Operations management is concerned with managing the resources that directly produce the organisation service and products. The resources are generally consist of people, material, technology and information but may go wider than this. These resources are brought together by a series of processes so that they are utilized to deliver the primary service or product of the organization. Thus operation management is concerned with managing inputs (resources) through transformation processes to deliver outputs (service or products).
Overview of the Company
Impressive Burgers was established 10 years ago with the goal of providing fast take away food to their customers quickly and of a higher quality to that of their rivals. Each restaurant offered a simple menu structure with a choice of six set meal options.
1. Burger, Chips & Soft Drink
2. Cheeseburger, Chips & Soft Drink
3. Chicken Burger, Chips & Soft Drink
4. Vegetarian Burger, Chips & Soft Drink
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The size of the chips and drinks portions varied but the burger size remained the same.
Using this format they were able to serve each customer their order within 4 minutes from a ordering at the till to receiving their complete order to take away.
Each restaurant places their orders with the suppliers directly based on the manager's prediction for demand based on the reports generated by the restaurants own till system.
The company has grown to a chain of restaurant operations and the management introduced a number of changes to the format 12 months ago in an effort to increase each business at each restaurants.
The number of set meal options available on the menu was increased to offer more options to the customer and to attract customers seeking healthier options.
The menu options were increased by a further three options:
5. Chicken Nuggets, Chips & Soft Drink
6. Chicken Salad, Garlic Bread, & Soft Drink
7. Hot Dog, Chips & Soft Drink
In addition to these set menu additions the company also offered the option of changing the chips option on the set meals for either a Side Salad or for Potato Wedges.
Since these changes have taken place the number customers and turnover has increased but overall profits of the company have decreased, the order time for customers has increased from 4 minutes to 9 minutes.
Evaluation of Impressive Burger PLC Expansion
Impressive burgers had begun their business with the aim of providing customers with the quality food and in less time than that of their rivals which they achieve in the start of their business but they start facing difficulties when they expand their business and put more things in their menu list. In the start they only provide customer with a small set menu option which keep it simple for the customers to make decision in quick time and normally customers before coming to restaurant know what they are going to eat but when they increase items in the menu list they give more option to the customer which increase the serving time and thus making some of the customer unhappy with the service provided.
Planning and controlling
The design activities should have put all the operation resources in place but to work effectively they need to be planned and controlled. Planning and controlling is the activity of deciding what the operation resources should be doing then making sure that they really are doing it. In Impressive Burger plc you can easily see that there is lack of proper planning and controlling activity, as they increase their menu they didn't increase their staff and machines which become one of the main cause of their expanding failure and also they didn't train their staff for more customers that why the quality of food suffer and customers become unhappy of the service.
Managing change in an organisation is very difficult thing; if change can be manage effectively then new operation system can work effectively. Impressive burger didn't manage the change properly they just impose the change on the staff which result in poor service and poor quality of food. The mistake which Impressive burger did that it didn't train their staff before implementing the change in the company. Staff must be trained and given experience, new equipment and procedures must be developed and honed, new approaches to management must be tested, shaped and given time to insinuate themselves in the organisation atmosphere. Sometimes companies are not aware of the full potential of the capabilities they are developing until a sudden insight incident reveals how they can be exploited. This is what has happen to the Impressive burgers and they have been exploited big time because of the change as their staffs was not train properly for the increase in turnover and heavy customer rate.
Process of operation management
Always on Time
Marked to Standard
Process of operation management has a very deep impact on the progress of the organization. There are four different processes. All operations processes are similar that they all transform input resources into output product and services. For impressive burgers PLC these dimensions plays an important role for the expansion of business.
Volume - Volume has important implications for the way Impressive Burgers operations are organised. The items on the menu are more as compare to the number of staff in the restaurant. Thus because of this there is less chances of repeatability and systemization in the company as compare to other big organization as McDonald and KFC. Like in McDonald there hamburger serve millions of people around the world in a day. The task people doing are repeated again and again by the same person, one person assigned to cooking the burgers, another assembling the buns, another serving and so on.
