The Strategic Objectives of Operational Management - Coursework Example

 The Strategic Objectives Of Operational Management Introduction to effective operations management Operations management is a complex process involving different internal and external activities related to customers, employees, clients, systems and technology all of which are strategically aligned to the organisation’s business strategy. According to Hill, ‘The production/operations management (POM) task is concerned with the transformation process which takes inputs and converts them into outputs, together with the various support functions closely associated with this basic task’ (cited by Brown, p.7). This critical transformation process can be applied to three main categories that include materials, stake holders and information. Brown (p.2-4) describes that Operations Management encompasses the most vital activities of production, beginning from and including, planning and design, production processes of goods and services, and also effective integration of marketing, finance, human resources management and strategy in order to enable a business to enter and compete with both new and existing markets. In other words, a business’s success and sustainability largely depend on the operational capabilities, including efficiency and quality. The best quotable examples of effective operations management include operations of food and beverage giants like the Starbucks and McDonald’s; automotive pioneers like Toyota and Ford; software giants like Microsoft and IBM. These organisations are known for their best customer service, superior quality and exclusive products, and high employee motivation. Moreover, such organisations have successfully expanded their businesses to other parts of the world through an effective strategic integration of the vital elements of operations. In this regard, Hill and Jones aptly stated, ‘it is important to note that the success of many multinational companies is based not just on the goods or services that they sell in foreign nations, but also on distinctive competencies (unique skills) that underlie the production and marketing of those goods or services’ (p.271). Thus, strategic alignment of activities to organisation’s goals is yet another critical aspect of any organisation’s success. Strategic objectives of Starbucks: Organisations tend perform certain specific activities/practices in order to achieve larger goals. These activities form their strategic objectives. Dess (p.34) explains that strategic objectives are used to execute the organisation’s mission and help in providing direction to fulfill the greater goals in a more specific and time-bound manner. For instance, Starbucks’ mission statement is, ‘To be the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow’ (Dess, 561). To achieve this, Starbucks has laid six guiding principles namely (cited by Dess, 561), Provide a great work environment and threat each other with respect and dignity. Embrace diversity as an essential component to the way to do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivering the coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to communities and Starbucks` environment. Recognize that profitability is essential to Starbucks’ future success. Starbucks’ activities and practices are aligned to these six principles so that it achieves its overall goal. The main approach followed by Starbucks is Total Quality Management (TQM), although this is more often related to the ‘quality’ aspect of an organisation. TQM is applied to various aspects of Starbucks’ including employee satisfaction, marketing, managing supply chains, achieving customer satisfaction, policies and procedures, practices, costs and accountability, communication, training and development, research on market demand and supply, meeting legal and regulatory requirements, social and cultural aspects etc (Vernhout, 5). Starbucks has laid much stress on continuous learning and improvement, which includes a continuous identification of areas of improvement and taking up these areas as opportunities to perform better (Hellriegel, Jackson & Slocum, 263). Strategic alignment of operational objectives with organisational goals: At Starbucks, operations objectives can be classified into three categories, i.e. product quality, employee satisfaction and customer satisfaction. Firstly, Starbucks adopts practices that continually enhance product quality thereby providing a rich coffee experience to its end customers. Secondly, its focus on employee satisfaction is equally important as it believes that motivated employees can deliver good service to customers (Whitley, 2006). Thirdly, from customers’ perspective, its objective is to ensure every customer receives the Starbucks Experience so that all customers are absolutely satisfied and would enthusiastically come back to Starbucks. Customer satisfaction is delivered to the through its employees’ unwavering commitment to excellence and their guiding principles, all achieved through a systematic and uncompromised quality of services and products. For high product quality, Starbucks adopts fair trade expectations with its suppliers which ensures usage of high-quality ingredients. In addition, Starbucks pays premium prices for coffee and maintains economic transparency to evaluate fair and equitable payment for their products (Bussing-Burks, 39). They also ensure a strong relationship and direct engagement with the coffee farmers and suppliers to keep a check on the progress and address issues. For employees, creation of best possible workplace environment for their partners, one that attracts and retains the most talented individuals and is regarded as a great place to work, takes high priority on Starbucks goals. This is achieved through employee empowerment, regular employee feedback through surveys, fair reward and recognition for performance, providing training and development, upholding workplace policies and respect for employee rights, and ensuring safe and healthy workplace. For its customers, Starbucks provides a range of different products considering cultural preferences, taste and requirement, presentation, and every other detail to give customers a ‘real coffee experience.’ Starbucks goal does not stop with providing customers all that they ask for, but going beyond by providing all other unsolicited ingredients such as choice of food and beverages, excellent ambience, value for money and best service, thus leaving no room of choice outside Starbucks, also providing service that delights its customers (Hitt, Miller & Colella, 62). Systems approach to Quality Management Quality is regarded as quintessential factor for any organisation’s success. Much emphasis is laid on this aspect in different forms and for different reasons. Numerous ways of ensuring quality have evolved over time in different parts of the world; more successful and efficient ones have been adopted by organisations all over the world. Two such quality management systems include Total Quality Management and ISO9000. Total Quality Management: According to Stahl, TQM is a comprehensive and integrated way of managing any organisation in order to meet the needs of customer consistently and to achieve continuous improvement in every aspect of the organisation activities. From a systems approach, Stahl described that TQM continually strives to increase value to customers by designing and continuously improving organisational processes and systems (cited Suganthi & Samuel, 73). Organisations have adopted TQM by using specific tools, techniques and approaches to specific processes that helped in achieving continuous improvement and learning. These methods include statistical approaches such as Six Sigma and non statistical approaches such as Just in Time (JIT), quality circles, brainstorming, Design of Experiment etc. Adoption of TQM requires adoption of a combination of these techniques and tools appropriate to the function. ISO 9000: The second system, ISO 9000 is an integrated framework used by organisations to define, implement and monitory quality in a structured way. This is set up by The International Standards Organisation (ISO); ISO 9000 includes set of principles/standards framed by the British Standards Institute (BSI) in the UK. Most organisations follow the ISO 9001 series currently. These standards focus on design, documentation, implementation, support, monitoring, controlling and improvement aspects of every process (Hoyle, 5). This system is used by most of the public and non-profit organisations in the UK. These standards define how organisations and/or its employees communicate with its internal and external customers; how to identify and meet customer requirements; monitor and measure customer satisfaction; adhere to statutory and legal requirements; standards of quality work environment and experience; evaluate effectiveness of training n development of its employees. In short, these standards help in improving product/service quality, customer satisfaction and employee motivation. Application of TQM and ISO 9000 to quality management These two systems can be adopted for effective quality management at organisations depending upon the nature of their products/services. Starbucks adopted TQM as its strategic quality management system through tools such as Just in Time (JIT), Taguchi, Design of Experiment etc; systems such as ISO 9000; human resources such as Total Employee Involvement and Quality Circles; Motivational such as Quality improvement awards. The JIT technique helps Starbucks in carrying out its operations in proper sequence in order to avoid wastage of space and any unnecessarily delays in the serving time to the customers. The same sequence of arrangement at Starbucks outlets is followed in almost every store. In addition, beverages and some other food perishable foods are delivered everyday to maintain freshness. Moreover, speed of services is enhanced by using automated machines at the counter (Mukerjee, 38). Employee empowerment at Starbucks encourages employees to actively participate in identifying opportunities for improvement and provides them with a platform to successfully implement their ideas. This concept in the form of Make it Your Own, has been one of the major causes for success (Michelli, 43). Michelli (p.74) pointed that Starbucks’ ‘Everything Matters’ approach includes aspects related to every detail of premises, product and its accessories, environment, as well as training and approach of its employees. On the other hand, ISO 9000 standards guide organisations to operate and produce products/services of a certain standard, which are comparable with those at the international level. These standards form the benchmark against which organisations can measure their product/service performance and can bring about improvements accordingly. ISO 9000 series provide schemes to improve quality