Supply Chain Management: UK Passport Office - Essay Example

Supply Chain Management: UK Passport Office Introduction: Supply chain process of a firm focuses on organising the functional aspects of the work structure and enhances the quality of work through a channelized work process. Supply chain concepts and models have evolved over the year as business houses are trying to align their work process with the objectives of the business (Christopher, 2011). The report is based on the case of UK passport office or ‘Her Majesty’s Passport Office’ and their supply chain management process. Case Briefing: Her Majesty’s Passport Office (HMPO) was brought back under direct authority of UK Government on 26th September 2014 because of huge backlog of passport applications. Chief Executive, Paul Pugh was also fired and is expected to be replaced by a director general (Spring, 2014). The huge backlog of the passport reflected their failure to cope up with the increasing consumer base and resulted in a backlog of over 500000 passport applications (Spring, 2014). The operations system of the company is based on computer as well as manual functions which ensure that the errors in applications are examined and processed appropriately. Passport production process is controlled by an external affiliate De La Rue who also makes bank notes (Spring, 2014). The customer service and enquiry handling department is also handled by a third party affiliate named Teleperformance who serve the customers based on basic information provided by the passport authority (Spring, 2014). The problem in the case is the inability of the functional departments to meet their responsibilities. It has to be considered that the process of application of the customers also influence the work efficiency of the customers as mistakes in the application form only extends the system. On the other hand, the growth in the number of the overseas application has also reduced the pace of work because of increasing variety and segmentation in the work process of Her Majesty’s Passport Office. Network Diagram for passport application and production process: The operational process of the passport office began mainly from the customers or the applicants of passport. This also shows the various processes that can be utilised by the applicants for pursuing their passport application. Apart from this if the customers are segmented into two groups namely overseas and local, the application process also differs as well. The below given network diagram reflects the process of operations for the local customers if they apply directly to the passport office or apply via post office check and send process: Figure 1: Network Diagram for passport application (Source: Created by Author) The network diagram of the local passport applicants are processed in two ways. The first approach is by directly approaching the passport office and applying for the passport, also it has to be noted that applicants can also ensure one day passport service by paying extra. This also increases the work pressure on the staff as the process has to be carried out in an accelerated manner. When the application is made by post office, the applicants can select the check and send option which delays the processing but ensures that the application form has been properly filled and the documents are in order. After receiving the passport applications and all the relevant data, the passport office forwards the documents to the verification department which takes the longest time in the overall supply chain. After the verification process is completed, the security measures are implemented and cross-checked and finally the passport is prepared. The passport manufacturing process is conducted by De La Rue who won the contract from 3M after their 40 years of consistent service. This transformation also created some controversies in the Government houses. Apart from De La Rue, another third party agency working for the passport office is Teleperformance (Spring, 2014). Although Teleperformance don’t have any direct work relationship with the supply chain as they are mainly focused on solving customer enquiry and helping them, the consumer inputs are provided by Teleperformance back to the passport office. The work process of De La Rue and Teleperformance have been reflected in simultaneous manner in the network as their work ending process and starting process began directly from the passport office. The overseas applicants have a different procedure for applying. The network diagram for overseas applicants has been reflected below: Figure 2: Overseas Customer Passport Application network (Source: Created by Author) The overseas applicants had to process their application from local offices of UK Government’s Foreign and Commonwealth Office. They used to collect the applications and sent them to the UK passport office. However, this process was brought back to UK for exercising more control in the passport application and delivery process. Pattern of demand on supply network: The entire work process of Her Majesty’s Work Process was facing a huge backlog of over 500000 passports. The entire supply chain process was facing problems as the error identification process in the initial stage of passport application was slowing the entire work process. On the other hand, the number of applications was also increasing which created problems for the passport office in the handling the extended pressure. The growth in passport applications was noticed mainly in the year 2014 when the applications for the duration of January 1 to May 2014 was about 3.3 million whereas for the same period during 2013 was 350000 less (Spring, 2014). This tremendous surge in the demand pattern created an unexpected situation for the authorities. However, HMPO stated that almost 97% of the straightforward applications were being provided within the given time frame of 3 weeks meanwhile another 99% were being delivered within 4 weeks (Spring, 2014). But the Home Secretary clarified that the number of straightforward applications being dealt within the time frame of 3 weeks was only 30000 which subsequently increased to 50000 by the middle of June 2014 (Spring, 2014). Figure 3: Changes in Demand Pattern (Source: Spring, 2014) In another explanation Paul Pugh mentioned that the total number of applications received since January 1st in 2014 was around 3.6 million and since April 1st the number of applications that came in fresh was 1.9 million (Spring, 2014). Paul Pugh also mentioned that per week demand of passport is around 150000 and the supply is also similar (Spring, 2014). However, this statement does not tally with the facts provided by the Home Secretary earlier. Pugh also clarified that the total number of passports being processed on the second week of June 2014 was around 165000 which was almost 90% and was well