Real ale production

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Organizational Management

Real ale production is a major industry in the United Kingdom, in Britain alone there are four major brewers and numerous local or regional family owned brewers. Beer brewing and drinking has been part of the British culture since centuries. People choose to go to pubs to socialize or simply to get a quick pint. Smithy's brewery is one such family owned brewer with pubs located in the south-west of England. In recent years the consumption of beer has significantly decreased due to the increasing consumption of wine (Brewers and Licensed Retailers Association, 2001. Smithy's brewers have been competing with the major and small brewers for a long time but recently it has become more severe. Thus they need to carve a position in the existing market.

In this age of immense competition it has become very difficult for any business to establish a market. Every organization strives to be different from its competitors. It tries to create a USP (unique selling point) to attract new customers. The customer is considered 'God', if they like the product or services the business survives and if they don't, it perishes. It can be said that an organization exists at the whim of the customer. Hannagan (1998) suggests that customer service is the only element that can distinguish one organization from the other in the same business.

The operations transform the inputs into outputs by undergoing particular processes (Slack et al. 2007). The input for the brewery would be staff, good facilities, raw materials for beer, location for the pub, information and the pub itself. As the original business of Smithy's is selling quality beer, operations has to provide services to support the products, in this case a pub (Slack et al. 2007). These inputs would be transformed into outputs as follows, good service, quality food, beer, convenience for reaching the pub. The look and feel of the pub is very essential to distinguish itself from the local competition. The transformation process would involve, brewing the beer, training the staff, making sure that the chefs use fresh and quality ingredients and also keep the kitchen area clean. Also with respect to the pub, the interior would have to be given priority such as the seating arrangement and its comfort/convenience etc.

Inadequate skilled staff, misunderstandings between the hierarchy, bad service in some pubs resulting in the drop of sales. Lack of understanding customer needs and demand. Staff training and motivation required. Recent surveys conducted in the pubs resulted that the customers were looking for a friendly environment to enjoy their time in the pub. The staff behaviour is an important factor which adds value to the overall experience. They do have some positive points also, they do have a few famous beers. Also, some excellent pubs, where the spirit of Smithy's has been nurtured and preserved. All the pubs are located within the 100 miles radius of Weston Super-Mare. Some Anvil pubs are featured in 'The Good Beer Guide' published by CAMRA (Campaign for Real Ale).

Slack et al. (2007) states that all operations are different in the form of volume, variety, variation (in demand) and visibility. The volume for smithy's would depend upon the amount of beer or Real ale sold to its customers. The location of the pub will attract different types of customers with different spending capacities and different taste preferences. Thus, the volume is moderately high. The variety for Anvil pubs is slightly less than moderate with Anvil Ale (a traditional ale), Old Smithy (a stronger beer), Thirstquencher (a lighter beer served during summer) and Alcopops (blends of alcohol and juices). The variation is moderate, when a person comes to a pub he is looking for a place to get beer and some snacks to go along with it. Also the influx of customers would be more over the weekend (to socialize), which would mean an increase in the amount of beer and food sold. Visibility is the value added to the activities in this case it would mean the staff behaviour towards the customers, the good food, good beer and overall good facilities (Slack et al.2007). The operation has to strike a balance between all the four V's. The visibility is low at this stage as the operations are still undergoing implementation.

As per the norms of Hayes and wheelwright classification it can be observed that Smithy's Breweries is at stage II. Where after comparison with the competition they realised they needed to be different. They may not be considered a threat by the market leaders at this stage but they are implementing 'best practice' in their performance (Slack et al. 2007).

Smithy's have opted for the improvement of their services as opposed to innovating their products. The products of a brewer can easily be duplicated by the other brewers for the same price or they could be acquired at a cost. Services are relatively difficult to imitate as against products in the brewery business. Thus, it is logical for Smithy's to choose service over product. Introducing or improving a new product would incur extra cost in the form of research and development, marketing etc. also it would be a short term strategy from which the company would not gain much.

Today's consumers are using their income to purchase more convenience, while looking for quality, variety, and value (Martinez and Stewart 2003). Customer services are being highlighted as the priority in all the Anvil pubs. The managements conviction of providing good customer service in order to gain a competitive advantage is logical as 'service' is the only element which can give the company a economic boost (Kandampully 2000). This would give the company an added benefit. The operations would improve and supervise the performance of the staff. Kandampully (2000) also states that service quality plays a very important role in distinguishing an organization. Operations management will have to create the service phenomenon in the business.

Customer needs ought to be identified and segmented Hannagan (1998). He further states that customer needs have to be viewed in comparison with the competition and the company who meets the customer needs better will most definitely be successful in the market. Smithy's have identified their drawback and are ready to tackle it with better service and facilities. Their customers are keen on new and improved provisions in the pub service.

The management wants to inculcate quality family business with the traditional values of, 'good beer, good food and homely service'. Operations management takes the input and transforms them into output (Slack et al. 2007). Thus, the staff has to be trained and equipped accordingly. The operations management would facilitate proper training programmes as per the need and feel of the particular pub. Alongside it would also have to improve its facilities such as food, ambience and good beer. The operations management would be producing facilitating services to support its Real Ale business

Demand and supply very closely related to each other. And when demand and supply both intersect it's known as 'Equilibrium'. The 'law of demand', states, "if all other factors remain equal, the higher the price of a good, the less people will demandthat good." (Investopedia 2003). The 'law of supply' states that, "the higher the price of the goods the more they will be supplied." Thus, Smithy's would sell more Ale at a higher price to its pubs depending upon the demand and the pubs in turn would sell it at an affordable price to its customers. The more the quantity the more revenue acquired. In order to do this effectively the company has to organise its supply chain accordingly (Sampson 2000; Shemwell & Cornin 1994; Martinez & Stewart 2003). By doing so, Smithy's will meet the individual demand of the pub more efficiently and this would prevent ullage.

