Learning an Operational Delivery Process

Operations Management (OM) is an important aspect of business (Slack et al, 2010; Greasely, 2013; Patton et al, 2011). Both service and manufacturing organizations use OM to ensure they are competitive and assist in providing and maintaining good levels of customer service (Johnson et al, 2012). Developing a system of an organizations operation

can be advantageous both for both the customer and the organization (Bamford and Forrester,2010). Subsequently, once a system has been developed and understood it should be possible to determine why the system works well, or not well, and to recommend possible production-related improvements that will assist both parties concerned.

Task

In this assignment describe and analyze a production system (service or manufacturing based) with which you are familiar, for example, a shop, restaurant, transport system, doctor’s surgery are possible examples. Your tutor will give some guidance on your choice of organization/case study. Your assignment should address the following questions:

1. How well are the inventories and assets of the organization managed

2. Evaluate the importance of supply chain management to the organization and illustrate in diagrammatic form.

3. From the illustration, in point two indicate where the organization’s delivery system may fail to align between its performance objectives and clearly demonstrating your understanding behind this reasoning.

4. Discuss how the lean approach could be utilized in your organization.

5. Draw key conclusion from your work discussing the extent to which an organization has achieved alignment between its performance objectives and the configuration of its operational process.

Format

Your assignment should be in a report format, being clearly structured using headings, subheadings, etc. It is not necessary to include an executive summary at the beginning of the report. Your assignment should be presented using Times New Roman (TNR) 12 font, 1.5 line spacing, and it should be approximately 3,000 (+/- 10%) words in length. Your word count is from the introduction to conclusion sections.

You must endeavor to use theory explicitly at all stages, but do not spend too much time describing a theory. While you must be explicit about the theories, models, techniques, etc. that you use, you can assume that the reader is familiar with them. What the reader requires is evidence of your ability to understand and apply the theory, and learn from in order to support the development of your findings and/or ideas.

You must cite all sources on which you have relied, for example, textbooks, journal articles, web pages, etc. using the Harvard Bibliographic referencing system. If you do not cite all sources, then you may be accused of plagiarism, and that may endanger your success in passing the module. If you are in any doubt about how to reference your work, please obtain guidance from the library and/or your academic librarian(s) for this module.

Please do use diagrams, illustrations, tables, graphics, etc. wherever these are helpful and remember that these do not count towards your word limit. If you do use these, please do not put them in the appendices if they are part of your discussion. Appendices are the appropriate places to put supporting material, however, remember if the reader is satisfied with the main points of your discussion; the supporting information within the appendices may not even be reviewed.

Marking Criteria

Your assignment will be marked against the following criteria:

1. Evidence of your ability to use Operations Management (OM) theory in order to help you think in a critical way, and to develop an understanding of how key operational decisions are made in the company/case of your choice.

2. Evidence of your understanding of how different OM approaches could contribute to addressing the aim of your assignment.

3. Evidence of your understanding of the strengths and weaknesses inherent in various

OM approaches to your company/case choice.

4. Evidence of your understanding of the limitations placed upon the OM options available to your chosen company/case.

5. Your ability to convey your conclusions and recommendations in a reasoned, supported and credible manner.

6. Accurate grammatical and economical use of English. A good presentation standard using the report format. Appropriate citation of sources using the Harvard Bibliographic Referencing System.

The above criteria do not carry specific weightings. Your overall mark will represent a judgment of extent to which you have provided evidence that you have achieved the learning outcomes for the unit.

Answer

Operations Management

The cooperate world is becoming more and more competitive. Organizations are expanding rapidly; therefore, business operations are becoming more and more complex. The numbers of transactions are more than a thousand in large organizations. Consequently, organizations need to develop efficient programs to govern their management process of producing goods and distributing them in complex networks and distribution chains (SHIM et als., 1999). Realistically, Operation management conceptualizes on the management of production processes and the distribution of products and services. Operation management core activities frequently comprise of product creation, the development process, production and distribution of goods and services from a company (JONES et als., 2012).. By and large, business operation management deals with considerable capacity and analysis of the internal process.

However, this paper critically analyzes and evaluates Operation management process by looking at Tesco’s contemporary operation management process. On the same note, evaluate on the importance of supply chain to fully comprehend in operation management and delivery process.

Background information

Tesco Company is one of the largest retail stores in the UK. The company has branches in 14 countries all over the world and serves more than ten thousand customers each and every day. Tesco customized their retail stores into four models, that is, Express, Superstore, Metro, and Extra respectively. Tesco also operates an online grocery shopping. The organization has enjoyed tremendous success because of their operation strategy, innovative operation platform, and efficient operations management (Hines et als., 1997).

Tesco has been able to sustain its business operation successfully, maintain competition, and successful response to risk because of effective operation management. Green, K., Morton, B., & New, S. (1996) pointed out Tesco as the world-class best retailer in the world.

Inventory and asset management in Tesco

Tesco depends on its transport in the primary distribution process. The organization uses the company’s trucks to increase the delivery speed and save on cost. However, Tesco’s primary distribution process is not fully developed to cope up with the current trends. The organization needs to improve upon their primary distribution process. The company’s trucks are not much enough to collect merchandise from suppliers who are always ready with packed goods for the business. The company also depends heavily on suppliers in the international market to help in the primary distribution process.

