BUS300 Operations Management

This study has highlighted the operation management of Almarai, a dairy food industry of Saudi Arabia. This study has provided the overall input, transformation and the output functioning of the firm. In addition, this study is also helpful to identify the major operations performed by the organisation. In this connection, this study has also identified the competitive advantage of Almarai. On the other hand, this study is benefitted to evaluate the capacity planning, inventory management, supply chain measurement and the performance measurement of the mentioned organisation.

Background of the organisation

Almarai is belonging from the food industry, which has the specialisation in the manufacturing of dairy products. This organisation was established in the year of 1977. The headquarter of this organisation is at Kingdom of Saudi Arabia. Initially, the organisation has a partnership with Irish agri foods pioneer Alastair McGuckian. In the year of 2005, Almarai has incorporated a new cheese plant. In 2007, Almarai has started their bakery business. In this connection, Almarai has started the construction of new bakery facility in Al Kharj (Almarai. 2016). This organisation has received several awards for it’s operations. In the year of 2009, Almarai has acquired HADCO. After that, Almarai has launched a new poultry brand namely, Alyoum. In addition, it can be mentioned that Almarai made a partnership with Pepsico in the year of 2009. This partnership also launched a joint venture with the Juice organisation and also with the International Dairy. As per the statement of Helleno et al. (2015), it can be mentioned that major products of Almarai are dairy, Yogurt, Juices, poultry, bakeries and infant formula.

Identification of the overall input, transformation and output operations of the firm

Figure 1: Input-transformation-output process

(Source: Jin et al. 2015)

From the above figure, it can be observed that the overall production approach of an organisation can be performed by following three definite steps such as input, transformation and the output method. In this study, these three mentioned steps of the production process of dairy sector of Almarai has discussed in this context.

As per the statement of Li, Li and Feng (2014), it can be mentioned that Almarai has used milk, colostrums, liquid milk products, fresh cream and also the thickened cream, butter, ghee, whey, butter milk powdered as the input materials to manufacture the best qualities dairy products. In this connection, it can be mentioned that this information has collected from the management of the organisation. The manufacturing head of Almarai has mentioned that the organisation used only the best qualities products in their production. In the words of Mohammadi, Soleymani and Mozafari (2014), this has increased the productivity of the dairy manufacturing organisation. Secondly, it can be stated that the location of Almarai is appropriate for getting the raw materials, which are required for the dairy manufacturing products. In this connection, Niknam, Golestaneh and Malekpour (2012) mentioned that position of the organisation is the key element for making a business successful. The head quarter of Almarai is at Riyadh, which is the most populous city. Therefore, it can be predicted that the overall sales of the organisation would be increased.

According to Parisio, Rikos and Glielmo (2016), it can be mentioned that in the transformation stage of the dairy production, Almarai has aimed to the food safety hazards program. As per this program, it can be stated that the organisation need to control the food safety hazards by formulating the documented food safety program. In addition, it is also required to follow several supporting programs. As per these programs, Almarai requires to keep the environment keep and clean. Therefore, it can be stated that the pests can be reduced in the manufacturing process. On the other hand, the organisation ensures that milk requires to cool and then requires to store at a certain temperature. This can prevent or can also reduce the growth of the microbiological hazards. In the words of Sedaghati and Kavousi-Fard (2014), it can be stated that Almarai requires to supervise the activities of the employees. In this connection, the organisation has aimed to the food safety and hygiene matters within the organisation. Moreover, it can be opined that a dairy manufacturing business requires to focus to the controlling of time and temperature.

The last stage of the production process can be considered as the output. In this case, Stoppato (2012) opined that Almarai has aimed to the packaging of the products. In this purpose, the organisation requires to focus to the weighing, sealing as well as on the labelling of the products. In the next stage, the organisation keeps the manufactured goods in the storage room for preventing the products from damage.

Supply chain design:

Supply chain design process is helpful to enhance the profitability and the shareholder valuation. The management of Almarai requires to follow the market and the sourcing strategies. This will generate the optimum financial performance. Supply chain design needs to manage the constraints and margins. By following these regulations and practices in their business, the management of the organisation can earn higher profitability. However, Flint, Signori and Golicic (2016) argued that there is uncertainty as well as risk in demand and supply and these are required to the organisation during the designing of supply chain (Waller and Fawcett 2013). On the other hand, Almarai needs to balance the short term and long-term plans and objectives. Therefore, it can be inferred that supply chain design requires to provide the organisation a detailed insights, which would shows how the demand can achieve the business profitability. In addition, with the help of supply chain designs, opportunities to increase the profit can be identified. Moreover, supply chain cost can reduce the consumer responsiveness.

