Write a brief description of two or three relevant Operations theories (the theories should address the underlying processes on which quality depends- do not rely on general quality/business process theory.
Operational excellence involves the improvements of the company through achieving the competitive advantage. The operational competency of an organization would give a result for value for the customers along with financial benefits. However, all industries experiences operation failure in their system. The problem can lead from the disruptions and error in materials, information and equipment. Operation of the organization deals with the transformation of the input into outputs so that the transformational process is managed and determines the efficiency and the profitability of the organization. Finance, marketing and human resource are the sectors which support the operation of the organizations (Schönsleben 2016).
The global market is managing the operation with its factories, stores and the distribution sectors. Supply chain in operation management is the most important concern as it deals with the flow of the goods and the products through the channel of customers, organizations or the partners of the supply chain (Chase 2012). Coordination of the operation is possible through minimizing the cost and improving the quality. The company needs to manage the process and the human resource through a complete dynamic in the workplace.
Organizations that have operation competencies can able to achieve a number of important contributors through performance and growth. Excellence in the field of operation can lead to involve a systematic and effective approach in the business operations. It enables the organization to initiate a productive and innovative workplace. Operational excellence can evolve in efficient systems which ensure employees, focus on fixing the problems. Employees need to understand the information and the authorization to solve the problems of the business in which they work. Nike is an American multinational company which focuses to produces and designs footwear, apparel and accessories. The company faces problems in operational management. The brief measures adopted to solve the problems of the organizations (Rushton et al. 2014).
Nike is one of the largest manufacturers of the footwear and the apparel of America. The company is the world’s leading manufacturer and seller of the athletic apparels and sports equipment. The company however has some operational problems, which becomes a barrier in terms of expansion. The company has its stores all over the world. However, the supply chain network of Nike is extremely complex. Nike has wide range of stakeholders all over the world. The supply chain in the initial stage was developed through take it directly from the manufactures to the suppliers (Christopher 2016). However, in the 90s the company introduced Future program, which divided the operations of the organization into different geographical areas. It was initiated to improve its operation management. In the year of 2000 Nike launched some programs like Nike Supply Chain (NSC), with the goal to implement the ERP and CRM into the considerations. However, the project proved a disaster for Nike. The early 2000 Nike lowered its earnings blaming software for demand forecasting and supply chain management. The inventory lowered the sale of Nike in a considerable amount of $ 100 million. The inventory management problem is one of the significant problems that start to raise another problem of the company’s ordering and scheduling system. It started causing problems for overstocking and created a huge impact in the inventory and logistic costs. The company was forced to organize the investor through initiating excess discount in the distribution channels (Krajewski et al. 2013).
The case study described needs to devise a plan so that the problems could be addressed. The identification of the problem is necessary in challenging times. The primary issues outlined are the distribution of products along with development of the control process. The problems needs to address in more complete form, the main problems are inventory control and scheduling. Along with it the problem of demand forecasting has also initiates a problem in operations management of Nike. The considerations need to implement with its exploration of the strategic tools and the software which enable them to improve the operations management (Khanna 2015).
showing the process map of Nike describes the supply chain of the company. The flow of the products incorporates the process shown below. The process found to incorporate the complexity of management. Nike’s main operating problems occur as they try to outsource their factories. Nike has outsourced the manufacturing plants in China and Taiwan. The initiates of such are because of the cheap labor and have no barrier to outsource from the oversea areas. The last few years have suffered from the operation management because of the poor labor management in the factories (Brownet al. 2013).The operation management team failed in the process again because of its infectiveness in the supply chain procedure. The distribution of its products and services in other countries need to execute plans so that they could operate it throughout the world. The location of the new business is another problem which arises beside the two problems which rose previously. The company needs to operate its operation management through implementing theories in the process (Stadtler 2015).
The operations problem of Nike enables to introduce a formation of implementation of theories. Theories need to adopt so that they could improve the process. The measurements of the theories would further help to understand the situation where the company lacks. It will help them to work accordingly. The theories would help to formulate a number for available options that the company can use. The problems of the company identified can be solved with proper implementation of the above (Monczka et al. 2015).
