Smes are the backbone of any economy

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INTRODUCTION

In every organisation the term that determines their function and goals is there operations. According to Slack et al (2009) operations management is the ways in which organisations manage the resources which are devoted to the production and proper delivery of product and services efficiently. Furthermore, Strath (2010) states that ''Operations management is a value-adding area of an organisation concerned with innovation, production and distribution of goods and services to customers whilst ensuring that the use of organisational resources remains efficient and effective. It is therefore a discipline that is critical to the sustainability of all organisations, industrial, service and public sector alike''.

BODY OF THE REPORT

According Ojala et al (2007) to in today's business environment high-technology small and medium- sized enterprises (SMEs) are playing more increasingly important roles in the global and local markets.

Company background

Softcat is a leading provider of software licensing, hardware, security and related IT services. The company was founded in 1993 by chairman and majority shareholder Peter Kelly, remains privately owned and currently has employees of over 270 people.

It achieved a turnover in excess of £145 million in its last financial year and has been profitable since inception, resulting in a strong balance sheet and very firm financial foundations. Their progress can be seen in the profit and loss account below-

Five Year Trading Record

Profit & Loss Account

year ended 31-Jul

 

 2005

 2006

 2007

 2008

Total Turnover

£m

57.10 

67.28

89.14 

102.92

Operating Profit

£m

1.15 

1.66

3.33 

5.74

Pretax Profit

£m

1.21 

1.70

3.48 

6.04

Profit After Tax

£m

0.82 

1.15

2.07 

3.92

Retained Profit

£m

0.82 

1.15

2.07 

3.92

Number of Employees

no.

127 

125

143 

167

Balance Sheet

year ended 31-Jul

 

 2005

 2006

 2007

 2008

Total Fixed Assets

£m

0.68 

0.46

0.52 

0.64

Cash At Bank

£m

2.05 

0.00

6.07 

10.37

Total Current Assets

£m

15.95 

15.94

25.85 

30.51

Total Current Liabilities

£m

13.45 

12.10

19.67 

21.22

Total Long Liabilities

£m

 

 

Total Net Assets

£m

3.40 

4.47

7.10 

10.31

Net Worth

£m

3.15 

4.30

6.69 

9.91

Shareholder Funds

£m

3.15 

4.30

6.69 

9.91

Cash Flow Statement

year ended 31-Jul

 

 2005

 2006

 2007

 2008

Net Cash Inflow/Outflow

£m

-2.86 

0.42

3.80 

6.52

Return on Investments

£m

0.07 

0.05

0.14 

0.30

Capital Expenditure

£m

-0.13 

0.05

-0.15 

-0.23

Financing

£m

0.06 

0.00

 

0.00

Net Cash Flow

£m

-3.57 

0.15

2.50 

4.63

Hemscott, 2010

Company position

The company's position can be seen in the report above that they are doing very well for their size. In recent years the companies has been awarded with different title because of their success and good customer satisfaction services. Softcat are very proud to have been awarded the Buying Solutions framework for Commoditised IT Hardware and Software (CITHS), sometimes referred to by the frameworks previous names GCAT, Catalyst, ITGAS or OGC, for the supply of IT infrastructure, software and associated services to the public sector.

The position is further shown in Appendix 1.

Softcat is one of the fastest growing resellers in the market, with consistent year on year revenue growth, which they expect to continue even in these more challenging economic conditions that has grappled the nation.

The company was listed as 55 in the Sunday times profit track 2010.

What they do

The company sells and supports products and solutions from all the world's leading IT companies. On all its portfolio products and solutions it offers a full range of services.

They give advice and guidance, technical design, product sourcing, implementation, support and project management.

The company enjoys a trading relationship with over 1,500 longstanding customers, predominantly from the UK corporate sector but also including large enterprises, small businesses and increasingly public sector organisations.

As a truly independent organisation with high level vendor relationships, they pride themselves on delivering unbiased and honest guidance for all our customers' IT requirements. From the most complex IT solutions to the simple supply of IT consumables, they have the technical expertise, logistics and experience to deliver.

The company's span of products and services are developed to support IT departments in their quest to deliver the business critical solutions their end users demand. 

They offer flexible and wide-ranging methods to conduct business with them, whether you want them on site, on the phone or on the Web, they can fit in with your working style.

All of this is delivered with the very best levels of attention to detail and customer service that has won them many accolades over the years (Softcat, 2010). Their operation is further shown in Appendix 2

Operations typology in the company

According to Slack et al (2009) operations in organisations varies in respect to the type goods and services they produce and that in some organisations it is relatively easy to picture the operations function and what it does, even if one has ever seen it.

