Parcelforce And BG Group Are Analysed Commerce Essay

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A critical analysis on organizations i.e. Parcel force and BG group is presented in accordance to the appropriate operational framework in management of tasks. Analyses are established under the keen aspects of operations management in which facts like customer orientation and needs and the organizations' responsiveness to those needs are highlighted.

Parcelforce and BG group are analysed on the basis of various concepts and frameworks including Supply chain management, Total Quality Management (TQM), Six sigma, Statistical approach, Process design, Job design, Process mapping, Layout planning, Systems thinking and Capacity planning. A critical analysis on the structure of both the organizations is provided which mainly entails the similarities and differences on their respective processes and operations.

Contents

Part (a)

Introduction to Parcelforce

Profile:

Parcelforce Worldwide is a trading name of Royal Mail Group Ltd. It is a British company providing a staunch link between businesses and the international markets for over 14 years. Its services include couriers and logistics. For the efficient collection and delivery system, the company has two operational hubs in Coventry. One handles the operations in the UK and the other handles parcels for international deliveries.

Products and services

Products and services of Parcelforce include the main streamline mail within the UK as well as in the rest of the world. Secondly, it offers an extended parcel delivery system in the Europe with the name of GLS (General Logistic System) and it is estimated that it delivers around 1 million parcels across 34 countries in Europe. Moreover, its worldwide operations are carried out at a vast collaboration with its partners. (Parcelforce, About us, 2010)

Customers

Parcelforce strives to provide its customers with hassle free delivery of their goods and mail. The main customers of Parcelforce are general public for their day to day postal and mail requirements as well as business to business customers. It maintains a network of post offices which generate huge volumes of mail and parcels to be delivered in the mainland UK and worldwide. Account customers, running large, medium and small enterprises also form a major customer base of Parcelforce, for instance ASDA stores signed a contract for their George brand to use Parcelforce service for logistics similarly, British Gas also maintains running contracts with Parcelforce.

Introduction to British Gas

Profile

British Gas is Britain's domestic and industrial energy supplier. Apart from providing gas and electricity to households and industry, the company also install and maintain central heating and gas appliances to homes throughout the country. BG Group is a growing business with setups in more than 25 countries over five continents. It is a publically listed company in the London Stock Exchange and is a component of the FTSE 100 index. (Profile, 2010)

Products and services

Being an integral part of the energy sector, BG group focuses on exploration and production of Natural gas and oil for domestic and industrial use. Production of Liquefied Natural Gas to facilitate the supply of energy to where there is a lack of energy resource availability. Transmission, distribution and generation of power in order to meet and exceed the daily household requirements as well as regular industry usage.

Customers

The BG group sells its products to various structures. These comprise of households, retail gas suppliers and electricity producing corporations. Moreover, it's also looking forward to start its own electricity producing projects. BG group has a global presence with around 60% of its projects outside UK. It is currently working in 27 countries. The main customers are household, electricity, gas and bi-fuel that is, both electricity and gas customers. However, BG also deals with business to business customers. These mainly comprise large, medium and small industries. There's a fairly slim customer base for boiler supply and energy efficiency advice.

Marketing Strategies

In the British market, Parcelforce is the market leader in terms of market dominance but while considering the international market, it lies among the market challengers. Its worldwide competitors include FedEx and DHL etc. its worldwide networking and outreach is declining due to the greater stretch of competition spreading to various geographic regions

Contrary to that, BG group is solely a challenger if the whole European market is taken into account. Though it has stolen a fine number of customers from competitors through promotional activities and market presence, it still needs to grow more to become the market leader.

Under the innovation strategies head, new product development and current business innovation plays part. Both the organizations are close followers of its competitors. Parcelforce is a subsidiary of Royal Mail-which is the actual pioneer, but it strictly is a follower of its competitors.

Market Segmentation

Before segmenting the market, one must position its brand in the market. After positioning, an organization must select the target market it wants to cater to specifically. Parcelforce, dispatches mail and sends parcel all over the world but it has segmented its market to C2C. This represents customers sending gifts to customers. Other areas include dispatching of educational and confidential documents all over the world. It also caters to some permanent B2B customers like ASDA and TESCO. BG group focuses largely on B2B customers. This means that it mainly supplies its product to the businesses. But it also provides services to the domestic level.

Product Differentiation

Product Differentiation is creating products so that customers perceive them as different from competing product. It is of vital importance in product management and has importance in product management and has great potential in devising successful marketing strategies. Parcelforce differentiates through lead in pricing competition and various attributes of products and customer friendly services it offers. BG group differentiates itself through supply of various types of energy resources to businesses as well as homes. These include Natural Gas and Electricity mainly.

