Cost of Operations for Longos Inc - Research Paper Example

TABLE OF CONTENTS TITLE PAGE EXECUTIVE SUMMARY 3 INTRODUCTION 4 COST OF OPERATION 4 QUALITY 4 SPEED 5 DEPENDABILITY 6 FLEXIBILITY 7 RECOMMENDATION 8 CONCLUSION 8 BIBLIOGRAPHY 10 Cost of Operations Executive Summary For every organization, it is important that the cost of operating the firm set at minimum level. By reducing costs, firms can invest the saved capital into new territories and departments. These department which ventured into, could lead to profits for the firms. Longo’s Inc is an international standard chain of supermarkets in Canada. The most important objective for this competitive company is to reduce the cost of operations, and invest the surplus capital into innovations, that enhance customer experience. Longo’s has been efficient in developing ways that maximize the four competitive objectives, which in turn reduces operational costs. These four competitive objectives include Quality, Speed, Dependability and Flexibility. By changing, the performance levels of these four competitive objectives, Longo’s and any other firm could affect the basic elements of functioning that in turn, reduce the costs of operations. Each of these four competitive objectives has both internal and external benefits. Internal benefits reduce the costs within the firms and lead to benefits for the internal operations regarding the firm. Whereas external benefits result in lower costs regarding firms’ operations with external environment and customers, and in turn leads to higher degree of customer satisfaction. Longo’s has used many methods to enhance the degree of performance of quality, speed, flexibility and dependability. It is obvious that these four competitive objectives are interrelated and benefit each other if performance is achieved in any of these objectives. This in turn leads to competitive edge for Longo’s in present competitive business environment (Slack, Chambers, Johnston, pp. 700-704). Introduction Longo’s, was initially set up in 1956 by three brothers Tommy, Joe and Gus Longo in Canada. The city they selected to open their first store was Toronto. Their first store was only about 2000 square feet, and the company only dealt in fruit and vegetable items. The second store opened in the same city, but in 1962. It was since then that Longo’s started to develop performance and process efficiency, and opened new stores across Canada. The company now plays an integral part in Canada’s economy. The store now deals in varieties of food items including Dairy products, Fresh meat, Grocery, Frozen Food products and Private label products for special occasions. The company is now a market leader in its Fresh department, which includes vegetables and fruits. These fruits and vegetables are produce on Longo’s private farms in Canada, and Italy. In present times, Longo’s has used the basic learning of Operating Management to enhance its operating features. These management techniques help Longo’s to save costs and improve performance levels. Longo’s uses four competitive objectives, which help the firm to reduce cost of operations. All the four objectives that bring in competitive edge for the firm need detailed study (Slack, Chambers, Johnston, pp.658-660). Cost of Operation Performance of Quality Quality for any firm refers to the ability of being Right. For Longo’s quality objective plays an important role in various ways. In terms of operational and process excellence, quality ensures that Longo’s provides enhanced service to customers as a result customers are satisfied and purchase the products, thereby generating sales for the firm. Secondly, quality incorporation ensures Process efficiency both internally and externally for the firm, thereby lower costs incurred, as no time, money and energy is invest into useless processes Quality control bring internal benefits for Longo’s, as error free process occur at all levels of operation of the firm. This in turn results in External benefits include Products and Services, which are free from error. Longo’s also takes measures to keep the store clean and hygienic, with attractive décor that enhances customer experience. The goods within the store are fresh and healthy, with attractive visual merchandising as to entice the customer to make the purchase. Longo’s also wishes to enhance its customer experience and thus their staff is well trained, helpful and courteous in dealing with customer queries and complaints. Quality specification result in specific set of rules to ensure quality delivered at Longo’s. This results in further external benefits for the firm, as this reduces chances of customer complaints. As for internal benefits, quality reduces error occurrence, which reduce speed of operations; prevents error, which cause low dependability levels and unreliability between staff members; and reduces errors, which waste time and efforts thereby saving costs. Quality thereby directly affects Speed, Costs and Dependability (Slack, Chambers, Johnston, pp.537-538) Speed Speed relates to the ability of a firm being fast and quick. The internal benefits of speed, is fast processes by staff members in all aspects of their operations. For Longo’s the staff members need to be quick in arranging inventories, stacking the shelves with products and delivery of goods to the stores and customers’ homes. For performance in speed objective, Longo’s now provides home delivery to its customers on orders above 200 dollars. Besides speed is important as the goods are delivered within 24 hours, of order placement by customers. This is the external benefit attained by Longo’s as they quickly deliver goods. Speed, is also defined in Longo’s as the ability, to reduce the total time for transaction by customers. This refers to the time taken by customers in browsing through products, standing in cue in front of cash counter and making the purchase. Speed also refers to the availability of goods at the right time, at the right place for customers. The external benefits of speed at Longo’s ensure customer gets the product when it is required. The internal