Discuss about the Case Study for Operations Management of Addressing Global Issues.
Efficient management of the business by the administrative head is known as operation management. The main responsibility of the operation manager in a business is to manage the productivity of the organizations by efficient use of resource that is scarce in nature. The main aim of the report is to analyze a case study of an organization and discuss its operations. The assignment discusses the principles of supply chain management, inventory and capacity management, risk management, waste management and the global issues of the organization. Various theoretical concepts of supply chain management are explained in application to the organization or the company (Chase 2012).
Operational manager is the administrative head of the organization that is responsible for managing the business. Business strategies are formed by the manager and implied by them for the benefit of the organization. Operations management is a multidisciplinary subject that has diverse nature and is different for organizations or business. Operation manager is responsible for planning, supervising and organizing the productivity of an organization. The broad prospective of operations management is supply chain management and logistics. The task of the operation manager is to handle routine and non-routine tasks of the organization (Hill and Hill 2012).
The five main performance objective of operations management is quality, flexibility, cost, speed and dependability. The company chosen by the author is Coca Cola because Coca Cola has the most sophisticated and well-managed operations in Singapore (Marshall and Farahbakhsh 2013). The distribution system of the organization is also very sophisticated. Coca cola is a beverage company that is engaged in producing and supplying carbonated soft drinks but in Singapore, it operates on a sustainable level where communities and healthy style come into play in the value chain. Coca cola is also known as Coke that is the leading dominancy in the fresh water. The beverages that the company is involved in supplying come in various varieties such as diet coke, lemon drink and Coca Cola light. The company has many distribution centers all across the world and there are many vendors selling the product (Krajewski et al. 2013).
The main competitor of Coca Cola is Pepsi that is also involved in supplying the same product. The mission statement of the company is to “inspire moments of optimism and happiness, while creating value for shareowners and making a difference across the word”. The company in Singapore is not only involved in making profit, but is also actively involved in many social responsibilities (Slack 2015).
The employees of the company work hard to accomplish the goals of the organization. The company has a channel through which it supplies its products to the end user. The products first goes to the warehouse from the production house, from warehouses it is transported to distribution centers, then it reaches the retail sector and then to the consumers. The main strategy used by the company is its total quality management. The organization concentrates on maintaining the quality of the product and services that it provides to its customers (Karnani 2013). Hence, operations management is an essential function of an organization that needs to be managed efficiently for an effective result.
The main purpose of the case study is to analyze the operations management of an organization. The author in this report first describes the theoretical framework of operations management. This includes supply chain management, inventory and capacity management, methods for improving operations, risk management, waste management, and global and international issues. These theories are then applied to the organization chosen. In this case, it is Coca Cola Company operating in Singapore. The author discusses the supply chain management of Coca Cola Company and its other operations management such as inventory management and waste management (Drake and Spinler 2013). At last, the author gives a recommendation as to how the company can improve its operations management in Singapore in order to achievecompetitive advantage in value chain.
The main reason for selecting Coca Cola Company is that the distribution and production of the company is very sophisticated. The operations of the company are well managed. The case study provides the detail analysis of the company, the aims and objectives, the strategies used by the organization and the theoretical concepts. The aim of the operations manager is to manage day to day task at organization so that it is able to fulfill its aims and objectives. Operations management is a multi-disciplinary subject. The main area of concern is to discuss the supply chain management of the company and focus on the ways that can improve the operations such as demand forecasting, calculations and strategy building (Lambert and Schwieterman 2012).Operations management is an important function of the organization. The main strategy adopted by the company was its change in structure in promotional strategy. The company decided to become more flat that is treat everyone equal where the employees are also included in decision-making.
Techniques and designs for improving operations-
The operations can improve through various ways. First is through proper demand forecasting. A company should hire a team of experts that is able to forecast the demand so that the goods that are produced are sold in the market. This will lead to low piling of stocks and unnecessary inventory. Demand forecasting also helps the producers knows the types of goods the customers need (Mitra 2016). The other way to improve operational efficiency is by using the KT process that is the Kepner – Tregoe (KT). The KT process works to reduce the waste. Lower the cost of production and develop methods for better sustainable programs. Through intelligent formulation of techniques the process helps in efficient utilization of limited resources. The overall costs also improve that helps in unit cost reduction. The main technique for improving operational efficiency is efficiently managing its supply chain management and quality in order to reduce the cost and manage the operations efficiently (Krajewskiet al.2013). Creating effective business processes with partners also helps in improving the operational efficiency. Communication is one of the essential tools that helps improving business operations and improve efficiency.
