The Four Vs Operational Process Marketing Essay
An operation has been identified by scholars to include all activities involved in the production of goods and/or services (Schroeder, 2000; Wild, 1989; Slack et al, 2007). Scholars equally vary less on their opinion by suggesting that although operations may take different form(s) between organisations, its application involves a sequence of input; transformation of the input; and the production/delivery of the output. Operational activities require a coordinated approach and management such that the ‘transformation process’ of input to output, produces an efficient and effective product or service that will create value(Schroeder 2000; Slack et al, 2007).
The context of Volume in operations management refers to the size, rate or magnitude of productivity of an organisation’s products. It is argued by scholars that the volume of the anticipated output from an operation would usually shape or determine the process conduct (Slack et al, 2008). The concept of volume tends to suggest that the size of output of organisation would determine the operational process of such organisation such that organisations with high volume of output, organisations tend to have systematic and repetitive (standardised) operational processes which increases speed of the operation and in turn reduces unit cost of production of goods/services as observed in large scale production/services exercises. However, in relatively small production/service outfits, there is usually less standardisation and higher flexibility in the production process. (Kanigel, 1999; Slack et al, 2008)
Scholars have identified that the nature of operations differ across industries and largely within industries (Wild, 1989; Slack et al, 2007). This is epitomised by industries such as the manufacturing, finance and hospitality industries as identified by (Slack et al, 2007). Although the model of the 4Vs might suggest a rigid sequence of high volume- low variety - low variation in demand - low visibility, (or the reverse for low volume operations), it is usually not the case in the present global market environment as organization try an effective operational process mix to ensure efficiency and meet customers’ needs. (Slack et al, 2007; Kotler et al, 2009)
The line drawn across the arrows in fig 7 above indicates the process characteristics at General Motors: As a global automobile company, with products sales in excess of 8.35 million alone in 2008 (General Motors, 2009: online) the volume of its production is high. The company has over sixty four different models of vehicles ranging from coupes, sedans, trucks, vans, SUV, convertible and crossovers. The different models offered by the company is a variety designed to give customers options to choose from (satisfying customer needs) in an effort to boost sales (a process of value creation for the company) (Kotler et al, 2009). The vehicles are produced in the companies’ manufacturing plants located in several region of the world (General Motors, 2010: online) with the production process concealed from the customer until the output (automobile) is ready for utilisation implying low visibility. With plant capacity some worth fixed due to the machinery and equipment and fixed cost due to workforce, fluctuating demand affects the company. Although production can be reduced in terms of number of units of vehicles produced over a period to cope with variation in demand, the fixed cost incurable would remain constant.
The enquiry into the operational processes of General motors and Zenvo automotive indicate differing operational pattern in each organisation. While General Motors has a high Volume, mid variety, low variation, low visibility profile, Zenvo automotive on the other hand has a low volume, low variety, high variation and low visibility. The Strength and weaknesses of individual operational processes is highlighted below:
For General Motors although high volume brings about a low unit cost of products, the necessary systemization of the production process requires a huge capital outlay. Furthermore due to the size of the company and its production system, there is a huge limit to the flexibility of their operation to varying demand. As such a large variation in demand would inflict the company with higher per unit cost of product that may even result to financial deficit for the company.
For Zenvo automotive, although the low volume of its operations requires less capital outlay, the production process implies that the unit cost of producing each vehicle will remain high. With just one model on offer, there is almost no variety as the single model is the company’s standardized product. This will limit the organization’s ability to attract a wide range of customers. However it can be argued that perhaps the company is targeting a niche market (Kotler et al, 2009) nonetheless with little or no variety on offer, the company’s ability to match varying customer need is limited.
The identified deficiencies of both companies’ operational processes inform the basis of the suggested optimal solution; in organisations which engage in high volume of operation, there’s need to design flexibility into their system to facilitate the adaptation of operations to varying customer needs and demand factors. Large organisations should endeavour to reduce the time gap between manufacturing and utilization by providing some level of visibility through customer involvement in production process especially product design. Organisations which however engage in low volume of operational activities need to device means of reducing unit cost of producing goods or delivering service.
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