Cost Leadership

Cost leadership represents that the organization is leading the industry due to the lowest cost of production. This represents either the production of a product or a service. Parcelforce is a cost leader in the industry by means of efficiency, size of the organization and scale of service production. BG group on the other hand, maintain its costs by the use of it bargaining power as a supplier/producer. There is an oligopoly in the energy sector so the prices are pretty much already set but they diversify by keeping their production costs low.

Competitive Priorities

Organizations compete in the market with one or more of the following competitive priorities:

Cost Value

Predominantly, most manufacturers are concerned with the cost of production or running the business. Main categories comprise of production cost, wages, capacity utilization and inventory control. BG group has adopted many ways to cut its production costs such as advancement in technology and improvement in supply chain management. Parcelforce has activated many regional collection centres and hubs to minimize the costs of collection and dispatching.

Quality Value

Different organizations have different definitions of quality. Like service sector focuses on the quality of service and manufacturing sector focuses on product quality. Parcelforce believes in carrying the parcels and gifts in the same condition they were received and returning them back if not delivered. BG group concentrates on the quality of fuel it provides to its customers through following proper measures in producing value.

Delivery Time value

On time delivery and the ability to deliver goods and/or services in the promised schedule is an important part of any organizations integrity and image. BG group has a vast delivery system. It has always provided its customers with the promised value and has never shed its load to make the customers suffer. Parcelforce's primary focus relies on delivering the goods and parcels in time and to the right receiver. And for this purpose it has proper workforce and vehicles.

Part (b)

Approach to Operations Management

Operations management encompasses a number of core concepts and frameworks. The scope of operations management starts at production and manufacturing and goes well beyond into service industries such as IT, banking and tourism etc. It addresses capacity planning, job designing, systems thinking, layout planning, supply chain management and various other aspects including, environmental and ethical concepts.

Process Design

Process designing involves understanding the two ends that is where to start and where to finish keeping in view the various requirements and limitations during the method performed. The method involves a many to one approach where many raw materials enter into one end of a value chain and end up on the other end of value chain being customer oriented value added products. Both Parcelforce and BG have well-designed processes that contribute positively to the business. Parcelforce maintains fleets of Lorries and a network of offices country wide that integrate to transfer mail and parcels efficiently and cost effectively. BG, similarly has a vast network of Corgi registered engineers and technicians for attending to various business requirements.

Layout Planning

The goal of layout planning is to allow workers, equipment (and where applicable, customers) to operate at peak effectiveness, efficiency and involves determining the most feasible locations of the facilities in order to increase efficiency and minimize cost of operations. The main distribution centres of Parcelforce are located in the midlands of mainland UK thus providing easy access from all motorways and train routes to gather and despatch all the mail and parcels country wide. The distribution centres also have direct access to Luton airport and London's airports for airmail. The layout within the centres is also managed in the most efficient way by assigning incoming docks on one side and outgoing docks on the other side of the building with processing zones in the middle. BG similarly is located near coal reserves and coastal areas for power generation however, its distribution grids are networked all over the UK.

Systems Thinking

Systems thinking relates to the fact that the subject under consideration or under study interact with other integral constituents of the system. It deals with larger parts of a system as a chunk and not by disintegrating them into smaller parts. In other words, it monitors the influence of individual entities on the whole. (Flood, 2010)

Key benefit of systems thinking is its ability to cater to the problems arising in an organization to the level where conventional problem solving fails. Issues include the greater density of problems, their complexity and the absence of instant viable solutions. At both BG and Parcelforce, modular systems thinking is adopted thus operations are divided into modules or entities which perform their functions independently and then integrate to form a common operation.

Supply Chain Management

Supply chain management is a comprehensive synchronization from the storage, movement and usage of raw resource to the unfinished work in process and ultimately the refined and reinforced finished product. In lay man terms, a supply chain is the pool of stages that an organization takes to convert raw constituents into the final product. (Hezarkhani, 2010) Characteristically, supply chain management consists of five phases namely, plan, develop, make, deliver, and return.

Supply chain is at the very core of Parcelforce operations since it is a supply a logistics company. Each stage of the supply chain is well addressed and a coherent system is formed where supply chain is upgraded into value chain where value is added at every link of the chain (Brock, 2010). There is a priority system for delivering various goods into 1st, 2nd and 3rd class with 1st being the highest priority. Collection and delivery are based on timelines further by introducing 1st class guaranteed by 9am and 1pm services. BG on the other hand maintains continuous electric and gas supplies which is an altogether a different kind of runtime supply chain. It runs an efficient supply chain management system that acts as a backbone to its day to day and long term operations.

