Operational Decision Making in Kate Spade New York - Coursework Example

Case Study: Operational Decision Making in Kate Spade New York Table of Contents Introduction 3 Operational decision areas 4 Product Design 4 2.Product Quality 5 3.Process and capacity 5 4.Location strategy 6 5.Layout strategy 7 6.Human resource management 8 7.Supply chain 8 8.Production planning 10 9.Production handling and maintenance 10 Conclusion 11 Works Cited 12 Name of the Student Name of the Professor Course Number Date Introduction “Kate Spade New York” is a fashion designer house founded in 1993 in America. The company had initially started its business with launch of handbags. With time, the company grew in other sectors as well, such as, clothing, shoes, jewellery, accessories, beauty products, fragrance, home decor and other stationary products. The company has around 80 retail outlet stores in the United States and more than 100 shops worldwide. Kate Spade New York is present in all major countries across the world and is known for lively colours, graphic prints, playful spirit and elegance. In 2012, the company opened its first flagship store in Dubai and presently, there are three stores in the Gulf region. The economic growth of UAE (United Arab Emirates) is a major reason for the company to enter this market. Moreover, Dubai has increasingly become an international hub of culture, sports, tourism, entertainment and business; as a result, it is home to most international brands (“The company”). The paper focuses on launch of a new fragrance by the fashion house in the UAE market (Dubai) and operational decisions associated with it. The product is being introduced by the company to target the mass consumers of UAE. The cost of the product will be standardized so that it is accessible by mass consumer, hence it is expected that the strategy of differentiation and standardised price will be appropriate. The following section elaborately discusses critical decision areas related to the product introduction. Operational decision areas There are ten major crucial decision areas that every organisation needs to evaluate before introducing a new product in the market. These decision areas involve product design, quality, process and capacity, location strategy, layout strategy, manpower, supply chain, production planning (inventory, Just-In-Time, Material-Requirement-Planning), production scheduling and maintenance. 1. Product Design Consumer perception Elements related to the physical product such as, shape, size, quantity, colour and price Packaging of the product and cost associated Product labelling While preparing product design, the designing department must research about preference and perception of the targeted consumers. Dubai is a multi-cultured juncture; but in UAE, Islamic culture is prevalent, which is slightly conservative by nature. This fact should also influence the product packaging and labelling design. Product design is mainly associated with creating a unique product in terms of shape, colour, size, quantity and most importantly, price. It is also important to keep a track of the cost to be incurred while designing the product (Bruce and Cooper 30-58). 2. Product Quality Clinical quality test Quality assurance certificate Formulation and implementation of quality policy Cost associated with quality Market feedback In perfume industry, quality of a perfume is determined by its fragrance, longevity and effect on consumers’ health. Poor quality of perfumes leaves stain on cloths or has allergic reaction on skin and health such as, itching, headache and sneezing. Hence, quality of the product should be clinically approved. Further, it is necessary to obtain quality assurance certificate from a standard organisation. The organisation need to formulate and implement policies related to quality. The cost of quality research should be determined so that the budget is maintained. Lastly, sample of the product should be tested on potential consumers in order to obtain feedback, which will determine future of the product (Krishnan and Ulrich 1-21). 3. Process and capacity Decision regarding equipments and technology Flow of process Line of production Capacity of production line Capacity planning in terms of human and non-human resources Time span of the process The process decision determines span of the process, whether long-term or short-term. In this area, decisions related to physical facility, process flow and line of production are decided. Moreover, various aspects such as, type of equipment, technology and manpower requirement, are decided. Capacity decisions involve size of the capacity, delivery period and decisions related to production quantity. Capacity planning involves planning about operation location and man power (skilled, semi-skilled and unskilled; permanent and temporary) required for direct as well as indirect operations (Martinich 8-30). 4. Location strategy Proximity to raw materials Nearness to market Transportation facilities Availability of manpower Availability of resources such as, water and energy The location strategy in operation management is one of the most important decisions related to product. The product location should be such that raw materials are easily available, transportation service is accessible, resources such as, manpower, energy and water, are present and closeness to market is maintained. These factors are crucial for location decision. A number of companies employ different techniques such as, location cost-volume-profit analysis, factor rating and centre of gravity method, in order to evaluate different locations and select the best suited one. Furthermore, cost associated with the location should also be evaluated. On that basis, the company should decide whether to rent the location or buy it for the plant (ReVelle and Eiselt 1-19). 5. Layout strategy Customer satisfaction Space utilization Efficient flow of information Employee safety Layout strategy should be appropriate as it serves as a ground for various other strategies such as, design and volume of the product, capacity and process equipment, location constraint and quality of work life. Layout can be of different types such as, fixed position, office, retail, process-oriented and product-oriented. Since production of perfume is highly dependent on consumer preference, the best layout for this purpose is retail. This layout will help in increasing flexibility and facilitate better utilization of space, machinery and manpower; it will also improve interaction with management and consumers. In production of perfume, hygiene is very important. Hence, the layout should support hygienic and safe working conditions (Krishnan, Cheraghi and Nayak 105-133). 