The Essence of Operations Portfolio in an Organisation - Example

MANAGEMENT Student’s Name Course Professor Date Introduction Operations management is generally a section of management that is concerned with the overall supervision and improvements of business operations as far as production of goods and services is concerned. It encompasses the responsibility of making sure that business operations are up to date in terms of resource utilisation, and effective in relation to meeting the requirements of the customers. It is therefore concerned with handling the critical process that converts inputs into outputs. The highest-level of management in an organisation shape the operational strategy and amends it from time to time, while the operations is concerned with making well thought decisions to resourcefully help in carrying out the strategy. In organisations there is no distinction between the levels for strategy is tactically formed by dynamic information and movement between roles by individuals in an organisation. The essence of operations portfolio in an organisation An operations manager, as indicated by the informal role of Chin in Classics Cabinets Pty Company typically involves ensuring smooth operation of the processes that determines the production of goods, and in the case of the company, kitchen cabinets. In fact, an operations manager’s role is very wide and includes many areas of operation. While other working force of an organisation can focus on a specialized operational area such as systems support, an operations manager’s job typically puts on multiple tasks which are about everything. Therefore, the role of an operations manager has tremendously changed due to the onset of globalization, for it has accelerated stiff competition amongst businesses. Due to this, a business manager is therefore expected to execute responsibilities that stretch beyond normal job description. According to The Economist (2005, p 14-27), operations functions of an organization are concerned with smooth operations of activities geared toward production of goods to the satisfaction of the customers. A misconception has been that operations management basically concerned with tactical, day-to-day and short-term issues. This is not the case considering the role of operational management in respect to its strategic significance. Classics cabinet company just as other business organizations is mainly concerned with future survival and prosperity. In order for a business organization to survive well in the market, it is imperative to adopt good strategies. A business strategy is definitely thought of as a set of intentions that will propel the long-term path of the organisational actions that are required to ensure organisational success. However, the success of organisational strategy can not be realised in practice without operational enactment. The operations of an organisation are strategically significant because most activity comprises the daily activities that falls within the boundaries of operations function. The long-term strategic course of an organisation is determined by the many daily actions of operations. The relationship between business operations and strategy is a critical determinant in survival and achievement of long-term success. Business success may only be realized if short-term business operations activities are in line with the stipulated long-term strategic agenda. The relationship between other business functions and operations is also equally important. The main objective of the functions of operation concerns production of goods and services that is needed by customers with a keen eye on efficient management of resources. Marketing functions generally centre on the need of marketing in order to ensure that operations only focus on customer satisfaction. Although this may look desirable, marketing will strive for operations to have the ability of meeting the needs of the customer under any given conditions. As witnessed by the Classics Company, customer satisfaction will automatically lead to higher demands of producing more volumes of goods, higher quality, more variety as well as faster response time. All this factors if not adequately addressed by the operations manager may quickly translate to less efficiency in operations. Conflicts would then infiltrate into the finance and accounting functions as there would be a desire by the accounting and finance to compel the operations to ensure efficient of management of resources as much as possible. This will tend to pull operations in exactly the opposite direction of that desired by marketing. Conflicts between production resource management and operations function are most likely to revolve around issues of business operations so as to maximise on profitability. For example, as for the case of Classic Cabinets Company, an operations manager may consider the need of varying the policies of an organization such as starting a new line of production so as to meet the demands of a certain clients. Such a move if not strategically planned can result in conflict of interests as human resource available may not have the ability and capacity to implement the program. The function of operations lies at the center of any business organization, thus mutually interacts with the other functions. In relation to that, striking an agreement about the decision domain of the operations and the basis of decision-making is an important part in ensuring action consistency for a successful organizational strategy such as institution of a new product line. The roles of operations manager are therefore quite diverse. An operations manager should ensure that all the necessary tools of production are in good form and therefore have the ability of producing quality goods and services to the satisfaction of the customers. He or she is also required to coordinate with the personnel of quality control in ensuring that goods meet the stipulated