as well as productivity of products/services (Budhwar, 454). In order for TQM to be implemented, organisations need to meet standards set by ISO 9000 as these standards will help in setting up a system. Subburaj describes that ISO 9000 standards virtually force the organisation to evolve a system for managing quality in the organisation (p.20.3). In turn, it documentation system helps in bringing all employees to the same understanding of quality policy and avoids misinterpretations. Through ISO 9000, an organisation will be able to identify gaps and areas for improvement in a more systematic and timely manner. Quality Culture: Quality culture is the infusion of quality-focused approach into every aspect of an organisation’s functioning and by all individuals at all levels. The main driving entity of quality culture is leadership that is committed to and understands the significance of Quality as an organisational system. Quality culture should aid in evolution of continuously improved processes and procedures, which further enhance customer satisfaction and help in sustaining competitiveness of the organisation. A few attributes that can are critical to bringing quality culture include leadership’s vision for quality; clear communication and information accessibility; high commitment to quality management; long and short-term strategic planning; training and continuous development of employees; creativity and innovation; effective team building and motivation; empowerment of employees; a systematic approach to building and implementing effective quality systems, tools and techniques (Doherty, 138). Studies have indicated that quality culture differs in every country, and is impacted by social, economical, cultural factors. For instance, Japanese management view quality as a structure approach to management, and thus entrusted the responsibility of quality to highly experienced managers. Whereas, the American management focused on training professionals at all levels to administer their quality sections and perform the quality management function. In addition, the American quality management focuses heavily on statistical data, and little on relationships (Shafritz & Rosenbloom, 338). Besides hierarchy, Japanese management strongly supports team working, a classic example is the formation of Quality Circles by Dr K. Ishikawa; these included small group of individuals meant to eliminate the special causes of variability in the product and to promote continuous improvement. Eventually, even American companies adopted the QC technique (Kaynak, 62). Conclusions: In conclusion, strategic alignment of objectives with organisational goals is a complex activity requiring a systematic approach at all levels in the organisation. Developing a continuing improvement to organisation’s performance, systems such as TQM will of great use. TQM requires ongoing action in terms of planning, implementing and monitoring activities to bring continuous improvement in all functions and at all levels. A report on organisational performance and an improvement plan for Starbucks Opportunities for quality improvement can be found in product/service quality; meeting and/exceeding customer’s requirements; enhancing employee performance, motivation and commitment; and improving profits for the organisation either by reducing costs or increasing profit inflow. To achieve these, data of past performance or data on revenue for at least six months would be required as it will help in understanding trends, gaps and opportunities for improvement. Secondly, occurrences of huge variation will provide sufficient evidence for lack of consistency and an opportunity to improve or bring about consistency in performance or profits. Presence of lapses in reproducibility of products/services; high production cost; presence of rework or erroneous products/services; higher turn around time; low profits; huge labour costs; high employee turnover; low customer satisfaction scores are other indicators of opportunities for improvement in quality. Performance improvement program Considering Starbucks’ objectives, performance management and improvement plan has been illustrated based on Deming’s PDCA approach. This will help in bringing quality output and continuous improvement process at various levels and all functions of an organisation. This report evaluates the three main elements of Starbucks’ business , i.e., product/service, customer and employee separately. 1. Product/Service: Plan: A review of past profits and an analysis of product preparation time, ingredients’ costs and revenue generated on each of its products will give a fair idea of which product is generating highest profits and the ones which incur losses. Low quality products or erroneous product preparation needs to be checked. These products or instances form opportunities for improvement. Identification of root causes for these errors/low quality outputs needs to be done. Action plan to curb these errors needs to be prepared. The action plan could include resource quality, process reengineering, training needs, and/or employee motivation or attitudinal changes. Do: Corrective actions identified as per the plan need to be implemented. Actions could include Acquiring better quality raw materials from different suppliers, Different ways of processing the food/products, Training staff as per requirement Introducing rewards and recognition programs, Providing one-to-one feedback to staff and improving relationship. Check: A continuous monitoring of the new activities implemented will help in assessing their effectiveness. Act: Evaluation of the new products/services based on the outcomes. If the outcomes are improved, then the new process can be continued for longer time. Otherwise, a new approach might be required. The new successful actions can be shared with others as best practices. 