Operations Management Case Study
Case Study; Concept Design Services. This case study provides the source material for the course work brief for operations management.
“Over a 10-year period we have totally transformed our outlook, our resources and our prospects. From being and inward-looking manufacturing company, we have become a customer-focused, integrated service provider. From a large commodity supplier, we have become known for our value-added and innovative designs. Most importantly, our performance as a company has been little short of spectacular, and I see no reason why we cannot continue on this upward path [Table 1]. I know that the Group board is very impressed with our achievements and uses this subsidiary as its best example of successful innovation.” (Excerpt)
|Please review the CDS case study and attempt the following. All points must be addressed.
· Critically evaluate the CDS operations and describe the relevance of operations management in CDS. Use the knowledge to explain how the CDS’ operations management activities be appropriate for its competitiveness.
· Identify and critically evaluate the strengths and weaknesses of the key operations performance of objectives for CDS. What implications can you draw from these?
· Critically evaluate the extent to which CDS activities, in terms of design, delivery, and development, influence its performance objectives.
· Analyse the changes, including their motivations, in CDS operations and processes, explain how CSD can adapt to future changes.
· How can CDS benchmark itself against competitors and what can you recommend for CDS to improve its operations?
Critically evaluate the CDS operations and describe the relevance of operations management in CDS. Use the knowledge to explain how the CDS’ operations management activities be appropriate for its competitiveness.
CDS’ operation management success is mainly rooted in the company’s improvements in the manufacturing level. The new developments through acquisition of new machines has led to reduction on production time and delivery of high quality products to customers. For example, the modern machines can produce 18 units per minute compared to older machine that could create 3 units per minute. This has led to 600 per cent in product. The new machines also uses multi-cavity molds, allowing the company to produce different components or products in different machine cycles. The quality has also increased as illustrated in the case study where the manager says “It allows us to use high quality and complex mold to produce a very high quality product. The efficiency in the production has led to reduction of the associated costs. Besides, the company operations are being carried in a modern and large facility, which is not so far from the head office. This makes it easy for the top management to coordinate the operations and address operational issues within the shortest time possible. Effective management in CDS is very fundamental, since it has allowed the company to serve customers with delays and at the same time offered them very high quality products.
Based on the CDS’ operations management evaluation above; the company new developments in the manufacturing operations have led to production in huge volumes and high quality products. The case study through the voice of the operations manager confirms that the company’s end product are second to none. Also, the benchmarking study on European based customers revealed that CDS produces superior and quality products. The aspects of high quality products and in large volumes presents CDS as the reliable company. The company has used the aspects of producing in large quantities and quality to build competitive manager. The customer voice as presented in the case study confirms that CDS competitors not match the company’s operations management standards. Competent staff has also been key in producing quality products, the progress which can attributed to effective human resource management.
Value Chain Strategies: CDS has relied on robust firm infrastructure, human resource management and technological development to build strong operations management that has led to competitive advantage through production in large quantities and high quality products.
Value Enhancement Strategy: CDS relies on differentiation that is achieved production of superior and high quality products.
Operations management is the crucial element of the company that it mainly relies it on to create competitive advantage. It gives the organization a unique benefit that it can use to differentiate its business from rivals. Operations is also an aspect of value chain as advanced by Porter. It is used to create value enhancement using strategies such as cost, differentiation and response. Concept Design Services (CDS) operations management has employed the concept of differentiation that is attained through high quality products to create competitive advantage. However, for the company to create competitive advantage using operations management, linking manufacturing with supply chain should be highly considered. CDS has linked supply services with operations management as stated in the case study. The company’s supply services are treated as the center of customer satisfaction. It has integrated with design, manufacturing and sales. Through the supply chain department, CDS plans for schedule production to maintain inventory at acceptable levels and plans for the distribution of finished products to the customers. Linking supply services with manufacturing operations ensure planned production that is aimed at the forecasted demand and the level of inventory in the warehouse. This enhances the aspect of reliability since there is no one time the CDS’ products will lack in the market when the demand is average.
