Operations management as a source of competitive advantage Sample Essay

Executive Summary

The undermentioned assignment looks at operations direction as a beginning for deriving a competitory advantage. operations direction and TQM are defined and discussed as to their importancy in the administration. The differing ways of deriving a competitory advantage are explained as is the manner organizational constructions and the execution of engineerings aid the edifice of these advantages.

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The Welsh Conservatory and window universe is used as an illustration of efficient operations direction.

Introduction

Operations direction is based around the decision-making associated with the usage of resources that enable an administration to supply merchandises that satisfy clients and enable the administration to vie with others in the
same market on cost. quality. velocity. dependableness and flexibleness.

Superior public presentation within an administration can be achieved by deriving a competitory advantage.

“The kernel of competitory advantage can be interpreted as the dissymmetry or differential among houses along any comparable dimension that allows one house to vie better than its challengers. ” ( 1 )

It is argued that quality is the most of import of all competitory arms. attending to quality within an administration means improved public presentation in dependability. deliver and monetary value.

Quality can be defined as “the fittingness for intent or use” ( 2 ) and it has been stated that “quality should be aimed at the demands of the consumer. yesteryear and present” ( 3 ) .

In the undermentioned assignment. the execution of operations direction techniques to increase competitory advantage will be discussed with mentions to administrations that have used these techniques. The Welsh Conservatory and window universe ( CCWW ) . a Swansea based double-glazing company will be the chief beginning of survey.

Section A: theory

Operationss Management

Operating systems within an administration span across the undermentioned countries: Industry

Conveyance

Supply

Service

Operationss directors deal with procedures within these countries. procedures are the cardinal activities of an administration. They manage procedures as to add the most value possible to the client. Operationss directors do this by utilizing suited techniques and schemes. Directors can plan and run procedures to give the administration a competitory advantage.

A procedure takes one or more inputs. it so transforms and adds value to it and provides one or more end products.

Appendix 1 shows this procedure

Benefits of Operations Management

*Improve operational control

*Reduces labour cost and waste

*Improves merchandise costing

*Tracks labour and machine resources

*Enables real-time determination devising

*Gains a competitory advantage

The determinations of an operations director are critical to an administration. There are two types of determinations in operations direction. The first are strategic determinations. these are long-run picks. The 2nd are tactical determinations. which are short term. Operationss directors are by and large faced with the undermentioned issues:

*Processes: including technological issues.

*Quality: Underscoring all procedures and work activity. Ops directors must put aims and happen ways to better the administrations merchandises and services. ( TQM )

The usage of review and statistical methods to supervise quality ( Statistical procedure control ) .

*Capacity. Location and Layout: involved with planetary operations and physical layout ( long term determinations ) .

*Operating determinations: Operating the installation after constructing. co-ordination of supply ironss. Forecast demand and command end product degrees. ( resource planning ) . Choosing which clients get top precedence.

Entire Quality Management

Entire Quality Management ( TQM ) can be summed up by the phrase. “getting it right fist time” . it is of class cheaper this manner. there will be reduced losingss in internal costs of stuffs. rewards. bringing. re-inspection etc. and External costs. such as fix measures. legal costs and guarantees. There are extra costs involved when implementing TQM. including preparation. planning and runing the new system. These costs will be to a great extent outweighed by the addition of net income achieved by the execution of TQM.

Cost film editing is non the lone ground for TQM. the doctrine behind it agrees with the basic selling construct. It is a doctrine that puts the consumer at the Centre of the administration. TQM states that it is indispensable to fulfill consumer’s demands to promote client satisfaction and in bend trueness.

The simple ground for consumer satisfaction is: if a client is non satisfied with the merchandise. he or she will non reiterate purchase. Even worse. the consumer will non urge other possible consumers to buy. And if the consumer is really disgruntled he/she will about surely go out of their manner to state other possible consumers non to buy a certain
merchandise.

By constructing TQM. we are deriving a competitory advantage of quality. the effects of holding a good repute for quality is easy seen in the Nipponese electronics industry. The betterment of quality has meant the gradual edifice of their reputation’s from ‘cheap and nasty’ to ‘high tech and desirable’ and of class meant a immense addition in gross revenues.

