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The purpose of this module is to create an understanding of operations and to help students to critically appraise the decision making relating to operations management in the manufacturing and service sector in today's dynamic market.
This assignment is designed to implement our knowledge of strategic operations management in an organisation which will help in our career. My chosen organisation for this assignment is Birds Eye and in this assignment i will be discussing the operational strategy of the organisation, layout of bird eye and value chain and quality.
Business strategy can be defined as a long term plan designed by senior management of the company to achieve certain goals or objectives. The strategy is a management tool to make the organisation work more effectively and efficiently and to the strengthen the performance of business. Which includes how the business will achieve certain goals and in how much time certain goals should be achieved. (rapid-business-intelligence-success)
Another simple definition of business strategy is '' a long term scope and direction of a company, which results in achieving advantages for the organisation through the arrangement of resources available in a testing environment, to fulfil the needs of markets and also to meet the needs or expectations of stakeholders. (tutor2u)
Operations strategy is a very appealing area for managers. Every organisation which makes products and deliver whether they do it for profit or non profit purposes rely on a process to make their products and also to deliver to them to customers. Each process acts as an operation for the company.
According to SLACK AND LEWIS ''operations strategy is the way of decisions which give a direction to long term capabilities of any type of operation and their role to overall strategy, through the settlement of market needs with operations funds''. (en.wikibooks.org)
Operation strategy can also be defined as '' strategy specifying how the firm will utilize its production resources to support its corporate strategy''. (allbusiness)
Strategic operations management creates services and products for customers by controling the creative resources of the company.
Strategic operations management is used in all organisations which are in the business of services or manufacturing products, but sometimes it is not called 'strategic operations management'.
(NCC study notes)
Birds eye is a frozen food company who supply quality frozen products to its customers all around the UK and at the moment they are the UK best. The target of this company is to supply quality frozen products which are healthy for the people and reasonable at price. Main reason why this company is a big success is because of its environmental, community and consumer values. The company is well aware to the future needs of the world that is the reason they are investing in their operations department and by 2020 they will be serving a lot of customers but their water supply as low as what they were consuming in 2007. Even though they are market leaders but also they are fully aware of their responsibilities towards environment and people.(foreverfood)
LINK BETWEEN OPERATIONS AND BUSINESS STRATEGY
Business strategy of birds eye is to sell a variety of quality frozen products to customers at reasonable price and make them available at different shops so that customers can easily access them. One of the other main goals of the company is to provide customers easy to cook food because in today's faced paced environment people don't really find time to cook food. Thus, the main business strategy of birds eye is to sell quality frozen products to customers, which are easily available to them at reasonable prices, which are easy to cook and healthy for the stomach. (birdseye)
In accordance to the business strategy of the company mentioned, the operation strategy is designed in such a way to make all the tasks possible of business strategy. The operations strategy of the company is based on five main objectives
Quality reduces costs and increase dependability. Which includes the condition of goods, the manufacturing area needs to be kept clean and tidy, hiring of professional staff at all different departments who can understand the requirements of business and customer needs.
Speed is a main part of birds eye operations strategy as it reduces inventories and risk. It includes availability of raw material at the production area at all times so that production stays up to date so customer requirements are met, in case of shortage goods should be available in as less time possible, orders from shops or superstores such as Teso, Sainsbury, Morrison should be delivered in as less time possible because a lot of customers buy from them.
In birds eye operations strategy dependability plays a vital role so that proportion of goods out of stock should be kept to a minimum, delivery of goods should be done in reasonable time, transportation vehicles and delivery drivers are available so there should be no flaws in delivering the products to shops.
Birds eye is well aware of their business strategy that is the reason their operation strategy is flexible because in today's market customer requirements change all the time and companies needs to make changes to their products that is the reason why company is using mix flexibility in operations. Volume flexibility is also introduced in the business because customers buying power is different in different parts of the year as in Christmas people do a lot more purchases than January so production is made according to the needs of customers, company has introduced delivery flexibility which includes the delivery of products to super markets whenever they order as it increases dependability. By looking at market requirements birds eye often comes up with different promotions to increase customer awareness.