VariationÂ - probably the easiest way to measure variation is the ratio of peak demand in a day or a week, to the lowest demand during that day or week. You could try asking the impressive burger manager for this information or (if you have time) make observations throughout the day or even the week. So if the restaurant was busy up to its full capacity for part of the day but at its lowest was only ten per cent full.
VisibilityÂ - This is a relatively simple issue. This means how much your business operation is exposed to the customer. Some customers can ask for the operations to be fully visible to them as they are main personal of operations. For impressive burgers visibility in not an issue for their operation failure as far as I think.
VarietyÂ - There are two important features to measuring variety for restaurants. The first is the range of different foods that the impressive burger serves. One is the number of items in the menu to get an indication of this and other factor is whether the impressive burger will customize food to your customer preference. For example, does it serve burger good, excellent or superb? Does it allow you to choose the whether you want fries or salad? Another evaluation from expansion of business of Impressive burgers can be seen that they have had increased the variety in their menu but they didn't increase the staff with that which has caused them trouble.
To evaluate the expansion of impressive burgers PLC we have to measure some of the performance objective of the company and have to judge that how they have performed on each of this objective.
Quality is one of the main performance objectives for impressive burgers as they are in the field of food and if the food is not of quality standards then they are going to lose business. There can be different type of measures which we can use see the performance of each objective. The main measure for impressive burger would be level of customer complain and customer satisfaction. We know that quality of food of impressive burgers was not that good because lot of customers were making complain about the quality of food and therefore customer satisfaction level was also going down. Also whether the food is hot or cold will also come in this matter.
This performance objective means that how much quickly customer order has been delivered. For example, speed is taken to its extreme in the electricity utility where speed means literally instant delivery. No electricity company could ask its customers to wait for their delivery of electricity. Speed therefore means an individually negotiated delivery time in low volume-high variety operations, but moves towards meaning 'instant' delivery in some high volume-low variety operations. For Impressive burgers PLC measure would include order lead time and customer query time, and we know that customer has problem with the speed issue of burgers delivered to them in time and they have wait quite a long for their orders.
In continuous operations, dependability often means the availability of the service itself, for example a dependable electricity supply is one which is always there. So dependability has moved from meaning on time delivery in low volume-high variety operations to availability in high volume-low variety operations. In context with impressive burgers dependability can mean in terms of food order and received, has customer receive the same order which they receive or not.
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Flexibility in low volume-high variety processes such as the architects' practice means the ability to design many different kinds of buildings according to its clients' various requirements. With the electricity company's process, the need for product flexibility has disappeared entirely (electricity is electricity, more or less) but the ability to meet almost instantaneous demand changes through volume flexibility is vital if the company is to maintain supply. Flexibility has moved from meaning product flexibility in low volume-high variety operations to volume flexibility in high volume-low variety operations.
Cost in terms of the unit cost per product or service, varies with both the volume of output of the operation and the variety of products or services it produces. The variety of products or services in low-volume operations is relatively high, which means that running the operation will be expensive because of the flexible and high skill levels employed. Further because the volume of output is relatively low, a few products or services are bearing the operations high cost base. Also more significantly for the operation, the cost of each product or service is different. Cost is one of main performance objective in Impressive burgers plc because they are turnover is going down but the revenues are not going up, this is mainly because of the utilization of resources and labour productivity in the company. Impressive burger is facing high loss in terms of stock wasted and held at the restaurant and waste has increased as well. Due to lack of staff quality of labour has decreased as well and their productivity has decreased.
Reason and solution of problems
The main reasons which I can see in impressive burgers plc for their failure in expansion and loss of customers are poor planning and controlling, failure to manage change efficiently, inventory control, staff management.
Poor Planning and Controlling
What is planning and controlling?
