Operational Supply Chain Management - Essay Example

Operational Management Question Supply Chain Management Supply chain management is aimed to help organizations deliver services at the best possible and cost effective way. Customers and products are separated in time, space, and ownership. The conduct of human activities presupposes the availability of an appropriate assortment of goods and services. Channels of distribution bridge the separations and support our life style. In a broad sense, channels are composed of middlemen and facilitating agencies -- wholesalers, retailers, financial institutions, and transportation agencies (Cohen and Roussel 2004). The case of restaurant managed by Ms Nok Si Leon shows that she is full of innovative and quality improvements ideas, thus some of them will not work in the airport setting. To present a total point of view, critics shall consider channels from the manufacturers' perspective, emphasizing their selection rather than the description of their components. Just the same, it should not be assumed that channels are always selected or devised on a rational basis. Many channels just grow and become habitual and institutionalized. In the future they must be planned more effectively because marketing tasks (which are shaped by technological changes, sociological and psychological factors, new product development, automation, and dynamic global markets) are becoming more complex (Naylor 2002). The proposed two shelf lines will help Nok to meet customers' expectations and different tastes. It should be evident that differences exist between the organization and management of a channel as compared with that of an independent unit. Authority does not flow directly through each of the units from the top down. Resources are owned and allocated by a number of units. Objectives and expectations of units vary; and although interdependence of interests exists, there are also conflicts. The ideal relationship as seen by each member may shackle other members. In such instances, negotiation, bargaining, and requests for cooperation as well as power become tools of coordination. Following Cohen and Roussel (2004) equilibrium in a channel depends on the development of mutually satisfying marketing relationships and roles among manufacturers, wholesalers, and retailers. The tie that binds and coordinates channel activity is the community of interest and independence that these groups share. Often the relationship is one in which the manufacturer is the primary organization and other channel members are secondary (Naylor 2002). The most ineffective strategy is to divide the restaurant into two areas and "move" it divided line when necessary. It will create a lot of problems for staff and visitors. Basically, restaurants have three channel policy courses available to them -- intensive, limited, or exclusive distribution. Intensive or broad distribution gives maximum exposure; these are convenience items where easy and ready access is important. The problem they pose of widespread market penetration often requires wholesalers. Limited menus permits a choice of dealers more ready to cooperate with a manufacturer and promote his line. This approach permits the concentration of effort on selected outlets, and requires careful planning. Nok should rely on high quality but limited number of food proposed to customers (Naylor 2002). For Nok, channel selection has great bearing on a company's financial requirements and market capability and vice versa. Given the total range of services supplied by a channel (the wholesaler, for example), companies are able to distribute to broader market areas and to expand their production capabilities. As distribution channels change, so do corporate financial requirements and resource positions. Manufacturers may establish a sequential plan for distribution based on their own development. For instance, a small manufacturer with a limited product line, limited finances, and geographically dispersed markets may use the full services of a wholesaler. As the manufacturer grows in financial stability, capability, and product line, he may switch to limited use of wholesaler services or to a selling agent or broker, perhaps just in selected areas. Later he may employ manufacturers' agents, and ultimately the company's own sales force and branches. As this sequence progresses, a manufacturer's control increases, and so do his financial and marketing responsibilities (Lucas 1994). A special attention should be given to process. Supply chain decision influence prices, middlemen activities, and margins. They strongly affect inventory situations and production fluctuations, as well as marketing policies in such areas as advertising, branding, product lines, personnel selling, and physical distribution. Yet channel selection often receives less attention than such areas as the allocation of advertising budgets or the motivating of salesmen. Although a continuing task, channel selection is often treated as a decision to be made once for a relatively long period of time. Whereas channel decisions usually involve long-run commitments, channel policy is not irrevocable. It must be reviewed and changed to improve efficiency. The wrong channel choice can severely handicap a program, especially for a new product, and yet switching channels is not likely to be a frequent occurrence because it is a disruptive and costly undertaking. Conscious distribution-channel decisions are usually made early in the formulation of a marketing program. Though channel selection is not entirely rational, relevant factors are usually considered. These decisions govern and affect other aspects of the marketing mix, including physical distribution, personal selling, advertising, credit, sales promotion, and product service. Through time, changes in the channels of distribution are not readily made, though, in theory, managers should continuously evaluate pertinent factors and select and shift channels accordingly (Cohen and Roussel 2004). Notwithstanding, supply chains are shaped by changing demand configurations and current business structures. The alternative policy for Nok is to join short time