Effective time and cost management is also essential for improving the business efficiently. Unnecessary travel time should be avoided as this will also help in lowering the costs of operations (Yin 2013). Employee satisfaction is as important as customer satisfaction as this will help in lower turnover and also reduce the cost of production. An efficient will be able to produce the goods more efficiently by reducing the cost and time of production (Myerset al.2016).
Inventory and capacity management
Warehouse is a place that is used to store the inventories and buffer stocks temporarily before being supplied to the clients and customers or distributors. Inventory management is meeting the demand of the customers by supplying the given amount of goods. Capacity management is the management of scarce resources so that it is available at right time and place (Seuring 2013). This includes management of raw materials as well as management of the finished goods. Capacity is the maximum output rate relating to the amount of goods and services that the company can produce when the company is running at its full potentiality. There are various factors that impact capacity management. This includes human factors that are labors, external factors such as regulations and policies, supply, process, facilities and capacity of network (Wisneret al.2014).
Inventories are goods that are not sold in the market. Inventory adds on to the stock of the company. Maintaining stocks of the company at warehouses is known as inventory management. There are various advantages and disadvantages of inventory management.Inventory helps the companies in economies of scale. Goods are available at the time when no production takes place (Stadtler2015). It also helps in time of unforeseen events and scenarios. The disadvantage of inventory management is that it increases the cost of production as the company has to regularly maintain the stock of inventories (Reedand Zhang2014). Some of the companies hold the stocks of inventories intentionally so that they are able to sell the goods at higher prices during the time of low production. There are various types of inventories such as raw materials and consumables. Such as fuel, stationary and other goods that are required for production (Barney2012). Inventories also include items and packing materials that are used for production process. Goods are stored either for repair or to resell the product.
There are five reasons for keeping stock. The basic reasons are time management where the suppliers at every stage require maintaining some amount of inventory. It is stored to manage inventories for consumption as well. The second reason to keep inventory is to provide the goods during the time when the demand varies (Schönsleben 2016). Producers capacity is fixed where the demands for the goods are periodical. Hence, stock accumulation is used to anticipate the future consumption. Inventories are maintained as buffers to meet uncertainties in demand (Chenand Simchi-Levi2012).
Supply chain management is the supervision of the supplies of the organization. The main purpose of the supply chain management is to transport and provide the finished products to the end user that is the customers. Supply chain management is an overview of the flow of information, materials and finances from the producers to suppliers to wholesalers to retailers to consumers. For the sustainability of the business, the entire supply chain process should be sustainable in nature (Dyckhoffet al.2013). There are seven principles of supply chain management that are as follows:
Supply chain management is the cross functional approach that manages the entire process of production and distribution from managing the movement of raw materials to the finished products. Supply chain management is the flow of goods, services and information from the suppliers to manufacturers to retailers to consumers (Coelhoand Laporte2014).
Waste and Lean management-
Elimination of waste is known as lean management. Waste management is the management of the operations so that the firms generate the least amount of waste in its operations to reduce the harmful impact to the environment. Efficient operations include least waste generation. There are various techniques that ten firms can use to reduce the waste. This includes efficient utilization of the resources (Martínez-Juradoand Moyano-Fuentes2014). Recycling the products and reusing the recycled products in its manufacturing. Overutilization of resources leads to large amount of waste generation. Waste management does not only mean generating less amount of waste but it also means managing the generated waste in such a manner so that it is not harmful to the environment (Guerreroet al.2013).
Waste management includes monitoring and regulating the waste from its disposal, processing, transportation and generation. It means managing the raw materials efficiently. It is the duty of producers and the employees to ensure that the waste is managed efficiently (Govindanet al.2014). Sustainability is a concept that is gaining a wide range of popularity. Sustainability means utilization of the scarce resource in such a way that the resources are available in future generation without hampering the development of the current generation (Blackman 2016). Coca- cola and many other brands manages the resources efficiently so that it is able to generate the least amount of waste.
Operation management of Coca Cola
Operation management of Coca Cola includes productivity improvement of the company and quality improvement of manufactured products. Resource utilization, designing, product packaging, labeling etc are part of operation management. The operation manager of Coca Cola is responsible for maintaining high technology, product innovation and achieving company’s goal. Distribution of products across retail store is also part of operation management. Formation of operation strategy helps in business process of the company (Zawislaket al. 2012). Operation manager monitors elasticity of demand for Coca cola product, cost management. Design of physical shape of Coca Cola product, composition is given priority as demand for product is influenced by presentation of the product. Planning is a part of the operation of Coca Cola, which control the resource utilization in production(coca-cola.co.uk 2016).
