Operations Management and Success in Organisation - Literature review Example

Operations Management and Success in Organisation Introduction The success of an organization is the core goal of every organization. All organisations thrive to achieve success and gain competitive advantage over other firms. This success is largely dependent on the three arms of the business organisations: operations; marketing and finance activities of the company. Over the years the shift has moved to the operations aspect of the management of the business. The operations of the business can be described as the processes that the business engages in. operations, as defined by Kumar & Suresh (2009), is focused the efficient use of inputs in producing outputs of the required quality. Therefore operations management involves the use of the resources in the operations to add value to the process in accordance to the standards set by the organization. It is this factor that most defines the success of the company. The operations management has various factors which are the success factors of the whole process. These factors include the quality t of the products or service; International Standards Organisation Standards certification; Just in Time processes; and most recently quality environmental management of the process. If all these factors are management then it has an impact on the success of the company. The success of the company in this paper will be taken to mean competitive advantage and financial performance of the organization. This paper therefore will review previous literature that has been done to establish the link that operations management practices has with gaining competitive advantage in the global market and the performance of that company. Literature review can be defined as a discussion of previously done literary works on a given subject or topic (Writing Center n.d) that seeks to give the background for study of the topic. This review, according to Birmingham City University, should ideally include comparisons of the different views on the said topic and a critical discussion of the issues raised and identification of possible gaps that need to be filled with any new research (Denney and Tewksbury 2013). The review also contributes to the field of knowledge that is the topic of research (Torraco 2005). This information can either be retrieved from published or unpublished works: academic works, books, government publications or news articles (Denney and Tewksbury 2013). It is this form of resources that will form the foundation that will inform the review. The literary Fund (n.d) outlines that this review involves the steps: a survey of the publications, the collection of this information and analyze the information that is critical to the subject matter. Success factors Total environmental management Within the past two decades, the world over has increasingly gained concerns over the sustainability of industries: which has trickled down to the organisations. The environmental aspect of the process is in relation to the impact of the process and the products of the organisations. Apart from the profitability of the company, many managers have increase become concerned with the sustainability impact as the long term success. Moreover the whole process of an organization includes the use of resources in the production of its products: resources that range from its raw materials to the energy used in the transformation process. There is also the waste material of the organization’s processes that is integrated into the environment. Global bodies have, in collaboration, with governments have put in place regulations that require compliance of companies to these standards in respect of their environmental impact of their activities this include the ISO 9000, ISO 14000(that concerns the environment). There is also the implementation of Environmental management systems (EMS) that seeks to reduce the negative impact of an organization process development (Horvathova and Davidova 2011). The operations management of a company is vital in ensuring that the value of the firm is increased and this value can translate to the profitability of the company. The inclusion of environmental sustainability into the operations management process is critical in determining the quality achieved within the organisations (Corbett and Klassen 2006). The motivation of including the environmental aspect of quality management are the according to Kleindolfer et al. is maintaining the trust and loyalty of the community and the employees in general. The logic is with the increased concerned over saving the planet, any firm that actually contributes to sustainability gains a competitive advantage over the rest. This will especially be beneficial in reducing the costs of the organization during the process development (Kleindolfer et al 2005). The sustainable Operations management therefore includes people, profit and planet which are concentrated on the strategy of environmentally friendly products and processes; sustainable operations; sustainable supply chain management (Kleindolfer et al 2005). Research (pagell et al 2004; Christmann 2000) has shown that indeed the firm gains profitability when it chooses to have sustainable operations. Social sustainability has also proven to be beneficial to organisations in creating the responsible image of the organization. Moreover sustainability has an impact on the perceived quality of the organisations product. Pagell and Gobleli (2009\0 showed that the operational performance of a company is strongly linked to the environmental and social performance of the organization. The environmental management of the firm can also impact on the performance of the firm by increasing its competitiveness (Corbett and Klassen 2006). However this link and interrelationship is not always straightforward as it involves other factors to be considered. Corbett