standards as well as generation of positive response from clients. An operations manager is expected to positively interact with the workforce, assess and prepare reports on the existing condition of logistics, and need be, make a quick decision on what to be done. It is clearly evident that the operations manager of Classic Cabinet Company failed in that aspect for the company’s premises being littered with unfinished products demonstrates operational weaknesses. The operations manager is mandated to obtain all requirements pertaining to coordination and logistics of an organisation. He or she is mandated to ensure that quality working equipments are procured to produce quality goods. Apart from management of logistics, the operations manager plays a critical role in crafting out the general operational policy of an organisation. For example, Chin as the operations manager of Classics Cabinets Company should determine the human resource capability in production of goods to avoid backlog of unfinished products that may jeopardise the organisational policy of quality. Such a manager could also come in handy in formulation of useful suggestions on how to optimize use of an organization’s resources (Leonard-Barton 1992 , pp23-38). In most business organizations such as Classics Cabinets Company, operations managers are supposed to adequately manage support services. Each support service of an organization has its own well stipulated main responsibilities and capabilities areas that in the long run contribute to the goals of the business. It is the duty of the operations manager to ensure maximum utilization of the output of the diverse support services such as human resource and finance. For example, the operations manager may in consultation with the production personnel procure machines that can reduce time taken in making the cabinets so as to reduce the current manufacturing period. It is normal for most business organizations to make use of third parties thus it is the duty of operations manager to ensure smooth operations of the third party relations. Such third party services include security. It is the work of an operations manager to ensure that accepted procedures are strictly adhered to when an organisation hires third parties. Also, such a person should also ensure that the required legal and administrative formalities are carried out. It is the duty of the operations manager to ensure that there is proper execution of the agreed terms and conditions of contract by the third party. As evident by the way Chin is carrying out her duties as the operational manager of the cabinet making company, the fulfillment of what is expected as a result of many functions seems to be one of the most challenging aspect of the job of being an operations manager. While the operations manager may not be an expert in every field, the general expectation to perform well in all the assigned duties and roles must continuously pose new challenges to the job holder. Chin, although is being short-sighted by the increased sales, the accountant has correctly pointed out to the challenge posed by packed factory house due to unfinished products and not selling to the full capacity as a result of increase in production time. Many business experts therefore believe that an operations manager role is currently one of the most challenging roles in business organizations (Mills et al 1998, p1067-1085). Improving the company’s operations Besides the willingness and ability to own mistakes, the success of a business venture is solidly based on the training and dedication of the workforce. The first thing that matters is customer service. It is in this aspect that untrained operational managers such as Chin should strive to acquire further training so as to ensure efficiency in operations in line with modern day business dynamics. Induction and training workshops are very vital for both the management team and the workforce as they test and affirm character and service orientation. Classics Company as illustrated started as a small venture with a small target market in a foreign country, but as demand grew, it has been forced to diversify and serve the general market with its philosophy of quality products and service to clients. The obsession of satisfying the market demands has led to the company taking more orders than it can satisfy in terms of production capacity hence the need to make uniformed decisions by the operations manager to only concentrate on the first moving products and leave the others half-finished (Cohen and Levinthal 1990, p128-152). For the two brothers of Classics Cabinet Company, investment in good quality means good slice of the market. As discussed in the case study, the company must be offering good packages for its workforce as there is no mention of pay related problems. Since this is a good motivation and an indicator of employee retention, it is the operations manager together with the general manager to enhance their managerial roles for efficiency in production and other services offered. Although management of the human resources has not become a challenge, but as noted by Manfred and de Vries 2003, p19), the inefficiencies in operations may make the company start having problems with it as it has the appetite of more market reach with reorganization of its production operations. For example, its market expansion requires hiring of more workforce and machinery to complete work in good time to minimise operational costs. Also, policies for additional workforce hiring to speed up production during peak periods when demand is very high should be considered by the operations manager so as not make the company’s factory space be congested. This can be of great danger to the staff ( Teece and Pisano 1994, p 537-556). The company executives believe that the relaxed style of management and flat organizational structure is adequate to react speedily to market dynamics on a daily basis. As evident, there