Operation Management at Tesco - Case Study Example

Running Head: Operations Management Operations Management [Institute’s OPERATIONS MANAGEMENT Introduction The world has transformed into a global arena where every organisation is participant of a competitive race, and one can observe organisations endeavoring to compete with one another by decreasing product costs, ensuring high quality of products, and at the same time, putting efforts for customer satisfaction. In such a competitive environment, organisations can no longer be run by a single individual but rather require huge teams and departments that work day and night for success of the company. One such very important component of business organisations is operations management that has come to evolve as a new field due to its huge demand and necessity. Few years back, operations managers were only one part of the organisations; however, today, one can observe their influence and impact on almost every department and function of the company that has resulted in their significant importance (Anupindi et. al., 2008, pp. 39-57). Although organisations are still relying heavily on their suppliers for high-quality products, however, operations management plays a supportive role in ensuring quality and satisfying experience of the customers at the very end. Particularly, this paper is an attempt to discuss and shed some light on steps that retail companies such as Tesco and others can take to ensure maximization of customer loyalty and best-quality customer service while relying on their suppliers for quality merchandise. In the year 1919, Jack Cohen founded Tesco (2014) that has now emerged as one of the top retailers in the British Empire while giving fierce competition to retail giants such as Walmart. Analysis has indicated that Tesco (2014) went through difficult phases in the past; however, it has brought several alterations in its systems, especially relevant to operations management that will be fruitful in terms of fulfilling purpose of this paper. In this regard, the paper will benefit from some of the strategies of Tesco (2014) that will enable a comprehensive understanding of the possible steps that may allow maximization of customer loyalty. System Diagram of Tesco’s Retail Store (Tesco, 2014) As discussed above, Tesco (2014) has been able to prove itself as one of the successful retailers in the market, and one of the major reasons behind their success is their effective operations management, diagram of which is above. Analysis of its systems has identified few steps that can be fruitful for similar organisations, and Tesco (2014) calls it ‘Tesco’s way’ as its magic formula for the success. Some of the important elements of Tesco’s way are “sophisticated technology, trained workers, effective utilization of spacious infrastructure, detailed planning, integration of departments, and employee-customer relationship” (Tesco, 2014). Discussion Retail organisations such as Tesco (2014) relies to a certain extent on its suppliers for quality merchandise; however, there are some essential components for effective business operations management that allow a company to ensure maximization of customer loyalty by confirming customer service of the best quality. It has been an observation that one of the mistakes that retail organisations usually make is their complete reliance on suppliers for quality merchandise but while doing that, they forget the most important element and that is integration of operations management in every department, such as finance, HR, marketing, etc that relate with operations managers in the organization. As the result, they get quality merchandise but they are unable to maximise customer loyalty, and subsequently, short-term success and lack of sustainability. In the past, operations management used to be a separate department; however, today, experts (Simons, 2011, pp. 56-61) believe that from production to distribution, operations management should collaborate with every department in the organisation, as this has now been recognized as a major step and success formula in organisations. From manufacturing of the product to its distribution and delivery at the local store, operations management should play an integrated role in the company. Scrutiny of further literature (Burtonshaw-Gunn, 2010, pp. 68-81) has informed that organisations lacking in integration of operations management with other business processes are more likely to confront failure in the future. In other words, while companies usually focus on creating relationships with their consumers and customers, it is very important for organisations that their departments enjoy an effective working relationship with each other. For instance, executives and managers should endeavor to ensure coordination of manufacturing department with marketing team, and similarly, purchasing team with distribution. Although their direct relationship may not be visible or required, however, on systems level, such coordination can play a significant role in maximising best quality of products and subsequently, customer loyalty. Therefore, interrelationship (Haines, 2007, pp. 29-45) is what that distinguishes successful organisations such as Tesco from others. In other words, this interrelationship is what that may allow the company to ensure that customer is receiving the best possible service. In addition to integration, another important step towards maximisation of customer loyalty is inclusion of operations managers in decision-making process of company. This may look unreasonable; however, studies (Haines, 2007, pp. 36-57) have indicated that involving someone in decision-making process increases motivation level and at the same time, help in enhancement of quality. Another imperative aspect of successful companies is trained staff, and in this paper’s case, trained operations managers. Although companies usually hire people that are trained in their fields, however, it is important to provide in-house training to them as this will be helpful in many ways. Firstly, it will enable the managers to