Identify and critically evaluate the strengths and weaknesses of the key operations performance of objectives for CDS. What implications can you draw from these?
Based on the case study analysis, CDS’ operations performance objective is to meet quality and produce in large quantities. To meet high quality products and huge volume production, CDS has made improvements in the manufacturing operations and linked it with supply services. The new changes in the operations management have helped the company to overcome some of the problem associated with the old system. However, the company has registered some challenges in the wake of new developments as illustrated by cumbersome and increased operational costs and inability to meet customer demand during peak times.By integrating manufacturing information with supply chain services, CDS has been able to meet its strategic goals. According to Pozo, et al. (2017), operations management objectives help a firm to implement strategic processes by putting them into action through planning and controlling. With operations management objectives in place, the can organization can effectively management resources to maximize on the creation of services and products offered by the company (Haleem & Jehangir, 2017). Through operations performance objectives, CDS was able to manage human resources effectively to aid in producing high quality inventory, materials management, purchasing from suppliers and logistics, including the distribution of products. Löfving, et al. (2016)studied on the benefits of operations performance objectives on the manufacturing companies and established that it is a primary factor in the manufacturing operations, if the company anticipates to reap competitive advantage through production. CDS has benefited from operation performance objectives through by improving its operations processes as well as supply chain services that are linked to production and marketing.
The benefits of operations performance objectives do not occur in vacuum, but in an environment that is characterized by drawbacks. As much as CDS has benefited from its operations management systems, it faces some weaknesses that negatively affects the company. For example, the company’s goal to achieve high quality products has led to adoption of less flexible machines as outlined by the operations manager who says they are cumbersome and difficult to change over. Jabbour & Jabbour (2013)attributed the weakness of operations management processes to reliance of many complex components that are tiresome to change. The inflexibility of the machines make it difficult to change them to produce different products. The Supply Services Planning Manager notes that it takes them company three to four hours to change the machine molds. The time take is quite lengthy, especially during the peak seasons, meaning that CDS can experience some inventory shortages. This will also challenge the company to meet short-term and unplanned customer demands. CDS’ new operation management processes are not producing 100 percent since it is maintained at 92 percent. This presents a chance of one out of twelve of the company failing to supply products, and especially during the peak season. When this happens, CDS will turn out as unreliable company.
The benefits associated of key operations performance objectives in CDS has led to fast production of high quality products and in huge volumes. The company has become more reliable than before as perceived from the customers’ side. The production has increased by 600 percent. However, the company has also faced other challenges, including running very complex machines that are difficult to change for production of different products. This has led to shortages during the peak seasons. The new operations system has not contributed to 100 percent production as currently is producing at 92 per cent.
Critically evaluate the extent to which CDS activities, in terms of design, delivery, and development, influence its performance objectives.
CDS design has shifted from manufacturing-based to customer-focused and integrated service provider. CDS design is now characterized with value addition and innovation. The new design has helped to meet the company’s profitability objective as illustrated by the company results from one of its subsidiaries.
In meeting the performance objectives through delivery, the company opted for the market change whereby it withdrew from complex and cyclical industrial moldings market and focused on focused on profitable product business. This was followed by market positioning whereby the CDS through the Marketing Director focused on modifying the product to suit the ever-changing customer needs. The new delivery approach has earned the company the new markets, retained in the existing customers and in the long run it is making more sales and increasing profits.
Net profits before tax
|Sales by market
|Home-ware Concept &
|Design House Concept
The development aspect to meet performance objectives is based on the development of the new product. The development of the new product is linked with the marketing to suit the customers’ needs. In developing the new products, CDS considers the elements of cost and quality. As such, the company has decided to have its product designed in South Korea. This does not only guarantee the company less operational costs but also high quality products. According the Grant Williams, the product development manager, the South Korea suppliers are cheaper and produce high quality molds compared to the European-based suppliers.
CDS development aspects is also witnessed in the market where the company sells products through different channels. For example, the concept branded products are sold through specialist office equipment contractors and retailers. The company has entered into alliances with foreign partners in German and Italy.