Coca Cola in Singapore enjoys competitive advantage over its rival. In order to get competitive advantage in the market, the operation management focuses on ingredient of the products, bottling and distribution of Coke product. Expansion of beverage portfolio in compliance with the increasing demand is given priority. The techniques that can be operated in the value chain in increasing the demand in Singapore is majorly based on plant structure where it has employed almost 300 people across operations (Ramchandani 2016).
Techniques of Coca-Cola for improving operation
KORE that operates in Caca Cola enables sustainable performance to monitors continuous improvement and standard of product and product safety. This department takes preventive action in case of arises of any product standard issue. To solve the product issue, KORE gives importance to Hazard Analysis and Critical Control Point or HACCP. This system helps the company to manage risk related to product standard. Being a global company, the company has to maintain different food standard regulation of that country. In past, this company had to face several issues related to product safety standard due to reporting of physical hazard problem of consumers. Biological and chemical composition of ingredients soft drinks affect final consumption of finished products. In US, The Food and Drug administration makes it mandatory to maintain HACCP criteria for Juice and meat (www.coca-cola.co.uk 2016).
During 2014, India government for not meeting license issue charged the company. Due to violation of rule, the company suffered financial loss as government rejected the application of Coca-Cola Company for the expansion of bottling plant. The company faced loss, as the plant was already built. The company has suffered from other allegations such excessive use of ground water, wastage of water, not meeting pollution standards etc. (Indiaresource.org, 2016).
Cost reduction is a strategy for improvement in operation in Singapore. During 2014, the decision rule has been taken by operation management to reduce cost as the sales volume of Coca-Cola was grown by only 1% compared to expected 3%. This was mainly due to the shutdown of plant structure in Singapore and the loss of employment. Whereas in countries of North America, the sales volume was dropped by 1% during same period. As per report of July 2016, company has decided to reduce cost of operation due to making more than expected profit in third quarter. Cost cut will help the company to reduce price of the product. Decrease in price may lead to rise in demand. As a cost reduction policy, the company targets to save annual cost by $3 billionuntil2019 (www.coca-colacompany.com 2016). The company has set its objective to cut job and selling a few bottling units as a principle of cost reduction but bottling the product assumes to be the main challenge in Singapore. This policy is not viable as it has social impact. Moreover, this policy may affect production process in future. Turnover of employees can reduce the productivity of the company. For full utilization of production capacity, optimal use of resource is necessary (Lambert and Schwieterman 2012). Maintenance of labor capital ratio per unit of production is required to meet total production target. However, selling bottling unit can be profitable as this can help to generate cash to meet short term liabilities.
Inventory and capacity management strategy of Coca-Cola
Inventory of Coca-Cola includes raw material used in production and finished product. The finished product incorporates Syrup used in Coca-Cola and finished beverages. Inventories of Coca-Cola Company are valued at market cost. In valuation of Inventory policy, the company uses FIFO method. FIFO method considers selling of first product, which has been bought first. This method is considered better than LIFO method. Use of FIFO method helps the company to manage inventory efficiently (Brigham and Ehrhardt 2013). If firstly bough good is sold first, this reduces the chance of the asset being obsolete. If the assets or products are stored in the company for long time, no revenue is generated from this activity. Selling obsolete assets generate no profit. Therefore, it is better for the company to sell inventory before it become obsolete (Adeyemi and Salami 2010).
Status of inventory is appeared in the balance sheet of the company. Early selling of inventory generates cash, which can be used to finance any immediate financial needs. If the company is able to generate sufficient cash from selling inventory, this improves current assets of the company. If current asset is more than current liabilities, this improves current ratio. Current ratio shows company’s financial performance. If the current asset is more than current liabilities, company can effectively, able to meet its short-term liabilities. Investors prefer the current ratio to be 2, which mean current assets of the company are double compared to current liabilities. It signifies good liquidity position of the company (Brigham and Houston 2012). The reduction in inventory due to increase in current assets will not only add liquid cash and cash equivalent but also might prove beneficial for Singapore.
The financial report of Coca-Cola company shows that inventory amount of Coca-cola unit has decreased from 2013 to 2015. During 2013, the amount of inventory was US$3277 million, which has been reduced to US$2902 during 2015. Therefore, it can be inferred that management of Coca-Cola Company has been able to manage inventory efficiently. Among the inventory, raw material finished goods have been released from $1240 million during 2013 to $1032 million during 2015. In calculation of inventory, balance of noncurrent inventory is excluded (www.coca-colacompany.com 2015).
