Managing Operations and Quality - Case Study Example

NАGING ОРЕRАTIОNS АND QUАLITY- WH SMITH CASE STUDY Student’s name Course Professor Institution’s name Date МАNАGING ОРЕRАTIОNS АND QUАLITY- WH SMITH CASE STUDY Executive summary This paper aims at studying the operation and quality management at WH Smith, which was founded in 1792 by Smith Family and became WH Smith Company in 1828. WH Smith operates at several high streets, shopping centers, and railway stations. WH Smith is a company dealing with book retailing and news agency. The main WH Smith store is located in Swindon. Operational activities are an important aspect of any organization. Operations management are the activities that are carried out by an organization to create the highest efficiency levels with the available resources (Doran, 2014). Operations and quality management are all about the utilization of the available resources to produce optimum profits. Management of operations in organizations involve planning, controlling, and organizing operations. To ensure that the efficiency and functionality of the organization are sustained WH Smith employs operations management. The efficiency aspect at WH Smith covers the utilization of resources including raw materials and human resource to gain maximum revenue. Through reducing the projects that are less profitable, WH Smith can cut down production costs. This report examines WH Smith through several operations management tools including the IPO process, the four V’s, three E’s, five performance objectives, and a layout and design process of the stores. Recommendations are then provided including layout changes, incorporating linear programming systems, and minimization of inventory as a flexibility maintenance technique. Contents Introduction 4 Statement and Analysis 4 IPO Process at WH Smith 4 Input 4 Process 5 Output 5 WH Smith’s 3Es 6 Economy 6 Efficiency 7 Effectiveness 7 Performance Objectives at WH Smith 7 Four V’s 8 Volume 8 Variety 9 Variation 9 Visibility 9 Process Design/System Design and Observations 10 Recommendations 11 Implementation Plan 13 Conclusion 14 References 15 Introduction The purpose of this report is to analyze WH Smith as a company in general, but the focus is on its stores especially the main store in England, Swindon. There has been a drop in revenue for the company especially due to increased competition and failure of the company to integrate online selling at the required rate. This drop in revenue has forced the company to shift its focus into the online selling of its products since that is where the world is headed. Operations and quality management is an important part of WH Smith in its attempt to take the company back to its high performing years. Through operations and quality management strategies, the company has shown significant improvements over the past few years. Below are an analysis and recommendation report on WH Smith Company. Statement and Analysis IPO Process at WH Smith The IPO process entails the Input, processing, and output (Doran, 2014). Input Input at WH Smith entails the raw materials required by the company for the production process for example the books, magazines, pens, files, print paper, and other types of stationery. The company needs to acquire raw materials from distributors that create value for money. WH Smith does research first on the distributors then selects the distributor that provides quality raw materials at the lowest price. It is essential for all organizations to acquire raw materials at the lowest cost possible to minimize the cost of production, which will, in turn, allow the company to maximize profits; this is the main function of operations management. Another utility at the input stage is employees or what can be referred to as a human resource. WH Smith has put in place strategies to manage its employees and ensure that they produce at the highest level and therefore earn the company maximum revenues by beating competition from its rivals. Managerial activities and resource allocation also make up the input stage of WH Smith. The company has ensured that it has effective management strategies that ensure the smooth operations of the company. Since WH Smith is a profit making company that deals with book and other stationery retail and news agency, management of the company's operations is essential and this is proven through the revenue that the company records each financial year. Process The process part entails transforming the input aspects into products that are now sold to make profits. For WH Smith the process involves innovation, machinery, and the managers processing strategies that are provided by the managers. The company’s machinery include cranes and motor trolleys used for transporting books and stationery around the store and arranging the stationery on the shelves is essential at the process stage. The stationery are shelved and marked depending on the categories for example poetry books are in one shelf, pens in another, Christmas and birthday cards on their own shelves, and so on. Innovation is critical for any business entity and for WH Smith there is no difference. Innovation for WH Smith mainly involves finding new strategies that can be used in the presentation books, magazines, newspapers around the store. Besides, innovation is also important in the designing of