Operation Management

Question 1

In the view of operation management, quality which is the organization trying to meet customer’s expectation. In customer’s view, quality is what they perceived the service or product to be. Productivity is a measure of the effective use of resources, and expressed as the ratio of what produced by an operation or process to what is required to produce it, that is the output from the operation divided by the input to the operation. Through the operation strategy decision, Productivity can be improved when operations reduce costs, improve quality and delivers goods and services on time.

Nigel slack stated that “Operation strategy concerns the pattern of strategic decisions and actions which set the roles, objective and activities of the operation.” The strategic decisions are referred to the different areas of operations where the organization’s management must address specific business objectives. And those decisions are the long-lasting choices and difficult to change.

The strategic decisions are as below, let use McDonalds’ an example: -

McDonald's® Brand vision is "To be the best quick service restaurant experience". Being the best means providing outstanding quality, service, cleanliness, and value, so that make every customer in every restaurant smile. And McDonald’s brand mission "Is to be our customer's first choice, when it comes to, top quality products, outstanding service / cleanness and great value for money ".

1. Design of Products and services

Product design is one of the important decision to the organization, the operation team should think how to design the product with both economy and quality so can attract to customer. McDonalds’ is the world’s largest chain of fast-food restaurants. As a fast-food restaurant, the food should be provided fast and be affordable. To maintain the speed and the quality of the food, McDonald develop the process of cooking food items so that food is prepared. McDonald also keep on adding new product to its menu, let customer have more choice.

1. Layout Design

Layout is deciding where to put all facilities, machines, equipment and staff in the operation. A good layout should minimize the length of flow through the operation. The layout can affect the costs and general effectiveness of the operation. Poor layouts can lead long process times, inflexible operations, reduce the overall capacity and overall productivity. McDonalds’ decide the layout of workspace – kitchen to ensure that production flow is smooth, proper layout of the equipment can reduce the production time and more efficiently.

1. Location Strategy

Success or failure of the organization may depend on where they situated the store. Choosing a location can base on many factor such as transportation availability, availability of right labour.. etc. McDonalds prefer to locate their store where the area have large customer base, transport access and availability of parking space.

1. Inventory Management

As most of the inventory are perishable item, McDonalds is managed with the rule of “First-In-First-Out” to control their inventory. Delivery of inventory happens twice or more times a week depending on the sales of the McDonalds. In addition, most of the inventory is stored in freezer with proper packaging to ensure freshness of the food items.

1. Maintenance

It is very importance to maintain the machines which use for preparation of food. If the machine is broken, that mean less choice to customer, cannot satisfy with customer, lower the overall quality and productivity. In the order words, maintain the equipment can maintain the quality of product, ensure employee safety and avoid further cost of repair.

1. Quality management

Each organization should determine their customer’s quality expectations and establish policies and procedure to identify and achieve that quality. For McDonalds, a fast food restaurant, customer expect everything can be simple and fast. McDonalds’ menu can be easy to read and understand, this can be saves time at the ordering stage.  

Every strategy decision of operation management can be affect the quality and productivity. Good planning and decision, can lower the operation cost and satisfy customer want, that is good quality.

Question 2

No matter whether the company scale is big or small, Operation Management can be applied to every industry and organization. Operation Management is relevant to every part of business. It manages the whole process of create products or services. By input resources such as materials, equipment, manpower, money, information, technology etc, these can be added value to the products or services, and finally value to the customers.

Each organization should have a team, or at least one person to responsible for the operation management activities. As briefly, the team or manage should first understand the nature and objective of each performance, and then set up the operation strategies. Per those strategies, they need to design the operation’s processes, the product and services. After being designed, the operation team should plan and control the delivery process and the quality of the product/service. And finally, the team should be keep reviewing their operation and organizing for improvement.

Below is illustrate the operation management activities of IKEA.

IKEA’s operation strategy

IKEA is the world’s largest home furnishing retailer has 390 stores in 48 countries. According to the website of IKEA, IKEA vision is “ to create a better everyday life for the many people. The business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” This concept began by Ingvar Kamprad, he would like to offer well-functioning and stylish home furnishing products at low price. Hence, he used the simple cost-cutting solutions which did not affect the quality of the products. He aims to operate every part, take every opportunity to reduce cost, except of idea and quality.