In this automobile industry inbound logistic is planned for raw material. Raw material is ordered as per the demand of product or sales of the product in the market. And in service sector there is no planning made for inventory or raw material they have to plan for the incoming delivery and outgoing delivery. Operation process in manufacturing sector is different for the different type of product but in service sector it is always same as it is planned before. In automobile industry quality of product is must and in courier service on time delivery is necessary or else they won’t be able to meet customer satisfaction and need. Transportation of goods is not the basic priority of organization but in this service company fastest way of transportation is necessary to meet the fastest delivery.
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Operation process of two different organizations one is manufacturing and another is service industry. Process of Hyundai and TNT Express is described in this case. It also shows the competitive priorities of both the firms. It is all discussed in depth of the operation process for Hyundai and TNT Express. Corporate strategy of the organization is explained which the most important part of any firm. Corporate strategy affects the profitability of company because it directly linked with the customers. Company’s capacity planning shows the ability of production and service. The main point of this case is inventory management which affects the profitability of organization and both company are using just in time method. In the last supply chain design is created to maintain the supply of product or delivery of service. In the last performance measures and six sigma is applied to assure quality and satisfy the customers. Both of this process is beneficial to both customers and producers.
Definition: – Mc Namara (n.d) defined “Operation Management as covering everything from product creation, development, production and distribution. To be successful in the area of operation management, the manager has to look at the entire production process, from choosing and working with suppliers, to the engineering, to the distribution line.”
Operation management mainly focuses on the operating system of production and service of the company or an organization. Optimum utilization of resources is totally depending on the operating system of organization. Each and every organization has different operating system e.g.:- service industry and production industry. Company must have best operating system to take out maximum output. Operation management is linked with whole system of company like purchasing, inventory controlling, supply chain, quality control, transportation and storage of product or service. Transformation process plays a huge roll to produce product or service for the customers. Operation process is differ from business to business i.e. manufacturing company has different process and service has different process.
The main aim of this report is to analyze and evaluate the transformation or operation process of two different companies Hyundai and TNT Courier Company one is Manufacturing Company and another is Service Company. They both have very good position in market and also listed in index.
This comparison shows the different type of operation process in two different type of company. From the operation management company can set their standards related to their production process. In this chosen service company operation management should be proper or else company can’t meet the customer requirement. If TNT does not have proper operation then they will not be able to give on time delivery because complex supply channel.
Task (a) – Description of Organization
Transformation process is a process that links the activities of organization or company’s internal and external activity to provide standard outputs to the customers. The internal activities include the gathering of raw materials which can used to transform it into a finished product. “Transformation process includes changing the physical characteristic of material, location of materials, ownership of materials, preservation or accusation of materials, purpose or forms of information etc. Transformation of product is necessary for automobile industries because the taste of customer is always changing. In the transformation process company form different strategy design and structure to provide proper output. Company forms their strategies and design considering the taste and preferences of their customers. After forming strategies and Design Company evaluate their process and if any deviations come they take measurable actions. Transformation of Hyundai is started from input of resources
Hyundai Company is most well-known company in the automobile industry. It is basically situated in Korea. It was started in 1947 and it was founded by Chung-Ju-Yung. The company introduced its first model Cortina in the market with ford. It has the main ingredient in Korean national growth. Hyundai started exporting its vehicle internationally i.e. Europe and United State since 1980’s. It’s the seventh largest car maker of the world.
Transformation Process of Hyundai
Transformation process of Hyundai includes input of resources like man power, management, energy, capital, machine, material, technology etc. This are the basic input of any production company and without them production of product is not possible. After input of resources operation of product development was started as per decision taken by management or engineer. At the last output of finished product will introduce in market for customer.
TNT Express is service based Courier Company. It was founded in 1946 by Ken Thomas; first it was known as Thomas Nationwide Transport, in short TNT. After 1950 the peak period of company was started because the company is offering rail and road freight service all over Australia. When company was started it has very small business and after few years it has started acquisition and mergers with different companies. After 1960 company was transformed into public company and also listed in Australian stock exchange. Company has started global expansion after 1960 with New Zealand. And then after few years it has also opened their branch in Europe, America, and Brazil. TNT got awards in best online financial communication for all Dutch listed companies. Company has transformed so much since it was started. It is now globally recognized company.