marketing strategies to improve sales. For WH Smith these strategies are generated and applied by the company's management. WH Smith ensures that the production process is at minimum cost to maximize the sales of its products. Output The output entails the final product that is sold by the company to gain revenue. For WH Smith its products include books, stationery, newspapers, and services that are provided by employees. Employees provide services to the company's consumers including customer care services, which need to be quality since the company gets its value from the customers. The company also needs to give value for money to their customers. WH Smith customers choose the company because it provides quality products including books and stationary. Pricing is also essential at the output stage and since WH Smith is an established brand, most customers are not concerned by the prices but the quality of the products that the company provides. The company ensures that it values the customer at this stage and that is what provides the company with maximum revenue. Strategies are also required at the output stage mainly strategies to deal with the marketing of the products. Marketing is essential and enables companies to gain a competitive advantage over its rivals, therefore, increase its profits (Elearn Limited (Great Britain) & Pergamon Flexible Learning, 2005). IPO Process INPUT PROCESS OUTPUT Employees Raw materials e.g. books, magazines, newspapers and others from distributors. Operational store Managers Innovation Machinery Managers processing strategies Services provided by employees Products e.g. stationery, books, and newspapers already priced and shelved. WH Smith’s 3Es The 3Es of operations management includes efficiency, economy, and effectiveness (Mohammed, 1988). Economy Being economical entails ensuring that all company processes are carried out in the cheapest way possible and avoiding unnecessary spending and use of resources (Mohammed, 1988). WH Smith ensures that it is economical by reducing unnecessary spending through different measures and strategies. By canceling projects that are less productive, WH Smith has been able to save and therefore become economical in its processes. Efficiency Efficiency is the ability to produce as smoothly as possible with minimum losses as possible (Mohammed, 1988). WH Smith has been able to do away with several activities and processes that were far from ensuring that the company obtains high-quality finished products. Besides, the company has been able to grow at a constant rate because of proper management strategies. Through several managerial decisions from executives, the company has been able to reach almost perfect production levels. Effectiveness Mohammed (1988) explains effectiveness as an aspect that involves ensuring that processes are done as close as possible to perfection and the product or service at the output stage is not far from the customer needs and demands. WH Smith has been able to gain a competitive advantage over its rivals in the book retail and news agency industries by ensuring that the decision-making process is proactive. The effectiveness of the company is attributed to promotional and marketing strategies and innovation through online shopping. Performance Objectives at WH Smith Performance objectives for organizations include speed, cost, dependability, flexibility, and quality (Slack et al., 2007. Cost The cost of an organization includes the expenses needed by the company to provide the customer with the products they need. Since the number of competitors in the news agency and book retail industry is very high, WH Smith has always been focused on ensuring the cost of production is low to increase the profits. The prices of the company’s products are reduced through online selling which provides the company with an edge over many of its rivals. Speed The speed of the production process is important for every company and WH Smith is has built a speedy process of product delivery and raw materials acquisition that has driven it into one of the leading newspaper and book retailers. The fast distribution network has created customer satisfaction thereby increasing the company's revenue. Flexibility WH Smith has a flexible production process, distribution channel, and service provision networks that can change in case of changes in the customer demands and needs. Flexibility at WH Smith is one of the highest ranked performance objectives. Dependability WH Smith has been able to integrate the customer’s demands, needs, and feedbacks to create a sense of dependability from the customers. Customers can count on WH Smith at any time to fulfill their requirements. Therefore, the company increases customer satisfaction through dependability. Quality The quality of the products at WH Smith is not questionable, as the company has put in place important strategies to ensure that it produces high-quality products and services to the customers. Customers’ view of quality when it comes to print media and books is all about the paper texture, the information found in the books and newspapers should be of quality. WH Smith has been able to raise costs by acquiring quality books and stationery which is a very hard strategy, especially in the competitive market industry that the company is involved in. Four V’s The four