is no professional distinction of duties as well as separation of management roles in Classics Cabinets Company; rather their roles are based on assumptions with no clear guidelines of mandate and jurisdiction. It may be lauded that Classics Cabinet has achieved tremendous success with a clear distinctive competitive advantage as a result of good service and value-for-money to customers. Its commitment to excellent service has been reflected in a long list of service-related awards (Mills et all 2002, p 113-145) The company may well be ranked one of the best in Melbourne when it comes to being innovative in meeting the needs of the customer, but the current trend of not completing orders in good time is a good example of the down spiraling of the operations. As is the case, a good manager should be a critical thinker as well as a good learner. In order to ensure that the company provides excellent customer service, it is imperative for the company to conduct performance evaluations at stipulated times lets say twice in a month. Customers can also be provided with a forum to evaluate the company. The suggestions and opinions received from the feedback cards filled by customers can be used to improve the company’s efficiency (Clark and Johnston 2005, p120-129). In relation to the suggestions made by Leong, Snyder and Ward (1990, p 109-122), the company’s operations manager can be able to ensure the provision of value-for-money trading by adhering to ethical policies of doing business such as maintaining products quality through stringent cost control and avoiding unnecessary increase in the cost of products. For instance, since the company is suffering from shortage of factory space due to unfinished products, it can benefit from a policy of target management so that all orders are finished in time so as to maximise on the available space by not renting a warehouse which in effect is very costly to the company. Company stocks should be replenished from an organized distribution place. This is the point that, although not mentioned in the case study, but modern organizations must embrace the use of information technology (IT) to skillfully and professionally manage the inventory and demand forecasts (Hayes et al 2005, p36-121). When products are sold, the barcode information is wired to the main computer of the company. The benefit of this information is found in the relative ease of doing stock analysis. The close integration of information systems can enable Classics Cabinet Company to drastically reduce the stress of slow-selling products piling in the warehouse. Savings that can result from efficient inventory policy can then be passed to benefit customers, which in principle can adequately reinforce the philosophy of value-for-money (Barney 1991, p 99-120). According to Slack, Chambers and Johnston (2004, p 68-104), when a business organisation becomes prosperous, there is always an urge to expand the areas of operation by expanding the product and services line as noted by Classics Cabinet manufacturers, so as to sufficiently meet the needs of the customers. Nevertheless, the company should just retain its tradition of keeping the stores simple, getting excellent results out of limited resource base and careful management of inventory. The company operations manager as well as the general manager should not strongly believe that selling a wider range of goods can make consumers to react faster to market changes. Developing an operations strategy One of the key questions one needs to ask about the main decision areas in the portfolio of operations management concerns what to be considered when a business or non-business organisation is in the process of developing an operations strategy. Although there so many classifications, scholars in the field of operations management generally agree (e.g. Leong et al., 1990) that the fundamental strategic decision areas in operations can classified into ten groups under two broad categories: the first one is structure and it encompasses the hardware or physical attributes of operations and the second is infrastructure which includes the workforce and other systems of operations such as IT. According to Ohno (1995, p 13-27), structural decisions generally involve major decisions on capital investment, which once decided up on is the pace setter for the operations of the company for a long time. They have a long-term effect on capabilities and resources of an organization, thus determines an organisation’s future potential output. When such decisions are made and implemented, it may be expensive to change them as they are strategic decisions of a business organisation. What the operations manger of Classic Cabinets Company should realize is that it may be relatively easier to change the marketing strategy such as the target market than it is to change operations strategy in respect to the structural decisions made. Key business infrastructure decisions include: Planning and control: the kind of systems required for planning and controlling the operations. Quality assurance: includes quality management practices and policies. Work organization: Includes organizational structures, accountabilities and responsibilities in operations. Human Resources: Encompasses recruitment and adequate selection, style of management, and training and development. Development of new products: the procedures and systems used in developing and designing of new products and services. Measurement of performance: Management of financial and non-financial performance as well as its linkage to reward systems and recognition. The issues highlighted are also significant to a business organization. It is relatively easy to change infrastructural aspects of operations than is for operations structure, thus the operations manager of the furniture company has a lot of work in implementing new policies. The market-led perspective is a good example where the development of operations