Operations management refers to an administrative field that focuses on the planning and running of processes that aid in the manufacture and distribution of goods and services. Thome, Scavarda and Scavarda (2016) allege that operations management guarantees that organisational activities are efficient. It is an essential function in an enterprise, which complements marketing, finance, supply chain management and human resource.
Initially, operations management was devised to help automobile companies streamline their activities. Later, organisations learned that it could be of significant value to service delivery, thus introduced the concept into the service sector. According to Thome, Scavarda and Scavarda (2016), operations management is critical to the translation of labour and raw materials into finished goods and services. It helps companies to reduce operations costs and enhance profit by striking a balance between revenue and expenditures.
An operations strategy is critical to the success and growth of business. It helps in planning of processes that enable an organisation to utilise resources effectively. Thome, Scavarda and Scavarda (2016) assert that an operations strategy delineates the procedures and regulations for using institutional assets to promote long-term competitive goals. It outlines company information such as size, location, employee skills, available facilities, unique procedures and talents that are required, application of technology and approaches to quality control.
Thome, Scavarda and Scavarda (2016) maintain that an operations strategy enables an organisation to match its resources to market demands. It is helpful in understanding a target market, as well as customers behaviours. A business must ensure that its operations strategy assists it to overcome competition and attract as many customers as possible. An operations strategy must not be static and should consider the dynamic nature of the market, thus accommodating possible changes in the future.
Theories of Operations Management
Contemporary operations management is premised on four major theories, which are reconfigurable manufacturing systems (RMS), lean manufacturing, business process redesign (BPR) and six sigma. According to Drohomeretski et al. (2014, p. 806), “an RMS is one that is designed at the outset for rapid change in its structure, as well as hardware and software components to quickly adjust production capacity and functionality in response to market changes”.
Gobalisation has intensified competition amid companies, created numerous business opportunities and contributed to regular changes in consumer demands. Therefore, organisations require having flexible manufacturing systems that enable them to manufacture an assortment of products depending on consumer needs. This can be achieved by incorporating RMS into a company’s operations strategy.
The theory of lean manufacturing holds that organisations can improve their performance by eliminating all forms of waste. This concept was initially applied in the manufacture of cars at Toyota Company (Walker, Chicksand, Radnor & Watson 2015). The theory cites seven forms of waste, which are process inflexibility, waiting, redundant stocks, defects, needless motions, transportation delays and overworking.
Addressing these wastes can help to improve the competitiveness of business not only at the local but also international arena. BRP aids in the analysis and configuration of business activities and the workflow in a company. Its primary objective is to assist corporations to adopt effective processes, therefore enhancing operations. Drohomeretski et al. (2014) state that six sigma is a production strategy that focuses on quality. It assists organisations to identify and eliminate errors that might affect the quality of their goods and services.
Wal-Mart’s Operations Strategy
At Wal-Mart, operations management covers numerous areas that are aimed at enhancing organisational efficiency. Nguyen (2017) claims that this company’s management entails dealing with challenges that managers encounter in their daily activities. Operations management facilitates the development and production of goods and services at Wal-Mart. This company offers a range of brands, including Sam’s Choice and Great Value.
Operations management helps in planning of retail services by highlighting the elements of cost-effectiveness and competence. Wal-Mart uses a generic technique to compete in the global market. This strategy cannot succeed without Wal-Mart coming up with ways to minimise operations cost. Consequently, operations management allows this company to design its Great Value brands in a manner that supports mass production, therefore leveraging economies of scale.
Operations management is critical to process and capacity development in an organisation. According to Nguyen (2017), operations management enables Wal-Mart to monitor, analyse and anticipate consumer and employee behaviours. Nguyen (2017) insists that behavioural analysis enables this company to improve processes in its stores and equip employees with relevant skills. On the other hand, forecasting employees and consumer conducts allows this retail business to change its operations to meet future demands.
