An operation management (ASDA -UK company) - Essay Example

?Case Study of Operations Management (ASDA-UK Company) Table of Contents Case Study of Operations Management (ASDA-UK Company Table of Contents 2 Introduction 3 Purpose of the Case Study 3 Company Background 4 Problem Number 1 4 Reverse Logistics 4 Literature Review 5 Recommendations 9 Problem Number 2 11 Customer Waiting Time 11 Literature Review 11 Recommendation 13 Problem Number 3 14 Increased Supply Chain Agility 14 Literature Review 15 Recommendations 18 Use of Project Management in ASDA 19 Role of Operations Manager 19 Use of Management System in ASDA 20 Conclusion 21 Introduction Nowadays, the retail market has become more multifaceted due to increased globalisation, bigger competition and vibrant business environment. Organisations which perform businesses in the international context need to develop strategies in order to maintain their positions in the market as well as explore and expand to new markets. To compete with the rivals within same industry, organisations need to increase the operational performance. Several issues can impact on the business operations of organisations and therefore need to be considered before implementing any strategy. Three major issues with respect to better operations logistics management, better customer service management and better supply chain agility have been discussed in the paper. Purpose of the Case Study Hence, the paper will describe the various issues associated with logistics, customer service and supply chain management for one of the largest retail chain organisations in the United Kingdom named ASDA. This paper will discuss about the coordination of process concerning return of goods from customers, the waiting time of customer service and the aspects regarding better responsiveness of supply chain of ASDA. These aspects are directly related with the operational performance of ASDA. Further, the case study will recommend solutions to those aspects about how better ASDA can cope up with those problems identified. The purpose of the paper is to: Understand the reverse logistics issues in ASDA Recognise the issues of customer service in ASDA Know different aspects of supply chain management Apprehend the importance of better responsiveness in contemporary environmental context and, Understand the solutions to deal with the issues identified in ASDA Company Background ASDA is one of the biggest retailing companies in the UK and it is the major subsidiary corporation of Wal-Mart. It deals with several merchandise products comprising food, grocery, housing, and entertainment goods in their retail stores. In the year 2004, ASDA had almost 259 retail outlets and 19 storehouses throughout the UK. It captures significant amount of share of the market of the UK. As a major supermarket, ASDA confronts with numerous supply chain issues which need to be rectified in order to gain competitive advantage (Corporate Watch UK, 2004). Problem Number 1 Reverse Logistics Few problems were identified in the process of operations management of the company ASDA. One of the problems increasingly witnessed by the company was regarding the procedure of reverse logistics. The company has been stated to deal in a varied range of products, most of which entails consumable products. With regard to the kind of business that is conducted by the company, it can be understood that the concept and the process of reverse logistics form an integral part. The company was encountering certain problems in the management of the procedure with regard to the return of goods and products that are received from the customers to the suppliers as well as the manufacturers. ASDA was learnt to witness increased volumes related to returns of electrical products owing to the moderate returns guidelines. Thus, with the intention to deal with such returns in an effective, suitable and cost efficient method, the company requires to concentrate on a competent strategy related to reverse logistics. The reverse logistics plan of the company would require controlling the flow related to the products together with the reverse chain of supply. The strategy related to reverse logistics would need entailing a management plan with regard to solid returns which would particularly engage returns processing along with becoming an integral division of the strategy associated with reverse logistics (Kosciukiewicz, 2007). It needs to be mentioned in this regard that in order to effectively comprehend the problem, the concept of reverse logistics requires an insight. Literature Review Reverse logistics has been referred to as a process which entails the moving of the products from their respective archetypal final destination. This particular procedure is carried out for the reason of incarcerating the appropriate value or for the proper discarding. Re-manufacturing as well as refurbishing could also be included in the procedure pertaining to reverse logistics. The commencement of this process occurs at the time a customer takes a particular decision regarding returning any single or more products. In most of the instances the returned products turn out to be the fresh products that are currently asked for and received. The reasons underlying behind such a decision of the customer has been observed to frequently entail the change in the made choices by the customers. It has also been noticed in this regard that the customers not only indulge in returning the fresh products but also return products that are made use of and which failed in meeting up to the desired expectations of the customers (Dyckhoff & et. al., 2004; Flapper & et. al., 2002). Once a product is returned, a company faces an issue regarding the way the returned product needs to be dealt with so as to make the most of its value. This