In order to stay ahead in today's market companies needs to be cost effective so more people can buy their product. To be cost effective birds eye has introduced state of the art machinery in their production department which are eco friendly and run more smoothly and produce more units in less time. The vehicles company is using to deliver the products to super markets are also new and use hybrid technology which uses less fuel thus, all these efforts help birds eye make cheap quality products.
Layout determines the flow of material or information through the operation process and it is very
Important for business to make the right layout decisions. Businesses don't normally change layout
Decisions. Good layout is important to perform the tasks effectively. It includes the safety of staff,
customers and visitors, making sure that appropriate staff conditions are available such as pleasant
working environment, determining the length of flow for operations objectives etc. (slack, chamber
Objectives of layout
Product design and volume (Product strategy).
Process equipment and capacity (Process strategy).
Quality of work life (Human resource strategy).
Building and site constraints (Location strategy). (slack, chamber & jhonson.2007)
Types of layout
Fixed position layout.
Process oriented layout.
Product oriented layout. (slack, chamber & jhonson.2007)
Importance of layout
Higher utilization of space, equipment and people.
Improved flow of information, material or people.
Improved employee morale and safer working conditions.
Improved customer/ client interaction.
Flexibility. (slack, chamber & jhonson.2007)
Design in operations management strategy is a process in which the needs of customers and the needs of market place are transformed into a product which satisfies the needs of both customer and company. This step is normally carried out by an engineer or a designer but it requires help from other people as well.
Process design provides great deal of help in problem solving. 6 different stages of process design are as follows
Product Design Specification
Manufacturing and Testing
It is recommended to develop a prototype just to check that all technologies work before committing resources to full scale manufacturer.
Process technologies can be direct, indirect or integrating and they are used in both manufacturing and services operations. Sometimes technologies can also be used to process customers.
Direct Process Technologies are the machines and devices that create or deliver product and services.
Indirect Process Technologies assist in the management of processes rather than directly contributing to the creation of product and services for example information technology which schedule activities.
Integrating Technologies is the process combination of materials, people and customers for example electronic point of sale.
(NCC study notes)
It is assumed that the company is using cell layout feature for manufacturing its products. A cell layout is actually a hybrid facility arrangement based on combining some of the principles of fixed position and product layouts. A cell layout involves grouping together a number of dissimilar machines or processes according to the design of the product being made or the operations required for its production. The main difference, however, is that in a cell layout the operation sequence and flow direction can be varied. Another important difference is that the workers in a cell are usually multi skilled and can operate more than one machine or process, whereas in a product layout they tend to be dedicated to just one task on one workstation. In this respect, therefore, a cell layout draws on one of the features of the fixed position approach. As with product layouts, a cell layout can be used in high productâ€volume situations, but its use is probably better established in intermittent batch operations. In this case the cell is used to produce product families rather than a single product and is based on the principles of "group technology." The main reason why cell layout is used in birds eye is because it allows company to produce groups of units but not just one unit at a time and this layout helps company fulfil market demand and to fulfil the needs of the customers.
The product design of birds eye is also very flexible the company has introduced machinery in the production area which can easily be altered to fulfil future needs and can produce different types of products at the same time.
Because birds eye is a big company therefore, all three types of technologies direct, indirect and integrated are fully used in the company. Direct process technologies are used in a way that company manufacturers all the products on machines, indirect technologies plays their part in both manufacturing area and in head office where human efforts are involved to make things possible.