Importance of Operations Management to Globally Competitive Firms
Multinational companies acknowledge that operations management is as critical to their success as marketing and finance. Moreover, business leaders understand that for them to succeed in a global market, they must adopt an operations strategy that supports the goals and visions of their firms. One of the significances of operations management to globally competitive businesses is that it promotes effectiveness and efficiency.
Thome, Scavarda and Scavarda (2016) posit that a multinational company cannot compete in a global market without creating strong competitive advantage that is premised on processes. Such a corporation must know how to use technology to create novel products and add value to clients. These objectives cannot be realised without applying operations management techniques that promote differentiation.
Supply Chain Management, Capacity and Quality
Importance of Supply Chain Management
Supply chain management is critical to organisational operations and competitiveness. As per Beske and Seuring (2014), supply chain connects organisational processes, which include procurement of raw materials, manufacture of products, storage and shipment of goods to consumers. Beske and Seuring (2014, p. 323) define supply chain management as “an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer”. Supply chain management boosts the competitiveness of a global firm by reducing operations costs and adding value to consumers.
It enables a company to achieve differentiation through administration of various processes that are interlinked. According to Ellram and Cooper (2014), supply chain management allows an organisation to tie supply chain goals to business strategy. In return, it becomes easy for a firm to resolve problems attributed to competing demands. Supply chain management enhances forward momentum because it streamlines operations within an organisation.
Supply chain managers play an essential role in the administration of logistics of a multinational firm. Beske and Seuring (2014) argue that efficient supply chain management may enable business to diagnose disruptions and challenges correctly.
Wal-Mart’s Supply Chain Management Practices
Wal-Mart is among the retail firms that peg their competitive advantage on effective supply chain management. Today, the company sources its products from over seventy countries and manages an inventory worth over $32 billion (Natto 2014). Supply chain management has enabled Wal-Mart to build rapport with suppliers and consumers. The company has an innovative supply chain that allows it to interact and share information with suppliers and consumers flawlessly.
The communication between Wal-Mart and its clients facilitates planning and forecasting of consumer demands. Wal-Mart has shared its central database with vendors as a strategy to build trust. The move has helped this firm to minimise losses, interference and barriers to communication. Natto (2014, p. 1024) posits, “Supply chain management enables managers in Wal-Mart to identify problems, track occurrences, monitor merchandise repositioning and provide better product management”. Any time that an outlet places an order, the information is relayed to this company’s distribution managers, enabling them to process it on time.
The modern customers have become quite demanding in terms of convenience, better service delivery and quality. In 2010, Wal-Mart initiated a programme dubbed “Must Arrive by Date” (MABD), which enables it to ensure that products are shipped to the right outlets on time (Natto 2014). This programme has helped to enhance customer loyalty since it guarantees that products are on shelves any time that consumers require them.
Wal-Mart appreciates that without an effective logistical system, it would be difficult to compete in the global market. Consequently, this company has a supply chain management system that assists it to control inventories and share information with suppliers. Wal-Mart has virtual a store that allows customers to purchase goods online. Moreover, it has a dynamic distribution system that enables clients to pick products at any of the company’s outlets or opt for home delivery.
Role of Technology in Supply Chain Management
One of the benefits of technology to supply chain management is inventory control. As Marr (2017) posits, technology enables retailers to create flexible business practices that facilitate the management of diverse demand circumstances. Wal-Mart uses technology to manage it supply chain, thus guaranteeing that its stores do not run out of products. Moreover, this retail giant leverages technology in cost reduction strategies.
Wal-Mart makes sure that it maintains the correct levels of inventory, thus avoiding the possibilities of waste attributed to goods getting damaged or expiring. Technology enhances communication between business and its supply chain partners. Marr (2017) alleges that Wal-Mart uses technology to monitor operations across its supply chain. This company can easily monitor procurement of goods from suppliers and their delivery to different outlets. Technology is invaluable in the prediction of possible changes in the future demands and decision-making. Wal-Mart understands the importance of delivering goods and services to customers on time. Consequently, it uses technology to liaise with its logistics providers, thus minimising delays in product delivery.
