How Companies Set up Appropriate Operations Performance Objectives - Essay Example

Operations Management How Companies Set Up Appropriate Operations Performance Objectives to Achieve Operation Excellence and Manage Trade-Offs Operational excellence describes an ideology of joint effort, leadership and problem-solving that leads to constant improvement in an organisation. Operational excellence causes businesses to focus on consumers’ needs, thus empowering workers and optimising operational functions in the process. In the present-day commercial market, operational excellence is vital for the productivity of every business. In the past, issues of quality, cost and delivery comprised operational excellence. In the present business climate, however, the rules concerning operational excellence are more rigid, and there are additional factors such as adaptability, risk mitigation and rapidity that influence the success of a business. How to Achieve Operational Excellence A business needs to pay special attention to the methods it uses in achieving its goals so as to ensure success. The basic objectives of operations management are speed, quality, flexibility, dependability and cost. Such factors add value for consumers and encourage competiveness by being able to meet consumer needs (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). Operational management usually makes use of critical performance measures to support consumer needs. Trade-off facilitates consumer preferences and protects against straddlers and repositioners. An example of a business that has used trade-offs is the Neutrogena Corporation. Neutrogenas positioning is balanced on a residue free and very skin-friendly soap intended for pH balance. With considerable detail in encouraging the input of dermatologists, Neutrogenas promotional strategy imitates the advertising tactics of drug companies and not soap manufacturers. Neutrogena markets its products in medical periodicals, carries out research in its official Skincare establishment and makes regular correspondence with doctors. Neutrogenas representatives also regularly participate in medical conferences. To strengthen its position, Neutrogena initially concentrated on distributing its products to drug stores and did not take part in price promotions. Neutrogena has also made use of gradual but costly manufacturing processes to develop its fragile soaps. In making the decision to go through with this strategy, Neutrogena turned from the normal practice of soap manufacturers. In most cases, the creators of skin softening lotions and deodorants outsource certain functions to other establishments in the market that are specialised in specific levels of processing. For example, Neutrogena forwarded price promotions and marketing to supermarkets (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). It also forfeited manufacturing efficiencies in order to realise the soaps much esteemed attributes. In its initial positioning, Neutrogena made trade-offs that would cushion it from imitators. Another example of a company that benefitted from its trade-offs is IKEA (New and Westbrook 2004). Most trade-offs are indicative of inflexibilities in an organisation’s personnel, machinery or systems. The more IKEA revises its functions to reduce costs by having its consumers conduct their own assemblage and delivery, the less capable it will be of meeting the requirements of consumers who need its services. Organisational Objectives Corporate objectives are necessary in mapping out the direction or the organisation within specified time frames. In many organisations, there are four main kinds of objectives: Financial Objectives Monetary objectives tend to focus on attaining reasonable profitability in a business’ pursuit of goals, long-term sustainability and the going concern aspect (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). Financial objectives show commitment to achieving results such as creditworthiness, improved cash flow, growth in earnings, dividend growth, an acceptable return on investment and stock price appreciation. Strategic Market Objectives Strategic market goals are centred on a corporation’s target of improving and sustaining the business’s long-standing market position and competitive strength through generating customer value. These types of objectives centre on capturing additional market share, realising lower costs than business rivals, having better product innovation and customer service than competitors, and gaining a better reputation (Stuart and Johnston 2000). These objectives also seek to launch the company in question in the international market, benefit from growth opportunities and encourage the company to adapt to technological leadership. Strategic objectives are usually competitor-focused and reinforce the corporation’s lasting competitive advantage. A business demonstrates strategic intent when it directs its competitive energies in achieving the above mentioned objectives (Koufteros, Vonderembse and Jayaram 2005). The strategic intent of an average-sized business could be to control a market niche. The strategic intent of a developing company can centre on outdoing the market leaders. The strategic aims of a corporation that is technologically innovative, on the other hand, could be to launch a new service or product. Small businesses that are determined to accomplish strategic objectives that surpass their resources usually end up being more formidable competitors than the well-known corporations that have modest strategic objectives. Strategic market usually takes into account higher product quality and more eye-catching product line than competitors, a larger market share and a stronger status as well as superior consumer service (Raturi and Evans 2005). Other factors include being identified as leaders in technical expertise and wider geographic presence than business rivals. Internal Operational Objectives Domestic operational objectives are centred on business procedures that have an effect on generating consumer satisfaction and value (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). Internal objectives also sustain the corporation’s core competencies. There are different types of internal objectives. Management objectives have to do with overseeing major operational procedures within the company, while operational objectives deal with how a firm manages frontline corporate units such as sales districts, plants and distribution centres. This also includes how to work on strategically critical lines, for example, maintenance, inventory control, and advertising campaigns among others (Rainbird 2004). Small Business Unit (SBU) objectives are merely comprehensive supporting objectives for every stage of management. Objective setting is usually conducted from the top ranks in order to direct lower-level supervisors and corporate units on how to accomplish outcomes that encourage the achievement of general corporate objectives. A top-down procedure... 