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Understanding The Nature And The Importance Of The Operational Management

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Questions:

Scenario
Furniture Supplier company who provides finished good to leading furniture retailers are reviewing their management of operations and would like to investigate new ideas which can be implemented to improve efficiency and effectiveness of their business.

Task 1

Write a report focusing on operations functions, Strategic operation management, Organisation of operation process and planning and control in operation. This report should include,

• An explanation of why operations management is important for organisations
• Analyse the operations functions of a selected organisation
• Evaluation, by using a process model, of the operations management of a selected organisation
• An explanation of the ‘three Es’ (economy, efficiency and effectiveness)
• An explanation of the tension between cost minimisation and quality maximisation
• Evaluation of the significance of the five performance objectives cost; dependability; flexibility; quality and speed that underpin operations management

Task 2

Develop a set of process documents with explanation to assess and evaluate effective operations management at the furniture supplier company.

• Explain linear programming and evaluate critical path analysis and network planning
• Evaluate critical path analysis and network planning
• Explain the need for operational planning and control in producing a furniture
• Design and discuss possible layouts for producing furniture and clearly define operational outcomes.
• Produce a network plan and indicate the resultant critical path for any design process of the company
• Identify approaches can be used for project management and quality control in sales, stock or purchases process

 

 

Answers:

Introduction:

Operation management is the majority concern for any organization not considering of its procedure as well as duration. At the same time this is also concerned regarding the scheming as well as conniving of the production process (AtwahAl-ma'aitah, 2013). In order to understand the operational management process in business context, a particular business scenario is considered here, where a restaurant chain is operating its business in London (Ahmed et al., 2014). To ensure their operational success, various context of operation management is considered too. So, this report provides information about the company background, resources, production process, its decision-making process, marketing strategy, management structure, financial analysis, restaurant marketing, etc to assess the success of its operation in location.

The restaurant that is being highlighted in this report is Bread Street Kitchen that is located at the heart of the city of London in the United Kingdom. It is basically located at the bread street area and runs successfully. As the business is growing steadily and at a greater pace, the organizational management plans to review its operation process for sustainability aspect in the London city. The restaurant premises would be quite big, a total of 130 square feet.

1. Understanding the nature and the importance of the Operational Management

Explanation on the importance of the Operations Management for Organization

According to Meng (2012), operation management is all about harmonizing the internal as well as the external obtainable resources following a specific method that it look like capable to convince the organizational goals in the long run. In the contemporary time frame, majority of the organizations are intended to attain the effectiveness as well as efficiency inside their business procedure. As a consequence, the most important objective of the operation management is led to enhance the procedure that augment the organizational competence to make use of its resources for attaining the production effectiveness. So, it is true that operation management is the amalgamation of all the other subdivisions inside the organizational structure.

Figure 1: Importance of Operational management

Figure 1: Importance of Operational management

(Ahmed et al., 2014)

Analysis of Operations Functions of Bread Street Kitchen

Any business to take a firm decision regarding any business venture, it needs to undergo a series of steps like firstly, problem recognition, secondly search process, thirdly evaluation of alternatives, selecting stage, and finally evaluation of decision. The organization mentioned here must initiate the process of decision making with the initial step of problem recognition where it needs to identify all the objectives and aims in the corporate context (Ahmed et al., 2014). For the Bread Street Kitchen, the problem lies in the fact that the organization aims to sustain itself in London through enhancing its operation process. For this, it needs to identify all requisites. The second process states that the search process needs to be conducted significantly. This step involves conducting a market research as well as gathering all related information. Information provides the basic foundation for organizational growth and success. Evaluation of alternatives includes identifying and then trying out all alternatives to select the best opportunity. Once the best approach has been selected, it is implemented and evaluated. Effective monitoring is to be conducted to maintain the stable position.

 

Evaluation of the Operations Management through process model

Input:

The Bread Street Kitchen restaurant would adopt a forma restaurant form, in which the major products to be provided include various types of continental foods, pizzas, burgers, sandwiches, and even beverages like tea, coffee, soft drinks and fruit juices  (Qur'an, 2009).