For better management of inventory, it is important to track inventory from time to time highlighting its production and distribution. Operation management of the company monitors inventory regularly by checking inventory of different stores. If there is any occurrence of loss of inventory, management takes initiative to check and compensate the loss.
This company also follows perpetual inventory techniques (www.coca-colacompany.com 2016). In this method, inventory is calculated after every purchase of raw material and sale of finished product. Frequent update of inventory helps the company to manage its liquidity efficiently. This method is very useful, however it is costly to use and time consuming to calculate. One important aspect of this method is that, company can access the data from anywhere of the world, if it is technology driven. This facility gives management an opportunity to manage inventory anywhere of the world, as it is a multinational company. There is risk of making error in calculating inventory (Adeyemi and Salami 2010). If there is any incorrect entry in inventory management data book, the calculation gives wrong result. Inaccurate inventory value presents false statement about company’s financial position.
Supply chain management system
The main objective of Coca-Cola’s supply chain management is to form a modern supply chain, making a consistent process of acquisition and integration of manufacturing activities with retail sector. In order to do that, the management of the company has taken policy to install SAP ERP system (Monczkaet al. 2015).
Figure: Supply chain management of Coca-Cola
(Source:Monczka et al. 2015)
SAP is an extensive supply chain management tool, which helps management to control demand and supply of product in the market, inventory management, controlling logistic network. Planning manufacturing activities, transportation management and sales management are also done through this software (Brownet al. 2013). Enterprise resource planning helps the Coca-Cola Company to manage available information and to integrate several departments of the organizations in several countries. Furthermore, use of ERP system increases the operational efficiency of the company. As discussed above, SAP system helps the company in inventory management. It also helps to improve customer service (Fernie 2014).
Figure: ERP system and contribution to supply chain management
(Source:Fernie 2014)
As depicted in above diagram, the ERP system helps to manage customer relation, which is important to improve business expansion. Customer satisfaction increases customer loyalty, which further helps to attract new customers towards business. According to Say’s law of macroeconomics, supply creates its demand itself. This theory is applicable here. Supply of quality products and maintenance of safety standard satisfy customer. Customer satisfaction helps for expansion of business by creating more demand for their product. Maintaining data warehouse is an approach, which facilitates the company to understand customer choice and preference (Aminiet al. 2012).
Product recycling, manufacturing, packaging, refrigeration and distribution are included in supply chain management of Coca-Cola. Coca-Cola follows aggressive marketing strategy in business operation. Use of information technology improves productivity of the company. Integration of different retail outlay across the Singapore makes the operation performance easier. In supply chain management, the company values local demand for product. The objective of the company is to maintain same taste irrespective of wherever it is produced. The supply chain of Coca-Cola is basically customer driven (Karnani 2013).
Waste and lean management
Coca- Cola maintains its corporate social responsibilities in business operation. It considers maintenance of environment standard regulated by the country, where business operates. During 2009, the company took an ecofriendly strategy named Eco-bottle. The plastic used in bottle is made from byproduct of sugarcane, which is recyclable. The Eco-bottle is not biodegradable. At every stage of supply chain management such as transportation and use of raw material, production, packaging, distribution, the company tries to maintain environment standard, which constitutes to be the essential part when operating in Singapore. Waste is generated at every stage of product life cycle. Waste management has also impact on environment. At the process of waste management, there is a chance of generating byproducts and pollutants. This reduces production of byproducts, the company required to employ improved technology (Dauvergneet al. 2012).
In order to maintain carbon footprint in production, the company invested US$300 million in the recycling plant. For business operation in different countries, the company has faced several issues related to water usage and health hazard. Investment in recycling plan as a part of supply chain management has raised company’s ability to recycle used products in ebery country. The company has target for water usage and wastage reduction by 2020 compared to 2004. Zero waste is a vision of company, which operates globally and depends on future growth prospect (Atsmonet al. 2012).
During 2016, the company expects to increase in operating profit by 6% -8% globally. Although, Singapore has facing many bottlenecks in relation to its plant in Singapore but there is still the drive to retain its sizeable sales force, sales and marketing, warehousing, distribution, procurement, human resources, finance/administration, legal and IT functions. Moreover, companyitself has experienced slow growth rate and fall in production during first and second quarter of 2015. Gross profit of the company has decreased due to fall in net operating revenue despite reduction in cost of production. Therefore, the sales volume has decreased during 2014-15. It can be recommended to the company that strategy needs to be taken to improve sales volume. As a part of long run strategy, capacity improvement requires to be given priority to increase sales.