The major problem identified is on the inventory process of the organization. The analysis of the theory on Inventory Control will help them to understand the problem. Large companies that help them to optimize the production and minimize the cost use the inventory control theories. It helps to store thousands of units for products and services. The inventory theory enables to control promotion for the product where it is necessary and store it. It helps to reduce the cost for carry, which on the other hands includes in the interest of the credit needed to make the inventory. However, the part discussed so far includes the risky factors (David and David2016). The risk involves if the single part of the supply for example the interest on the credit for the inventory. The production cost and the shipping cost loss increase if it takes longer time to wait. It generally appears when one needs to wait for the ship orders especially in a busy season. The theory of inventory control helps to optimize the labor cost through making the optimization of labor cost. One needs to forecast the demand according to the month, quarter and the year. However, if someone waits until they have the sales in order then it might causes to for a shift or overtime of the workers. On the other hand they need to pay the workers as they sit idle. Generally large organizations used to buy the inventories as the units are depleted. The manufacturer needs to adopt the new products as generated by the sales team of the warehouse. The systems measure the total amount that needs in considering the shipping of the item. The theory of inventory control revolves around creating the inventory control method considering the conditions of the marketplace. Access the capital and the production capabilities with it. The most important approach is the seasonal activity of the labor along with the customers and the fluctuations of the price (Pengand Lai 2012).
Decision Theory enable to generalizes the approach in the decision making process. It ensures that the decision maker initiates the theory to analyze the complex situations with the alternatives and the consequences related in it. The decision theory is a normative theory, which solves the problems of the decisions where one can perform with contradiction without being irrational. The decision theory enables the organizations to focus on some subdivision into five steps (Becker et al. 2013). The first step is the identification of the problem. Secondly, they need to obtain the necessary information about it. Thirdly, the production of the solution for the circumstances needs to arise and it needs to amend. Fifth step is the selection of the strategy for the performance of the organization. The decision theory further concentrates to makes the decisions and chooses between options, which would help to provide the outcome for the organization. However, the process does not include providing a positive outcome. The outcome could be positive or negative (Berger2013).The theory however contains some serious risks. His common two criticisms are discussed against the usefulness of the theory. The first argument is on the interference problems, which arise outside the domain of the theory, it is important for the increase of the understanding of the process. The second criticism associates are about the questionable value. It arises because of the presence of the costs and the prior probabilities that is appropriate in the context for application, which is difficult (Rokach and Maimon 2014).
Nike has its main issue in terms of its inventory control. The theory approached contains the appropriate measures to overcome the problems of the inventory measure. The theories describe the optimization of the product through minimizes the cost. The processes of Nike involved dispatching the amount in discounts. However, the theory on inventory adopts in measure and manages their production and storage based on the cost-containment and completing the needs of the customers through service (Chernoff and Moses 2012). The case study further shows that the process involves by Nike are on storing the inventory in advance. While the theory implies that order, need to fulfill when it is necessary. Proper inventory control would lead to labor cost while the processes of Nike went wrong because of its adoption of policies to reduce its labor cost and outsourcing from foreign countries.
The process of Nike needs is lacking the decision process. They need to adopt measures on the decision making process. The decision process enables in choosing from the alternatives. The situation describes to initiate possible alternatives. Nike lacks to adopt the policy from there (Slack 2015). The decision theory will enable for the pattern of demand to remain stable throughout the year. Again, the decision theory explains to get the highest expected monetary value. It includes the processes either with highest expected cost or with lowest expected cost (Cummings and Worley 2014).
The adoption of the theories initiates not only the adoption but also the difference in the process comparing with Nike. However, the policies need to implement the strategies’ according to the theories. It would help them to achieve operational efficiency in terms of success. The two theories adopted so that it could solve the problems related with the process of the operations in the organizations (Haimes 2015).
Nike needs to adopt an effective supply chain management, which would ensure for provide an accurate demand forecasting. The quality of the service of operations can be improved thorough its improvement in the demand forecasting. It is because of the fact that procurement, distribution, scheduling and the inventory are determined through the predictions of the demand. However, the forecast cannot become accurate so they need to adopt the essential tools and the techniques that the company can use to increase its proficiency (Kaplan and Atkinson 2015). Nike needs to consider a variety of quantitative methods to utilizing its data. It in return would enable to make effectiveness in production that would meet the demand of the customers. The company needs to ensure the demand in right amounts according to the supply. It needs to achieve through the adoption of tools and techniques in forecasting of the demand. They need to use the process of linear regression to improve forecasting demand. Nike could able to relate with its time and the trend of liner line. The company can predict the future predictions from the slope. To improve the quality of the company needs to improve its quality through the adjustments in forecasting of the error and improve the accuracy. They need to implement the forecast error in using the techniques like mean absolute Deviation or MAD. It can ensure improves in its quality through the determination for the predictions either high or low (Christopher 2016).