CDS’s design, delivery and development actions are influenced by performance objectives. Pozo, et al. (2017) agrees that organization’ choice of implementing organizational operations management practices is influenced by the performance goals. Based on the study of 56 companies, the authors concluded that the choice adopted by the firm in operations management procedures is mainly defined by the performance goals. CDS is no exception as majority of design, delivery and development approaches aligns with the company’s performance objectives, which are profitability, high quality products and production in huge volumes. The decentralized delivery adopted by CDS helps it to reach markets through contracts, alliances and retailers. The study by Bracciotti (2017) discussed the benefits of decentralized delivery, including increasing profits and its ability to achieve the set performance objectives. The need for CDS to deliver the products in the accordance with customer needs has led to creation of new products as well as market developments. If the company wants to use development concept to meet the operations management performance objectives, it must align product development practices with the target markets (Kavian & Abbasi 2014). CDS has been do so by modifying its products to meet the changing customer preferences both in the domestic and foreign markets.
Analyse the changes, including their motivations, in CDS operations and processes, explain how CDS can adapt to future changes.
CDS was motivated by the profitability goal. It realized that using its old operation systems was to slow and produced low quality products. The company also started recording profit decline on complex and cyclical industrial molding market, forcing it to focus on high earning household product business. To facilitate these changes, CDS was forced to employ new design and delivery methods as well as engage in product and market developments. The profitability goal would be achieved through producing high quality products and in huge volumes. The changes in the value package prism as discussed by influences the company to change operations management practices (Correa, et al. 2007). The organization should adopt flexible operations management practices that can offer the range of value packages (Corrêa 2008). CDS had to adopt flexible operation management system that could produce different decorations and styles.Battistoni, et al. (2013) presented operations management practices as the importance indicators of the firms performance. This means that if the organization is not performing to its expectations, it might be forced to change its operations management practices. Based on the study of SMEs in the manufacturing sector in Italy, Battistoni, et al. (2013) established that businesses would change the operations management strategies to implement best processes that could increase revenue, profits and internal efficiency. This denotes that every time new policies have been to be introduced to the betterment of the organization’s future success as it has been the case with CDS. The studies have maintained that change in operations management policies cuts across all organizations and the company’s plays very insignificant role determining whether the firm will adopt new processes.
When the need for change arises, companies are influenced to undertake the necessary changes. For example, CDS realized that it was losing a huge market share to competitors dealing with home business products. To overcome this, it engaged in changing its manufacturing operations to produce profitable goods. The CDS decision is supported by Jabbour & Jabbour (2013) the need to attain competitive advantage encourages company to change its operation strategies. Using the Brazilian electronic sector, Jabbour & Jabbour (2013) found that firms were forced to align internal and operations management practices before competing successfully in the international market. CDS was also forced to links its internal operations with external operations to integrate customer needs in the operations management.
Further analysis if CDS case study reveals the changes in the operations management was also driven by integration and continuity. These are some of the factors influencing firm’s continuous change as discussed by (Rizescu & Tileaga, 2016). CDS wanted to integrate new system, including molding machines that will see the company shift to more profitable products and the same time produce high quality goods and huge volumes. This could not be achieved with the old system that was slow and costly. The need of CDS to continues with its operations in the wake of fierce business rivalry influence the company to improve its performance capacity, calling for the need to align supply with manufacture operations and marketing.
CDS had been struggling to before implementing the new operations management practices. The increase in profits was realized after the reviewing its business strategy, and seeing the need to drop its major product at the favor of the most profitable one. Since the market is dynamic, CDS should continue with the same approach of assessing the performance of its products in the market as well as the actions of the competitors. The strategic decisions to switch to new product should put quality as a priority. With high quality goods that can be produced in different styles and decorations, CDS will continue to dominate the molding market.
How can CDS benchmark itself against competitors and what can you recommend for CDS to improve its operations?