It has been seen that current assets has increased from 2014 to 2015 although short-term investment and amount of liquid cash have fallen. It signifies that company has suffered from decreasing liquidity, which may create problem to meet short-term liabilities. It may happen some times that company requires finance for any unprecedented incident. To face that incidence without difficulty, liquid cash is required. Hence, it is needed to maintain a certain level of cash and cash equivalent in short run.
As per above analysis, the company gives priority to long-term vision but fails to operate in plant factories. However, short-term operational issues are required to be given priority. If short term is no met, it is not possible for the company to meet long-term goal. Although the company is able to manage inventory effectively, it fails to manage accounts receivables, which may create cash flow problem for the company. Accounts receivables indicates the amount that are payable by consumers. If the receipts from customer come before the period of account payable to the creditors and suppliers, this creates cash flow problems. Cash flow problems affect daily business performance of the company. Therefore, operation management needs to give attention in capacity improvement and sales increase. It has been seen that net operating income during 2015 was highest from North America. Therefore, business performance in other territories whether it is Singapore, North America or Europe needs to be improved in order to achieve long-term growth prospective of the company. Besides this quality control, issue and waste management require to be given more priority for effective control of supply chain management.
Information management system
Coca-Cola uses SAP software as a part of enterprise resource planning in information management system. This software is effective to manage business. However, information system can be improved further. Information management system of a company has several aspects such as document and record management, digital asset management and data collaboration with other subsidiaries of this company etc. Therefore, people, business process, and implementation of technology are included in the information management. Company may face challenges for information management such employee turnover, lack of clarity in company’s strategy, diverse business needs.
Hence, to overcome the problems, first thing that is needed is improvement of skill of employees and the retention power of the employees for the company to grow in Singapore. Employees need training about usage of new technology. With changing work environment, the workstation needs to be replaced with a new one. Company can install a decision support system for manager. This system aggregates data of different department and presents in a report format. Using this report, manager can analyze the proposed decision in the report and make own decision. Electronic data processing system is an effective decision making tool. Company can use this system to record transaction and business reporting.
Project management
First step of project management is planning of project. For efficient management of a undertaken project, formation of a cohesive team is needed. Customer relationship management is a part of project management. At the planning stage, the manager would analyse the scope of the project and expected outcome. The project may be expansion of existing business in a new market or may be launch of a new product. Therefore, analysis of market expectation regarding a new project is required. To evaluate market demand, the company can conduct a primary survey at the target market.
Resource planning is an important task of project management. Proper estimation of budget, resource allocation and preparation of time schedule are required. An effective communication plan is required to communicate with stake holders of the project such as employees, manager, customers, suppliers and shareholders (Brownet al. 2013). At the execution and project monitoring stage, the management needs to conduct a variance analysis. This analysis is necessary to see the variance of actual time, financial and physical resources from the budgeted allocation. Management needs to control the budgetary variance to reduce resource wastage. After completion of the project, an audit requires to be done to evaluate project success.
Role of operation manager
Operation manager is responsible for monitoring daily business operation and project management. Operation manager has important role in building good relation with customer by addressing all complaints and problems immediately (Hill and Hill 2012). Staff management, budget management, project planning, managing risks of a project all are important task of operation manager. The manage needs to oversee budgetary variance and financial performance of the Coca-Cola business. If actual expenditure of the project is more than budget allocation, fund problem may arise in the business. Operation manager requires managing finance and timing schedule for every task of the project to reduce wastage of resource.
Conclusion
Operations management is a very efficient tool that is essential to manage the business effectively. The role of operational manager is to manage the resources efficiently in order to effectively accomplish the business. Operations management includes supply chain management, waste management, quality management, cost management and effective time management. Coca Cola Company is a branded company that is famous all over the world for its effective operations but has been facing bottlenecks in plant structure in Singapore. The company has a sophisticated brand image due to the business plan that it has developed. The supply chain of the company includes the suppliers, the manufacturers, the distributors, retailers and the customers. Company is engaged in various social responsibilities which makes it sustainable in different countries. The aim of the company is to generate the least amount of waste and hence the company uses the recycled products in its manufacturing. The main concentration of the company is in quality development of the product. It ensures that the customers get the best quality product. Its aim is to satisfy the needs of the customers.
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First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download