environment drivers of the rise in outsourcing as a business strategy, also new management concepts such as business process re-engineering, organizational restructuring, benchmarking, and lean management have stimulated the trend. Outsourcing reduces costs and improves customer satisfaction and generate other effectiveness improvements. Outsourcing should be mandatory business strategy for companies to compete in today's competitive market environment. In general, outsourcing is viewed as one of many approaches to maintain or develop competitive advantage (Cooper, Lambert & Pagh, 1997, p.23–29). Environmental Supply Chain costing and Management: From a decision-making angle, it is crucial to know which steps of production and distribution cycle environmental improvements are most promising. International clients operate in a highly competitive market; thus financial implications of environmental supply chain improvements are of great interest. ASOS should gather, analyze and use supply chain cost information for managerial decision-making. Supply chain costing provides information to determine the overall effectiveness of the supply chain, identify improvement opportunities, evaluate alternative supply chain structures and select supply chain partners. The implementation of supply chain costing is a difficult task as its benefits do not necessarily occur evenly throughout the chain. The sharing of cost information may give away a hard-earned competitive advantage or provide negotiating advantage to their supply chain partners (Cooper, Lambert & Pagh, 1997). Logistics and Trade-offs: A more positive viewpoint that ASOS should consider is to interpret these and other interrelationships in a planned approach to identifying and determining cost trade-off. These will provide a positive benefit to the logistics system as a whole. Such a trade-off may entail additional cost in one function but will provide a greater cost saving in another. This type of trade-off analysis is an important part of planning for logistics. There are trade-offs that occur within single functions of the distribution components. For example, ASOS should implement a decision to use random storage locations compared to fixed storage locations in a depot. This provides better storage utilization and easier packaging and distribution of clothing (Inkpen, 1998, p.123–159). 2. CONNECTIONS BETWEEN STRATEGY AND OPERATIONS Functional Areas for ASOS The vital operational perspective in ASOS Company is the interdependence between operational management and strategic management in the international communication and public relations context. Operational management arguably encompasses the routine, day-to-day decisions, controls and actions that enable an organization to continue to function effectively along the course set out in the organization’s strategic and operational plans. According to the journal of Martha Cooper, (1997) she argues that the operational management decisions at ASOS Company are usually made, but during the implementation is where the problem comes in. Appropriate actions do not take place at the departmental and functional levels due to managerial issues at those departments. Strategic management, by contrast, is concerned with the key decisions and actions that determine the overall intended positioning of an organization, including the allocation of the necessary resources to pursue the chosen strategies. At ASOS, there is no clear hierarchical relationship between strategic and operational management, with the latter normally taking its lead from the previous decisions (Martha Cooper, 1997, pp.1 – 11). Examining the international communication context, and how many practitioners operate in practice, it is clear that this distinction between strategic and operational decisions and actions is not always fully understood in ASOS. Perhaps the most common flaw is the tendency to view all but the most routine of activities as being ‘strategic’. This is an error of ‘levels‘ or ‘perspective’, and of course is not confined to the public relations field - it is also found in other functional areas such as marketing or human resources. This flawed perspective on strategy has been attributed because practitioners at operating at the functional level have partial appreciation of these issues (Martha Cooper, 1997, pp.1 – 14). ASOS Company has little understanding of an organization’s business, so the functional managers do not prioritize issues that are most relevant to their own function as most important and hence, from their perspective, the decisions and actions relating to those issues may well seem to have less important consequences. However, when these issues, problems, or opportunities are observed from the top management team's perspective, in the framework of the firm's overall corporate or business strategy, they may be seen in as different. Perhaps being recognized as having important implications at the functional level, but limited ‘strategic’ significance for the organization as a whole (Cooper, 1999, p. 1–13). Moreover, it is necessary to distinguish between ‘access’ to the top management and ‘participating' in the top management decision-making. Anecdotally, the single most important catalyst for a change in the internal status and international communication and PR functions seems to be where organizations have experienced some form of major crisis or challenge that threatens their position or survival. The main questions here are; ‘what went wrong’, ‘who is to blame’ and ‘how can we restore ones reputation and avoid such issues from happening again. The Interconnectedness and interdependence among the operational systems at ASOS should follow a simple concept as C has been brought about by solution B to the problem A (Cooper, 1999, p. 1–17). SOLUTION 2 The ‘Operation’ at ASOS International marketing is becoming an increasingly important business activity. Businesspeople who are knowledgeable about international marketing procedures have the best chance to benefit from this growing business area. International marketing is related to the broader study of international business but deserves special attention as a discipline. This is because the strategies that make it possible for the exchange process and development of business relationships are complex. They may also differ from those encountered in domestic marketing. Related areas such as international trade and international operations contribute to the development of the theory and practice of international marketing (Cooper, 1999, p. 1–17). Even though similarities exist in marketing techniques between domestic and international marketing, sufficient behavioral differences are encountered that necessitate the study of international marketing be separate from the study of domestic marketing. For ASOS, studying international marketing should be a clever move because of