Value Chain Analysis
This approach was developed by Michael Porter in the 1980 in his book competitive advantage. This concept can be utilized to develop a company's competitive advantage in today's global and dynamic market. Organisation consists of performance that ties together to build up the value of business and together these actions form the organisation's value chain. These actions include purchasing activities, development of the products, sharing and advertising of company's goods and actions. (slack, chamber & jhonson.2007)
Main Aspects of Value Chain Analysis
Value chain analysisÂ is a great tool for managers to recognize the key activities within the firm which shape the value chain for thatÂ organisation, and have the possibility of a sustainable reasonable benefit for a company. Therein, reasonable benefit of an organisation smears in its skill to carry out critical performance next to the value chain superior than its competitors. (slack, chamber & jhonson.2007)
The value chain analysis can be divided in two main parts which are Primary activities and Secondary activities. Both of these activities are explained as under
Primary activities includes the following
These are the actions apprehensive with acceptance the materials from suppliers, storing these outwardly sourced materials, and handling them within the firm. (slack, chamber & jhonson.2007)
These activities are linked to the production of goods and services. The distribution of this area varies from company to company. For example, in case of a hotel the operations would include the reception, room service etc. (slack, chamber & jhonson.2007)
These activities are linked with the distribution of final product or service to the end consumer. If we take the example of a hotel the outbound logistics include the bringing of customers to hotel. (slack, chamber & jhonson.2007)
Marketing and salesÂ
This area plays a vital role in success of any company as it needs of the customers and its main responsibility is to create awareness among the end consumers of the company about the products the service the company is offering. Organisation use marketing communications tools like advertising on radio, television and billboards to attract customers. (slack, chamber & jhonson.2007)
Not all companies provide this service as it involves the after sales service which basically requires if anything goes wrong with the product. (slack, chamber & jhonson.2007)
The main responsibility of this department is to purchase material which is necessary for operation of the business. An outstanding procurement department is who manages to get highest quality at a cheap price. (slack, chamber & jhonson.2007)
Human Resource Management
This function is responsible for recruiting, training, motivating and awarding the employees of the business. Now a day human resource is becoming very important for achieving reasonable growth. (slack, chamber & jhonson.2007)
This area is linked with innovation of technology, knowledge and training which is very important for sustainability and growth of business. (slack, chamber & jhonson.2007)
This covers the planning and control side which includes accounting, corporate strategy and finance. (slack, chamber & jhonson.2007)
Limitations of Value Chain Analysis
This model has certain limitation and one of the main one is that it emphasises on manufacturing sector that buys raw material from one place and process it in the in house facility and then sell it to the end consumer. This is because that model was introduced in 1985 and at that time the service sector was not at his boom or in other words was not use to hire enough people comparing to today. (slack, chamber & jhonson.2007)
Value chain analysis of BIRDS EYE
Most of the stuff the company use for manufacturing its products gets imported within the country. Once the goods gets unloaded at the port, company trucks which are fuel efficient and contains reasonable amount of storage picks them up and deliver them to the manufacturing plant. Back side of trucks where goods are kept contains freezer so that quality of products does not damage while transferring them from port to factory.
Once goods get delivered in the factory then they taken to the manufacturing plant and go through machines under the supervision of trained staff. For example, the process of birds eye breaded fish is that truck put them on a conveyer belt and then machines add breading and after that same machines pack them up and make them finished goods. Waste control is a crucial issue and to stop waste the company has introduced waste management system that not just tells about the wastage of food but also controls it by its state of the art technology.
After preparation of goods the next step is distribution. Birds eye have there own vehicles that transport those goods to retailers and deliveries are made 24/7 which guarantees the availability of goods to shop floor at all time.
Marketing and Sales
Marketing and sales is the life blood of every business and birds eye is fully aware of that. That is the reason why company spends millions of pounds on advertising the products over TV, radio, billboard and even by displaying different brochures of various promotions in major departmental stores. The company has recently launched a new campaign of ''every day low prices'' which has resulted in double the sales of selected products.
Birds eye care about its customers therefore they offer full refund or exchange in case the customer is not satisfied by the product or if they think its faulty or expired in any way.
The purchase or procurement department of birds eye is full with talented executives who made high quality products available to the company at reasonably low prices so that customers can get quality food at cheaper price.
Human Resource Management
Honest and hard working staff always plays a major role in the development of any business. Therefore, birds eye have a state of the art human resource department who hire good employees and over the period give them outstanding training and to motivate them this department also introduce various reward schemes.
State of the art production plant and highly fast and reliable intranet system of birds eye clearly shows that company is investing in this department and they are fully aware that this area is crucial for strategic development.
Previous years profits clearly state that planning and control system is outstanding and is full with talented people. The company has a research department who keeps an eye on the market. Finance department makes all the crucial decisions for the business and is based on highly qualified people.