V’s of operations management include variety, volume, visibility, and variation in demand (Heizer & Render, 2004). Volume The volume of output as WH Smith including products and services is high, and this leads to high repeatability levels. At WH Smith, there are high-volume processes that result in low costs per unit production of products and services. The repeatability levels at WH Smith enables the company’s employees to get experience and specialize in their tasks and this, in turn, leads to activities of the company to be streamlined. At the company, there exists a manual that is clearly designed and explains the duties and performances of each task and this is essential in reducing the cost of production. Besides, there is an improved efficiency in the production process, which mainly entails acquisition of books, newspapers, magazines, and other stationery and shelving them to appeal to the customers. Variety Variety is all about the diversity of the products and services. For a high variety of products and services to be produced, an organization has to involve itself in a wide range of activities. Variety at WH Smith is not much of an operational factor since the company specializes in the retail of print media, books, and other types of stationeries. The only variety at the company is the sale of different types of books and stationery. Besides, the company also provides a variety of customer care services. WH Smith Company does not thrive on variety but on the production of high volumes of products. Variation Variation is the most challenging issue of process operations management and dealing with customer requirements, and demands are the main aspect of variation. WH Smith deals with variation through its ability to be flexible. The company has a flexible production process, distribution channel, and service provision networks that can change in case of changes in the customer demands and needs. The flexibility of the company enables it to deal with variation issues that may result from variation of customer needs and demands, distribution process, and price fluctuations of both raw materials and products in the ever-competitive market. Visibility These are the general company’s processes that have a direct influence on the customer. The provisions of direct services for example in the healthcare industry is one of the most visible service industries. Nevertheless, product provision and processes of transforming information also lead to customer visibility. The operations at WH Smith can be classified as both high visible or low visible. High visible entails the customer service provided to customers who visit the store to purchase the books and newspapers. The customer service is classified as being a high visibility process since it has a direct influence on the customer (Johnston & Clark, 2005). The sale of products to the customers is a low visible process, and other examples include loading of shelves and cleaning of the stores. Overall, the company’s visibility can be classified as average since it entails both highly visible and low visible processes and operations. Process Design/System Design and Observations The process design or system design is a group of parts or functions that perform independently but are set to achieve a common purpose. Customers that do not want to visit the stores can order the books or any stationery product online, and they are delivered to their locations. Besides, customers can buy the digital books online. Customers that visit the stores physically first check in at the reception located at the front of the stores where the customer service employees can direct them to the location of their choice of book. Regular customers can go directly to the shelves since they have complete information on the layout of the stores. Once the customer has selected the book or newspaper he or she requires, he takes it to the cashier located at the reception of the stores where he or she will be sold the book and given the receipt. The average time taken to serve the customer at the cashier table is about five minutes. A bench is also placed near the reception where customers can relax and review books before purchasing. The shelves at SH Smith Swindon store are arranged depending on the category of the stationery and further classification. For example, poetry books are put in one shelf; there are specific shelves for the cards section labeled card market as shown in Appendix A. After being at the store for twenty-four hours, I also observed that most of the customers visit the store from 6pm to 10pm; during these hours, many people have finished their daily activities. Most of the customers were aged between 35 to 60 years and this prompted me to interview the store manager. During the interview, he told me that their own research has concluded that the youth prefer to purchase books and newspapers online on their laptops and smart phones as opposed to visiting the store. The company’s reports also provided useful information regarding the issue by suggesting that the number of online sales is rapidly growing and would be the main mode of selling their products by the year 2020. Sample layout of the SH Smith Swindon store is as shown below. Pictures of the stores arrangement can be found in the appendix A and the daily operational hours in appendix