Planning and controlling is the reconciliation of the potential of the operations to supply products and services and the demands of its customers on the operation. It is the set of day to day activities that run the operation on an ongoing basis.
Poor planning of Impressive Burgers PLC:
Poor planning of impressive burgers PLC is visible from the fact that they have made a change in their menu which is a good thing but they didn't plan it and didn't train their staff for new menu. They didn't plan properly and didn't forecast the demand before making the change in the menu because of which the time of serving increased from 4 min to 12 min. Also after implementing the new menu they didn't control it, they also have to monitor the plan and if there is any changing in the plan that needs to become the part of the plan.
In planning and controlling the volume and timing of activity in operation four activities are necessary:
Loading - which dictates the amount of work that is allocated to each part of operation
Sequencing - This decides the order in which work is tackled within the operation
Scheduling - determines the detailed timetable of activities and when activities are started and finished
Monitoring and control - it involves detecting what is happening in the operation, re-planning and intervening in order to impose new plans.
Impressive Burgers PLC has to do capacity planning for their expansion of business and has to increase the number of staff. Capacity planning means to forecast your planning according to the demand from the customers. First impressive burgers have to forecast demand fluctuation, they have forecast demand on daily or weekly basis, like demand of burgers can be low in the morning time but can be very high at lunchtime or after work time similarly demand food can be low on Monday and Tuesday but it can be high on weekends. As an operation manager this should be known so that order of stock can be given according to that. Impressive burgers also have to do measure capacity either they have staff and material to meet the demand at the peak time.
Management of Change
Impressive Burgers biggest problem was that they were not able to manage the change properly. They were unable to diffuse the change in the staff of the company because of this quality of food went down. Management of change needs good planning and implementation. It should also be consulted with people who are going to be affected by the change. Change has to be measurable, realistic and achievable. Impressive burgers failed to manage the change because they didn't even train their manager for the new things that they are going to bring in the menu. It is not employee's responsibility to manage change but just to do his best to perform his job. The real responsibility to manage change is on managers and executive of the organisation they should manage in such a way that staff has no problem with it and they can easily cope with it. As we know that at impressive burger only menu has change but the staff and the machinery has not change this shows the lack of planning in the management because if you are going to offer more things in menu it is obvious that turnover is going to be high and for that you need more staff and more machinery to deal with the demand. The staffs is getting more rude because they have to more work with same number of resources and because of the increased number of customers the orders are getting mixed up.
Inventory management and control
Inventory or stock is defined as the stored accumulation of material resources in a transformation system. No matter what is being stored in inventory or where it is positioned in the operation it will be there because there is a difference in the timing or rate of supply and demand. With the new menu in the impressive burger plc there has been a problem with the stock been held up more and there is more chances of it getting waste. Following are some disadvantages of holding inventory.
May become obsolete as alternatives become available
Can be damaged or deteriorate ( age, rot, corrode etc)
Could be totally lost or be very expensive to retrieve as it gets hidden among other inventory
Might be hazardous to store
May take up excessive storage space compare to its value
Invariably involves high administrative and insurance costs
As impressive burgers has started to stock more inventory than before it can be a problem for the company and it will also result in more loss for the company. To deal with these problems they have to make certain levels of inventory in each restaurant.
Inventory to be controlled
The main issue here is how manager discriminate between the levels of control they apply to different stock level items. The managers have to make classification of stock that which one is more important and which one can be kept at the premises. They can also control the inventory by using some of the sophisticated computer based information system which has a number of functions, updating of stock record, the generation of orders, the generation of inventory status reports and demand forecasts. These systems critically depend on maintain accurate inventory records.
Impressive burger PLC has to manage staff properly to make the changes more effective. As we know management has not increase the number of staff people in the restaurant but has increase menu things because of this people has to wait a long time in queue because processing time has increased and staff has also suffering due to this because they have to do more job with same resources.