and Klassen (2006) asserts that environmental managements can impact success in an Organisation through creating new markets, cutting costs involved in waste management or through gaining a competitive advantage over the other firms. The ISO14000 as an international standard has been used to assess how an organization performs in terms of its environmental responsibility. The standard focuses on the management system, operations systems and the environmental systems of the organisations. However the impact of the adopting the ISO certification is not necessarily beneficial to the performance of the company (Corbett and Klassen 2006). Financial performance can be improved from TQEM inclusion given the increase in demand for goods that are in compliance with green retailing (Lai et al 2010). Research by Powell et al (2000) showed that companies that complied or adopted the international standards showed to have high value in the stock market. Adoption of the ISO certification cans also reduce the costs associated with compliance with the many regional regulatory requirements on environmental protection (Corbett and Klassen 2006). Total Quality management The quality of a product or service can be defined as receiving a good or service that matches your willingness to pay. Otherwise put as that level of the product or service for which the customers’ expectations are met. Therefore total quality management can be defined as the processes that an organization applies in improving quality that meet the consumer expectations along its quality measurements (Duarte et al 2009). TQM is part of the internal practices that firms can use in the developing their competence (Duarte et al 2009). The dimensions of quality have been identified to include performance, appearance, reliability, perceived quality, durability safety and conformance (MCU n.d). The interrelationships of TQM and performance can be evaluated in terms of its impact on the organizational outcomes, financial performance and operational performance (Gharakhani et al 2013). TQM can either influence the performance of an organization and its success based on the customers perception or its influence on its processes (Gharakhani et al. 2013). TQM is instrumental in increasing customer satisfaction (Fornel et al 1994) which could translate to client loyalty and eventually increase the profitability of the company. The quality aspect is one of the key elements that contribute to the competitive advantage of the organization, therefore the TQM practice that a company practices has the possibility of impacting on the organizational performance of the Organisation. A research carried by Powell (1995) proved that although the contribution of TQM to competitive advantage is not sustainable, there are elements of TQM that contribute to the culture and skills within the organization. The weak correlation between TQM and market performance of companies was confirmed by research dine by Sila (2007) which found that TQM increased organizational outcomes but does not translate to financial performance. Duarte et al (2009) on their research on various factors of operations management on performance of firms in Brazil showed that there was no positive relationship between OM and firm performance. However research done by Ittner and Larcker (1996) showed that indeed TQM has a positive correlation with the profits of an organization while Easton and Jarell (1998) showed an improvement in corporate performance for firms that implemented TQM. The compliance of organisations to the internal Organisation of Standardization standr5ads has also been shown to impact on the performance of the organisations. The ISO 9000(duality) is most critical in this. ISO 9000 requires the customers need are met in the production of any product, which is in line with the quality of the product. There is evidence to show that t5hose firms that comply with the ISO certification stand a higher chance of performing better than those without certification (Heras et al 2000). Third is however only beneficial to large companies that can afford the costs of attaining such standards. In respect to global markets and competitive advantage, those firms that have acquired ISO certification gain a higher chance of competing against other multinational on the global scale. Furthermore, the assurance that comes with the certification promotes profitability for the company (Duarte 2009). A research carried out by ISO organization (Manders and Henk 2012) that an ISO certification enhances the financial performance by lowering costs of controls , improving internal process increasing sales and signaling quality. However, studies done in USA have shown to the contrary of ISO organization findings: Han et al (2007) found that ISO certification and firm performance had no relationship. A different research (Dunu and Ayokanmbi 2008) showed that there was increased performance after certification but they could not find evidence that this improvement was directly due to the acquisition of the certification. Karim (2015) asserts that the variations in the impact of standardization on the financial performance have a lot to do with the motivation with which the certification was sought. This implies that ISO certification in itself cannot contribute greatly to the performance of the company if the motivation behind its adoption is not aligned with the goals of ISO. Some companies adopt these stands out of customer’s pressure or industry pressure but they do not implement. There is however limited research on the relationship between outsourcing and the operational performance of organisations. Kotabe (1992) defined the outsourcing activities of an n organization as the supply of components of finished products to the organization by different and independent suppliers. Ideally organisations decide to outsource so as to reduce their costs and acquire better quality