benefits of speed ensure also that internal problem between staff is minimized via controlling dependability. Plus, costs are saved as the need to operate resources passing through the operation’s processes are minimized. Thereby Longo’s performance efficiency towards speed benefits both costs and dependability objectives of the firm (Slack, Chambers, Johnston, pp.593). Dependability Dependability is the ability of a firm to be punctual and on time. It is another way of efficiency. Dependability ensures all processes of operation for Longo’s work in sequential and smooth manner. Dependability at Longo’s, is incorporated for all staff members and their workings. Dependability has internal benefits for Longo’s which include the existence and maintenance of reliable operations at all levels of the firm and its procedures. Dependability helps Longo’s organize and arrange its work functions and tasks, and direct these tasks in a coordinated fashion. Hence, dependability ensures no time wasted in delivering the goods at the Longo’s stores and to the customers. Hence, it ensures that speed objective is not affected, and works at performance level. Dependability also prevent delays in any task performance, which in turn reduces mismanaged tasks and time wastage, thereby reducing costs. As for external benefits, dependability at Longo’s ensures enhanced product quality and service, and minimizing customer complaints. This in turn, places a tick on the checklist if whether dependability, has been delivered. Dependability thereby directly promotes Costs and Speed competitive objectives (Slack, Chambers, Johnston, pp. 593) Flexibility Flexibility is the ability to change for any organization. This change can be related to operations of the firm, its organizational structure, service methods and products offered in the market. At Longo’s, flexibility delivers operational and process excellence by developing opportunities for process learning by all internal employees. This results in buildup of capacity for future innovation in firm’s operational procedures and product line. The flexibility at Longo’s, includes the ability to change product and service methods. This is termed as product flexibility. For example, Longo’s has launched new varieties of frozen Food items for Christmas season (Fresh, Boneless, skinless chicken breasts). Next is the ability to change the mix of products offered at Longo’s. This is termed as mix flexibility. For example, Longo’s frequently offers various combinations of product at lower prices (Red wine and Cottage cheese combination). Third is the ability to change volume of products displayed and offered at Longo’s. This is, referred as Volume flexibility. Longo’s uses hi-tech inventory systems to ensure product supply perpetually exceeds product demand. Lastly, we have the ability to change delivery times of products both to Longo’s stores from warehouses, and to the customers (delivery). This is termed as Delivery flexibility. Long’s has now developed more efficient and quicker way of delivering fresh product at customer’s doorstep. They make the purchase decision easier for customer by developing online purchase convenience at Longo’s website. Flexibility at Longo’s also ensures new goods frequently introduced. Secondly, that there is wide range of goods stocked and in surplus volume. Flexibility at Longo’s also ensures that the firm is prepared to serve any quantity of customers at any moment. This also leads to providing those products to customers, which are out of stock. Flexibility thereby directly promotes the objectives of speed, dependability and costs. Thus Longo’s ensures that staff is able enough and in sufficient numbers to cater to ever growing customer capacity. As modern day consumer is hard to please (Slack, Chambers, Johnston, pp.593). Recommendations It is obvious that Longo’s has developed efficient and reliable method to apply all four competitive objectives at ideal performance levels. This in turn, has resulted in greater competitive edge and costs saved by the firm. There is only, a little we can recommend for this high-level, performance firm. Firstly, the firm needs to improve its customer satisfaction and experience, as per the requirements of modern day consumers. For this, the website of Longo’s, can be further improved to enhance customer experience. Secondly, Longo’s should provide all details of its product line for the customer online. This would provide for an enhanced experience by visitor, while browsing the Home page. Lastly, Longo’s should provide attractive online delivery deals for its customers. This would help Longo’s develop loyal customers. This in turn could lead to higher profits. Thus, all these recommendations would enhance the quality objective for Longo’s (Slack, Chambers, Johnston, pp.652) Conclusion Longo’s has used the four competitive objectives of quality, speed, dependability and flexibility with utmost effectiveness and efficiency. By enhancing the performance levels of these four competitive objectives, the firm has managed to save the costs of operations. Generating profits is not the only mission and vision statement for this firm. Longo’s, wishes to do more for the community as a firm. It wishes to apply and use operational procedures, which benefit the society and community as a whole. These techniques set an example for other firms, as how to manage their transforming resources in an efficient fashion. This leads to motivated and satisfied employees. As they only need to implement basic elements of quality process, speed and dependability. The employees are courteous and helpful, which also portrays the firm ability to be flexible in all environments. . BIBLIOGRAPHY/REFERENCES Shim, Siegel. Operations Management. Prentice Hall Publications, 1999. Lewis, Slack. Operations Management. Rouletdge Publications, 2003. Waters. Operations Management. Price Waterhouse Cooper Publications, 1999. Slack, Chambers, Johnston. Operations Management. Prentice Hall Publications, 2007. Incorporation, Longo’s. “About”. Longo’s Limited.www.longos.com. 14th December 2010. Read More