particular issue or reason of concern is stated to be the way of disposing that particular product. The mentioned phenomenon would entail certain options with regard to the returned goods (Amini & Roberts, 2012). Reuse The reuse process or method entails reutilisation of the made packaging or that returned product or good is again included in the stock for the purpose of selling it again to certain other customers (Amini & Roberts, 2012). Repair or Repackage In this method a reasonable amount of mending or pre-packaging is done to facilitate the reuse of the product (Amini & Roberts, 2012). Return to Supplier The company looks for ways for returning the good to the supplier from whom the purchase of the product was made (Amini & Roberts, 2012). Resell Resell is a process where the returned product is again prepared to be sold in the secondary market. There are a few existing logistics organisations that work on finding the appropriate matches for the buyers as well as the sellers in the secondary markets (Amini & Roberts, 2012). Junk In this process the product is commonly disposed of in a landfill. This process is tried to be avoided by the companies as the costs incurred in this particular process is huge (Amini & Roberts, 2012). Recycle Recycle process entails the procedure related to breaking down of the returned product in order to get back the components used in the course of manufacturing the product. These components are then once again sold or most of the times even used again (Amini & Roberts, 2012). Renew In the renew process, the utility factor of a particular used product is re-established with the help of putting back the worn out parts or to manufacture the product again in certain ways. This is done so that the product could be again used (Amini & Roberts, 2012). Recommendations The company, ASDA could be stated as a direct marketer which implies that quite a few of the above mentioned options would be availed by it in case of returned products. The problem identified with regard to the company was that it witnessed quit a few problems in managing the process by which the returned electrical products from the customers were sent back to the suppliers and the manufacturers. It could be suggested that the company initially needs to develop a proper and an efficient dedicated system of managing the process of reverse logistics that is the return and processing and disposal of the products. The company needs to develop a proper system of receiving the returned goods based on the nature of their stated problems. The management of reverse logistics in order to function effectively needs to be properly organised. A definite dedicated structure of reverse logistics needs to be followed in this regard with a dedicated workforce for this particular purpose. Firstly, the product needs to be either collected back from the customers or the market. The quantity, composition, timing and quality of the returned products then requires to be dealt with in close assistance with the other parties involved in the supply chain. The products need to be sent back to the facilities entailed in the other levels for the reasons of testing, sorting and disposition. The products need to be tested and the classification based on the quality as well as composition regarding the returns needs to be ascertained. This would help the company to decide on the kind of disposition that needs to be made for the returned product. The company needs to ensure that the returned products are dealt with in an appropriate way. The company requires opting for the suitable disposition method that is considered to be best suited for the returned product. The method of disposition needs to be chosen suitably in order to make the most of its value. The kind of disposition method for the returned goods needs to be ascertained based on the nature of the reason for return. In case the product is bought by the company from a few specific suppliers then the company should look for particular ways to communicate with the suppliers as well as the manufacturers to take return of that product. The company should ensure that recovery of the value of the returned product is made by bringing back the materials as well as the components in the initial section of the supply chain (PricewaterhouseCoopers, 2008). The diagrammatic representation of a reverse logistics system: Source: (Stock, 2007) Problem Number 2 Customer Waiting Time It is often found that the customers need to wait for long hours during the process of gaining and consuming the products and the services. These experiences are found to have an off-putting impact upon the overall satisfaction with the product and the services. In order to administer the waiting experiences, most of the companies have installed numerous programs not only to decrease the actual duration of wait but also to enhance customers’ perceptions regarding waiting line (Kumar & et. al., 1997). Literature Review Customer waiting is considered as one of the most crucial aspects of service quality. There are numerous researches that bring into context negative influences of waiting. It is significant for the managers to develop suppleness in the service process design by utilising alternative designs. There are numerous break-even models in order to investigate the conditional nature of the performance of alternative designs. There is requirement for developing flexibility into the service process designs by showing the fact that waiting time performance can be optimised if design plans are changed in relation to ongoing alterations in service system input parameters (Sheu & et. al., 2003). Comprehension of the waiting lines or queues and identifying the method to administer them is one of the most noteworthy factors in operations management. Waiting lines are generally