Companies do no operate in isolation, but in the environment that is full of competitors. With each company having profitability goal as a priority the competition is always intense. Krishnamoorthy & D’Lima (2014) argued that organizations can find ways to overcome competition, including benchmarking themselves against the best. Similarly, CDS can benchmark itself against the competitors to determine the performance of its operations management practices. To do so, CDS needs first to determine what metrics should be benchmarked. For example, it can benchmark its customer satisfaction, profitability ratios, inventory turns or revenue turns against the high performing competitors in the industry. By doing so, CDS will understand the areas that need improvements.
To benchmark against the competitors, CDS will need the business rival annual and performance reports. CDS can obtain this information from company websites, publication consultants, business magazines and trade journals. CDS should base its benchmarking in three key areas: process benchmarking, strategic benchmarking and performance benchmarking as put forward by (Asrofah et al. 2010). The performance benchmarking will help CDS to understand its operations management processes and compare them with competitors in the bid to make its procedures more effective and efficient. Strategic benchmarking will aid CDS to compare its business strategies and models with the competitors and adopt what makes the best in the industry successful. Finally, performance benchmarking based on the profits will help CDS establish its operations and product performance in industry. The company can copy the approaches used by the best performing companies in the industry to increase revue and profits.
As much as CDS operations management practices have been performing well, there are still short comings that calls for improvement. For example, the company’s production capacity is at 92 percent that is caused by time to taken to rearrange the molding machines to produce a different variety of product. This has caused delays, and the company is unable to meet demands at peak times. As such, CDS should consider acquiring the flexible system that it will take less time to fix to produce a product with different decoration. The new production system is also costly, although it produces high quality products. This will have adverse effects on the company’s profits, especially if the competitors are using less costly system and still producing high quality products. CDS should compared its operations cost with the best in the industry. If its production cost is higher to the competitors, then it should adopt the production approaches used by the rivals. “
Asrofah, T., Zailani, S. & Fernando, Y., 2010. Best practices for the effectiveness of benchmarking in the Indonesian manufacturing companies. Benchmarking: An International Journal, 17(1), pp. 115-143.
Battistoni, E., Bonacelli, A., Colladon, A. F. & Schiraldi, M. M., 2013. An Analysis of the Effect of Operations Management Practices on Performance. International Journal of Engineering Business Management , 5(44), pp. 1-11.
Bracciotti, M., 2017. Operational Management Study, Aberdeen: Robert Gordon University.
Correa, H., Ellram, L. M., Scavarda, A. J. & Cooper, M. C., 2007. An operations management view of the services and goods offering mix. International Journal of Operations & Production Management, 27(5), pp. 1-17.
Corrêa, H. L., 2008. Changes in The Role of Production and Operations Management in the New Economy. The Flagship Research Journal of International Conference of the Production and Operations Management Society, 1(1), pp. 1-11.
Haleem, F. & Jehangir, M., 2017. Operations Strategy Practices of SMEs. Global Economics Review(GER), 2(1), p. 12 – 23.
Jabbour, A. B. L. d. S. & Jabbour, C. J. C., 2013. Contributions Of Operations Management To The Competitiveness Of The Brazilianelectronics SECTOR. Journal of Business Economics and Management, 14(1), p. 358–376.
Kavian, M. A. & Abbasi, M., 2014. Analyzing the operations strategies of manufacturing firms using a hybrid Grey DEA approach – A case of Fars Cement Companies in Iran. International Journal of Supply and Operations Management, 1(3), pp. 371-391.
Krishnamoorthy, B. & D’Lima, C., 2014. Benchmarking as a measure of competitiveness. International Journal of Process Management and Benchmarking, 4(3), pp. 342 – 359.
Löfving, M., Säfsten, K. & Winroth, M., 2016. Manufacturing strategy formulation, leadership style and organisational culture in small and medium-sized enterprises. International Journal of Manufacturing Technology and Management, 30(5), p. 30(5): 306.
Pozo, H., da Silva, O. R., Tachizawa, T. & Liu, S., 2017. The influence of performance objectives on the implementation of lean manufacturing practices: An analysis based on strategic groups. Cogent Business & Management, 4(1), pp. 1-18.
Rizescu, A. & Tileaga, C., 2016. Factors Influencing Continuous Organisational Change. Journal of Defense Resources Management , 7(3), pp. 139-144.