See appendix 2 for Deming’s Chain reaction theoretical account of TQM.

Types of competitory advantage

Schemes based about competitory advantage see three chief countries as of import degrees to vie on:

*Differentiation ( being better )

*Cost leading ( being cheaper )

*Response ( being faster )

These advantages can be obtained in a figure of ways. A Competitive Advantage could cross from two types of organizational power:

1. Positional: a status-defining place that leads to better company public presentation.

Positional advantage comes from an administrations alone host of resources. its market place. and other traits that are comparatively inactive in their nature. It is based on the company’s position. societal or economical. existent or perceived. in the eyes of clients. rivals. spouses. regulators. and other stakeholders.

2. Kinetic: advantage gained by the organisation’s ability to move.

kinetic advantage comes from an administrations cognition. expertness. competency. or capablenesss. It is based on an administrations competency and accomplishment in carry oning concern activities. including:

*The ability to place market chances.

*knowledge of clients

*technical know-how and capableness

*speed of action and response in the market place

*and efficiency and flexibleness of concern or organisational procedures.

Positional and kinetic advantages interact. they are linked in that kinetic advantages arise from positional 1s and. in-turn. kinetic advantages strengthen positional 1s. Without Kinetic advantages. the future positional advantages of the company are at menace. and if the administration lacks positional advantages. Kinetical advantages will ne’er make attain their possible success.

An administration must maintain the solid elements of thess advantages stable and fresh over clip for the advantage to be maintained.

Advantage Through Technical Capability

Marketing proficiencies allow an administration to place its clients and visualize its chances. and it is the administrations proficient capableness that serves the clients through engineerings and operating procedures. The advantages to be gained here are merely explained: If an organisation’s proficient capableness allows it to be more efficient. flexible. and delivers a higher quality in its operation to clients and does so rapidly in response to client demands. gross revenues will increase.

Administrations use their proficient capablenesss to derive an advantage by utilizing them:

Creatively: To plan and develop a new merchandise ( R & A ; D ) . eg Sony. Apple Mac. Microsoft. Gillette.

Efficiently: Using automatons. information monitoring techniques. E commercialism and cyberspace communications. an administration can bring forth more expeditiously. Chiefly evident in standardized merchandises. eg autos. Televisions and toothbrushes.

Flexibly: administrations with flexible runing systems can respond to alterations in the market topographic point quicker than rivals with stiff technological systems in topographic point.

To heighten Quality: An administration whose proficient procedure and capableness allow it to accomplish high quality in its merchandises and production has the advantage of making client value. Motorola vowed that production would be successful 99. 9997 per centum of the clip. The “six-sigma” plan saved Motorola $ 500 million in 1990 entirely.

To increase velocity: Merchandise design and production must be done at gait to win clients in such a dynamic environment. The most obvious illustration to reference here is Kwik-Fit. who advertise their competitory advantage as “you cant get quicker than a Kwik-Fit fitter” .

Advantage through organizational layout

Operationss directors must construct relationships with others inter-organisationally ( providers etc ) and intra-organisationally ( with co-workers through transverse functional co-ordination )

Cross functional Co-ordination

This attack to deriving a competitory advantage fundamentally suggests that communicating. the life blood of an administration. should be between all sections of the administration. Communication and understanding creates a incorporate administration with common ends and efficiency in strategic programs. Organizational constructions should be level. the hierarchy must back up transverse functional co-ordination by cut downing the formal communicating channels. Deming besides suggests the that remotion of fright and ‘Blame’ Culture is of import.

Departments must be brought together to work out jobs. this manner. input from different countries of the administration consequence in a holistic. efficient response. Directors must better information systems and put up informal societal systems of communicating. for illustration assorted canteens and out of work societal activities.

The strongest links with the operations section are in the Marketing and accounting sections.

The selling section determines the clients need and forecasts the demand.

The Accounting section helps operations directors to understand their current public presentation. labor costs and the benefits of new engineerings.

Without cross-functional co-ordination. operation systems such as stock list direction. programming and capacity direction will be inefficient and decidedly non be effectual. A deficiency of understanding for strategic ends wastes resources and could ensue in the incorrect merchandise being produced. This. in-turn bumps up merchandise monetary values and losingss client attraction. It is hence a wise premise that cross-functional co-ordination can be used to derive competitory advantage.