6. Human resource management Managing human resource through job designing Maintaining work ethics and job standards Motivation and incentives system Employee empowerment The decision pertaining to human resources is another crucial one. Job design is one of the major aspects of human resource management. The appropriate allocation of job as per individual’s qualification results in satisfactory outcome and productivity. Employee empowerment motivates employees and makes them feel more connected to the organisation, given that a greater share of planning, decision-making and controlling abilities is endowed on the individuals. Furthermore, employees need to be motivated by raising work standards as well as through ethics and incentive system (Evans, Pucik and Björkman 20-120). 7. Supply chain Managing raw material and finished products Development of transportation and logistics facilities Coordinating transportation with production and marketing plan In global companies like, Kate Spade New York, an integral role is played by the supply chain. Perfume creation need raw materials in a timely manner as it may otherwise result in interruption in work flow. In addition, fragrances are delicate products, so are its raw materials such as, spirit and essential oils. Transportation and logistics delay may eventually hamper work-in-progress. Hence, the firm need to exercise caution as well as coordinate logistic functions along with marketing and production plans. The international brands such as, Kate Spade New York, undertake integrated global supply chain management so as to avail resources from different parts of the world at the facility on time and at a reduced cost (Christopher 15-40). (Source: Author’s creation) In the above chart, the purchase and delivery supply chain has been explained. It shows that the user has filed his requirements with the purchase department, who in turn checks it with the supplies department by filling order; if the product is available they send it to the user while in case of unavailability of product the loop continues. In case Kate Spade New York, the chances of last situation that is unavailability or shortage of product is almost negligible as the company has its own plant in the country and it has efficient supply chain management regarding inventory and final product supply. 8. Production planning Inventory management Just-in-time Material requirement planning (MRP) Any production plan requires uninterrupted material flow in order to continue operations. Inventory management ensures timely availability of raw material to production department, accessibility of finished goods for consumers and distributors and less accumulation of inventory. Just-in-time production is not a technique, but a management philosophy, which ensures that products are available to consumers at right quantity and quality on right time. It further secures the fact that wastes are eliminated. Another important part of production planning is MRP. MRP helps in determining the required quantity of raw material through economic order quantity and material turnover period. It helps in preventing over-production, reducing set-up time and improving flexibility (Stevenson and Hojati 15-38). 9. Production handling and maintenance Production cycle handling Quality check and equipment handling Reduction in breakdown and repair Improvement in quality The main advantage of production handling and management is cost efficiency. Preventive maintenance approach in production is supportive by way of avoiding untimely breakdowns and consequently, operational loss. Production handling involves scheduled quality checking and evaluation of production cycles, plant facilities and services. Production maintenance helps in reducing chances of accidents, wastage and defects, besides ensuring improved quality and better service in terms of product delivery. The initial cost incurred in installing preventive maintenance system can be comparatively high, but it reduces costs related to machine failure, production halt, speed loss and so on (Panneerselvam 25-38). Conclusion The paper discusses various operational decisions pertaining to product launch. The main focus has been on introduction of a new perfume by Kate Spade New York in Dubai, UAE. Perfume production is a delicate operation, which is why exercising caution is necessary. The operation related decisions include product design, quality, plant location and layout, supply chain, production process and maintenance and relevant cost. Better product at an effective price is the main agenda for all international brands as this helps in distinguishing their services. For this purpose, production lines should be flawless and there should be continuous supply of material. The various sections of this paper have evaluated these decisions criteria in an elaborate manner. It was also observed that the decision of the company to introduce the new fragrance at a standardised cost was appropriate. The product was created keeping in mind the conservative nature of UAE’s culture, which is Islam hence, the idea of differentiating the product in terms of size, shape and type of fragrance was useful as well. Works Cited Bruce, Margaret, and Rachel Cooper. Creative product design. New Jersey: Wiley and Sons, 2000. Print. Christopher, Martin. Logistics and supply chain management. UK: Pearson, 2012. Print. Evans, Paul, Vladimir Pucik, and Ingmar Björkman. The global challenge: International human resource management. Boston: McGraw-Hill Irwin, 2011. Print. Krishnan, Krishna K., S. Hossein Cheraghi, and Chandan N. Nayak. "Facility layout design for multiple production scenarios in a dynamic environment."International Journal of Industrial and Systems Engineering 3.2 (2008): 105-133. Print. Krishnan, Viswanathan, and Karl T. Ulrich. "Product development decisions: A review of the literature." Management science 47.1 (2001): 1-21. Print. Martinich, Joseph S. Production and operations management: An applied modern approach. New Jersey: John Wiley & Sons, 2008. Print. Panneerselvam, R. Production and operations management. India: PHI Learning Pvt. Ltd., 2012. Print. ReVelle, Charles S. and Horst A. Eiselt. "Location analysis: A synthesis and survey." European Journal of Operational Research 165.1 (2005): 1-19. Print. Stevenson, William J. and Mehran Hojati. Operations management. Boston: McGraw-Hill/Irwin, 2007. Print. “The company.” Kate Spade New York. Kate Spade New York, 2014. Web. 31 May 2014. Read More