The Issues And Challenges Essay
Introduction of Operation Management
Richard Chase, Robert Jacobs and Nikolas Aquilano define operational management as administration of all the recourses that are necessary for manufacture of goods and services by any company (2005). Other researchers say that operational management is a science about concepts, methods, procedures and technologies, which are used by manager while creating and ruling operational system. All in all, one cannot but encounter the fact that the term operation management incorporates such five performance objectives as quality, speed, dependability, flexibility and cost; for all that, one can witness a variety of discrepancies in terms of whether it is vital to focus one’s thought on one particular objective or on all the above-listed and why. As for this essay, it argues that, in view of many experts basing their decision on a number of conducted surveys, it is necessary to focus on one particular objective, which is flexibility. The further case study aims to indicate the evidence of the significance of flexibility from the perspective of running successful business.
Considering the operational management of an enterprise, it is obviously a process of designing, planning, coordinating and controlling all the resources, methods and kinds of activities, which are necessary for transforming labour, capital, material, energy and professional skills into goods and services to satisfy the demands of society.
Operational management belongs to the system of planning and control that has the following structure: marketing situation, corporate strategy, operational strategy, and finally operational management (Slack., Chambers., Johnston 2010). In its turn operational management also is divided into several constituents, which are staff, departmental division of an enterprise, components of a good that is manufactured or service that is provided, and economics processes (Lovelock & Wirtz 2007).
The main aim of operational management is producing goods and services at the proper time and using for this purpose the minimum resources. There are several principles developed to define whether the management is effective or not. These principles include the quantity of manufactured product, costs of materials and staff salary, maintenance of equipment, quality of the product, delivery issues, return of investments, flexibility while changing products characteristics and its quantity (Crainer 2000). Case study that concerns the company FreshDirect aims to emphasize the most appropriate performance objective while running business.
Being founded by Joe Fedele and Jason Ackerman back in 2001, FreshDirect is recognized to be one of the leading online grocers in the U.S., delivering premium quality fresh-from-the-farm foods and brand-name groceries to customers in the greater New York, New Jersey and Connecticut metro area and Philadelphia, Pennsylvania. During last ten years the supermarket managed to survive 4 replacements of senior management staff with the fifth one that is ruling the company now and is chaired by Richard Braddock.
Fresh Direct is a client oriented company that offers qualitative products for reasonable prises. Great variety of foods, discounts, delivery in time, cleanliness, health, and safety while preparing products for sale, are among business priorities of the supermarket and definitely belong to its strengths. The constant replacements of senior management group including the executive board and the president of the company have a negative influence on FreshDirect performance and interoffice administration processes. In the era of Internet technologies online shopping is becoming more and more popular, and this fact means a great opportunity of development and improvement for FreshDirect. Another thing is that the online supermarket captures quite a limited territory of the USA and in this way loses potential customers.
Analysis via Porter’s Five Forces Model
The fact that FreshDirect is not the only one online food supermarket in the area means that completion cannot be avoided. Peapod, NotGroser, YourGroser and other companies use every possibility to attract new customers. Different delivery models, special deals and a possibility to buy the most suitable product are key features that help customers to identify a supplier. For example delivery charge for FreshDirect varies from 4.99$ to 9.99$ and for YourGrocer – from 9.99$ to 14.99$. This fact may be crucial for those clients who make many orders but with limited number of products included. Due to the fact that the demand and the proposal are interconnected notions the clients are becoming more and more demanding, they pay attention not only to quality of product and its price but to quality of service as well. From time to time the demand for certain products decreases and the company may lose money. For example, nowadays people tend to buy fresh and healthy food, and in this situation FreshDirect is in a better position than many other companies as it sells 5.000 kinds of perishable foods that are considered to be more healthy than packed (Laseter., Berg., Turner 2003).
Among the issues FreshDirect faces one can name the lack of local suppliers that would deliver foods to the shelves of online shop. The situation is getting more complicated as WholeFoods, Tesco, CroceryWorks and other supermarkets apply to the same food manufacturers. It is obvious that due to skipping with the framework of flexible business model, the company gradually loses its profits. The thing is that modern world is characterized as the unsteady platform requiring from business players the ability to manoeuvre in order to answer the demands of the market.
Analyzing the drawback of the company, it is necessary to male mention of that while proclaiming to be an organic oriented company FreshDirect uses plastic wraps for packing foods and it looks like it deceives the customers; it also proves the enterprise to be unadapted to the regularity of the contemporary market tendencies.
Online grocery shopping is a fast-growing brunch of trade industry that is selling not only foods but services. It means that the companies with quick pace development can occupy this market niche and other supermarkets will have fewer chances for success. To be a well-known and reliable food supplier, the awareness of the need to obey the construct of flexibility based on constant improvement in the sphere of new technologies, administration and competitiveness is unquestionable.
Analyzing the paramount importance of flexibility within operation management, it is worth drawing attention to the fact that its essentiality is caused by today’s turbulent world; consequently, the companies should be flexible and ready to adapt quickly to the changing environment. Driven by rapid technological changes, new products are launched to the market with an increasing speed (Fitzsimmons & Fitzsimmons 2004). This gradually leads to the decline in sales and popularity of the old products which soon become obsolete and are then substituted by the new ones (Bartels et al. 2012). In order to be effective in the market, the company should be flexible and ready to shift to market demands.