Lean Management

The underlying concepts of lean management are cost reduction, quality improvement, responding dynamically to customer needs and employee empowerment. It is a process by which value is added into customer experience on a continuous basis. In a production environment it is fairly easy to measure wastes and hence the costs attached to them by identifying faulty objects produced against the total number of objects produced. It is easier because the items are tangible. On the contrary, service is fairly intangible and hence is not easy to measure. For measuring wastes in a service environment, to name a few, factors such as time management, hierarchical managerial procedures and resource management etc. are important. (Radnor, 2008)

BG has adopted lean management partially such that it has identified the customer perceived value and is maintaining streamlined flow throughout all operations. BG employees are empowered to take on new initiatives responsibly. This has resulted in a leaner organizational structure through which it has been able to reduce costs and enhance efficiency. Parcelforce, however, maintains a more hierarchical structure and is not completely following lean management practices. But it does stress on specifying value and how value is perceived by the customer, recognizing the entire delivery chain and maintaining streamlined flow of deliveries throughout all regions.

Six Sigma

Six sigma is a methodical and logical framework for achieving higher quality of operations and productions. It was first incorporated by the Motorola Corporation in the early 1980's. The term is originated from a lexicon associated with manufacturing. It stresses on error finding and isolation of problem for rectification, hence, reducing probability of occurrence of any mistake during the production process of goods or services and implies that how far the adopted process deviates from precision. It makes use of many quality assurance and statistical methods to ensure defect free production (McAdam, 2005).

Six sigma is not a fairly adopted framework at both BG and Parcelforce due to its apparent complexity of being a core statistical process. Although, error reduction is being implemented at Parcelforce and BG however, it is not as illustrated according to the six sigma framework. At Parcelforce, Six Sigma is an important element in improving the information quality, giving the initiative a focus on process-performance data as opposed to process volumes - that is to say, doing it right, first time. BG on the other hand, can improve its oil and gas exploration and transportation by adopting the DMIAC (Define, Measure, Analyse, Improve and Control) approach of Six sigma.

Total Quality Management

Total quality management or TQM for short is one of the widest used and most familiar terms in the operations management frameworks. It is a framework that integrates and is applicable to each and every organizational process irrespective of the organization being service based or product based. It encompasses top management initiative, employee commitment and involvement, customer focus, strategic planning, management systems approach, employee training, teamwork, continuous improvement, employee empowerment, statistical approach, do it right the first time, buyer supplier relations, performance measurement, benchmarking and developing partnerships (Ozen, 2007).

Some of the major initiatives are discussed below in highlighting operations under the essence of both the organizations:

Training

While considering the service as well as manufacturing industrial implications, training of an organization's human resource is an integral part (Martinez-Costa, 2009). Parcelforce lays immense stress on employee training. That includes both on job training as well as scheduled training sessions. As a result of these, Parcelforce has been able to win Health and Safety award. BG also takes training seriously. It runs an Energy Academy and ensures its entire field staff operating as technicians and engineers are well versed with the latest technologies; Corgi licensed and is confident in what they are doing.

Continuous Improvement

The continuous improvement shapes an organization's operations in favour of customer needs and wants keeping in view the financial position. Research and development commonly plays a key role in the development of this initiative. Moreover, it encompasses benchmarking and performance measurement for an insight ahead. Also does it underline a sense of competitive advantage for the organization. Competition in both Parcelforce and BG is driving continuous improvement process and they are constantly upgrading the knowledge base as well as innovative technologies.

Capacity Planning

Capacity planning is an integral part of operations framework. It refers to the total required capacity needed to response back the ever changing consumer and industry demands for the goods and/or services. The aim is to minimize the divergence of inadequacy in the production process or in the un-fulfilment of customers' wants.

Prominent characteristics take account in the introduction of better raw material and inventory keeping, innovative and/or technologically advanced techniques for production and business, flexible and increased working shifts and expansion through acquisition of more production facilities and/or human resource. (Tu, 2010)

Capacity planning is conducted in detail at BG. It follows a bi-pronged approach when doing capacity planning. On one end it is managing the raw materials required for energy generation and on the other end it is actively involved in assessing the per unit energy demand of its consumers either domestic or industrial. Similarly Parcelforce has estimations for its volume of operations. It has planned a seasonal workload and capacity accordingly. For instance, during Christmas season, it deploys extra Lorries and workforce to meet the excessive volumes of mail and parcels. This is all part of the capacity planning done at Parcelforce.