its growing importance to business in general and the increased chances of international involvement during the research. After the research, the management of ASOS should note a few aspects for example, more sales were generated from younger customers. Reason being; fashion moves faster in younger clients than the elder clients. This fast-moving fashion will eventually generate a series of mass production for a clothing line (Hongmei, 2003, p.333–352). From the research, it will be noted that the demand for that the product will facilitated mass marketing targeting the younger customers with the corresponding clothing line. However, marketing problems may be encountered internationally. When operating in a foreign country, a new uncontrollable marketing environment and the domestic marketing environment are confronted. According to Hongmei, the ability to develop a marketing mix and strategy is affected by this additional foreign environment. As a result, ASOS encountered an additional risk in the international marketing. ASOS should initiate a plan to recognize the existence of many markets taking into consideration the purchasing capacity of clothing buyers (Hongmei, 2003, p.333–352). The ‘Strategy’ for ASOS (Market Entry) Since ASOS is an online clothing shop, its main opportunity is the internet. The internet technology has created an occasion where firms are able to overcome geographical barriers hence expanding them into foreign markets. ASOS should benefit from the ability to gather a client’s information. This is one of the market entry strategies that have relatively little expense. Knowing your client gives one an opportunity to profile him/her and understand her preference is key to marketing. Additionally, the internet platform has lowered cost of marketing communications since it is easily available to all. Increased contact between the company and the buyers is also evidential with the internet as a medium of communication (Ernst, 2002, p.1-40). Since ASOS’s platform is already internet-based, it should experience first-hand internet marketing as market entry strategy. Internet marketing in the old days has not been seen as a strong marketing mechanism. Now, it has continuously dominated the arena of online business. Originally, the scope of Internet marketing or Online Advertising, to some, is based on strategically advertising or marketing an online product or service via the Internet. As it began to become dynamic, it tried to wipe out the “traditional” advertising mechanism that put in place the modernized and technologically, advanced medium of advertising any product. The Internet as virtual media to create an environment of advertising is deemed such a powerful and strong platform to reach and extend to a global market. Logically speaking, the concept of far-reaching the potential client universally is very potential as the Internet has become a universal commodity to all people from the developed to developing countries. Everyone seems to need having an Internet access. Today, the Internet has become more aggressive in its capacity to reach out, Internet marketing is not only seen as a marketing arm, but also to advertise a product or a service online. Just recently, the Internet marketing concept has been used as a platform to better campaign and advocacy. This is because the Internet can reach out widely in terms of geographic size (Ashman, & Vazquez, 2012, p.975 – 996). Stakeholders connected to OM issues of ASOS Beyond immediate boundaries of the firm are other parties with a direct connection with the businesses’ OM. Amongst these stakeholders, the most important of all are the customers. Customers have a number of interests in the activities of a business. These interests can only be enhanced by an effective operation system of the business. Service, Availability, Price, Reliability are some of the issues that are concerned with the operations management of every company. The supply chain elements affect customers directly and indirectly. Shareholders and employees also contribute and provide support to the company whenever called upon; therefore, in order for the ASOS Company to maintain good relations with them it should be able to meet stakeholder needs. This ability cannot be accomplished without an effective OM system that will implement strategic and tactical operations that will ensure stakeholders needs have been met (Ashman, & Vazquez, 2012, p.975 – 996). Conclusion The elements of logistics and the operations management have, of course, always been crucial to the manufacturing, storage and movement of products. It is only recently that they have come to be recognized as vital functions within the business and economic environment. ASOS online clothing have put much emphasis on the roles played by OM and logistics in that it now plays a vital role in the success of the organizations. In essence, the underlying concepts and rationale for OM have been taken upon by the managers at ASOS so as to acquire the competitive advantage against all other online clothing companies. They have evolved through several stages of development, but still use the basic ideas such as supply chain analysis, strategy and systems theory together with their associated techniques (Ernst, 2001, pp.1–40). Reference Andrew Inkpen. April (1998). Learning, knowledge acquisition, and strategic alliances. European Management Journal. Volume 16, Issue 2, p.223–229 Carayannis, E.G., Rogers, E. Kurihara, and K. Allbritton. (1998), “M. High Technology Spin-Offs from Government R&D Laboratories and Research Universities.” Technovation, Vol. 18, No. 1 p. 1–11. Hongmei Gou. (2003). A framework for virtual enterprise operation management Computers in Industry. Volume 50, Issue 3, p.333–352 Martha C. Cooper, Douglas M. Lambert, Janus D. Pagh, (1997) "Supply Chain Management: More Than a New Name for Logistics", International Journal of Logistics Management, The, Vol. 8 Iss: 1, p.1 – 14 McCormick, H., Charlotte Livett, (2012) "Analysing the influence of the presentation of fashion garments on young consumers’ online behaviour", Emerald Vol 3. p.16. Rachel Ashman, Delia Vazquez, (2012) "Simulating attachment to pure-play fashion retailers", International Journal of Retail & Distribution Management, Vol. 40 Iss: 12, p.975 – 996 Ruane, L., Wallace, E., (2013) "Generation Y females online: insights from brand narratives", Qualitative Market Research: An International Journal, Vol. 16 Iss: 3, p.315 – 335 Cooper, R.G. (1999), “The Invisible Success Factors in Product Innovation.” The Journal of Product Innovation Management, 6 p. 1–17 Ernst, H. (2002),”Critical Success Factors for New Product Development.” International Journal of Management Reviews, Vol. 4, No. 1 p. 1–40 Slack, N., Brandon?Jones, A., Johnston, R. and Betts, A. (2012) Operations and process management. 3rd ed. London: Prentice Hall/ Financial Times. Read More