within the agreed standards of service delivery mentioned (Spring, 2014). Figure 4: Straightforward Applications Processed within 15 working days (Source: Spring, 2014) The change in demand pattern is obvious for the passport office but the business process was not able with the growth in the passport applications which created the backlog. Moreover, the difference in the data presented by the HMPO and the Home Secretary also created confusion regarding the actual performance of HMPO in 2014 (Spring, 2014). However, the data presented above reflects that the HMPO was able to maintain a moderate performance level in the month of June. Another dataset presented by Paul Pugh regarding the straightforward applications of overseas applicants can be cited as the primary reason for the huge backlog of HMPO. Table 1: Straightforward Applications from overseas completed within 15 working days Actual (%) Target (%) Previous Week (%) Change in week (%) 2014/15 Year to Date (%) June 08 39.99 99.75 37.8 2.2 13.4 June 15 11.44 99.75 40 -28.6 13.2 June 22 20.48 99.75 11.4 9.0 13.8 (Source: Spring, 2014) From the above given table it can be observed that performance of HMPO has been really low in handling the overseas applications in the year 2014. There has been marginal change in the year to date percentage and also the actual performance of the department. A major factor affecting the performance of HMPO in handling the overseas applications can be the increase in the number of local applicants of UK. But by comparing the data of local and overseas applicants it is clear that most of the backlog is created by the overseas applicants. Overseas Applications differ from the process of UK residents and their implications: The overseas applications of UK nations had to follow a different process for gaining their passport. As reflected in the above given network diagram that the applicants have to apply to a locally situated office of Foreign and Commonwealth Office of UK Government (Spring, 2014). This process was later changed in the year 2014 by the Home Affairs Select Committee in order to bring more discipline in the work process and also monitor the work structure of the abroad passport delivery (Spring, 2014). Furthermore, the fees for the overseas applicants were reduced in the year 2014 in order to provide them better value for money. However, this also increased the number of applications and created more pressure for HMPO. On the other hand, as the processing and issuing of overseas applications were being done by HMPO directly problems were faced in amending the inappropriately filled forms. This also elongated the entire process of passport issue and delivery. However, the customer service provided by Teleperformance was a support for HMPO in handling the overseas applications. Another factor for which HMPO was criticised for was that additional staffs were recruited and trained in order to handle the increase in demand of passport. However, the despite of additional help from Teleperformance and the enhanced workforce, HMPO was not able to meet the demand with their supply of services. The entire supply chain of the HMPO was still being managed with a centralised command which was reducing the pace of operations and also created a major flaw in inter-departmental communications. Fisher (1997) mentioned that centralised operations reduce the flexibility of the entire work structure bringing them under a common management pattern which can hamper the output ability. One of the most important factors in the case of UK Passport authority was cited by Slack, Brandon-Jones and Johnston, (2010) as the verification process of the details provided by the client was not directly handled by HMPO. The verification process is the lengthiest process where the data was transferred between many hands and the chances of error were more. This also increased the time taken for processing of the overseas passport applications. Service Operations and Supply chain: The service operations of supply chain management process depend mainly on the nature of the services being provided. Ge et al. (2004) mentioned that intangibility of the products and services is the biggest advantage and disadvantage of the service providers as it provides scope for flexibility but also reduces the ability of the customers to measure quality. The supply chain process of HMPO as describe above reflects the problems being faced by them because of change in pattern of demand on supply network. Apart from this diversity in the supply chain for processing different types of services for different consumers has also complicated the process of delivery (Van Hoek, 2001). These problems are mostly stated in the supply chain design of a service organisation. However, to study the issues faced by a service provider, the differentiation with manufacturing organisations will be studied and analysed in details. Distinction between service processes from production process: In the words of Harrison and Van Hoek (2011), supply chain process of a firm is dependent upon the nature of products and services being dealt in. The nature of products and services and the variety in them increases the complexity of the work structure of a supply chain process. Moreover, the demands of the customers also influence the operational process of a firm and have different impacts on service and product manufacturing processes of the business houses (Pagell and Wu, 2009). Thus, the first difference considered is the nature of goods being delivered. The output of a production firm is physical in nature which allows the customer to see, understand and measure the product in terms of quality and other essential variables whereas the nature of output of a service firm is intangible (Carter and Easton, 2011). Customers make their decision in terms of services based on their needs and the purpose being served by the services (Winter, 2003). The difference in the production process of service and manufacturing units is that service firms have to design their services and does not incur huge capital investments unlike manufacturing units. Service is based on the necessity of the consumers and the output of the firm is based on the requirement of the clients (McIvor, 2009). On the other hand, product developers have the scope to store and manage their production in warehouses and storage places which helps them in coping up with sudden decrease or increase in demand. However, in the contemporary scenario with the introduction of lean management concept manufacturing firms are trying to develop a process for reducing their cost by plummeting over-production of goods. The service firms on the other hand cannot store their outputs but have to be prepared in order to handle any changes in the demand pattern that may affect their supply output (Winter, 2003). For instance the given case