Conversion:

The freezer, microwave, coffee machines, dishwasher, and all necessary electronic equipment would be sourced from Comet, whereby a business membership account is to be created. All catering equipment like plates, trays, spoons, forks, bowls, etc would be sourced from Makro, which sells various wholesale food items to different small or big businesses. All food ingredients that would be required in huge amount on a regular basis would be sourced from supermarkets, since they offer considerable discount for business owners. Not all food items would be prepared in house. Rather, to avoid any sort of delay or confusion, the organization would be preparing some of the food items that it specializes in and some other items like sandwiches, burgers, pizzas would be source from retailers that specialize in the very products (Ogbogu, 2013). This idea of buying food items from wholesalers on a regular basis would allow the organization to retain the maximum profits with itself by outsourcing the harder part of the job and retaining the easier part to earn and retain maximum profits. All continental food items would be prepared by exotic chefs within its premises.

Figure: The process Model

Monitoring:

As the restaurant is high rated and expensive the target customers belong to the higher class of the society. These are the potential customers (Ng, 2004). The location of the restaurant is on the roadside of an extremely busy street with several big companies and workmen around to visit the restaurant at any part of the day. Also, being one of the busiest roads of London, the location is ideal as several passers-by pass the street every day. An analysis showed that there are no such big restaurants or coffee shops in the vicinity around. So, one at the location would make it an ideal place for people to visit. Opportunity exists for such a restaurant to grow at the region, since not many restaurants are located at the specific area (AtwahAl-ma'aitah, 2013). Direct competition is quite low in the industry that is usually highly competitive. Some of the shops or cafeterias that are a bit distant to the location may impose a threat if the restaurant is not well maintained to attract customers.

Output:

The overall services that the Bread Street Kitchen would provide would be hospitality services, whereby customers would be arriving and relax themselves with tasty food and refreshing drinks. Apart from wooden chairs there would be sofas arranged in a circular manner to add to the beauty of the restaurant interior (Coughlan, 2005). The atmosphere would be enhanced with music of all genres.

2. Understanding the link between Operation Management and Strategic Planning

‘Three Es’ Explanation

Economic:

The economic aspect of operation management mainly revolves around how well the organization able to maintain its stand point in the market place in terms of providing less expensive but quality product. In this specific context, for Bread Street Kitchen, thus it is become very much essential aspect to provide less expensive foods with maintaining the quality aspect. Research about the income level of UK citizen, where 50 people is considered as the sample shows that the average income range of the UK citizens [40% of the total citizens] revolves around  just above the £50,000 per month, which suggests that the target group of Bread Street Kitchen restaurants will be middle class people. The higher class people earning more than £ 80,000 and above £5, 00,000 are 10% hence the food products should be priced keeping in mind the income level of the mass population. Now, this helps the researcher to understand the income level and the purchasing power of the citizens. So, the prices of the food items need to be made in accordance to the purchasing power of the citizens.

Efficiency:

Efficiency is other important aspect of operation management, which explores how well the organization maintains its operation to fulfill the demand of its customer. Here, the efficiency of the Bread Street Kitchen can be measured in terms of how many times customers visits the restaurant. The survey showed around 50%of the customers opined they visit the restaurants twice in a month which means that the services of the restaurant are hugely availed in UK.

Visit rates in restuarants

Further, to measure the efficiency of the organization, the researcher tried to analyze the taste and choices preference of the customers and whether the organization capable to provide such kind of food items. In this specific, context, research showed that around 55% of the customers opined that they prefer non vegetarian meals with diverse opportunities for dishes provided by the Bread Street Kitchen. However only 10 % of the selected customer opined that they prefers vegetarian and organic meals provided by the Bread Street Kitchen. Hence this will help the management of the restaurant to understand the priority rate of the items and also will be able to price the items accordingly.

Effective:

Finally, the aspect effective in operation management is also playing similar role like other cases. In case of the Bread Street Kitchen, in order to measure the effectiveness following two questions were asked to selected customers:

Q1] How much are you willing to spend for the type of food you like?

Q2] Which of the following price package are you willing to opt for in restaurant?