noted in supermarkets and factories where the jobs need to wait in lines in order to be worked at numerous machines. It can be described that waiting lines tend to be quite persistent (The McGraw-Hill Companies, 2012). The point to be considered is that waiting line tends to occur when there is more customer demand for a particular service than can be offered. Billing counter is the section of the retail store where the rush of the customer is quite high which can be a significant problem for a retail store such as ASDA. It is quite significant for the managers of ASDA to consider and decide the level of service to be offered to the customers. If ASDA decides to offer low level of service then it may be inexpensive in the short run. However, it may acquire high costs of customer discontent such as lost future business and actual processing costs of customer complaints. When ASDA considers offering high level of service, it tends to cost more to the company and will lead to lower dissatisfaction costs (California State University, 2012). In the recent times, most of the companies such as ASDA function in extremely competitive markets and thus need to face ever more demanding customers. Competition tends to be rewarded not only in terms of price but also via the quality of the services offered. One of the significant components of quality that has been crucial in the recent times is related to the speed with which the companies deliver the services. Customers generally do not prefer wasting their time waiting to be served or attended to. As a consequence, it is the long waiting times that may lead customers to be dissatisfied with the services that they receive, thereby reducing the competitiveness of ASDA. Most of the authors have tried to focus upon the negative impacts that waiting lines have upon the overall satisfaction of the customers with the services that is obtained by them. In relation to speediness of service, there are two features that the company need to consider such as the customers’ insights related to waiting time and the actual waiting time itself (Mondschein & Weintraub, 2003). Apparently, if the waiting period can be kept short then it will assist in creating a lower perception of waiting time. On the other hand, if the waiting time cannot be monitored by ASDA then in such circumstances also it may be possible to minimise customers’ perception of it. A collaborative review of customers’ insights of waiting time has been offered. Propositions need to be made in order to administer the service environment which can assist in minimising customer perception of waiting time and enhance the overall satisfaction. The service environment can be made comfortable and adequate attention can be paid towards the lighting, music, temperature and waiting room furniture. Along with it, a feeling that the procedure of attending the customers is socially fair can assist in reducing the insights of waiting time. One of the decisive components that can be installed by ASDA offering services is the appointment system. It is worthy of mentioning the fact that the appointment procedure utilised has a direct influence upon customer waiting time as well as upon the satisfaction with the services. It is the design of the appointment policy that is significant in explaining the success and breakdown of the service-offering enterprise (Chase, 2003). Recommendation In addition to these, it is significant for ASDA to focus on making the transactions appear brief so that the customers can have significant time for themselves. There are two methods of accomplishing this desire, either through operations management or through expectations management. The operations management approach entails one of the ways to make customers feel that they are spending less time in line, which is to physically minimise the length of time. Expectations management approach entails that one of the ways to enhance the customer satisfaction is to directly manipulate the insights of the customers and expectations of waiting It has been observed that in the retail organisation, the customers’ need to wait for hours in the billing counter. It is quite important for ASDA to implement automated electronic machines so that the process of billing can take place rapidly. Furthermore, when the employees are dissatisfied with the job the quality of services offered by the counter staff tends to be quite uneven. Therefore, ASDA needs to monitor the satisfaction level of their employees so that they can increase the efficiency of operation in the organisation and the waiting time of the customers can be reduced to a great extent. In retail stores such as ASDA, the use of Multiple-Queue-Multiple-Service-Points can be used since it provides the probability to segment the customers depending upon the service needs. The customers who want services with longer expected service time can be differentiated from the customers requiring faster service (Katz & Martin, 1989). Problem Number 3 Increased Supply Chain Agility Supply chain agility helps organisations to empower quick and unsolidified alterations in order to provide customer enriching performances. In ASDA, the major issue faced by supply chain agility is flexibility of operations such as delivering products. In order to maximise the inbound prospects ASDA requires strong supply chain agility. In terms of maintaining agility in the retail supply chain of ASDA, it is facing increasing number of difficulties which impacts on the operations management. Presently, the retail market is quite uncertain where demand for any product can change unpredictably. Therefore, retail organisations such as ASDA need to be quite responsive with the retail market prospects. Lack of supply chain agility of ASDA can impact on the supply of products to the demanding