The operations of Softcat Ltd can be analysed through their activities and the type of business they are into. The company is into providing IT solutions and other services to individuals and organisations.

Transformation process

In the words of Knod and Schonberger (2001) operation is a transformation process. They further state that transformation is like a path organisations follow to meet the customers demand. The transformation process comprises of - inputs, transformation and outputs.

Transformation process in Softcat Ltd is the inputs of software's from producers and other IT facility suppliers and it goes through the transformation process, from there to the output stage and then to the consumers. As seen below-

Operations process

According to Slack et al (2009, p19) although all operations processes are similar in that they all transform inputs, they vary in a number of ways, four of which, known as 4 V's. They are

Volume

Variety

Variation

Visibility

Volume

According to Slack et al (2009, p19) refers to the repeatability of task and systematization of the work where standard procedures are set down specifying how each part of the job should be carried out.

The volume output of Softcat Ltd is high, because of the number of product and services they produce, furthermore because of the repeated task they engage in. The company has a lot of helping hand from top organisations to produce their products. Example, they are in partner with several IT companies like DELL, HP, APPLE, MICROSOFT, MCAFEE and many more at their disposal. Therefore, their output is high and with the number of different organisations to give them more of the product in demand, the volume output would increase.

Variety

The ability of organisations to change their operations to tackle and meet the demand of the customers is known as variety (Slack et al, 2009, p20)

At the outset, the number of variety or multiple options available to customers is much in the Softcat Ltd. This is because of the number of services and products in the company, their variety compromises of the different IT Company that they are in partner with and the different service they render. They are further seen in Appendix 3.

Variation

According to Slack et al (2009, p20) organisations need to change in respond to changing tide and inflow of customers.

Softcat Ltd, give a different amount of variations. This is because of the different target market of their product and services. They provide services to not only direct customer but to big organisations as well. The company provides customers with variations in the sense that they provide after sale services to customers and maintenance of the installed product and services.

Visibility

In the words of Slack et al (2001, p24) means how much of the operation's activity its customers experience, or how much of the operation is uncovered to the customers.

The visibility operation of Softcat Ltd is of high degree. This is because most of the time they engage with the customers in face to face transaction. They also provide after sale services which sees them going to the customers to do periodic maintenance check, with that, the facial contact with the customer is increased. The number of brand logo's they have is a step up the visibility tree of operations.

Operations performance measures

According to Greasley (2008, p7) operations management is not simply about day to day running of an organisation but the careful implementation of strategic roles in ensuring that the management of resources and processes are moved towards the organisations long-term goals. The goals of organisation can only be achieved with careful breakdown of operations performance measures of the organisations, which compromises of the following-

The five performance measures are

Speed

Quality

Flexibility

Dependability

Cost

Speed

According to Greasley (2008, p18), speed is the time delay between a customer request for a product or services and the receiving of that product or service. In respect to Softcat Ltd, the company with its wide range of product and services and the many number of varieties at their disposal the issue of speed is not problem but an advantage because they can deliver the products and services to customers faster. The option of online request and online customer care service puts them at a position which they can help their customers faster. They also provide next day delivery as standard on the full range of hardware products from consumables to enterprise solutions.

Quality

Greasley (2008, p18) stated that quality from an operations viewpoint is related to how closely the product or services meets the specification required by the design. Correspondingly, Softcat Ltd meets most of the requirement to satisfy customer in terms of quality, because of the many big brand names and large IT companies who they are in partner with.

Flexibility

In the words of Greasley (2008, p19) flexibility is the ability of an organisation to change what it does quickly to meet customer demands. The company Softcat Ltd through their extensive sourcing system and partnership can supply literally any IT product in the market without much disruption. They also provide a wide range of services which makes them flexible to change at most times. The company has a policy to get products and services not listed in their service list to the needed customer or organisation.

Dependability

According to Greasley (2008, p19) it refers to consistently meeting a promised delivery time for a product or services to a customer. Softcat Ltd's partner with strong brand names gives them an edge and products they need when the customers demand for products. Their staffs also play a vital role when it comes to dependability; they are motivated to satisfy the needs of the customers at all times because of the company's goals to meet employee needs.

Cost

According to Greasley (2008, p20) cost is the finance or resources required to obtain the inputs (that is, transforming and transformed resources) and manage the transformation process which produces finished goods and services. In terms of cost Softcat Ltd has a direct contacts with most of the suppliers of their product which in terms sees them getting discount because of the relationship they have with them. The company is certified reseller and accreditations partner to Major IT product seller, the prices they get the products will definitely vary from that of other organisations. The cost of running the company is already shown in the trading profit and loss account, and the balance sheet of the company at page --.