1. ...assists in creating cohesion among the goals and intentions of diverse sectors of the business 2. ...contributes by unifying corporate efforts to conduct the company through the preferred strategic plan. Innovative and Learning Objectives Innovative and learning objectives are centred on functions that contribute towards improving and creating the business’ value. It includes improvement in the business’ knowledge base and knowing the best revolutionary practices. In what ways product design is integrated with service design (cover key considerations in product design and service designs and then comment on how product design is integrated with service design. Illustrate your answer with an example of one or two firms that you are familiar with)? Product and Service Design When companies make plans to introduce a new service or product, the main factor that is usually considered is the design (Gunasekaran and Ngai 2004). Product design involves determining all the qualities and attributes of a product. Service design, on the other hand, involves organising people, material and communication elements in order to enhance service quality. It forms the connection between customers, their experiences and the service provider. A service is any activity that is performed for a client and performed and delivered concurrently (Kannan and Choon Tan 2005). The critical factors that govern service design are the levels of variation in requirements and the extent of contact between consumers which decides how consistent the service will be. The higher the level of consumer contact, the more the chances of selling. Additionally, the ideas and concepts that are formed are captured in service prototypes. The strong visual component, along with the chance of testing and swiftly transforming services produces genuine value in the existing competitive commercial markets. Product Design uses business as well as product knowledge to produce ideas and notions, and then change them into usable or physical objects. Product designers create and evaluate concepts and themes that they believe are profitable. The product designers make these concepts practical through using a methodical approach (Vonderembse and White 2004). Service design is a quality that is intangible; whereas product design is practical. Services are usually generated and delivered simultaneously and cannot be held in storage like tangible products. In addition, services are more visible to consumers (Anupindi, Chopra, Deshmukh, Mieghem, and Zemel, 2006). Service or product designs have to match the corporate strategy for the corporation to be successful. For example, if a product is created with several features it will probably cost more to produce. The main differences between service and manufacturing processes are that tangible products are the result of manufacturing, whereas services only involve the consumer (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). Service design is more complex because a company has to generate the service as well as service concept. The Disney Theme Parks as well as Border’s bookstore are examples of two corporations in which product design is integrated with service design. At McDonald’s, the tangible products include food, children’s play areas and the functional seating. The sensual benefits include the reliable taste of the meals provided, and the satisfaction of happy children (Vonderembse and White 2004). The emotional benefits include the fast food and a period of relaxation. At Border’s bookstore, the tangible products are the café items, books and areas to chat and read. The sensual benefits are the sight of interesting books, and the enticing smell of items in the café. The emotional benefits include the comfort as well as enjoyment of the esteemed status of the bookstore. Explain what customer relationship management (CRM) is and how companies (two examples) use this method to enhance their supply chain performance? Customer relationship management CRM (customer relationship management) is an expression used to describe software, methodologies, and other internet capabilities that assist in managing customer relations in a systematic way (Vonderembse and White 2004). For example, a business can create a catalogue about its consumers that depicts in detail relationships so that the management, service personnel, salespeople and the consumers can match consumer needs with offerings and product plans, and remind consumers of service requirements. Customer relationship management agendas are used to make sure that consumers can access services as well as product parts when necessary and after sale transactions have occurred (Finch 2006). Companies such as Dell and IBM both integrate supply chain management and customer relationship operations in order to realise increased profits. CRM is mainly concerned with recognising, maximising and retaining the value of corporation’s consumers. CRM is a service as well as sales business strategy where the business wraps itself around the consumer so that whenever there is a transaction, the data that is exchanged is about what is pertinent to that particular consumer. This means comprehending everything that affects the consumer and appreciating the profitability of that consumer. CRM is basically a practice that seeks to form the complete picture of a given consumer, thus accumulating comprehensive, consistent and credible data on all facets of the existing association. These include risk profiles, profitability information and cross-sell probabilities. When executed successfully, corporations may be able to achieve several objectives, including increased sales, streamlined sales and marketing procedures, better service levels and consumer retention, customer loyalty and increased Call Centre efficiency. The companies