Operations Management Plan for ALWYNS Sports Supplies - Case Study Example

Operations Management Plan for ALWYN’S Sports Supplies Objectives Assess the methods of supply chain management to see how Alwyn’s procurement and logistics division can manage its supply chain more effectively in an online business context, and what IT systems are best suited for this critical aspect of the company’s Internet-based operations. 1.a. Create a simple supply chain diagram for Alwyn’s biggest suppliers. 1.b. Propose strategies for Alwyn’s procurement and logistics division director to manage the company’s supply chain effectively. 2. Explore ways to give Alwyn’s and its proposed commercial website a more personalized touch and a distinctive feature so as to guarantee customer satisfaction at all times. 2.a. Appropriate IT systems for Alwyn’s. 3. Propose ways to improve service quality so as to ensure customer satisfaction through Alwyn’s Winners Online. 3.a. Quality management and its implications on service improvement and customer satisfaction. 4. Recommend methods and techniques to help Alwyn’s achieve and maintain high quality service: 4.a. Two quality management techniques. 4.b. Three quality assessment tools. 1.a. Supply Chain Diagram Thailand, Malaysia & Pakistan (Sportswear) Indonesia & Philippines (Footwear) Operations Management Operations management is pursued by organizations for one reason and one reason only: enhance and maintain the quality of its products and services to satisfy the customers. This is because customer desires and attitudes exert the biggest influence on operation strategies and decisions (Nie & Kellog, 1999). Issues & Trends in Operations Management Global markets and operations Global sourcing Virtual companies Greater choice and more individualism Emphasis on service Speed and flexibility Supply chains Collaborative commerce Technological advances Knowledge and ability to learn Environmental and social responsibilities The 20th Century Corporation Vertical integration Mass production Domestic operation Quarterly financial reports Monthly inventories Top-down strategy The 21st Century Corporation Virtual integration Mass customization of products Global reach Real-time financial reports Hourly inventories Bottom-up strategy 1.b. Strategic Relationships The new business environment has departed from the single exchange transactions and now places emphasis on operating and maintaining a long-term strategic relationship with buyers. These strategic relationships in turn call for supply chain management, in which materials and information simultaneously up and down the supply chain to improve operating efficiency and strengthen a firm’s market position. “As the economy changes and competition goes global, it is no longer company versus company but supply chain versus supply chain.” – Meier, et al., 2004 1.b. IT Systems Among the IT systems proposed for Alywn’s are Commerce One and SESAMi.NET, which serve the following functions: Commerce One – a browser-based and XML-enabled purchasing automation software that puts buyers and sellers together in one online trading community. This makes for lesser search costs and fees for processing transactions such as invoices, purchase orders and payment schemes. SESAMi.NET – this is linked to the Global Trading Web, the world’s largest network of trading communities on the Internet. Because of this vital link, the system reaches an extensive network of regional, vertical and industry-specific e-markets around the world. Both large and small and medium enterprises can have access to trading partners, e-marketplaces and internal enterprise systems for the purpose of sourcing out supplies, buying and selling goods online in real time. Online Business For Alwyn’s, the Internet can create a distinctive business and strengthen its competitive advantage by integrating new and traditional activities. It will also allow the company to reach larger markets, replicate innovative processes with the least expense, and provide customers with many conveniences such as the ability to compare product features and prices. Types of E-commerce Business-to-Business (B2B) – this consists of company-to-company online transactions involving supply chain management, inventory management, distribution management, channel and payment management. Business-to-Consumer (B2C) – online transactions between business and consumer such as getting and providing information, purchasing and receiving goods. Digital Infrastructure In going online, Alwyn’s needs a shared digital business infrastructure fitted with production and distribution technologies that would allow business participants to create and utilize the network economies of scale and scope. The Internet provides an integrated and extended system of supply chain management, which links customers, workers, suppliers, distributors and even competitors. For Alwyn’s particular requirement, the online facility that could be useful are those that provide a range of services, from single or specific business type to intermediary or industry-wide type and regional or comprehensive websites. Web-based Purchasing The acquisition costs in material procurement can be slashed by half if the process is done through web-based purchasing. This also enables the company to choose from a much larger group of suppliers. What is needed for this operation is a website design that is easy to use, makes for easy browsing, and enables customers faster and better control of the transaction process. Use Case Diagram SCM Online Purchasing 1) The consumer navigates to shopping website. 2) Demo system presents products and catalog. 3) Consumer enters the number of the product required. 4) Satisfied with the quality, the consumer submits his order to the retailer via the demo system. 5) Retailer validates order, rejecting it if the product is unavailable. 