of HMPO reflected that sudden increase in demand of passport applications among the customers created huge rush in the production process and reduced their efficacy to handle the customer demand (Spring, 2014). According to Ge et al. (2004), the advantage of manufacturing firm lies in their employment process. The operational staffs are trained in a manner so that they can adapt to the work structure of the firm and contribute to the production of a particular product. Meanwhile in case of service firm, the employees must have a minimum level of qualification in terms of skills which allows them to adjust with the service process (McIvor, 2009). As service manufacturing does not include any materialistic process, the employees are expected to create service based on the basic design provided by the consumers and deliver it to the customers in time of retreatment. This also creates diversity in the service development process as each individual or team has a different level of skill sets and hence the production process also differs (Pagell and Wu, 2009). In case of HMPO, the service provided by the organisation was segmented into separate divisions which created problems for managing the work process. The network diagram reflected that the time taken by each department for completing their work was not uniform and hence the service standard fluctuated. The figures presented by Paul Pugh also showed that the output of the staff in the three weeks of June 2014 was different although the number of staff, production hours and production process remained the same (Spring, 2014). One of the primary factors that reflected difference in the service delivery and service management process of HMPO was the inputs provide by the customers. In case of a product development firm, the business houses are not able to develop any major criteria for their product development as the inputs are gathered in a collective manner from the customers and the products are hence produced in a uniform manner (Carter and Easton, 2011). The difference in the requirements of the clients is of crucial value for the service development firms. The business has to consider the needs of each client and meet them accordingly which increases the time of processing inputs and also lengthens the process of service delivery (McIvor, 2009). The inputs received by HMPO were mainly of two types namely, straightforward and errors (Spring, 2014). Errors were again of many types and were handled separately. This factors increases pressure on the service delivery process and also hampers the service quality. Considering the above mentioned differences in the supply chain of service and product development process and the case of HMPO as cited in the previous segment, it can be observed that the problems faced by HMPO were mainly because of surge in demand pattern and inability to manage the work process in the required manner. It was mentioned that HMPO foresaw the increase in demand pattern and recruited additional staffs but were still unable to fulfil their duty which signifies inefficient handling of the work process. Thus, in order to improve their supply chain quality they have to change the structure of work and connect each work division. One of the most common processes of establishing inter-departmental links used by the product manufacturing businesses is lean management process (Pagell and Wu, 2009). The lean management processes focuses on streamlining the entire functional division of supply chain also increase quality by reducing wastage and aligning the supply process with the market demand (Carter and Easton, 2011). HMPO which has now been shifted under the direct control of UK Government’s Home Office can implement the lean management process in their service structure for connecting the departments and managing the work process in a better manner. Conclusion: Her Majesty’s Passport Office had been facing problem in managing the increased demand in the applications of passports in the year 2014 and as a result had developed huge backlog of applications pending for delivery. The reports presented by various UK officials and authorities reflected that HMPO was not able to manage the work process despite of having additional staff and support from affiliates such as De La Rue and Teleperforamnce. He analysis conducted revealed that there was increase on the pattern of demand on supply which resulted in the backlog. Also different processes were being used to handle customer queries and applications creating complicacy in the supply chain process. The study of differences in product and service manufacturing processes showed that because of intangibility and non-inventory system the service firms face problems in dealing with changes in market demand. In relation to this, lean management has been recommended for the new authorities of UK Passport Office to recover them from the present crisis of backlogs and develop a steady work process. Table of Contents Case Briefing: 1 Network Diagram for passport application and production process: 2 Pattern of demand on supply network: 5 Overseas Applications differ from the process of UK residents and their implications: 8 Service Operations and Supply chain: 9 Distinction between service processes from production process: 10 Conclusion: 13 Table of Contents 14 Reference List: 15 Reference List: Carter, C. R. and Easton, P. L., 2011. Sustainable supply chain management: evolution and future directions, International Journal of Physical Distribution & Logistics Management, 41(1), pp. 46-62. Christopher, M., 2011. Logistics and supply chain management: creating value-adding networks, Harlow, Financial Times Prentice Hall.  Fisher, M., 1997. What is the right supply chain for your product? Harvard Business Review, pp. 105-116. Ge, Y., Yang, J.B., Proudlove, N. and Spring, M., 2004. System dynamics modelling for supply-chain management: A case study on a supermarket chain in the UK. International Transactions in Operational Research, 11(5), pp. 495-509. Harrison, A. and Van Hoek, R., 2011. Logistics Management and Strategy, UK: Pearson Education. McIvor, R., 2009. How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of Operations Management, 27(1), pp. 45-63. Pagell, M. and Wu, Z., 2009. Building a more complete theory of sustainable supply chain management using case studies of 10 exemplars, Journal of Supply Chain Management, 45(2), pp. 37-56. Slack N, Brandon-Jones, A. and Johnston R., 2010. Operations Management, 7th Edition, Upper Saddle River: FT/Prentice-Hall. Spring, M., 2014. Case Study: The UK Passport Office. Van Hoek, R., 2001. The rediscovery of postponement:  a literature review and directions for research. Journal of Operations Management, 19(2), pp. 161-184. Winter, S.G., 2003. Understanding dynamic capabilities. Strategic Management Journal, 24(10), pp. 991-995. Read More