Below is the details answer of these two questions:

For question 1:

Options

No of respondents

Total respondents

Response %

£ 200 - £ 400

10

50

20%

£ 500 - £ 700

30

50

60%

£ 800 - £ 1000

5

50

10%

More than £ 1000

5

50

10%

Table: Willing to spend

For question 2:

Options

No of respondents

Total respondents

Response %

Single meals

12

50

24%

Combo meals

18

50

35%

Discounted meals

10

50

21%

Meals with free items

10

50

20%

Table: Package willing to opt

On being asked about the price range of the food products in a restaurant the customers were of the opinion that around 60% of them will pay around £500 to £ 700. This shows that the customers prefer the low pricing strategy. The management of the restaurant should thus adopt a low pricing strategy so that they can capture the market initially and increase the price gradually.

On the other hand, the second question shows the preference for the type of meals along with the price. Around 35 % of the customers prefer combo meals because they give value for money. 24 % prefers having single meals although the cost for same will be high and 21 % prefer having discounted meals which are present in the restaurants during happy hours or occasional offers.

So, based on two above situation, it can be said that the organization is effective enough to sustain its operation in the London city in the long run.

Explanation on the tension between the cost and quality maximization

While sustainability of the operation of any particular business organization is taken for consideration, then it can be said that both cost and quality of service must be taken care of. Now, if the contemporary scenario of the UK is considered here, then it can be found that the UK restaurant industry is presently worth over £ 40 billion and around 90% of the customer’s engage themselves in the habit of eating out at any time of the day (Sandler, 2013). Over the years the majority growth percentage has been noticed in the pub restaurant sector with a growth rate of 80%. IN the recent years from 2013 the restaurants have started including s new health trend within their food items by introducing ingredients like beans, dark green vegetables, salmon, soya, walnuts, yoghurt, blueberries etc (Turner, 2012).

Figure: Growth rate of different restaurants in UK

Figure: Growth rate of different restaurants in UK

(Source: Jamaluddin and Dickie, 2011, pp- 65)

On the other hand, if the turnover of major business chain is considered here, then it can be found that in total, the top restaurant chains in UK accounts for around £ 7.3 billion revenue of the country. Wetherspoon being the first traditional pub chain is the second largest restaurant chain in UK to record high customer satisfaction level as well as high turnover (Miller, 2012).

Figure: Turnover of the major restaurants in UK

Figure: Turnover of the major restaurants in UK

(Source: Maxwell et al. 2011, pp35)

This clearly indicates that there exists a tension between cost and quality of the service in this specific market place. So, it becomes very much apparent that both cost as well as quality will be the key to attain success in long term operation for Bread Street Kitchen.

 

Evaluation of the five performance objectives

Cost:

The costing strategy to be adopted by the Bread Street Kitchen would be based upon the entire strategy of the organization is to target higher, middle, and also low income earners as per the demographic distribution. The restaurant would aim at providing much affordable food and drinks. So, the products would not be priced too high that may deter customers. Also, it would not be priced too low that it may render the firm with loss. On account of the broad based generic product strategy that the firms aims to adopt, it would take up a value based pricing strategy, whereby the price of each item that is offered may be based upon how much the firm believes its customers in the region are ready to pay. The Bread Street Kitchen intended to adopt some of the most effective pricing tactics for all its ranges of products.

Quality:

Quality aspect is to be adopted for all its special food items and those that the restaurant excels in. These will be mostly based upon the product that is offered by market competition. Although the product of the Bread Street Kitchen restaurant would be bit cheaper, still much emphasis would be given to preparing and ordering food items of higher quality and taste. The strategy of cost-plus pricing would be adopted for all the products like sandwiches, cakes, pizzas, burgers that are sourced from external means (Ritter, 2006). The prices would be marked up for all those products, which will support to maintain the quality aspect. Finally, pricing of market orientation may be used for food items especially during lunch or dinner. The firm expects to attract a huge mass of customers and the policy of pricing all products effectively would enable its strategies.

Dependability:

As the firm engages in the hospitality services, it needs to be careful about the fact that everything has to be properly placed and the atmosphere of the restaurant has to be excessively soothing and comfortable. Since the business would be run as a sole trade, the firm would be headed by the owner in presence of the store manager.