The performance objectives help monitor and measure operations (Slack et al. 2007). The performance objectives are explained in order of their precedence. Quality is very crucial at this stage as the company is struggling to make a unique identity of its own. It is also believed that those who provide quality service can have a stronger competitive position in the market (Kit-Fai Pun & Ka-Yan Ho 2001). Speed, the mangers have to pay close attention to the speed of service. If the customer doesn't receive goods or services sooner they tend to form poor opinions about the pub. Dependability, the customers rely on the pub to have a good time as per their convenience. Cost, today's customers demand better service quality in less time and at affordable cost. Flexibility, meeting the customer needs and demands is an important aspect of keeping the customer happy.

The organizational strategy or corporate strategy is the plan or actions undertaken by an organization to reach its objectives (Mullins 2005). Smithy's 'strategy statement' could be, 'To provide better service quality at affordable cost, at the preferable location with good facilities as per customer requirements', keeping elements such as time, demand and supply in mind (Mullins 2005; Dessler 1986 & Hannagan 1998). Thus, Smithy's has to upgrade its services. To do so, operations management provides physical training as well as material for self training and improvement. They also have to understand their employees in order to guide and motivate them (Brooks & Weatherston 2000). In order to maintain their position in the market, Smithy's have to sustain the quality of services and goods.

Quality is consists the following features, functionality, appearance, reliability, durability, recovery and contact. These characteristics can be specified and measured accordingly. In smithy's case, functionality would be beer, food etc, the way the pub looks and how clean is it? constitutes the appearance. Reliability would mean how efficiently and securely the food and beer are served over a period of time. Durability would be the service as a whole. Recovery, how easily any hitch in the service or goods is overcome? Here contact would be considered the most important aspect, it signifies the service provider-customer contact. The customer perception of the organization based on contact. The customer's opinion about the business will be held after one or several interactions in the pub (Slack et al. 2007).

When a certain degree of quality is attained it would be customary for the business to maintain it. Constant effort for improvement would justify the above statement. Smithy's use 'benchmarking' as a tool to measure and improve quality. They perform internal, external and competitive benchmarking which are ideal for their assessment (Slack et al. 2007 & Greasley 1999) . The pub would be a continuous improvement as it takes one step at a time to make new adjustments to its operations. DMAIC cycle best suits Smithy's as they follow the step by step process to identify and then control problem (Slack et al. 2007).

TQM strives to harmonise the quality between all the operations of an organization. The most important aspect of TQM is to meet customer needs and demands. Smithy's operations deploy to meet customer demand. As it is a family owned business they want to keep it culturally and traditionally intact. So the values and quality projected would also need to be very unpretentious. It is thus important for Smithy's to integrate customer expectations into a quality improvement process (Slack et al. 2007; Greasley 1999; Kit-Fai Pun & Ka-Yan Ho 2001)

Like every company Smithy's brewery have hit a rough patch and are determined to come out on the top. If they follow the provisions mentioned above rigorously under the proper guidance of the operations team, they will most definitely be head to head with the competition in a few years. What makes them different from the competition at this stage is the fact that they identified the problem and have chosen to deal with it from within the organization. Using all the tools and techniques available from operations management. Operations management is the function that gets the work done in any organization (Hannagan1998).

Reference list

  • Slack, N., Chambers, S & Johnston, R. (2007) Operations management. 5th edition. Essex, Pearson Education Limited.
  • Mullins, L. (2005) Management and organizational behaviour. 7th edition. Essex, Pearson Education Limited.
  • Hannagan, T. (1998) Management concepts and practices. 2nd edition. Essex, Pearson Education Limited.
  • Greasley, A. (1999) Operations management in business. Cheltenham. Stanley Thornes (Publishers) Ltd.
  • Dessler, G. (1986) Organization theory: integrating structure and behaviour. 2nd edition. New Jersey, Prentice-Hall.
  • Brooks, I & Weatherston, J (2000) The business environment challenges and changes. 2nd edition. Essex, Pearson Education Limited.
  • Economic. (2003) Economic Basics: Demand and Supply [Online]. Available from: http://www.investopedia.com/university/economics/economics3.asp [Accessed 30th November 2009].
  • Pencheon, D. (1998) Managing demand [Online]. Available from: http://www.bmj.com/cgi/content/full/316/7145/1665 [Accessed 30th November 2009].
  • Kandampully, J. (2000) The impact of demand fluctuation on the quality of service: a tourism industry example. Managing Service Quality. [Online] 10, 10-19. Available from: Business Source Premier [Accessed 28th November 2009].
  • Martinez, S & Stewart, H (2003) From supply push to demand pull: Agribusiness Strategies for today's consumers. Available from: http://www.ers.usda.gov/amberwaves/november03/features/supplypushdemandpull.htm [Accessed 30th November 2009].
  • Kit-Fai Pun & Ka-Yan Ho. (2001) Identification of service quality attributes for restaurant operations: a Hong Kong case. Managing Service Quality. [Online] 11, 233-240. Available from: Business Source Premier [Accessed 28th November 2009].
  • Sampson, S. (2000) Customer-supplier duality and bidirectional supply chains in service organizations. International Journal of Service Industry management. [Online] 11, 348-364. Available from: Business Source Premier [Accessed 29th November 2009].
  • Shemwell, D & Cornin, J.(1994) Services Marketing Strategies for Coping with Demand/Supply Imbalances. Journal of Services Marketing. [Online] 8, 14-24. Available from: Business Source Premier [Accessed 28th November 2009].

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