Nike needs to adopt inventory management systems in the organization. The organization further emphasis on the quality of the software ensures to improve the quality of the business. The company needs to improve its domain mainly on products in which they lack the important operational activities. However the inventory management includes improves for the quality of the product (Lillis 2014). The quality and customer retention should the first priority for the company needs to adopt ways to complete the process. They need to improve their inventory process. The process needs to develop not only through qualitative method but also through quantitative method. The company needs to adopt the policies according to it. The company needs to give its focus on improving its quality through adopting tools and techniques in terms of supply chain and inventory management (Hilland Hill2012).
The improvement in the quality operations would prove benefit for the company. The operation management connects with the economic forces, regulatory concerns, consolidating industries and the workforce of the industry. Nike needs to update the customer database. They need to update it through phone, email and letter. The customer needs in reminding of the business and give them options to think about them. The company needs to gives focus on its quality through encouraging repeat business. Operation improvement is the fundamental requirement for the organization. The operational efficiency leads to growth and expansion of the business. The discussion further focuses on the supply chain and inventory management makes the operations in a better state. However there are other points which need to consider ensuring better quality and customer service by the company. The company needs to adopt improvement in asset optimization. They need to adopt measures for quality and safety improvement. Further the company needs to execute the project. They need to adopt reliability in their techniques. The organization further needs to adopt the process of value engineering (Lillis 2014).
The dynamic demand fluctuations in the inventory management establish the company, which has inventories to satisfy the demand through, minimizes the cost. It has many cost associated with maintaining the inventories. The first step is to ensure the correct measure of the demand forecast. Nike needs to utilize the ERP software and ensure coordination among supplies. The supply chain of Nike needs to be beneficial through the consideration of the Vendor Managed inventory or VMI and the process for Continuous Replacement Program. The combinations of the strategies would initiate a positive impact on the company and its suppliers. It would improve the overall supply chain starting from its upstream of the procurement of the raw materials (Subramanian and Ramanathan2012).
The right product in the outlet would ensure excesses of supply chain management. The companies start to get benefited from the VMI/CRP. VMI and CRP make the supplier responsible for the inventory management and the replenishment of the product. The implementation of its ERP software and integrating it towards the suppliers for the sales data as well as the demand forecast. The manufacturer would ensure operations according the demand forecast the inventory requirements that that need to produce Nike places order (Khanna 2015).
The supply chain encompasses the flow and transformation of the goods and the services of raw materials stages to the customer who is the end user. They are associated with the information low. The Nike supply chain being the manufactures source the raw materials for the production of the company. The fact the Nike outsource their manufacturing implies to control procurement and manufacturing process. Nike considers the acquisition to gain control in operations where the company suppliers control its operations. The implementation for the VMI/CRP would ensure the operations as it would provide operation of the company in upstream because of the manufacturer (Hill and Hill 2012).
The processes of Process Map in the figure shows the points of consumption through its understanding in a simple way. The company here needs to purchase raw materials from various sources and then needs to ship plant. They need to assemble the product from there itself. The assemblage of the products would ship the products directly to its customers from the Online Store. The other distribution store mentioned is the retail stores, direct sales and the distributers (Kaplan and Atkinson 2015).
Conclusion
The operational management of a company forms the basis of it. Recent years Nike already shows improvement in its supply chain management. The assessment based on the conditions of the company in past. The primary areas where improvements need to implements are the areas of demand forecast, inventory management and scheduling. The areas mentioned are interrelated as the demand forecast determines the inventory requirements. This will ensure the scheduling. The strategies that need to follow are the effective address of the successful implementation and the integration of its software. The company needs to adopt the theories through proper utilization of it. Analyze further points there is a huge difference between the theories and the process. Nike needs to adopt policies to solve the gap between it.
Reference List:
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