Task 1
• Explain the importance of operational management and relate that to your chosen organisation
• Explain the need to produce safety; on time; to cost; to quality and within the law
• Explain the link between operations management and strategic planning
• Produce a systems diagram to illustrate a typical business
Task 2
• Explain the ‘Three E’s( economy, efficiency and effectiveness)
• Explain the tension between cost minimisation and quality maximisation with supporting examples based on your chosen organisation
• Evaluate the significance of the five performance objectives that underpin operations management
Task 3
• Explain linear programming
• Evaluate critical path analysis and network planning
• Explain the need for operational planning and control to your chosen organisation
Task 4
• Produce a set of clearly defined operational outcomes
• Produce a network plan and indicate the resultant critical path
• Explain how quality could be defined and maintained with supporting examples based on your chosen organisation
Operations management is significant in business operations for controlling the operational system. It also deals with the design, operation and system improvement for creating and delivering primary products and services for the company. WH Smith is the popular retailer of books and news agent in UK. This company makes use of operations management in every fabric of an organization (Wernerfelt 1984). This company applies operations management for sustaining and ensuring the effectiveness and efficiency of the company. WH Smith efficiency is focused towards how well the resources like human inputs and expertise is put. WH Smith ensures that basic objective is to set up profits and increase the shareholders value. The company also minimizes the cost through cutting the projects that are less profitable. The effectiveness of WH Smith leads towards productivity and leads to capital utilization and production system efficiency. The coordinating function and management control cannot be overlooking in the case of operations management, mainly for WH Smith (Wernerfelt 1984).
Require producing safely- the safety of staff need to given high priority. Employee’s efforts play a significant role in organizations success. Therefore, it’s important to ensure that safety should safeguard the rights.
Require to produce on time- WH Smith has gained a reputation in their field, and customers are interested in taking their service. WH Smith has adopted measures for serving the customer within the time to gain customer efficiency and retaining loyalty (Barney 1991).
Require producing with quality- the success of WH Smith is determined through its quality services. For retaining the customer loyalty and image, WH Smith has not compromised with quality (Mintzberg and Quinn 1991).
Operations management stress over managing the process of producing as well as distributing goods and services. The key activities include creating, developing, producing and distributing (Barney 1991). This is a strategic process, as it includes preparing the best respond towards circumstances of the environment within the company; whether the circumstances are explained in advance. A high focus should be placed over effectiveness and efficiency of the process; therefore, operations management should include analysis of the internal process. On another side, strategic planning should focus towards energy and make sure that organization members should work hard for attaining goals, assess and adjust as per organizations direction (Mintzberg and Quinn 1991). It also includes setting goals and developing the approach for attaining goals; therefore, it is mention that both the process is contributed towards WH Smith.
Economy- it means doing things at low cost, and avoiding to spend on unnecessary things. Through taking various measures, WH Smith has cut the cost and has given various less productive projects that could save money.
Efficiency- it implies doing things in a smooth way, by reducing process that don’t lead towards the finished item. Through a proper system of management, WH Smith has attained consistency in business growth (Cohen and Levinthal 1990).
Effectiveness- it means doing things and ensuring that end outcome match with needs of customers (Mintzberg and Waters 1985). Through taking various proactive decisions, the company has increased its competitors.
In the starting of a decade, when WH Smith struggle for surviving in business, reduction in cost was required, but reducing cost in an unplanned manner can be risky for the company. Therefore, it’s important to consider economy, and management has taken the decision to cut cost in less growth oriented projects (Cohen and Levinthal 1990). This permitted WH Smith to save the important amount without even impact the key profitable business. Through adopting promotional activities and risk of establishing the stores at different locations, WH Smith has lead to increase its earnings (Prahalad and Hamel 1990).
Objective 1: Minimization of cost
The cost reduction strategy of WH Smith has helped the company in attaining economic strength. Reducing cost for running projects that are less growth oriented save amount and creates an opportunity for investing in profitable projects (Ferdows and de Meyer 1990).
Objective 2: Digitalization
Coping with the changing trends is important for company’s success. Identifying the needs for digital ways for purchasing, the company came with internet shopping through the website.
Objective 3: Meeting customers
Through establishing many stores at different locations, WH Smith has come close to customers. It also offers customers with access to company’s products.
Objective 4: Promotional Campaign
Through promoting the items by using the attractive campaign, banner can support the company in enhancing its sales (Ferdows and de Meyer 1990).
Objective 5: Stressing over efficiency
Running the efficiency of the company is another major success of WH Smith. Through adopting appropriate strategies can bring employees at all level.
Linear programming is a mathematical process that supports managers in taking decisions. This is a widely used tool in industrial engineering and management science. It also supports company in reducing cost and increasing profits. WH Smith operations use linear programming for purchasing (Hayes and Wheelwright 1984).
