A Make to Stock Operations Company - Case Study Example

Kwik Fit Ltd. A Make to Stock Operations Company Total Number of Words 036 Introduction Kwik-Fit Group Ltd is a leader in Make to Stock Operations (MTS) in automotive parts, repair and replacement services (Hoovers 2010). The company is one of the largest of its class in Europe offers tyres and other services in the market. After going through the order winners and market qualifying criteria, the classification of operational process will be tackled in details followed by comparing the operational system of Kwik Fit and McConechy. Order Winners and Market Qualifying Criteria As created by Terry Hil, order winners is referring to operational changes that creates competitive advantage and market success whereas order qualifier is a product and service characteristics that could satisfy customers with products and services they receive from a company (Reference for Business, 2010). To achieve zero-inventory goal, Kwik Fit improved its IT system to enhance the ordering process and production flow suitable for its MTS system. IT systematized operations networks provide Kwik Fit’s staff working in research and development with data. As Kwik Fit expand its existing market channels, its operational strategy is advantageous for its operations analysts and customers. The IT system which speeds up the flow of operational data is a market qualifying criteria which makes the company stay in the market. It is also an order winner since fast response to customers’ specific needs and preferences makes the company able to convince their customers to purchase Kwik Fit’s tyres. Kwik Fit’ IT systems is a value added expense within organizational budgets. Its IT MTS operational system enables Kwik Fit to enjoy cost-saving insights that fits the business requirements. Classification of Operational Process As MTS with regional potential for growth in the European Union, Kwik Fit’s operations are responsive to competitive pressures in a multi-national, regional market that enforces top performance and safety by consumers interested in efficiency, service, and the environment. In the current global economic climate, firms are increasingly pressed to stem overflow of stock by streamlining their inventories to ‘zero-inventory’ goals. Kwik Fit’s MTS operations are based on adequate, pre-existing stock to order, yet pose costly overages in cases where customer or auto manufacturing specifications delineate emphases on certain product related services and not others. Regulatory policies pertaining to environmental mitigation enforce Kwik Fit’s back-end recycling of merchandise. In 2008, Kwik Fit launched its first environmentally friendly logistics system for transportation and elimination of tyres. The CEVA rolling cage concept enables the Company to assume far greater control over its supply chain through integration with the new National Distribution Centre (NDC) through integrated command of ‘roll cages and vehicles with the NDC [inventory] storage media and the IT systems (Logistics and Handling 2008). Integrated MTS operations enabled the advancement of Kwik Fit’s tyre delivery strategy as well. Decoupling point in the operation is seen in the elimination of time constraints previously incurred by way of direct from manufacturer dependency. The new strategy also allowed the company to enhance product availability aside from facilitating the development of a product menu in tyres which exceeds 1600 standard models to its chain retail locations. This strategy allows Kwik Fit’s customers to receive their MTO tires no later than next day. Better accountability of stock within the inventory system generates indicator data on demand and unsold stock for return to the NDC. According to Kwik Fit’s Head of Supply Chain Manager, Neil Arnott, the reverse logistics capability provided the company with a highly manageable system for sustainable growth; one that replicates the Company’s ‘fast-fit’ solution to service. Cybit’s telematics Retail Operations Inventory (ROI) system was ‘selected to provide Kwik Fit Mobiles 200 tyre-fitting vehicles with web-based fleet tracking to manage growth in the corporate fleet mobile service sector’ (Retail Technology Supply Chain News 2008). The most important aspect of the internal environment of Kwik Fit is not chain management of merchandise, nor the regulation of service applications, but the integrated knowledge base with employees whom supply the expertise. The new ROI solution allowed Kwik Fit to connect human intelligence to logistics intelligence and included analysis options for evaluation and management of mobile worker performance. Redirection of MTS operations was sought by investment in ‘robust occupational road risk management procedures’ sector’ (Retail Technology Supply Chain News 2008). Discreet in size, the ROI interfaces with a GPS device that is located inside the service vehicle; providing real-time information, transmitted via O2s GPRS network to Cybits servers. Data generated by the ROI system is accessible from any web-connected PC, and may be processed into a broad range of user defined reports with historical analysis. Comparison between Kwik Fit and McConechy’s Tyre & Exhaust Centres McConechy follow the traditional Make-to-Stock (MTS) production system. It means that the company produces tyres and stock it as inventory until the tires are sold (McConechys Tyre, 2010). Unlike in the case of Kwik Fit, the problem with MTS production system is that it is difficult to reduce the inventory of tyres since the company could not have an accurate way of measuring which specific tyre made and tyre design would be in demand for a specific time frame. With systems transformations come change management challenges, and lean and agile options in systems often entail high tech solutions and reverse operations planning strategies and implementation (Berry and Naim 1996; Naylor 1997). Specifically the linkage of Kwik Fit’s business analysis operations to its inventory control and tracking system provides a unified platform for direct integration of data from various stages in the service chain for deep integration of factory to market strategies. This gives Kwik Fit a better competitive advantage as compared to McConechy. Conclusion Kwik Fit is successful in measuring its competitive market position. Combining MTO with effective IT system is necessary in enabling the company meet its zero-inventory goal. By immediately responding to market and operational data through the use of mobile services which connects Kwik Fit with staff, its industry suppliers and consumers, the company is excellent in optimizing instrumentation of its MTS inventory. As part of improving the company’s operational system, Kwik Fit sought reorganization of its logistical operations format. *** End *** References Berry, D. and Naim, M.M., 1996. Quantifying the relative improvements of redesign strategies in a P.C. supply chain. International Journal Production Economics 46:47 (1996), pp.181 196. Hitt, Back & Porter, 1995. Management. Upper Saddle River: Pearson Education, Prentice Hall. Johne, Axel, 1999. Successful market Innovation. European Journal of Innovation Management, 2:1 (1999), pp. 6–11. Kwik Fit Group Ltd. Hoovers. Available at: http://www,hoovers.com Kwik Fit and the Environment. Kwik Fit. Available at: http://www.kwik-fit.com/kwikfit-and-the-environment.asp Kwik-Fit Group Limited, 2010. Business Week, June 06, 2010. Available at: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=763202 Kwik Fit Mobile to implement Telematics technology from Cybit, 2009. Retail Technology Supply Chain News, June 08, 2009. Available at: http://www.retailtechnologyreview.com/absolutenm/templates/retail_supply_chain.aspx?articleid=609&zoneid=1 Kwik-Fit awards UK contract to CEVA, 2008. Logistics and Handling, July 02, 2008. Available at: http://www.logisticshandling.com McConechys Tyre. (2010). Retrieved June 15, 2010, from Quote Me: http://www.mcconechys.co.uk/cms/component/option,com_fabrik/Itemid,24/. Naim, Mohamed M., 2010. Operations Strategy Management. Lecture. Naylor, Ben J., et al., 1999. Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain. Int. Journal of Production Economics 62 (1999), pp. 107-118. Reference for Business. (2010). Retrieved June 15, 2010, from Order-Winning and Order-Qualifying Criteria: http://www.referenceforbusiness.com/management/Ob-Or/Order-Winning-and-Order-Qualifying-Criteria.html. Read More