Another case study deals with the services operations. The point is that it will also demonstrate the example of how the principle of flexible business model is likely to make a shift of focus from middle business players to the leading ones.
Coventry Sports Centre (CSC)
Generally, the Centre employs about 20 trainers and runs around 10 different programmes, which include swimming, tennis and personal training (such as treadmill, weight lifting). The discussion provider of sport is quite promising business structure; however, it is characterized by serious losses due to many competitors working in this field. Analyzing the given company, it is possible to witness the absence of clear operation management. Moreover, after thorough investigation, the company appeared to disobey the norms of flexibility, which is likely to be major cause of its poor progress.
In order to meet the requirements of the present consumer’s psychology, the company has to make fundamental rearrangements based on the need to approach the concept of flexible business structure. At first, each member should be able to take on more than one training programming. There are currently about 500 members and 15 training rooms. The major task for the Centre administrator is to store basic information about the training rooms, the trainers, the training programs and the members of the Coventry Sports Centre. The required data to be stored includes the following parameters:
Trainer: ID, name, address, email, contact telephone number;
Training programme: Code, title;
Member: Registration ID, name, address, email, contact telephone number;
Rooms: Code, name, location, capacity.
The management has decided to allocate the swimming to indoor pools, the lessons of tennis or badminton to sports halls and the other personal training programs to the training studios. Basically, each training room may be used by a number of different training programs but a particular program should be always held in the same training room. Therefore, all this information should be included into the system and the administrator will keep all the data about the members, trainers and training programmes. Additionally, the administrator should take into consideration that some changes that can be made to the facilities of the rooms, they can be demolished or the new ones can be built. The timetabling process should be aimed at producing the timetables for the trainers, training rooms, programs and members. Besides, the timetable software should be then sent to the Centre’s separate mail server that posts it to all the trainers and the members.
Moreover, the administrator has to be responsible for putting all the information about each training programme in terms of the number of hours and facilities required for swimming, indoor sports and personal physical training. Additionally, it is necessary to edit the information in order to show which trainer is in charge of the program (each trainer may run at least one training program) and allocate the times and rooms for the training.
As for the booking system for the Coventry Sports Centre’s members, the administrator should use the standard one that will satisfy the requirements of the program. Generally, each member is allowed to book more than one training program and the system should suggest the time, the trainer (s), the programmes and the suitable rooms. Nevertheless, the administrator has the right to make the final selection once a time according to all the requirements. There is sometimes a need for short-term bookings for individual members who wish to drop in to a training programme during the year. In this special case, the booking requirement is entered as part of the operation and is not done separately in advance.
Considering the peculiarities of the given provider of sport services, it is possible to conclude that the discharge of the operation management in general and flexible business model in particular is likely to lead to further deterioration of its position. All in all, on the other hand, in case the board of managers decides to adapt the business to the construct of following such performance objective as flexibility, such a decision will result in an obvious improvement and the advancement of the given company, since ignoring the major constituent of operation management, which is flexibility is hardly to bring the increase of stock of capital (Grönroos 2006).
Flexibility as the Key to Maintaining Business
Obviously, having analyzed two cases in regard to manufacturing and services operations, it is possible to sum up that flexibility is critical for the success of the enterprises; and one should know that whether the company is targeted on producing goods or offering services does not matter at all. Such a conclusion is mainly based on the investigation of the discussion cases mentioned above. In any way, it is possible to state the following citation in order to emphasize the complex nature of this essay’s subject: ‘‘only recently have the logistic, operations management and supply chain management research groups started publishing more about the embodiment of sustainability in supply net- works.’’ (Van Bommel 2011, p.896)
In a highly competitive turbulent environment, many companies die as soon as their products or services become obsolete. The thing is that the company’s competitiveness often proves to be tightly linked to the accuracy of operation management. Moreover, flexibility, as one of the major constituents of operation management, appears to be a unique operation performance objective necessary to succeed in running business; the enterprises obeying the construct of a flexible nature are mostly likely to adapt to the market changes. By monitoring external conditions such as product perception, customer needs, technological developments, and shifting its production line accordingly, once keeping the business models flexible, the companies emerged to be better targeted on its consumers, which signifies the inevitable advantage (Hanke & Wichern 2009).
Operational management emerges as one of the pivotal principles of all the enterprises; and no matter whether its focus is on private, public or voluntary areas. It is basically about the design and management of products, processes, services, and supplies (Campbell 1966, p. 99). It considers the acquisition, development and use of resources, the firm must provide the goods and services that their customers want.
Supply agents range from the strategic to the tactical and operational levels. The representative of the strategic issues include determining the size and location of manufacturing facilities, determining the structure of services or telecommunications networks, network design and technologies of power. Operational management is one of the most widely used ways to provide any company with success. Not high technologies and significant investments, though they are also notions of great importance, make the company powerful and successful, but strategic thinking and mathematics lows. Strategy matters, because without it a firm does not have direction. Consequently, any successes that it may gain will be by fluke (Brown., Blackmon., Cousins., Maylor 2001). Hypothetic case that happened to Sowa Industries can be a real challenge for any company, where basic principles of operational management have not been implemented.
Deep review of the study case has shown us that quite often the real situation is rather different from what it seems to be; not always the most profitable decision is the best one. Also, it is important to have as many plan variants as possible, because every alternative increases company flexibility, which is determinant factor of the efficient business model.
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