Figure 2: Supply chain design

(Source: Flint, Signori and Golicic 2016)

Identification of major operation areas and the competitive advantage

According to Zhang, Shah and Papageorgiou (2013), it can be stated that operation areas are critical to the competitive advantage of an organisation. There are five major operational areas, which can gain the competitive advantage of Almarai. These operational areas are such as quality, speed, dependability, flexibility and cost.

In the point of Li, Li and Feng (2014), it can be mentioned that quality can enhance the competitive advantage of the organisation. As a result, it can be stated that the organisation can set out their targeted consumers. In addition, Almarai can reduce the price of their manufacturing goods. However, the speed aspect can deliver their products to the consumers more quickly. This aspect can also offer superior consumer services, which focus to the after sales services. Hence, it can be mentioned that the organisational risks can be reduced.

Dependability is helpful to identify the level of stocks of the organisation. In order to measure the level of sock of the organisation, Almarai requires to improve the working conditions as well as the internal maintaining facilities. This would in turn save the money of the organisation due to the lack of disruption.

As opined by Mohammadi, Soleymani and Mozafari (2014), it can be mentioned that workplace flexibility can be categorised into four sections such as product, mix of the goods, quantity and the delivery. Nevertheless, Parisio, Rikos and Glielmo (2016) questioned that product flexibility convert the rigid mass production towards the mass customisation in order to achieve the global requirements. Therefore, Almarai has focused to the quantity and the time of delivery in order to satisfy the consumers’ needs. This will improve the product development approach for the development of new products.

Lastly, cost structure is the key measurement for the improvement of a business. According to Niknam, Golestaneh and Malekpour (2012), it can be mentioned that ideal cost structure of the manufacturing goods can increase the profitability of the business. Therefore, revenue earning of an organisation can be improved.

Evaluate the performance of each area

In order to measure the performance of quality, speed, flexibility, dependability and cost for gaining the competitive advantage, the organisation has used some specific tools such as capacity planning, inventory management, supply chain design and the quality management. Capacity planning is helpful to forecast the budget of a business in order to meet the present operations and can meet the business objectives. As a result, based on the predicted budget, Almarai can set out the price of the products and the quality aspect can be improved. Moreover, capacity planning is helpful to identify the future capacity needs. This will in turn increase the production of an organisation. It can monitor the cost structure of the manufactured goods.

By following the inventory management, an organisation can increase the inventories as well as the level of stock. This would be benefitted for increase the functioning of dependability. This would generate the higher profitability within the organisation. On the other hand, Parisio, Rikos and Glielmo (2016) cited that supply chain management is a network, which can move the product from one stage to another. In addition, this can increase the customer service of the organisation. Therefore, it can be mentioned that Almarai aimed to improve the customer service of the organisation by delivering the products to the customers within the proposed date. Therefore, the speed aspect can perform successfully in order to gain the competitive advantage of an organisation.

Recommendation

After analysing the entire study, it can be recommended that Almarai requires to follow some relevant marketing dynamics such as speed, dependability, flexibility, cost and quality, which can gain the competitive advantage of the business. In this respect, it can be stated that if Almarai would not be able to deliver the products to the consumers, then the good will of the organisation towards the consumers would be declined. In this pount, it can be recommended that speed sustainable dimension would be benefitted. By following this sustainable dimension, the food industry can deliver the products to their clients within the proposed date. Moreover, the dairy farm has planned to set out the price of the product affordable. They used modern technology and updated techniques in the manudacturing process. As a result, it can be inferred that the quality of products would be improved. This would be helpful to gain the competitive advantage of the organisation. On the other hand, it can be recommended that inventory and capacity management require to work effectively. In this respect, it can be stated that Almarai has the competitive advantage in the manufacturing of dairy products based on the level of stock. Capacity management can efficiently estimate this level of stock of an organisation. Therefore, it can be mentioned that the productivity of the organisation will be increased. In addition, the service quality of Almarai will be improved.

Conclusion

This study has highlighted the operation management of Almarai organisation of Saudi Arabia. In this purpose, this study has discussed the overall input, transformation and the output operation of the organisation. As a result, it can be understood what materials are used for the manufacturing process of the dairy products. On the other hand, this study has identified the competitive advantage. In this context, this study has mentioned how Almarai has achieved the competitive advantage through the operation management. Moreover, this study has described some quantitative techniques such as capacity management, inventory management, and supply chain management in order to solve the operation management challenges within the business.

References

Almarai. (2016). Almarai - About Almarai Company. Available at: https://www.almarai.com/en/about [Accessed 27 Dec. 2016].

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