Advantage: Productivity through procedure

As antecedently discussed. the operations director decides what processes exist within the administration. The Operations director must make up one’s mind on review modus operandis and how much to order and when. Certain organizational tools can be used to help the planning of procedures.

( 1 ) The Flow chart

( 2 ) Cause and consequence diagrams

( 3 ) Control charts

( 4 ) Histogram

( 5 ) Check sheets

( 6 ) Pareto charts

( 7 ) Matrix diagrams

Operationss directors use these amongst other tools to expose information visually. With the usage of these graphical tools. jobs and betterments are easy visualised.

Productivity =Output

Input signal

Productiveness can be improved by acquiring a higher end product figure without increasing that of the input. Or maintaining the same end product figure while cut downing that of the input.

Operationss Directors must pull off aggregative capacity within the administration. there is no set method of telling stock/materials to derive optimal efficiency. the theoretical account used differs between administrations ( see Appendix 3 for the theoretical accounts used ) .

Implementing Changes in operations

Once we have a competitory advantage. it is indispensable to prolong it through responding to alterations in the administrations environment.

The incremental theoretical account of alteration splits the administration up into sections. which react independently to alter. where direction do determinations independently of other divisions of the administration. With clip the administration will hold morphed into a modern version of its old ego.

The use and success of this theoretical account is widespread. its “bit-by-bit” method is attractive as it spreads the work load over clip and the administrations resources. Dangers with this theoretical account prevarication in bad communications. If communicating links throughout are good. the smooth running of a invariably germinating administration is to be expected. But if communications are bad. the administration will endure to a great extent.

Through a systematical invention procedure the instrumental theoretical account of alteration promotes a higher degree of quality with lower costs.

Section B: instance survey

The Cambrian conservatory World. based in Parc-Tawe. Swansea is a fifth adolescent twelvemonth old company. Last twelvemonth. the company was split into two separate companies and the private sector side of the administration was taken over by one of the original spouses. With this acquisition. the new pull offing manager made serious alterations to Cambrian. There are now no boundaries forestalling him doing alterations where he was restricted earlier. At present. Welsh usage its old provider to buy stuff from.

The operations that exist within Welsh are:

*Preparing citations

*Sales minutess

*The ordination and installings of conservatories and Windows

Fixing citation. process illustration: see appendix 1

The competitory advantage that Welsh relies on is strictly differential. Welsh offers the consumer unique. usage built hardwood conservatories and award winning Nexus safety plastic Windowss and doors with Teflon coated locking systems. Welsh is going known for this quality offering and are harvesting the benefits of word of oral cavity and public dealingss in this country.

Welsh are limited in their response to market demands and cost fight by their providers. The administration is happening it difficult to interrupt away from this relationship. As a new. separate company it can non afford to put up its ain mill. the trust with the Pembrokeshire based Cambrian Trade owned mill is a confining factor.

Welsh portions both positional and kinetic competitory advantages. its positional advantages are:

*Market place in south Wales is good.

*Unique designs with quality resource stuffs

Cambrian periods Kinetic advantages are:

*Awareness is turning due to freshly implemented selling schemes

*Technical capablenesss of staff. gross revenues reps and fitters are all really experient employees in the place betterment field.

*The flexibleness of merchandises

Welsh usage engineering within the administration to help competitory advantages. Technologies include. database system of existent and possible consumers. synergistic citing system. CAD. E-mail quotation mark telling. E-commerce with providers.

Representatives go on gross revenues leads with a laptop equipped with precise citing package which produces an accurate. ocular show of the merchandise. The consumer can so see what he/she is being offered. Welsh uses this engineering as a merchandising point:

“Most dems ( presentations ) we go on are impressed by the citing system we use… they are glad to hold a difficult transcript ( publish out ) of the quote… it’s a good merchandising point because they can look at their hereafter conservatory after I’ve left” – Leighton Uphill Gross saless director. Cambrian.

Example: The usage of engineering to assistance quoting:

Creativity: On screen show of merchandise that is to the full adaptable by size. coloring material. manner and stuff.

