Evaluate the importance of operations strategies in achieving competitive advantage.
Introduction
Operations management ensure outputs come out of the business with value and quality. products are correctly produced and quality. Their processes include sequencing and scheduling, technology and customer service. Through a combination of these operations management successfully delivers their product. However, in order for these tasks to be completed successfully and efficiently there are strategies in place. Operational strategies include the performance objectives, product/ service design and development, supply chain management, outsourcing, technology, inventory management, quality management, overcoming resistance to change and global factors. These strategies are set by operations management to ensure their product is delivered effectively to the consumer with minimal faults. Therefore, with the added aid of other business units and their interdependence the business is able to achieve a competitive advantage which can be measured through benchmarking.
Performance objectives
In order for a business to successfully deliver their product out to consumers, it is important they consider the six performance objectives which include quality, speed, dependability, flexibility, customisation and cost. Quality ensures the product is satisfactory to the consumer, with quality however the business should also achieve economies of scale and efficiency. LG the phone company for example used to be known for its faulty products. Now however they have changed that and begun focusing on the quality performance objective. Speed is also something business needs to ensure and aim to keep their lead time as low as possible. Dependability relates to the priority and word of a business to effectively display customer service and is highly crucial as one lost customer has an almost 0% chance of returning. Additionally, flexibility looks at the businesses ability to be prone to the variation in demand and variety. Coca-cola in 1990 started producing more variety to help adapt to the changing social and technological demographic. Cost is another performance objective in which the achievement of all the other objectives can be and is taken as an important priority. Performance objectives are structured to assist the business in achieving its goals in a competitive way.
New product or service design and development
In order for the business to continuously have a competitive advantage they must have a variety of products catering to their many customers. Steve Jobs for example gives his customers exactly what they want. Apple comes out with new designs each year to keep customers interested. This gives them a competitive edge over its competitor Samsung. Samsung after their models were deemed faulty and were banned had to expand its product range and now provides a larger range of technology. Product development is the process of bringing a new product into the market. It includes design, engineering, market research and marketing analysis. The steps include- SWOT analysis, forecasts, engineering, economic assessment, environmental assessment, product is concept tested, manufacturing decisions, specifications, pricing structure and commercialisation.
Supply chain management
All businesses in order to effectively be competitive and raise funds aim to have the lowest lead time. This means efficient management of raw materials, acquisition, inventory management and selling is required and can be done through stock control, time management, elimination of mistakes, globalisation and specialisation. Supply chain management is important as businesses rely on effective chains in the global environment due to the interlinking of many economies to successfully produce a product. To improve SCM Porsche has begun to use vertical operations processes hence reducing their land space and need for expansion. This improves manufacturing management, development of products, commercial growth and financial management. Supply chain management aims to streamline relationships with outsourcing, create strategic partnerships like the One World Alliance, improve cash flow, improve scheduling by using vertical production methods and capitalisation. Essentially resolving problems with distribution networks, logistical costs, inventory and cash flow. Thus, by implementing an efficient supply chain management all businesses will improve their operations processes and hence be more competitive.
Outsourcing
Outsourcing is an effective way to be more competitively advantageous as it allows the business to focus on their internal; processes. Despite the lack of control over that function and change in corporate culture; investing in a specialised form of task completion will make the business more competitively built. Most schools, for example, outsource their cleaning staff to get the job done well and eliminate the need for staff to be rostered.
Technology
Businesses in order to stay in the market must be up to date with all the leading-edge technology. Telstra, for example, utilises leading edge technology in that they have introduced 4G/5G trials for mobile Internet as compared to the established standard Internet plans and copper wire networks. This new implementation of technology improves the businesses cash flow and will assist in them expanding in the market.
Inventory management
In order to prevent “cash on shelves” and be competitively behind in the market. Businesses need to evaluate the advantages and disadvantages of holding stock and how it affects their business. Advantages of holding stock can include always meeting demand and satisfaction of consumers whereas disadvantages include the spoilage of products under certain circumstances and the fact that the money can go into improving the business. Businesses in order to remain competitive and not be dragged behind should implement strategies such as LIFO for non-perishable items and FIFO for perishable items. Additionally, a JIT strategy could also be used but can be dangerous due to demand variations. Toyota has Just in time production. They stock products when they need it to reduce waste. Dick Smith ltd in 2016 went out of business as they were carrying excessive levels of older stock and due to technological advancements, they became obsolete.
Quality management
If the business is faced with an issue regarding quality, it can greatly drag them behind in the market and affect their reputation. Thus, the business must ensure quality control, assurance and improvement every step of the way in operations processes. Quality management ensures the product is reliable, durable, safe and value according to the Competition and Consumer Act 2010 and Fair-Trading Act 1987. Quality control is when managers check transformed and transforming resources at all stages. For example, feedforwards, concurrent checks and feedback controls all ensure the correct processing. Quality assurance uses a series of measurements and assessing them against pre-determined quality standards, for example, The International Organisation for Standardisation 9000. Quality improvement is an approach that relies on continuous improvement. Toyota for example rather than correcting mistakes they can put key performance indicators identification of problems and then suggests considerations to management benchmarking allows businesses to compare themselves with the rest of the industry.
Overcoming resistance to change
Resistance to change arises from human nature to be unwilling to undergo shifts in environment. One of the reasons staff and managers are resistant towards change is due to the financial costs involved. Purchasing new equipment, redundancy payments, retraining the workforce and reorganising plant layout. Managers must evaluate the pros and cons in order to keep the business improving and remaining competitive. Another occasion in which for the resistance to change their cultural incompatibility in merges and takeovers. For example, banks often merge with Google who has a flat structure and banks have a much more rigid structure so there is resistance to change in that as employees may not adjust with the culture. Staffing issues are also where resistance occurs as employers are resistant to make employees redundant despite some destroying the culture of the business. Strategies that can be implemented to reduce resistance and transition effectively are developing employee trust, allowing employee participation, mutual discussions, evaluating all changes, providing feedback and supporting employees throughout the change. Many NAB workers will be lost due to robots taking their jobs though on the other hand their business is implementing technology to improve processes.
Global factors
In order for a business to have a greater competitive edge it must use global sourcing as a way of improving their processes. Specific countries may specialise in products useful to the business and can benefit the business as it reduces costs to manufacture the product themselves. Apple’s iPhone uses parts from Japan (display), Korea (RAM), processor (Korea), storage (Japan) and Wifi Modules (China). Additionally, all businesses should aim to achieve economies of scale as it reduces cost per unit and can up helve the position of the business in the market. Alternatively, in order to achieve a competitive edge business must always scan and learn from other competitors and innovate through research and development. Though it is costly it is always profitable.
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Topic: Business: Operations Response (Read 2719 times)