Add Value To The Delivery Of Goods Commerce Essay


Using a relevant case study on operations management discuss the relationship between strategy and operations management and explain the ways in which an organizations operations can add value to the delivery of goods and services.

Key Points:

Identify a case study on operations management.

Demonstrate a clear understanding between strategic management and operations management exploring schools of thought on the role and importance of operations management.

Consider the key elements of OM and explain how they have been configured (arranged) to deliver value.

Identify areas of operations management that could be improved

Discuss people/human management issues relevant to operations management

Ensure that essay is coherent-stitching all key OM issues together.

Possible areas:

Operations strategy

Operations competitive dimensions






Business process Outsourcing

A case study on operations management

What is operations management?

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-Production is the creation of goods and services. Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Activities creating goods and services take place in all organizations. In manufacturing firms, the production activities that create goods are usually quite obvious. In them, we can see the creation of a tangible product such as a Sony TV or a Harley Davidson motorcycle. In organizations that do not create physical products, the production function may be less obvious. It may be "hidden" from the public and even from the customer. Examples are the transformations that take place at a bank, hospital, airline office, or college. Often when services are performed, no tangible goods are produced. Instead, the product may take such forms as the transfer of funds from a savings account to a checking account, the transplant of a liver, the filling of an empty seat on an airline, or the education of a student. Regardless of whether the end product is a good or service, the production activities that go on in the organization are often referred to as operations or operations management.

What is strategic management?

-The strategic decisions of Operations Management are product design, quality, process design, location selection, layout design, human resources and job design, supply-chain management, inventory, scheduling, and maintenance.

The 10 decisions of Operations Management that support missions and implement strategies follow:

Goods and service design. Designing goods and services defines much of the transformation process. Costs, quality, and human resource decisions are often determined by design decisions. . Designs usually determine the lower limits of cost and the upper limits of quality.

Quality. The customer's quality expectations must be determined and policies and procedures established to identify and achieve that quality.

Process and capacity design. Process options are available for products and services. Process decisions commit management to specific technology, quality, human resource use, and maintenance. These expenses and capital commitments will determine much of the firm's basic cost structure.

Location selection. Facility location decisions for both manufacturing and service organizations may determine the firm's ultimate success. Errors made at this juncture may over-whelm other efficiencies.

Layout design. Material flows, capacity needs, personnel levels, technology decisions, and inventory requirements influence layout.

Human resources and job design. People are an integral and expensive part of the total system design. Therefore, the quality of work life provided, the talent and skills required, and their costs must be determined.

Supply-chain management. These decisions determine what is to be made and what is to be purchased. Consideration is also given to quality, delivery, and innovation, all at a satisfactory price. Mutual trust between buyer and supplier is necessary for effective purchasing.

Inventory. Inventory decisions can be optimized only when customer satisfaction, suppliers, production schedules, and human resource planning are considered.

Scheduling. Feasible and efficient schedules of production must be developed; the demands on human resources and facilities must be determined and controlled.

Maintenance. Decisions must be made regarding desired levels of reliability and stability, and systems must be established to maintain that reliability and stability.

The key elements of OM and explain how they have been configured to deliver value

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Sourcing and Purchasing

A new way to look at purchasing to leverage buying

You can make more money buying than selling.

Managing Inventories

How to truly manage inventories aimed at reducing on hand and improving turns.

You really can reduce inventories by 20% or more.

Stock and SKU Rationalization

Stock the products that best support your business.

Twenty percent of your items represent 80% of your sales, and……..

Fifty percent of your products represent 5% of your sales.

Dead Stock

Get rid of obsolete and dead stocks from your warehouse

Dead stocks take up valuable space within your warehouse.

You can not afford it. Cut your loses add warehouse space, and reduce inventory carrying costs.

Warehouse Receiving

Quickly and accurately receive products into your warehouse.

You need to make products available for customer orders as soon as they are received

Dock space is the warehouse production space-use it effectively.

Warehouse Organization

Organize your warehouse to improve flow, increase productivity, and maximize space utilization.

Product shipping

Selection and shipment of products are the key elements of all warehouse operations.

You spend over one-half of your warehouse dollars on processing customers' orders.

Customer Deliveries

Match customer deliveries to service demands to reduce delivery costs and improve service to customers.

Give your customers the service they really need.

Customer Service

Measure and manage service levels to your customers.

You can and should offer different levels of service to different groups of customers.

Measurement and Reports

-Establish key measures to use as benchmarks to measure progress directed at continuous improvement.

You can not manage what you can not measure.

Identify areas of OM that could be improved


Total Quality Management refers to a quality emphasis that encompasses the entire organization, from supplier to customer. TQM stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer.

TQM is important because quality decisions influence each of the 10 decisions made by operations managers. Each of those 10 decisions deals with some aspect of identifying and meeting customer expectations. Meeting those expectations requires an emphasis on TQM if a firm is to compete as a leader in world markets.


Capacity is the throughout or the number of units a facility can hold, receive, store, or produce in period of time.


Process focus - production facility organized around processes to facilitate low-volume, high-variety production.


The objective of location strategy is to maximize the benefit of location to a firm. Location is such a significant cost driver, the consulting firm. Location decisions based on a low-cost strategy require careful consideration. The location decision often depends on the type of business. For industrial location decisions, the strategy is usually minimizing costs, whereas for retail and professional service organizations, the strategy focuses on maximizing revenue. Warehouse location strategy, however, may be driven by a combination of cost and speed of delivery. In general, the objective of location strategy is to maximize the benefit of location to the firm.

Operation Strategy:

Four International Operations Strategies:

International Strategy:

An International Strategy uses exports and licenses to penetrate the global arena.

Multidomestic Strategy:

The Multidomestic strategy has decentralized authority with substantial autonomy at each business. The advantage of this strategy is maximizing a competitive response for the local market.

Global Strategy:

A Global strategy has a high degree of centralization, with headquarters coordinating the organization to seek out standardization and learning between plants, thus generating economies of scale. This strategy is appropriate when the strategy focus is cost reduction, but has little to recommend it when the demand for local responsiveness is high.

Transnational Strategy:

A transnational strategy exploits the economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competence does not reside in just the home country, but can exist anywhere in the organization. Transnational describes a condition in which material, people, and ideas cross-or transgress-national boundaries. These firms have the potential to pursue all three operations strategies (differentiation, low cost, and response)

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