An Example of linear programming- A firm wants to purchase five new cargo vans that could offer 12 tons, of additional capacity of shipping. A model has 3 tons, and its price is around $5000. Truck of B Model has 4 tons and its price is around $8000. Then how many trucks of every model should be purchased by the company for offering an additional capacity of shipping at a minimal price? What will be the minimal cost? These types of problems are solved through the concept of linear programming.
CPA is the project management tool, and WH Smith uses it for ensuring that project is completed on time with appropriate resources.
Even after the operational system gets successfully designed, and is also placed at its original place then managerial discretions exist, and this happen, as decisions need to be made in short period. Control decisions and operational planning include control of labor, scheduling, material as well as capital input for producing required quality and quantity of output (Hayes, Pisano, Upton and Wheelwright 2005). WH Smith applies operational planning and a control for forecasting future needs. It is noted that unexpected market trends, competitor’s actions, and new product development might throw the forecast and issues in operations system can minimize capacity.
Operational customers’ related to innovative marketing at WH Smith tries to attract customers when other competitors stress over business expansion. WH Smith enhanced its outlets. The company also attracts teenage customers by its techniques of innovative promotion. WH Smith also makes items easily available by increasing its stores, and this has resulted into increase in revenue through sales (Hayes, Pisano, Upton and Wheelwright 2005).
WH Smith uses Critical path analysis and network planning. Task included in the campaign of advertising are:
The time length of every task:
These activities could be depicted over the network, below is a network for an ad campaign.
The ad network depicts the order in which task is entirely completed
If its assume that EST for A is valued 0, then in that case B and C can’t begin for 4 hours (0+4), its depicted in the top right hand of the node 1 and 2. It is seen that task D can’t begin A and B; and this might take 10 hours (0+4+6) that’s depicted in node 3. It is seen that task E can’t begin A, and C, and the same will take 11 hours and is depicted in node 3. It is seen that task F can’t begin E and D and EST for F task is valued at 21. It is significant to select the highest route while measuring EST. The route A, B, D is only 18 hours; the highest route of EST is depicted in node 5
LFT of every task calculation is without expanding the complete project. It starts with node 7; Task G is completed with a 35th hour, and it’s depicted in node 7. For measuring LFT, task F subtracts the time from last LFT (35-5=30) and it will be placed in the node 6. While selecting 2 LFTs, within the task A select route, and provide lowest LFT (Mills, Neely, Platts and Gregory 1998).
Once LFT is explored, then the critical path is made. It implies that EST and LFT node should be same. The critical path, in this case, is noted as A, C, E, F, and G. If in case the manager views the possibility of a task then it can consider a shift in labor through the non-critical task.
FLOAT B and D are delayed for 3 hours without impacting complete task time. Total float is subtracted from EST and LFT duration, so task B is 3 (13-6-4).
Along with WH Smith business of book retailing it also has stationary items. For explaining the product quality, product standard is set. Then comparing with the standard of product, the available items quality could be assessed. If in case any product is not up to the set mark, required steps could be undertaken. This is how product quality is maintained (Mills, Platts, Bourne and Richards 2002).
The report discusses WH Smith operational managements system and tries to analyze how company reduce its cost and focus towards quality.
Wernerfelt, B. 1984. ‘A resource based view of the firm’. Strategic Management Journal, 5, pp. 171–180
Barney, J. 1991. ‘Firm resources and sustained competitive advantage’. Journal of Management, 17, pp. 99–120.
Cohen, W. and Levinthal, D. 1990. ‘Absorptive Capacity: A New Perspective on Learning and Innovation’. Administrative Science Quarterly, 35(1), pp. 128–152.
Ferdows, K. and de Meyer, A. 1990. ‘Lasting improvement in manufacturing’. Journal of Operations Management, 9(2), pp. 168–184.
Hayes, R.H. and Wheelwright, S.C. 1984. Restoring our competitive edge: competing through manufacturing. New York: John Wiley.
Hayes, R., Pisano, G., Upton, D. and Wheelwright, S. 2005. Operations, Strategy and Technology: Pursuing the Competitive Edge. New York: John Wiley
Mills, J.F., Neely, A.D., Platts, K.W. and Gregory, M.J. 1998. ‘Manufacturing Strategy: A Pictorial Representation’. International journal of Operations and Production Management, 18(11), pp. 1067–1085.
Mills, J.F., Platts, K.W., Bourne, M.C.S.B and Richards, H. 2002. Competing through Competences. Cambridge: Cambridge University Press.
Mintzberg, H., Ahlstrand, B. and Lampel, J. 1998. Strategy Safari, Hemel Hempstead: Prentice Hall.
Mintzberg, H. and Quinn, J.B. 1991. The Strategy Process (2nd Edition). Hemel Hempstead: Prentice Hall.
Mintzberg, H. and Waters, J.A. 1985. ‘Of strategies, deliberate and emergent’. Strategic Management Journal, 6, pp. 257–72.
Prahalad, C.K. and Hamel, G. 1990. ‘The core competence of the corporation’. Harvard Business Review, 68(3), pp. 79–91
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