B. Recommendations The first recommendation is that the company needs to renovate its stores but has to be planned. The renovation can otherwise be referred to as layout changes. The changes can be relocating the shelves in a different plan to ease movement in the stores, and this is an issue of quality improvement and improves operations in the stores (Ho, 1999). Creation of an open environment will be essential for the company and makes the managing process easy at the same time improving communication efficiency in the stores, as the employees will be able to communicate easily with one another. Apart from the shelves, other parts of the stores that need repair include the ceiling, floor, exterior walls, and the checkout area. WH Smith should also be able to maintain flexibility, and this means that it has to make space for new conditions. The company can reconfigure the design of its stores to accommodate change. The change can be in terms of new products or a new mix of products that the company produces. To create more space, WH Smith can also minimize the inventory that often takes up a lot of space in the stores. Inventory is inevitable since it is essential in allowing effective operations but too much inventory, in turn, leads to ineffectiveness as it interferes with the flow of raw materials and the products, which include print paper, newspapers, magazines, and books. It is essential for WH Smith to minimize its inventory especially manual inventory and apply information technology innovations to manage the inventory, which will allow for the creation of more space in its stores. SW Smith should be able to improve its online selling platform since from the observations; it has projected it as its main revenue earner by 2020. Innovation and increased allocation of resources to this platform is necessary if the company anticipates a substantial increase in revenue by the same year. Finally, WH Smith can also introduce linear programming to its systems. Linear programming can generally be described as a mathematical system that can be used by management for purposes of decision-making. Linear programming will go a long way in helping WH Smith minimize its production cost, which will, in turn, lead to profit maximization. This system uses innovative technologies that allow managers to calculate sales units and prices easily, which leads to an increased company revenue. Issues of prices and costs that the company has been struggling with will be dealt with by the use of linear programming. Apart from normal store prices and sales, linear programming can also help WH Smith in solving issues such as purchasing trucks used in the distribution process. Implementation Plan Recommendation Resources needed Time needed to Implement Advantages Barriers Linear Programming Systems New systems, training of staff, and new I.T technicians. 6 months Profit maximization. Helps in the decision-making process for the managers. The systems are expensive, and staff training is required which leads to increased cost of production. Renovation and Layout Changes New layout plans, labor, and new shelves. 1 week Improves communication between employees. Quality improvement by making customer movement in the stores easy. Also, requires more money, therefore, can be termed as expensive. Flexibility through minimizing inventory. Digital inventory systems, training of staff and labor. 2 months Effective store operations by creating more space in the stores. Expensive to create digital inventory systems. Employee resistance to change. Conclusion In conclusion, operations and quality management are essential for every profit making organization since the processes entailed are aimed at reducing costs and maximizing profits. Through several tools of operations and quality management including the three E’s, Four V’s, and the five performance objectives, WH Smith has been able to effectively manage its operations, and quality is an effective manner thereby increasing its revenues. Recommendations including minimization of inventory, changes in layout, and integration of the linear programming systems are some of the ways the company can improve its operations and management. Overall, WH Smith has been effective and efficient in the planning and control, and therefore managers monitor the operations easily. The growth of the company is enough proof that it is effective in its management of quality and operations. However, further improvements can be made through the recommendations provided. References Doran, D, 2014. Operations Management. Harlow: Pearson. Elearn Limited (Great Britain) & Pergamon Flexible Learning., 2005. Management extra. Oxford: Elsevier. Johnston, R. & Clark, G., 2005. Service Operations Management, Improving Service Delivery. Seconded. London: Pearson Educated Limited. Heizer, J., & Render, B., 2004. Operations management. Upper Saddle River, N.J: Pearson Prentice Hall. Ho, S. K. M., 1999. Operations and quality management. London: International Thomson Business Press. Mohammed A. K., 1988. Performance Auditing – The Three ‘E’s. Accessed from: http://www.asosai.org/journal1988/performance_auditing.htm. [27 April 2017]. Slack, N., Chambers, S., & Johnston, R., 2007. Operations management. Harlow: FT Prentice Hall. Appendices Appendix A: Shelves at WH Smith : Appendix B: Operational Hours Read More