interact with one another that will promote interrelationship and interdependency. Secondly, in-house training will help them contextualize their content knowledge according to particular environment of the company that often lacks in organisations resulting in short-term success or lack of customer satisfaction and loyalty despite of quality merchandise. Thirdly, in-house training also ensures uniformity in the company that allows similar quality service at every retail stores or locations that promotes customer loyalty to a great extent. For example, at Tesco (2014), “the participation of operations managers is present from strategic to tactical and operational levels. In addition, their activities include site location, layout, and structure, inventory management, traffic and materials handling, equipment selection and maintenance, designing technology supply chains, etc” (Metz, 1998). In the past, customers used to trust in everything that companies used to tell. However, in today’s era of information and technology, customers are now very well-informed about different aspects of business and products, as well as more concerned about factors, such as environment and that has become one of the major factors influencing and/or affecting customer loyalty. For this purpose, in order to ensure customer loyalty and best-quality product/service, it is very important that companies may give importance to environmental considerations (Lippmann, 1999, pp. 5-11), and indicate it by implementing environmental-friendly processes (OECD, 1999) in their business. While environmental consideration will help the managers in promoting customer loyalty, this step will also be helpful in endorsing sustainability management in the organisations (Webb, 2000, pp. 10-17) that talks about balancing human wants and natural conditions (Moore, 2008, pp. 17-34). In other words, a successful company is the one that is able to balance between desires/wishes of the customers/consumers and the natural environment. Thus, reliance on suppliers for quality merchandise might have been enough in the past; however, it has not remained sufficient in today’s world and that is where operations management can play a crucial role in instilling such elements in decision-making process of the organisation (Saturn, 1999, 11-16). While organisations now also have to deal with the natural environment, there has been a constantly altering factor all around the globe, increase in costs of the material (Cumming, 2004, pp. 56-71). For this reason, only relying on suppliers may offer quality products; however, this may not allow the company to survive in this competitive business environment. To ensure maximisation of customer loyalty, the managers will have to take cost-effective decisions that are not possible nowadays in complex organisations such as Tesco or Aldi. It is no longer in the human capacity to make decisions without usage of methodological tools of business operations (Burtonshaw-Gunn, 2010, pp. 28-49) that nowadays have become one of the greatest tools of survival and success for the organisations. As discussed earlier, technology (Gharajedaghi, 2006, pp. 47-53) is playing an enormously significant role in almost every sector, and thus, organisations can nowadays benefit from technological tools to make informed decisions allowing them to ensure timely and quality delivery of products at different retail locations while continuing their partial reliance on suppliers for production of quality products. Analysis of Tesco’s operations management system has also indicated utilization of advanced technological systems that are playing a crucial role in allowing the managers to take educated guesses and make effective decisions resulting in customer satisfaction to a great extent and that distinguish Tesco from other organisations in the market. For example, in recent years, Tesco (2014) has introduced various technological tools in its different processes, such as “HHTO stock management system, labour management system of Denver, Damage Control Asset Management System (DCAMS) for goods in scanning, DCOTA which remotely controls the movement of reserved pallets of stock via FLT terminals” (Humby, Hunt & Phillips, 2007, pp. 19-35; Tesco, 2014). In addition to abovementioned system, Tesco (2014) has also introduced “paperless picking that remotely controls assembly of store orders via AMT’s, LPH Loading that remotely manages loading of store orders via AMT’s and ISOTRACK that keeps track of fleet on the road and turnaround, delivery time” (Humby, Hunt & Phillips, 2007, pp. 19-37). Furthermore, ISOTRACK system is one of the best examples of Tesco’s efficient operations management system that tracks every vehicle in the system for timely delivery of the products, as well as timely availability of vehicles that has been crucial in enhancing their efficiency and effectiveness. At the same time, this scheduling and routing system acts as a helping hand in case of any emergency that has helped the Tesco (2014) in staying one-step ahead of other organisations in terms of customer loyalty in the market. Conclusion Conclusively, the paper identified various steps that retail organisations such as Tesco or Aldi may take to maximise their customer loyalty in addition to their reliance on suppliers for quality merchandise. Today’s era is of information and technology, which requires well-informed and timely decisions that are possible with utilisation of methodological tools (Thompson & Martin, 2005, pp. 28-57) and strategies and trained staff as discussed in the paper. In this regard, although suppliers might be providing high-quality products, however, today’s competitive environment calls for extra efforts besides recognising importance of operations management. Finally, it is anticipation that this paper would be helpful for managers and students in understanding the actions that a company may take to acquire an edge from their competitors with the help of effective operations management. References Anupindi, R. et al. 2008. 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