6) Retailer determines which warehouse can supply the item, asks the warehouse to ship it. 7) Retailer gets back to customer to say the product has been shipped or could not be shipped, as the case may be. 8) Customer pays through a pre-registered card. 2.a. Quality Management To preserve product quality and satisfy customers, the literature on quality management suggests this sequence of steps: Define the primary task of the organization. Assess the firm’s core competences. Determine what products would generate the most orders and what product qualities would invite such purchase. Position the firm as to how it would compete in the market, whether through an advantage in cost, quality, flexibility or speed of service (Russel & Taylor III, 2006). These all boil down to quality management. Challenge for Quality Management Companies like Alwyn’s that produce many different products and need to constantly introduce new versions of these products operate in a complex and unpredictable environment. Thus, quality management has to change at a moment’s notice to respond to changing market demands. This is the single most important challenge for quality management. SCM Strategies Supply chain management is the supervision of materials, information and finances as they move from supplier to manufacturer, and from there to wholesaler, then to retailer and finally to customer (Meier, et al., 2004). Managing the supply chain thus encompasses all the activities associated with the flow and transformation of goods from raw material to end product. By carefully managing the supply chain, a company can lift its functions and outcomes to new heights of success, including product quality, customer responsiveness and satisfaction, cost control in manufacturing, product and market flexibility and macroeconomic performance such as market share and profitability. Building Blocks of Quality Management Customer orientation Process control Continuous improvement 2.b. Quality Management Techniques For Alwyn’s, these are the two quality-oriented operations management techniques worth considering: Cost leadership – the firm aims to establish itself as low-cost leader in its industry by exploiting such sources of cost advantage as the pursuit of economies of scale, proprietary technology and preferential access to raw materials, among others. Differentiation – the firm seeks to be unique by selecting one or more attributes perceived as important, and then it uniquely positions itself to meet these needs. Wal-Mart succeeds at differentiation by endeavoring to keep its inventory levels low and its product flow short. Assessment Tools The following assessment tools are recommended for Alwyn’s based on the levers of control set by Simons (1995), which could prove useful in measuring and improving quality management operations at Alwyn’s. 1. Boundary systems – the company sets parameters on the activities of managers and employees. 2. Diagnostic control systems – information systems are put in place to monitor performance and outcomes. 3. Interactive control systems – these are designed to involve managers in the activities of their subordinates. Speed Providing a speedy service on the Internet is the formula for success of many online businesses. Southwest Airlines, for example, realized savings of $30 million yearly by providing fast service on web-based bookings and ticket sales. Most of the amount saved would have gone to travel agents as commission or as expense for maintaining ticket outlets in major cities. Flexibility The National Bicycle Industrial Co. is the most profitable chain of bicycle stores in the US because of its flexibility, such that its product variations come up to over 11 million. McDonald’s Model Business is always brisk at McDonald’s because it makes communication and transportation between stores fast and efficient through such processes as EDI-satellites, cross-docking and focused locations. SCOR Model The procurement and logistics division of Alwyn’s can manage the company’s supply chain more effectively by using the Supply Chain Operations Reference (SCOR) model, as espoused by Householder (2005). Through SCOR, the supply chain process can be defined in as clear, concise and consistent a manner as possible. By giving the company a clearer grasp of its key processes, improved performance comes naturally. RACI Analysis The RACI (Responsible, Accountable, Consulted and Informed) analysis, if used in conjunction with SCOR, creates a detailed process-centered map of accountability and roles across the firm and its supply chain. With this structure of accountability, metrics and incentives at all levels can be tested for their alignment to the overall process and the supply chain goals. Organization and Skills An equally important tool in supply chain management is an organization and skills road map, which aligns the organizational structure to the skills available. If the organization aims for a higher goal and the employee skills do not match up, it would be a good idea to spend for training to calibrate skills. Sometimes a more expensive workforce is more cost-effective than one that fails to perform. SCM Sourcing of Goods 1) The retailer ordering goods and requesting shipment from the company warehouse. 2) Retailer records the items being shipped. 3) If the requested item is available and filled, the SCM diagram ends. Group Log Members of the team performed each specific task to study the elements in the supply chain of Alwyn’s. No. 1 – looked into the company operations through some of the traditional retail stores in UK. No. 2 – studied the flow of operations in the online business of some commercial websites. No. 3 – conducted research on the existing literature on operations management and supply chain management. Conclusion The study indicates that a total of 1,000 weekly orders is a reasonable projection once Winners Sports goes online to boost the regular operations of Alwyn’s Sports Wholesale. In its initial foray as a regional website, Winners Sports Online is expected to widen its customer base in the whole of UK, including North Ireland, the Channel isles, Isle of Man and the Scottish islands. Building a 7,000-foot extension into the existing warehouse in anticipation of the bigger demand is a step in the right direction. It could also be a good idea to keep the planned overseas expansion on hold before the online operations become established and profitable. In time, chances are good that Alwyn’s will contend with international orders. Findings Market trends reveal that many of the retail customers in UK and elsewhere are moving online because of its many advantages. For example, consumers are spared the hassle of going from store to store to find the products that they need. Online shopping even gives customers greater control and influence on how products are made and delivered. There is also pricing transparency and less transaction costs since the process does away with the layers of intermediaries required in traditional buy and sell activities. References: Householder, B. (2005). “Process Change.” Frontline Solutions, May 2005. Meier, R., Williams, M. & Singley, R. (2004). “Supply Chain Management: Strategic Factors from the Buyers’ Perspective.” Journal of Industrial Psychology, vol. 20, no. 2, April 2004. Nie, W. & Kellog, D. (1999). “How Processes of Operations Management View Service Operations.” Production and Operations Management Journal, Fall 1999. Russel, R. & Taylor III, B. (2006). “Operations Management.” 5th edition, John Wiley & Sons. Simons, R. (1995). “Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal.” Boston: Harvard Business School Press. Read More