of those components. This further enhances their competitiveness in the market (Kotabe 1992).however a research on small size firm (Isaksson and Lantz 2015) on the impact of outsourcing on financial performance found no relationship between the two variables. Supply Chain management The other success factor apart from the TQM and the TQEM quality practices, there is also the Supply Chain management (SCM) quality that has an impact on the performance of organisations. This SCM integration can be describe to mean the degree to which a manufacturer strategically collaborates with its supply chain partners and collaboratively manages intra and inter organizational processes (Flynn et al 2010) .therefore SCM can be classified to include internal or external: where external integration is the SCM practices between the manufacturer and the customers and the suppliers (Flynn et al 2010; Li et al 2004). Internal integration on the other hand implies the ability of the Organisation to synchronize its procedures, information and decisions within areas of activity in order to meet the needs of the clients. It is the combination of the internal and the external integration practices that make up the SCM practices of an organization this has in the recent past also included the green SCM (GSCM) that incorporates the sustainability practice of the company into the objectives of the firm.. The SCM process is taken to include the transformation of the inputs to outputs and it is an integration of the suppliers, producers, distributors and customers. Frohlich and Westbrook (2001) in their research showed that the SCM integration has an impact on the performance level of the organization. The inclusion of various SCM policies in terms of suppliers’ management has a positive impact on the competitiveness of the organization with regards to the costs, quality and delivery of the supply services. However the result of a survey carried out by Martin and Patterson (2009) showed that there was no relationship between SCM and the performance of the firms. The survey focused on the SCM practices that the companies had applied with regard to performance measures. Evidently, there is some correlation between the SCM practices of an organization and the competitive advantage and organization performance of the organization. Furthermore, there exist an interrelationship between competitive damage and the organizational performance. An empirical research carried out by Li et al (2004) showed that firma that SCM directly impacts competitive advantage and organizational performance. However the extent of this impact and correlation may vary depending on the size of the company, the industry of operation and the type of supply chain practices applies. Generally, the larger the firm the more the organization is likely to benefit from its complex advanced SCM integration practices (Li et al 2004). Otherwise up, large organisations enjoy greater impact on competitive advantage from their SCM practices and therefore high levels of organizational performance. Moreover, the greater the competitive advantage position of the organization, the higher the level of it performance (Li et al 2004). Shi and Wu (2013) in their review of the relationship between financial impacts and SCM found that there exists a close relationship between financial performance and effective SCM practices. In particular, the practice of integration of technology, outsourcing and SC relationship management were significant in determining the financial impact of the SCM. Unlike Li et al (2004), Green et al (2008) found that there is no direct relationship between SCM and financial performance. Instead, results showed that SCM and logistics operations had a positive impact on the marketing performance of the organization, whose multiplier effects would benefit the financial performance of the company. Conclusion The operational management of an organization has within the last few years developed an increased research interest on its impact on the performance of that company. This aspect of the company has been said to contribute to the performance of an entity in equal, or more, measures as the marketing and finance aspects of the company. Therefore the interrelationship that is achieved from the effectiveness of this aspect cannot be underestimated. OM in general included focus on the quality managements, supply chain management, strategy control especially on production such as the Just in Time strategy, the environmental management and the product or service design. All these aspects have in one way or another have an impact on the overall impact of operational management on performance. The quality of OM will ultimately benefit performance especially in regard to gaining competitive advantage and organizational performance. The quality management factor has direct and positive correlation with performance while environmental management only links performance in competitive through customer perception. However the extent to which environmental management affects performance is dependent on the motivation that was behind the adoption of the measures. The Supply chain management and process also plays a significant role in achieving growth and success in an organization. It has been established that indeed SCM if well practiced van gain the organization a competitive advantage. Given that competition is no longer between firms but on the basis of supply chains, then SCM cannot be underrated in determining performance. The paper has extensively shown that indeed the quality of the operation management does contribute to the success/performance of an organization/entity. References Birmingham City University Center for Academic Success Study Guides: writing [online] available from: library.bcu.uk/learner/writingguides/1.04.htm Corbett, C. J., & Klassen, R. D. (2006). 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