and long time product lines and propose them in one menu. It will help to meet the contract and deliver the heist possible quality of services. The concentration or diffusion of states and customer wants and needs affect menu selection. In most situations, however, the choice is neither direct nor simple. Workable rather than optimal choices must be made because of the lack of complete information. Since existing alternatives present limitations and the wisdom of decisions is determined by unpredictable future events and long-run commitments, management must deal with expectations. Nevertheless, the consideration of channel factors can make the decision a very logical one. Thus, channel analysis and evaluation is important; it is part of the marketing audit. Adjustments must be made continuously, based on criteria of channel performance (Cohen and Roussel 2004). The best choice varies with both the restaurant and market situations. Developing a balanced, smoothly functioning and efficient channel is a demanding task. It is based on considerations of markets, products, customers, company constraints, information about competition, current business practice, and feasible alternatives. Basic to all factors are cost-revenue considerations. A distribution channel may be a complex network. It can comprise a number of separate and distinct organizations that have independent legal and functional status. Yet their activities are coordinated to form a vertical system that seeks joint opportunities in the marketplace. A channel is thus a super organization, an ecosystem, governed not only by desires of producers and middlemen but also by consumers and socioeconomic environment. Because supply chain involves changes in numerous functions and organizations, it is important to consider the sensitivities involved with this controversial subject matter. As a result, in an economy of abundance a heavy burden moves from the physical production of goods to their marketing. Such marketing facets as the supermarket and the discount house; television, magazine, and newspaper advertising; and consumer credit and the distribution center are part of the mass-marketing technology designed to support mass-productive systems. It must be expected that costs of marketing products will increase relative to the costs of physically producing them. However, the availability of mass markets permits a drop in production costs (Cohen and Roussel 2004). In sum, the best possible solution for Nom is to restructure its services and create a unified menu based on short term and long-term lines. The fulcrum of supply activity is the customer. Without some form of hierarchy, most firms would quickly descend to a chaotic state for lack of both a focus for their actions and a glue to hold them together. Anyone who has been in collegial groups where everyone enjoys about equal levels of power will not question this statement--nor forget the agonizing experience! Question 2 Quality is the main priority of the food and restaurant industry. Service quality improvements are an almost natural outcome of attaining the time reductions and balance shown above (Naylor 2002). To be sure, quality is not simply or solely a matter of putting parts together right or serving customers with speed, accuracy, and courtesy. Product design, whether it be room service, a restaurant's atmosphere, an amusement park's rides, or a seamless aluminum can for soft drinks, is tremendously important in the quality actually built into the product (Beckford 2002). In order to assess the quality, the restaurant can use quality assessment questionnaires filled by customers and control charts. Robust quality, he asserts, helps minimize the quality loss (that is, cost of subsequently rectifying the product to suit customers' needs and other stakeholders' requirements). While the important transition from qualityas-designed to quality-as-delivered is beyond dispute, we are not so sure we support the implied conclusions that (a) if quality is to be improved, it is best to focus on the product's design and, as a corollary, (b) any enhancement achieved in quality during the operations phase (stage of the value chain) is marginal and not deserving of all the attention showered on it by writers and managers alike. Our objections to this line of thinking must be obvious (Naylor 2002). Value delivered lies not only in what is done at each stage but equally in how the stages are connected to each other. Undoubtedly, early stages of the chain limit the potential of later stages. A poorly-designed product severely constrains how much value can be built into it, just as there is only so much marketing one can do with a poorly-made product. However (and this is the core of our argument) a well-designed product does not necessarily result in a well manufactured and made one. Even if ninety percent of a product's or service's quality sprang from its concept and design, the other ten percent could mean the difference between top-notch and second-rate final quality (Naylor 2002). Granted, quality as designed is an important determinant of final quality and it could be crucial to newly-introduced products since unexpected defects and malfunctions may have to be designed out. But as products mature, competitors come out with copycat offerings, and in general, design know-how gets diffused across the industry, value construction tends to emerge as the determinant both of quality delivered to customers and of quality differences among competitors. A poorly designed product, therefore, will almost certainly be deficient in quality. A well-designed product, on the other hand, is no guarantee of superior quality. Having stated our stand on the strategic importance of quality constructed into the product, we return to our assertion that the nexus of setup, processing, or scheduling times can have a strong impact on quality (Beckford 2002). There are many measures of quality applicable to both manufacturing and service businesses that are in popular use. two quality techniques are quality control and TQM management. Acceptance of the TQM philosophy demands changes in organizational structures, and quite possibly