Flexibility: to the full synergistic. feedback allows Rep to change merchandise in any manner

Efficiency: No leeway for dearly-won errors such as underquoting. ( design is linked to monetary value database )

Enhanced quality: A precise quoting tool. consumers can maintain print out programs.

Speed: An instant quotation mark. edifice can get down within 3 hebdomads ( precise programs are passed on to surveyors and fitters with no negligible errors due to package truth ) .

Organizational layout of Welsh

Cambrian is a all right illustration of Cross functional co-ordination. the organizational construction is really level. There are good communications links between differing sections and all work is aimed at common ends. Meetings take topographic point at the beginning and terminal of each working hebdomad where gross revenues and marks are discussed. Each member of staff is asked for input at these meetings where all organizational issues originate.

Cambrian besides has good communications links with their providers. All members of staff know each other on a personal degree. this is partially helped by the size of the company ( merely 38 employees ) who have all worked there for at least 2 old ages. Another factor assisting these relationships is the regular societal eventides ( at least one time a month ) where everyone attends.

Procedures in Welsh

Flow chart showing gross revenues:

Customer contacts Welsh either by phone or electronic mail

Rep demonstrates merchandise

Gives quote

If yes proceedIf no

Customer visits salesroom to see illustration of built version

Welsh receives a sedimentation ( full payment depends on in agreement program )

Surveyer visits site

Gets be aftering permission

Order is put in for stuffs

Put a day of the month for work to get down

Fitters arrive and get down to construct

Coating

Customer service

Productivity in Cambrian

The productiveness figure from the equation has increased by cut downing operating expenses. therefore take downing the ‘output’ figure. The Telesales section was closed and hours were reduced for non indispensable full clip staff instantly after the company take over ( therefore cut downing rewards measures ) . More frequent wireless advertisement and sponsorship have replaced the non-productive teleselling squad.

Capacity Management in Cambrian

The chase theoretical account of capacity direction is used in Cambrian. orders are merely put in when requested. ( see Appendix 3 for theoretical accounts ) .

Pull offing Operational Change in Welsh

New merchandise lines are introduced incrementally. The Hardwood conservatory is a new merchandise line and if it does good. hardwood Windowss and doors will follow.

Recommendations

Welsh demand to set up new relationships with other providers so they can besides vie on the evidences of cost. The individual competitory scheme they are presently using is working ( turnover up 30 % since coup d’etat in June ) but with the advantage of cost over their rivals. Turnover would increase once more.

Merely holding the competitory advantage of quality is non plenty. in such a crowded market topographic point.

Decision

With the research and completion of this assignment. it has become evident to the writer how of import Operations direction truly is. Today’s consumer is no longer reliant on any one administration to carry through his/her demands. In the bulk of markets they are now spoilt for pick and being customer-focused is an indispensable scheme for administrations. The administration must provide the consumer with quality merchandises at competitory monetary values. The organizational director has many tools available to him to assist these aims. Few of which are discussed in the above assignment.

Cambrian was a good beginning of mention as they are efficient in deriving a competitory advantage through organizational scheme and the usage of engineering.

Modern twenty-four hours engineerings aid the direction procedure. In brief. for operations direction to accomplish a competitory advantage it has ne’er been so difficult. but the technological resources available have ne’er been so plentiful.

Appendix 1: fixing an synergistic citation.

Appendix 2. Deming’s Chain reaction theoretical account of TQM.

Appendix 3 Ways of accommodating capacity and demand

Bibliograhphy

H Costin. Total Quality direction. Harcourt Brace. 1994

R Wild. Production and operations direction. The British Library. 4th edition

W. L Moore and E. A Pessemier. Product planning and direction. McGraw-Hill Iraqi National Congress 1993

J. S Oakland. Total Quality Management. Butterworth Heinemann. 2nd edition

M. E Porter. Competitive scheme. the free imperativeness. 1980

J Heizer and B Render. Principles of Operations Management. Prentice Hall. 4th edition

Quotation marks ( 1 ) Hao Ma Issue: Business Horizons. Jan. 2000

( 2 ) Juran

( 3 ) Deming

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