Speed:

The store manager would be responsible for supervising that the entire store is working effectively to achieve its desired goals. For hospitality services towards customers, there would be ground staffs and waiters to assist in satisfying customers (Coughlan, 2005). Other management members would include supervisor or assistant who would enable procurement of supplies as well as running of the shop.

Flexibility:

There would a staff supervisor who would be guiding all staffs to offer better services to the customers. Store assistants will be appointed to act as the main contact point for the customers. They would be responsible for receiving orders as well as to attend all needs of the customers.

 

3. Understanding on how to organize a typical production process

Explanation on Linear Programming

Use of linear programming supports the business organization to maximize the revenue of the operation in terms of minimizing the expenses. This particular technique is employed mainly because of the fact that it supports the business to consider all the constraints of operation. Within the specific limitation, how much production will efficient enough to attain maximum revenue can be measured through this technique.

Critical Path analysis and Network Planning

Network planning helps to reduce the complexity of task. In this study, implementation of TQM within the existing supply chain system of the furniture company, network diagram will give the time of the project which will help in scheduling of the project. Below are the details of the network plan for the selected business organization.

Figure 3: Gantt chart

 

Figure 3: Gantt chart

(Source: Created by author)

Network diagram:

Activity

Description of activity

Duration of activity

1-2

 Formation of team

4 months

1-3

Surveys for market research

12 months

3-4

Market research results analysis

5 months

2-4

Investment for expansion in London

13 months

3-5

Plan implementation

15 months

4-5

Project completion

3 months

Table 1: network diagram table

(Source: created by author)

Figure 4: network diagram

 


Figure 4: network diagram

(Source: Created by author)

Explanation on the need for operational planning and control

From the above discussion, it can be concluded that despite some of the available threats for the firm in the market, there are several scopes for the company to result in increased profitability and sustainability. Direct competition is quite low in the industry that is usually highly competitive. Some of the shops or cafeterias that are a bit distant to the location may impose a threat if the restaurant is not well maintained to attract customers. What is mostly needed is proper planning and control of operational activities. The overall services that the Bread Street Kitchen would provide would be hospitality services, whereby customers would be arriving and relax themselves with tasty food and refreshing drinks.

 

4. Relevant techniques to the production of an operational plan for organization

Operational outcomes for the selected restaurant

It is noted that being a representative of the hospitality industry, the organization needs to set in motion with pre-assessment of its procedure to provide service towards the customer, followed by the supplier evaluation as well as the operational outcomes assessment. Below are the essential operational outcomes for the selected business organization:

Operational planning

Conversions

Expected benefit

Forecasting demand

The demand for the particular food is forecasted by the company as well as assesses the demand of the product and accordingly orders the raw material for the food.

High

Assemble stock

Assembling the stock such as groceries, freezer, microwave, coffee machines, dishwasher, and all necessary electronic equipment, etc

low

Shorting

Here, all the necessary raw materials like groceries will be shorted.

Low

Monitoring and using adhesive and various other materials

Freezer, microwave, coffee machines, dishwasher, and all necessary electronic equipment, etc are to be well monitored.

High

Checking the quality

Quality controller check the quality by assessing the test, freshness, organic foods, hygiene factors (Trietsch and Baker, 2012).

High

Inventory

The raw materials like groceries are to be well maintained so that no raw materials stayed long time in the inventory, as this will lead to damage of raw materials.  

Low

Supply to customer

Here, all the prepared food will be served towards the customer according to their order.

Medium

 

Network plan and critical path analysis

Considering the above mentioned network diagram, it is noted that the total completion period is 28 months. Further, 1, 2, 4 and 5 will be the critical activity here.

Network plan and critical path analysis

Quality management techniques:

There are several aspects that can be utilized to enhance the quality aspect of service provide by Bread Street Kitchen. Taken for example, selection of just in time (JIT) approach will reduce the damages of raw materials as well as finished food products. On the other hand total quality management (TQM) or implementation of ERP system will support to enhance overall success of the operation.

 

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