an organizational revolution will ultimately result from its widespread acceptance. Much organization thought dwells on such concepts as the centralization of business management. Customer orientation, in contrast, stresses consumer sovereignty, environmental forces, and coordinated marketing systems. Moreover, the viewpoint of the firm in its socioeconomic system, with interdependent and interacting elements dominated by the consumer and shaped by competitive action, creates new organizational problems (Naylor 2002). Organization and leadership, therefore, must be perceived in another manner. Organization questions concerning how to best organize to implement the marketing concept, how to use specialists in marketing, and how to coordinate new types of personnel and technology, are being raised. More traditional organization models are being altered and challenged, and new forms are emerging. Modern marketing organizations face the formidable challenges not only of integrating a wide variety of activities that cut across internal departmental boundaries, but also of coordinating activities and decisions of independent manufacturers, wholesalers, and retailers to create systems that best serve customers and consumers. There are problems of determining the proper amount of structure, centralized or decentralized authority, strategies of leadership or followership, and organizational change and growth (Naylor 2002). Coordinated quality action is basic to the achievement of manufacturing, as well as marketing, and financial goals. The TQM philosophy connotes the acceptance of the fact that the fundamental business of business is creating customers, and that marketing provides a perspective for the total management team. The marketing concept refers to a company's management of its marketing resources -- its conception of marketing activities. How does market opportunity interact with the marketing mix It is through the mix that the culmination of the combination of company resources is offered to the marketplace. Market opportunity should determine the particular kind of mix to be offered. The major decisions on changing product lines or automating production, for example, imply risks and should be made only after assessing market opportunity. Thus, the choice of fundamental policies and strategies, and hence company survival and growth, depend on opportunity. Since company resources are limited, only selected opportunities can be effectively cultivated (Beckford 2002). To view market opportunity properly, a company and its products should be seen in their broadest perspective. Extended vision is required to recognize that a company is not in the television business, but is rather in communications. Similarly, a company markets household environments rather than household furniture. When assessing market opportunities, executives are confronted with a spectrum of situations that vary from the relatively easy to the most difficult to assess. At one extreme are those stable, nonperishable items that have a regular demand pattern. At the other extreme are fundamentally new products, or those with high style and high obsolescence factors. A good system of sensing market requirements provides ideas, information, forecasts, and the evaluation of their potentialities. Salesmen can sometimes provide valuable insights. They are often more intimately familiar with customer reactions, needs, and potentials, and with competitors' impact. They can be sources of new product ideas (Beckford 2002). The compilation and analysis of their estimates are useful in determining market opportunity. Opportunity assessment is the basis for sound investment decisions and strategy considerations that shape the total direction of a firm. As a result of the performance of this function, new product opportunities and the need of adjusting current product lines are brought to the attention of management (Naylor 2002). Indicators of value range from the precise to the elusive. The more exact indicators include long-term profitability and the time-based indexes such as OCE, while at the other extreme are indicators one can do no more than get a general feel for. Most of the measures of value and interdependence explored earlier lie at or in the proximity of precise measurement, particularly if improvement is to be evaluated. We now embark on a review of indicators, most of which are far less precise. Although opportunity assessment may appear to be relatively simple and straightforward, it is actually complex and requires sophisticated corporate thinking. Concerned with clear and precise definitions of enterprise purpose and market segments, it is indispensable to the profitable functioning and growth of the firm. Its scope is broad, affecting all budgets, research and development, new products, investment in plant and equipment, and profit planning (Naylor 2002). Opportunity assessment, the first and most critical of the functions, includes sales forecasting, the determination of target markets, the management of innovation, a concern with stages of market development of products and corporate strategies, and the determination of the impact of future environments on a business. It is an activity crucial to the profitable growth and survival of an enterprise (Naylor 2002). The third quality function is organization and leadership. Their products as conceived may be so severely flawed that the best of efforts at constructing value (through quality consciousness, thorough testing, and instant service) may fall far short of customers' expectations. An assertion often made (and rarely contested since it is difficult to verify or refute) is that eighty to ninety percent of quality is determined at the design stage (Naylor 2002). Bibliography 1. Beckford, J. 2002, Quality. Routledge. 2. Chase R.B., Jacobs R.F.2003, Operations Management for Competitive Advantage, Hill/Irwin; 10 edition. 3. Cohen, S., Roussel, J. 2004. Strategic Supply Chain Management McGraw-Hill; 1 edition. 4. Lucas H.C. 1994. Information systems Concepts for Management. McGrawHill, 1994. 5. Naylor J. 2002, Introduction to Operations Management, 2nd Edition Pearson Education. Read More