Also, the company has applied new technology and introduced lean management. Tesco introduced RFID technology to assist in tracking products data throughout the supply chain (Vijayaraman et als., 2006). RFID technology incorporates barcodes to scan product data. RFID has enabled the organization to better customer services by improving on check-out speed, reducing waiting and as a result, keep its customer retention. Secondly, RFID has increased increase reliability on the supply chain by reducing stock-outs and focus on customer benefit. Finally, RFID has significantly increased working efficiency by order processing. Workers can quickly locate a product needed by a customer. Moreover, Use of RFID technology in Tesco has improved the accuracy of data by automatically tracking the product in the whole process hence benefit from controlling the entire supply chain.

Tesco introduced Cross Docking Operation and application of Collaborative Plan, Forecasting and Replenishment (CPFR) to help in inventory management and logistics. In cross docking approach, same-store goods are loaded into trailers instead of storing them in distribution centers (Fernie et als.,2004). This approach reduces the cost of renting a warehouse to store goods and also reduce inventory holding cost. Tesco uses a CPFR system to analyze the need pattern in customers and shares the information on their website

Some of the demerits that limit the use of RFID technology include; the technology can cause an error when used on liquid or metal surfaces, it is also more expensive compared to a barcode.

Importance of the supply chain management to Tesco Ltd

Having an efficient supply chain has enabled Tesco to enjoy numerous advantages both internally and externally

Increase in delivery speed within the supply chain: Tesco is characterized by a primary distribution where they use their fleet to transport merchandise from suppliers increasing the delivery efficiency of goods and services.

Reduce the cost of production: The organization enjoys economies of scale by transporting goods using their trucks and purchasing in bulk. The use of RFID technology has reduced the number of workers needed to check and countercheck products to ensure that stock-taking is done accurately hence reducing the company costs.

Competitive advantage: having a lean management system and use of RFID has enabled Tesco to have an edge over other retailers, within the UK, and other countries in which the company has branches.

Reduce stock-out cases and hence boost the customer service: Incorporating RFID technology in the company’s operation management system has helped the organization to reduce stock outs by digital monitoring of stock-levels. So that the organization can easily note down low stock-level and re-ordering before the product is out of stock. Use of CPFR also, help to identify customer patterns (Lindgreen et als., 2003), and hence, the organization can determine the volume of different products required. Hence, the company can reduce “dead-stock” cases in the organization.

Reduction of inventory holding cost: Using of cross-docking operation, and CPFR in the inventory management has helped the company to reduce the stock holding cost. By eliminating the need for a warehouse and also analyzing customer trends to determine the amount of stock level that will be economical. Having too much stock will increase inventory holding stock and generate waste (Wamba et als., 2008). On the other hand, having less stock will lead to stock-outs and loss of customers.

Where the organization may fail to align between its performances objectives

The primary value of Tesco is to ‘create value for the customer to earn their lifetime loyalty’. Some of its performance objectives include avoiding wastes, improve employee efficiency in providing services, developing an economic delivery system, minimizing cost, etc.

However, Tesco may not be able to align between its performance objective, core values, and well developed Operation Management system. Though Tesco uses a balanced scorecard to help monitor its performance, there is some weakness in the operation management strategy adopted by Tesco. Tesco’s primary distribution process is not developed well to meet the organization’s performance objectives and, therefore, need to be improved. Sometimes the company may not have enough trucks to pick up goods although suppliers are prepared well (Wilson, 1996). In some global market, Tesco has few trucks and depends intensely on suppliers and, therefore, putting the company at a disadvantage.

There are some drawbacks to using RFID technology adopted by Tesco. Firstly one of Tesco’s objectives is to pursue low price and hence reduce the cost of production. Consequently, using RFID tags which are relatively expensive than barcodes. Increases the cost of production, Therefore, the company may not achieve its organizational performance objectives, unless the company find ways of continuously improving RFID technology and at the same time cutting its cost when spreading RFID to suppliers (Hill, 2008).

How lean management approach can be utilized in Tesco

Lean management help to simplify operation processes by removing unnecessary elements in the supply chain and avoid waste. Tesco can use lean management by adopting continuous replenishment system, where the company depends on the point of sale data to provide real-time transaction information. Under this system, the company replenishes goods in the shelves several times within one day based on the number of orders. This method will help reduce inventory holding cost, improve product availability, cut down on cost and also guarantee food quality. By improving efficiency in reducing touch points and lead time.

Conclusion

Tesco group has developed operation strategies that have helped the company enjoy remarkable success in operation management. The companies operation strategies have enabled the organization to a greater extent to achieve its performance objectives. The company has developed a wide range of operation plans to help achieve its performance objectives such as reduce the cost of production, satisfy customer needs, improve delivery system, innovate supply chain system, and control inventory holding, etc (KAMAUFF et als., 2010). On the same note, Tesco can competently integrate the corporate strategy, functional strategy and business unit strategy using innovative operations design and efficient operations management. Tesco core concept is strong customer focus to keep customer loyalty. The company introduced online grocery shopping and a club card in order to increase customer satisfaction and hence customer loyalty. The company uses technology to formulate customer habits, know customer attitude and develop trends in customer demand (MAHADEVAN, 2010). This ensures that stock level is maintained and at the same time the company is able to minimize waste and, therefore, increase its profits.

References

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JONES, P., & ROBINSON, P. (2012). Operations management. Oxford, Oxford University Press.

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Wilson, N. (1996). Supply chain management: a case study of a dedicated supply chain for bananas in the UK grocery market. Supply Chain Management: An International Journal, 1(2), 28-35.