strategy is carried out in response to the prevailing market environment that an organisation operates. Although there are very many literatures on approaches that offer suggestions on how it might be done, the best piece is that of Terry Hill (1985). He suggests that the operations strategy of an organization should be comprehensively linked to the marketing strategy. This should be done in full consideration of how the products and services can attract substantial sales in the market place. He believes that here is a possibility of identifying the types of competitive criteria in a given market, thus market qualifying criteria which refers to factors that must be conditionally satisfied prior to customers considering making an order. Order winning criteria, which are the second one, are the key factors on which customers fully rely on to the buying decision. For example, for the Classic Cabinets Company, the order winning criteria is making cabinets to the specifications of the customers, with criteria such as good pricing, time of delivery and pricing being market qualifying criteria. Consequently, the development of operations strategy should aim at satisfaction of market qualifying criteria, but good performance at order winning criteria for any market segment (Chase, Jacobs and Aquilano 2005, p 41-82). An approach that substantially audits products and services that a business organization offers in the market has been used by Platts and Gregory (1990). It was done with an aim of identifying any loopholes between market requirements for any products and services and the organization’s operations performance in the delivery of the same products and services. The market requirements for a given product are adequately analysed in relation to the various competitive factors notably quality, cost and reliability. The assessment of the performance of the business organisation’s operations is then assessed. It has also been proposed that operations strategy should be devised in such a way that it can enable the operations to be at par with the degree of performance expected by customers (Koontz Harold and Weihrich Heinz 1990, p 54-119). Why resource-based view in operations The essence of the resource-based view (RBV) is due to the fact that quality performance is derived from the way a business or non-business organisation acquires, develops and builds its capabilities as opposed to the way it positions itself in the market (Barney, 1991; Wernerfelt, 1984). Owing to this, the strategy development process should be based on a good understanding of the operational capabilities and an analysis of the possibilities of their future development. This can resourcefully provide the platform for informed decisions in regard to the likely markets for deployment of current and future capabilities (Hayes et al., 2005). Mills et al. (2002) also developed instrumental methods through which business organsations can effectively apply such concepts in practice. This includes undertaking a thorough resource analysis that has influenced a business unit’s activities for a long period (Gomez-Mejia 2008, p19). Therefore, categories of resources that are fully dependent on each other are experience and knowledge resources, tangible resources, procedural and systems resources, network resources, values and cultural resources and other resources vital for change. Such resources should then be evaluated against versatility, sustainability and value. In effect, resources that can independently or dependently record high scores in the criteria are then considered to be vital resources. They are therefore sources of potential competitive advantage to a business organization (Ferdows and de Meyer 1990, p168-184). The need of scientific management theory in operations The first management theory developed by Frederick Taylor is referred to as Scientific Management. This theory is very practical in application when one considers the managerial systems being applied by the management of the Classic Company in their daily operations. He is honoured for starting the modern era of management as he lamented the inefficient and awkward of people as a big loss. He therefore advocated for the removal of a system of management he called “by rule of thumb” and effectively replace it with a well thought and planned management practice. Taylor also advocated for the systematic training of labour force to offer them one line of practice as opposed to allowing them to perform tasks independently. He also believed that a business organisation’s workload would be shared evenly between the management and the workers, with the former performing what he termed as the science and instruction and the latter performing the labor hence each party performing its role without any interference (Stoner et al 2003, p 65-78). Conclusion It should be noted that the publicly desirable and logical aim that any manager such as Chin would aim at both in business and non-business organisations is excellence in operations. Thus, any managers must ensure an establishment of conducive environment where employees can comfortably without due stress accomplish the goals of the organisation within the shortest time possible using the available resources. In a business enterprise, critical units such as accounting department have very noble goals and must strive to accomplish them. Such departments can provide timely advice to the management team on operational standards so as to maintain good work ethics and profitability for business organizations. Bibliography Barney, J. 1991, ‘Firm resources and sustained competitive advantage’, Journal of Management 17:99–120. Chase, R., Jacobs, R. & Aquilano, N. 2005, Operations Management for Competitive Advantage (11th Edition) New York: McGraw-Hill. Clark, G. & Johnston, R. 2005, Service Operations Management: Improving Service Delivery, Harlow: Pearson Education. 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