Technology, People and Ethics
Changes in consumer demands are forcing organisations to look for efficient methods of running and managing operations. Today, many customers prefer to buy customised products, which are delivered to their workplaces or homes. Consequently, retail businesses and manufacturers require using technology that can promote real-time scheduling and planning. Artificial intelligence has proved to be effective in satisfying these requirements.
Currently, many businesses, especially production companies have invested in manufacturing operations management (MOM) systems that allow them to monitor activities, thus guaranteeing timely completion of processes.
The application of artificial intelligence has immense benefits to retail stores such as Wal-Mart. It enables these firms to supervise their inventories and customer orders, hence ensuring that they do not run out products that are in high demand. Moreover, this technology helps Wal-Mart to avoid operational mistakes attributed to processing information manually. Marr (2017) alleges that artificial intelligence allows “lean” management of Wal-Mart’s inventories, thus minimising wastage. In addition, this technology helps Wal-Mart to reduce costs by removing redundant operations.
Wal-Mart has invested in an application that enables it to determine customers who are unhappy with its services. Nguyen (2017) says that this retail giant has a facial recognition technology that enables it to gauge the degree of frustration amid customers, thus knowing if clients are satisfied with services. Wal-Mart has gone further to apply Internet of Things (IoT) to analyse product consumption (Marr 2017). The company uses this technology to tag different products to determine the rate at which they are purchased. The IoT has been helpful in replenishing stores as managers can easily tell when certain goods are running out.
People in Operations Management
Operations management entails handling raw materials, information, equipment, and people. Nevertheless, most managers ignore the role of people in the success of operations management (Lam, O’Donnell & Robertson 2015). For instance, some companies procure systems and software meant to boost operations management, but fail to assist employees to cope with the new changes. In most cases, changes that are introduced into operations management affect the routine activities of an organisation.
Consequently, some people may be opposed to these transformations due to fear that they might interfere with their performance. Lam, O’Donnell and Robertson (2015) allege that alterations in operations impact communication and interaction between employees. At times, some employees may no longer relate to individuals that they have worked with for many years. Such inconveniences may impact people’s morale, therefore affecting their productivity.
Ethics in Operations Management
Ethics plays a critical role in operations management and should be reflected in an organisation’s corporate responsibilities. Simangunsong, Hendry and Stevenson (2016) argue that many ethical issues that affect firms arise at the operations level. Ethics in operations management focuses on the strategies that businesses take to boost their profit rather than the amount of income that they make. Companies have a responsibility to make sure that they do not earn profit at the expense of their employees or clients. Simangunsong, Hendry and Stevenson (2016) cite opportunism as a major ethical challenge that is associated with operations management. It refers to a situation where business takes advantage of an existing opportunity at the expense of customers, workers or society.
According to Simangunsong, Hendry and Stevenson (2016), the need for cost reduction and impractical strategic goals are some of the factors that lead to operations managers engaging in unethical practices. Wal-Mart appreciates the contribution of operations management to ensuring that business upholds ethical practices. Consequently, this company makes sure that its suppliers abide by the established ethical norms. For instance, Wal-Mart requires vendors to treat staff fairly and provide good working conditions (Simangunsong, Hendry & Stevenson 2016). They are also expected to use environmentally friendly methods to produce their products. This company sources products from vendors who obey the established labour laws.
Operations management assists in the manufacturing and distribution of goods and services. Numerous theories explain the concept of operations management and its value to organisational development. They include lean manufacturing, six sigma, BPR and RMS. Wal-Mart uses operations management techniques to evaluate and forecast changes in consumer and employee behaviours. One of the aspects of operations management involves controlling supply chains. Wal-Mart acknowledges the role of supply chain to its competitiveness. Consequently, this retail firm has invested in technology (artificial intelligence) to enable it to communicate with customers and suppliers, as well as control inventories. Operations management practices must respect existing ethical values. Wal-Mart makes sure that its suppliers obey labour laws and use environmentally friendly methods to manufacture their products.
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