Transformation Process of TNT EXPRESS
TNT Express is service base company, so some of the function is different in transformation process then Hyundai. In this process company is able to provide the service to customer as per their requirement. All this activity is must for service industry and without this it is not possible for company to meet demand of the customers. In first stage of transformation process resources are capital, land, transport vehicles, energy, machinery and man power needed. Without this no firm can run their business. By utilization of this resources company can take necessary steps to fulfill the customer requirement as an output. Cost of the service is depending on how output is produced and it affects the profitability of enterprise.
Analysis of Organization based on competitive priority
“Hayes and Wheelwright (1984) define competitive priorities as strategic preferences or the ways in which an organization chooses to compete in the marketplace. Leong, Snyder, and Ward (1990), focusing on operations, identify competitive priorities as a consistent set of goals for manufacturing to gain competitive advantage. Several other terms are also used in the literature to refer to competitive priorities such as organizational priorities, content variables, dimensions of competition, core content, manufacturing tasks, order winners and qualifiers etc.” In this competitive world if any firm wants to be sustain successfully in market then they need to focus on customer requirements. It is found that competitive priority has four main four points’ low cost, quality, delivery and flexibility. And rest are on-time delivery, development speed and variety.
Competitive Priority of Hyundai
In manufacturing industry of automobiles competitive priority is a key element for making strategy of operation. Production of product is depending on the approach of competitive priority of company. Most of manufacturing industry have low cost and on time delivery priority. Decision regarding priority was mostly taken by the top level managements. The competitive priority of this firm is constant quality because Hyundai is Production Company and its main focus is on production of cars. The main requirement of the customer towards one car is about quality, it should be of good quality. All point is very important of competitive priority but constant quality is the key consideration of Hyundai. The volume of production is very high so it is necessary to maintain constant quality of output.
Competitive Priority of TNT EXPRESS
TNT Express has very good competitive priority as on time delivery and low cost. In most of the service organization they have on time delivery as a competitive priority. TNT has delivery speed and delivery reliability to satisfy their customer’s needs. The main objective of this firm is to provide best, fastest and cheapest service to its customers. On time delivery is the strongest advantage of company. For this priority company has invested lots of fund in franchises in different country. In each and every country they have their center of courier office. The one of the biggest problem for their advantage is transportation. Huge fund is invested in transport vehicles but this is the only thing which gives them profit to run their business.
Corporate Strategy of Hyundai – Customer Intimacy
The decision regarding corporate strategy is pertaining to top level management. Corporate strategy is depending on the market scenario of the firm. Competitors also affect the strategy of organization e.g. Hyundai has huge number of competitors Toyota, Suzuki, Vauxhall, and Volkswagen. Because of high level of competition company has to develop strong corporate strategy. Hyundai has customer intimacy as their corporate strategy. They are building long term relationship with customer and their main objective is to satisfy the customer. Customer intimacy is the best way for growth, sustainable competitive advantage and profit of the organization. Customers intimate the problem which is not detected by the company and by this they can develop strong strategy with customer.
Corporate Strategy of TNT Express – Customer Intimacy
TNT Express is Courier Company which considered as service based organization. In this type of company corporate strategy is very important because rival firms are always waiting for the weakness of company. There is always cut throat competition between these types of organization. TNT has accepted customer intimacy as its corporate strategy. Their main aim is to maintain their customer for long time with delivering fastest service and reliability. In courier service reliability is the first thing comes in customers mind when they want to courier, if company proves reliable then customer’s reliability increase.
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Task (b) critically discuss Capacity Planning
Capacity planning means estimating the demand of product and services and according to that production is projected by the organization. Here estimation regarding how many resources needed for production, how many labors, and production facilities. The production of company can made stable by the capacity planning. It can also increase profit by reducing waste and work at its full capacity. Each and every organization has different type of capacity planning and that does all depend on demand of product or service. By doing so efficiency of organization will increase and optimum utilization of resources will achieve. There is six type of approach in capacity planning Waiting line method, 3 dimension of strategy, Expansionist, Theory of constraint, Use of decision tree and Bottleneck.
Bottleneck Approach in Hyundai
In bottleneck approach the capacity of organization is at optimum level but still demand is higher than production. Bottleneck is also known as throughput concept e.g. in car manufacturing company they put benchmark for 5 cars/day per machine and machine can produce 2 cars in a day per machine then our capacity is only 2 cars per day. So if you increase the throughput of bottleneck the production will increase. Company has to always cop up with bottleneck because the production is running with the demand. Hyundai is also following bottleneck approach. Their production of cars is running with demand from customers and dealers.