2. Employee Perspective: Plan: A performance evaluation based on specific pre-defined metrics and prior benchmarks will help in assessing employee’s contribution to the work. Every employee’s strengths and areas of improvement have to be assessed so as to provide appropriate coaching and training. This assessment will help in developing specific action plan for every employee. In case of generic skills like product development or process, all employees can be trained simultaneously. However, specific skills such as communication (verbal or written), customer management, interpersonal, time management, telephone etiquettes, team bonding, supervisory and leadership skills vary for every employee. Identification of these training needs is extremely important for customer satisfaction and good productivity within the organisation. Issues such as stress and work overload cannot be ignored. Do: Upon identification of root causes for low performance or poor quality outcomes, action plan could include, Product and/or process training or updates related to product/process can be provided. To enhance employee motivation, appropriate rewards and recognition along with acknowledgement of improvement or good performance can be very helpful. Regular one –to-one feedback sessions need to be conducted to discuss performance and other issues that might affect employee performance. If work-related stress is identified as a hindrance to performance, then employee work timings may be revised; or introduction of frequent breaks, relaxation time etc may be introduced. Check: Employee performance in terms of productivity and quality needs to be continuously monitored by his/her supervisor. This monitoring should take place at all levels and departments because organisational performance depends upon performance of all individuals and teams. Issues related to team bonding, interpersonal relationships and staff-supervisor need to be checked. Leadership plays a significant role in managing employee performance. Employee working time should be monitored constantly so as to ensure organisation is not employing too many staff because of reduced or modified work timings. Act: Actions leading to enhancement in performance and improvement in employee behaviour can be continued and shared with other areas of the organisation. If the changed/modified work timings produced better productivity and efficiency, then the same concept can be adopted in other areas. These actions may be continued as long as the performance is not being affected adversely. However, for continuous improvement, the actions can be further modified in order to enhance productivity and efficiency further. 3. Customer Perspective: Plan: Reviewing customer satisfaction scores derived from customer survey can be of great help to improve performance. Based on these scores and feedback from customers, Starbucks can check for details such as customer expectations in terms of employee behaviour, etiquettes, politeness; ambience issues like hygiene, presentability, and comfort; value for money, product prices versus quality and taste. Issues or low satisfaction scores may be assessed for identification of root causes. Do: For issues related to employee behaviour, employees can be trained on soft skills and customer management aspects. Customer dissatisfaction on products may be checked for quality of product in terms of taste, presentation, freshness. Employee contribution to this dissatisfaction can be addressed by checking employees competence levels and skills; their decision making style; and the process of making the product. High-cost issues can be addressed by introducing similar products in varied and affordable sizes/quantities. Check: While the new actions are being implemented, they need to be constantly monitored and corrected if inappropriate or are being done incorrectly. Upon implementing these action points, customer satisfaction needs to be assessed so that the actions that improved customer satisfaction may be retained else changed. Act: Assessment of customer satisfaction through similar surveys will determine if the actions were useful. Actions that resulted in improved satisfaction may be standardized, if not need to be planned again. A continuous monitoring of progress is extremely important to sustain enhanced customer satisfaction because customer’s needs keep changing. Conclusions Deming’s PDCA approach provides basis to frame a comprehensive plan for an ongoing performance improvement. This approach has the capacity to covers all stakeholders and all processes within the organisation. It helps in identifying and targeting specific areas that need to be improved, thereby saving time and efforts; however, constant monitoring is important to check for effectiveness of the action plans implemented. Works cited Dess. Strategic Mgmt: Text & Cases. Edition 3. NY: Tata McGraw-Hill, 2009. Brown, Steve. Strategic operations management. Great Britain: Elsevier, 2000. Hill, Charles. W.L and Gareth R. Jones. 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