Operations strategy or four perspectives of operations

According to Slack et al (2009, p62) operations strategy concerns the design of strategic decisions and actions which set the roles, objectives and the activities of the operation.

Operations strategy has four perspectives which are-

Top-down perspective

The bottom-up perspective

The market requirement perspective

The operations resources perspective

Top-down

The top-down perspective of operations management is a strategic way in which organisations position themselves in the global, economic, political and social environment (Slack et al, 2009, p65). Top-down perspective can also be what the organisation is into and its sets goals (Slack et al, 2009, p65). Softcat Ltd, aims and goals is to deliver the most effective and efficient IT solutions to organisations and individuals at their discrete position. They position themselves to be able to breathe different type of product, services and develop support to IT departments in organisations and also provide critical solutions to the end user of their product.

Bottom-up

According to Slack et al (2009, p67) the bottom-up perspective of operations management is the day to activities of the organisation internally. But also Slack et al (2008, p68) states that it is how the organisations shapes its operations by the knowledge of day to day activities. In the case of Softcat Ltd it is the activities of their staffs that drive the organisation to greater heights, this is because immense task they have to satisfy their customer in any way possible and that can only be done with a good and satisfied employees of the company.

The market requirement

According to Slack et al (2009, p68) operations in organisations have to be continually meeting market standard or requirements. The understanding of the market requirement makes sure that the company or organisations is ahead of its competitors, when the company meets its performance objective in respect of the market its operating in we can say that it has satisfied the market requirement perspective (Slack et al 2009, p69). Softcat Ltd is one of the most financially robust companies in the market, with high levels of cash reserves and no debt.  This is reflected in their credit ratings and a very strong balance sheet. In turn, this benefits their customers as it enables them to continually invest in the development of the business.  It also means that they never have any credit line issues, ensuring continuity of supply for their customers and providing the bedrock of a long term supplier relationship (Softcat, 2010). We can say that (Softcat Ltd) is at the maturity stage because of the number of years they have operating and the number of large and strong companies they are affiliated with.

Operations resources perspective

Slack et al (2009, p73) stated that the perspective is based on one of the most important leading theories of business strategy, which is RBV or recourse based view. Furthermore, he states that organisations can have significant advantage over their competitors when they have a strong based operation resource strategy in place and can see they the company growing immensely. In addition to that no organisation can select the part of the market it wants to do well in without considering its ability to produce and secure product and services in a way that will satisfy the market (Slack et al 2008, p77). In respect to Softcat Ltd's operation resources perspective, they hold a strong resource supply compared to others in the market they operate at. This is because of the many companies they are affiliated with. Partnering with companies that produce the product they sell ensures that they never run out of stock whenever the need arises, this can be seen with the number of companies they conduct business with. As seen in Appendix 3.

Hayes and Wheelwright's model of operation strategy

According to Slack et al (2009, p63) Hayes and Wheelwright developed a model which consist of four stages in which organisations can use to evaluate the role and function of their operation strategy, from the early stage to the fourth stage. The four stages include-

Internal neutrality

External neutrality

Internally supportive

External supportive

Internal neutrality is lowest level of operations contribution to any organisation (Slack et al, 2009, p63). The function of the operation is geared towards the goals of the employees rather than the competition.

External neutrality has to do with the organisation comparing its self with outside competition and rival companies engaged in the same type of business as them (Slack et al, 2009, p63)

Internal supportive- this is a stage in which the company has reached its initial stage of market awareness, they may not be on the same level as their competitors but they have a share in the market they are operating in (Slack et al, 2009, p63)

External supportive- the company at this stage is focusing its operations on the long term rather than the present, it sees the company been innovative, creative, proactive and setting apace to be a step ahead of their competitors (Slack et al, 2009, p64). Furthermore, Innovation capability is one of the most important dynamics that enables SMEs to achieve a high level of competitiveness both in the national and international market (Cakae et al, 2010).

In respect of Softcat Ltd it can be said that the company has passed the first two stages of the Hayes and Wheelwright's model of operation strategy. This is because of their [position in the market they operate at, and with the numerous numbers of partners they have at their disposal is also an indication of the stages they are in.

Conclusion and recommendation

In conclusion the company Softcat Ltd has placed itself in a position that is good for the employee's and the customer it tends to satisfy. Their strategy to diversify their operation is an added advantage when it comes to the market they are in. But they can still make improvements in their operations by opening more branches to be closer to their customers and make an interactive website of their products, in which the customers can choose from. Also the company can go international as well to broaden its horizon, it not going to be easy but expansion is necessary if they want to noticed globally.

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