Waiting Line Method in TNT Express
Waiting line is operation process of production and services of organization. In waiting line method product or service finished turn by turn. It is like line production or line service in these goods is waiting for the process from which it has to go through. In most of the service organization customers have to wait in queue for getting service by this company can utilize their maximum time and remove constraint. TNT Express is using this method because the capacity is limited and supply of courier is high. Even they have unlimited capacity if one lot of courier is not completed then another lot have to wait for service.
Inventory management is related to controlling stock of organization where forecasting relating to stock estimated. Its helps to reduce additional cost incurred to maintain inventory and holding of inventory. Excess inventory leads to damage goods, holding cost, and acquire lots of space to reduce this problems inventory management applied. It supports the company’s strategic plan.
Inventory management manages flow of materials, utilizing manpower, co-ordinate internal activities, equipment, and customers. There are three method of inventory management just in time, ABC analysis and EOQ.
Just In Time Inventory Hyundai
Just in time inventory is very new concept in this competitive market. Just in time inventory is developed by japan automobile industry. Most of the manufacturing industries using this method to reduce their operating cost. In this method the material is supplied just before the production starts so the cost of handling reduced and reduces waste as well. This method is used by most of the organization in this industrial revolution. JIT is the best way to cut cost and achieve advantage. But for JIT company should have proper supply chain or else on the last moment company will not able to provide product to its customers. Hyundai is using this strategy to give cut throat competition and take advantage of market demand.
Just In Time Inventory TNT Express
TNT Express has just in time inventory because when the stock arrived at their particular warehouse it was shifted to another process and ready to deliver. They have very tight schedule regarding inventory all couriers should reach their particular address on particular time. Just in time inventory helps them for reducing handling cost and damage of courier.
Supply Chain Design
The main aim of supply chain design is to increase profit and reduce expenses. Supply chain also smoothen the process of production. Supply chain is useful to manage constraints and managing risk. A successful supply chain can reduce cost of both client and customer. Main objective of supply chain is to manage flow of material, information, service and money regarding any activity. Supply chain of Hyundai is lean system it reduce the waste and increase profitability. Most of the automobile industries have this system as their supply chain. TNT Express is following value chain system. This is very systematic approach of supply chain it contains inbound logistics, operations, and outbound logistics. It is very important for courier service industry.
Performance measures are the indicator to evaluate the production process or service of organization. In performance measures benchmark was set by the company to compare their product with the desired product. Without having performance measures organization cannot achieve their best performance or top quality product. To evaluate service performance data relating to organization and benchmark of service needed. There is two type of method for evaluation of performance balance score card and metrics. Hyundai is measuring their performance by metrics because they have very high production. TNT Express is also using metrics method to evaluate the performance.
Six sigma is a system to check or measure the quality of product or services. Six sigma is use to remove constrains and defect in product and service. It shows the performance of process in production. This process is beneficial for customers and producers both because if customer does not find any defect or problem in product then customer will satisfied and also become loyal to company. It always focuses on improvement of product and service. Hyundai is producing its products on six sigma quality level. Hyundai is using DMAIC process (define, measure, analyze, improve and control) to improve their products which are falling below specific level or benchmark set by management. TNT is also using this theory to remove the constraint which is in their management process. By this process they will be able to achieve systematic approach and will be able to satisfy their customer with proper service.
As we discuss above the transformation process of the Hyundai and TNT Express, each has different inputs and while one is offering product and the other is dealing in service. Moreover, the competitive priority is been identified as the Hyundai motors follows the constant quality while the TNT Express follows on time delivery. Apart from this, each company follows the different types of corporate and management strategies, In this case, if we talk about the Hyundai and TNT Express has implied the same corporate strategy i.e. Customer Intimacy.
Furthermore, the capacity planning of the both of the companies are as follows:
Hyundai has the bottleneck approach and the TNT Express has the waiting line model. Thereafter, Inventory management approach is JIT (Just In Time) in both of the companies. The supply chain design is the lean system in Hyundai and the TNT Express has Value chain.
Thus, there are certain comparison difference between the above two mentioned companies and there could be more if there would be detailed study.
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