will also realise higher rates of closes, reduced expenses, better customer profiling and increased market share. Although the advantages of consumer relationship management are many, not all businesses have employed this strategy in realising their goals. Barriers to the realisation of customer relationship management in various organisations include the complexity that is necessary to employ work flows, especially in the larger firms. In the past, CRM tools were mainly exercised only in contact management or in documenting and supervising interactions as well as communication. Over time, the uses of CRM tools were expanded to support additional business functions associated with consumers. In numerous circumstances, the implementation of CRM tools is usually fragmented. Different business divisions usually take action only for their individual benefits instead of working for the good of the entire firm. There are a number of variations in customer relationship management. The common ones include marketing, sales force automation, analytics, customer service, integrated and shared practices, social media, small business and membership based plans. Describe key principles of project management, and analyse their importance using two highly publicised examples of project management done extremely well vs. project management gone terribly wrong. The Seven Key Principles of Project Management are: Business Rationalisation: each project should create adequate proceeds. Investors have to understand how they will benefit from projects prior to committing their capital. Moreover, circumstances can quickly change once the process of production has begun. Processes that waste capital should be eliminated (Anupindi, Chopra, Deshmukh, Mieghem and Zemel, 2006). Specified Responsibilities and Roles for Personnel: All the employees that are involved in the project should understand their responsibilities as well as to whom they are accountable. Without clearly defined responsibilities and roles, workers will not have the impetus to own their tasks. In such a disorganised environment, the advancement of the project will be largely hampered. Manage By Exception: Investors in projects should not be over-involved in the daily administration of projects. Project managers should be given all the authority they need to handle all issues that arise in the daily running of the projects. When project sponsors micro-manage different projects, they obstruct genuine development (Vonderembse and White 2004). Project sponsors should instead determine the cost as well as the period for the realisation of the projects. Manage By Phases: It is essential for project managers to divide the project into smaller stages that increase the project’s manageability. At every stage, the project sponsor has to make decisions about whether to retain the same number of personnel and whether to take more risks. Fragmenting the project into different parts is a low risk technique that allows the sponsor to supervise by exception. Focus on Products and Services: it is critical that clients and consumers carefully consider the communities they will need prior to the commencement of the project. If they take this into account, they will be more reasonable about what can be achieved. This makes running the project considerably simpler and less risky. Learning from Experience: Project managers should not repeat mistakes in successive projects. They can determine why definite aspects bring problems, and then assimilate what they learn in the subsequent projects. Projects Should be Created to Suit the Environment: Whatever methodology the project managers favour, it must cater to the specific requirements of the project in question (Vonderembse and White 2004). Instead of using untested methodologies, the project manager has to adapt to processes that match the demands of the tasks at hand. The Bamínica Power Plant Project case illustrates the difficulties that can be encountered by a multinational corporation when seeking to establish branches in developing countries. This project was also unsuccessful because of the differences that cropped up between different partners in equity joint ventures. In addition, the project was plagued with disagreements between construction and equipment contractors, frosty community relations and irregular project financing. Airbus is another casualty of faulty project management. After the Airbus Corporation announced a postponement in the delivery of its impending A380, which was to be the largest passenger jet ever made, it disconcerted its consumers. The company openly stated that the delays resulted from difficulties experienced in project management. Quebecor, R.R. Donnelley & Sons Company, Big Flower Press and World Colour Press are examples of firms that have effectively executed project management. The international furniture retailer, IKEA, which is based in Sweden, has also successfully implemented project management over the years. References Anupindi, R., Chopra, S., Deshmukh, S., Mieghem, J. & Zemel, E. (2006) Managing business process flows: principles of operations management, Prentice Hall, Upper Saddle River. Finch, B. (2006) Operations now, McGraw-Hill Irwin, Boston. Gunasekaran, A. & Ngai, E. (2004) ‘Virtual supply-chain management’, Production Planning & Control, vol. 15, no. 6, pp. 584–595. Kannan, V.R. & Choon Tan, K. (2005) ‘Just-in-time, total quality management, and supply chain management: understanding their linkages and impact of business performance’, Omega, vol. 33, no. 2, p. 153. Koufteros, X.A., Vonderembse, M. & Jayaram, J. (2005) ‘Internal and external integration for product development: the contingency effects of uncertainty, equivocality, and platform strategy’, Decisions Sciences, vol. 36, no. 1, pp. 977–133. New, S. & Westbrook, R. (2004) Understanding supply chains: concepts, critiques & futures, Oxford University Press, Oxford. Rainbird, M. (2004) ‘A framework for operations management: the value chain’, International Journal of Operations and Production Management, vol. 34, no. 3, pp 337–345. Raturi, A. & Evans, J. (2005) Principles of operations management, Thomson Southwestern, Mason. Stuart, N.S. & Johnston, R. (2000) Operations management, Financial Times Management, New York. Vonderembse, M.A. & White, G.P. (2004) Operations management: concepts, methods, and strategies, John Wiley & Sons, Danvers. Read More