Organizational Difference on Operations Basis

Parcelforce

Parcelforce is a service based organization and it pursues strategies that feature more towards customer orientation. And for the implementation of these policies and approaches, service firms recognize the need to focus their energies more on customer oriented behaviour and preferences. Being a service sector industry, Parcelforce emphasises on two factors i.e. Quality and efficiency. If any of these go down, effects may include loss of financial wellbeing and reduction in customer base. (Schuler, 1992)

Besides, a better employee communication helps Parcelforce know where to focus more in terms of customer satisfaction and service betterment. One of the basic principles of operations management is the idea of continuous improvement. Without the improvement in the service, Parcelforce might face unexpected consequences. This might even result in obsoleteness. The worth of a service greatly depends upon the process. Mistakes that reach the customer result from mistakes somewhere along the process sequence.

Parcelforce's Customer service and process management, accepts the inevitability of bottlenecks of any unexpected delays or shortcomings and focuses on supervising them to manage the work flow more efficiently. It is the duty of a comprehensive operations management to make sure that the time arrangement works in agreement to the volume.

BG group

BG group is a multi-faceted organization with goals reaching beyond conventional energy requirements. It serves both under the service sector as wells as the production sector. This means that it has to manage its operations in both contexts. While producing, BG group manages raw material in the form of crude oil and natural gas. Then it goes to the processing and refining where the technical staff monitors the processes and in case of any issues, he reports the error to ensure fault free production.

Proper training is provided to the employees to deal with the machinery. With that, comes health and safety for employees. The company's major emphasis is on day-to-day management. And by using an effective operations management program, oil and gas operations can keep pace with the speed and demand of today's changing business environment. BG group adopts Real-Time Operations Management which is aimed uniquely to complement the briskly progressing oil and gas industry by managing output, energy, and returns.

It has strong roots into the service sector as well. The services it offers include the installation of equipment for the domestic users as well as industrial users. Proper pipelining and storage of oil and gas is also offered to its customers to ensure hassle free supply. Like Parcelforce, It also focuses on quality and efficiency. It is influenced by the managing the process of taking the input like labour and materials and converting it into output in the form of goods and services in more efficient and effective way.

Part (c)

Analysis

Both the organizations are service based and only BG group is practicing production management. Critically, BG group and Parcelforce follow various key concepts and frameworks of managing operations. BG group has a leaner management which means the chain of command is followed more efficiently and reporting is done according to the status while reducing the costs and improving the quality.

Parcelforce has horizontal integration which offers a diverse range of departments reporting to one or two heads making it difficult to manage. Plus, they have not been able to respond well to the changing customer needs and wants.

BG group has adopted Total Quality Management (TQM) at a full scale. They have successfully been able to manage it work according to the changing technological advancements and management initiative while maintaining its oligopolistic stance in the market. Also, the efforts for employee empowerment and customer focus are aligned to the objectives. Perhaps, Parcelforce follows a statistical approach but has not practically acknowledged any efforts regarding employee commitment and involvement and customer focus. Both organizations also lack performance measurement of employees.

Though partially, but as such no organization under discussion uses the Six sigma approach absolutely. One reason to this could be the lack of awareness among the industry as a whole. Secondly, there has been a common thinking among the Oil and Gas sector that Six sigma has a high cost of implementation. This is not entirely true as the benefits it provides can never be nullified in comparison to the trivial initial cost. Parcelforce can reduce its storage costs by using Six sigma in a way that retrieval of digitalized data and automated version of document control can be handle with an extra ease.

Since sales are an integral part of BG group, they focus more on supply chain management as compared to Parcelforce. As the ending point of this whole process is sales, BG diversifies more on the product and its delivery to the end user. Similarly, Parcelforce follows supply chain management but in other ways i.e. the process involved in receiving of mail and parcels to managing and sorting it according to regions and then dispatching them to the marked locations. All the process is acutely managed and has been made error free.

Parcelforce follows horizontal integrative pattern which incorporates a fairly accessible chain of command and process implementation. There are individual entities independently working and integrating into a larger system, under the same umbrella. This solely refers to systems thinking. The processes are well designed at Parcelforce such that the maximum and minimum delivery times and frequencies are brought under strict quality standards.

BG follows lean management pattern through which it has been able to reduce costs and enhance efficiency. One more important distinguishing characteristic embraced by BG group is Material Resource Planning. This involves the planning related to buying and usage of materials from raw form till the finished phase. This phenomenon doesn't apply to Parcelforce. They in fact use the Goods Management System to ensure proper administration.

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