customers, which in turn can lead to higher frustration. In ASDA, the issues identified regarding the responsiveness of supply chain agility are manufacturing swiftness and better flexibility in the transportation (Akabo Media Ltd, 2011). In today’s competitive business environment, being able to rapidly react to the fluctuating demand patterns of customers is more essential for an organisation than attempting to create the perfect promotional prediction. As the market is fluctuating, the forecasting is becoming quite hard, therefore to get benefits from the market ASDA can strengthen its supply chain activities by increasing the flexibility and speed in manufacturing and transportation (Watson, 2010). Literature Review The supply chain agility has two basic characteristics which are speed and flexibility. With respect to speed, it is considered as a dimension of time an organisation requires to dispatch or obtain products or raw materials. On the other hand, flexibility is the extent to which an organisation is capable of adjusting the time in which it can dispatch or obtain products. Flexibility in supply chain is divided into two capabilities which are the promptness of organisation, by which it can adjust the business operations with the supply chain speeds, destinations and capacities according to the market requirement (Prater & et. al., n.d.). The supply chain of an organisation is allocated into three basic classes which are obtaining good, manufacturing products and delivering finished goods. The combination of these supply chain elements can result in supply chain agility. In other words, the level to which an organisations’ supply chain is agile is measured by how the organisation’s physical constituents (such as obtaining, manufacturing and transporting) are arranged to integrate speed and flexibility in business operations. In order to gain better flexibility, an organisation can combine the shortages in speed or flexibility of supply chain components by excelling other components of supply chain such as manufacturing or transporting. Organisations can increase the supply chain agility by compensating one component against the others. For instance, if organisations’ rapidity of outbound logistics is stubborn, the speed of manufacturing or obtaining goods can help to compensate for the sluggish outbound transportation (Prater & et. al., n.d.). The following diagram will describe the supply chain agility for an organisation: Source: (Prater & et. al., n.d.). Supply chain agility is vital for organisation in the strategic level. As successful supply chain management has become an imperative for gaining competitive advantage, the agility in global supply chain supply chain can determine the survival of an organisation in the industry. The higher responsiveness of supply chain into planning and managing decisions in critical to the success within international market (Prater & et. al., n.d.). Recommendations Better Information Flow: Agile supply chain management necessitates getting information from the end-users’ point of view and associating them through the whole supply chain management process for rapid exchange. The disparate computer systems are ineffective in present days’ competitive environment. Fostering the business performance entails good arrangement of information. Networking computers and restructuring the information movement can help to combine knowledge within ASDA and simplify the rapidity of products movement. ASDA can implement several account administration applications, product configurators, and enterprise resource planning systems for developing an operative supply chain management strategy. Faster Transportation: Strategic transportation approaches are directly associated with the agility of supply chain system. Better transportation not only will help ASDA to make better inventory decisions, but also the company can effectively satisfy the fluctuating demand of market. As transportation encompasses a major portion of supply chain management process, therefore it is recommended that ASDA can use accurate transport medium for shipping their products. Choosing appropriate transportation system is a vital strategic decision for ASDA, which will ensure a smooth distribution of products and in particular, all customer service requirements will be fulfilled. However, ASDA needs to be concerned about the cost before selecting a fastest transportation medium; otherwise it will impact on the product cost (Ligus, 2007). Wiser Supplier Selection: Suppliers can determine the affectivity of an organisation with respect to price as well as performance. Choosing appropriate suppliers is critical for ASDA to gain agility in the supply chain management system. ASDA should prudently select the suppliers for sourcing products by considering the rapidity, the product quality as well as the flexibility, as all these factors can impact on the operations management of the company. Use of Project Management in ASDA Project management is vital especially for organisations which deal in numerous projects at a time. For large organisations such as ASDA there is need for better project management tools which can successfully plan, schedule or change projects accordingly. ASDA runs a “Change Steering Committee” for every project comprising those regarding the sustainability (Chartered Institute of Management Accountants, 2009). The finance department in ASDA plays significant part in running the projects and executing them. Each project in ASDA comprises one administrative owner, one programme head and one project leader who control all aspects of project management in ASDA. The finance representative can ultimately measure the success of projects undertaken by ASDA. ASDA could use several tools of project management such as project charter, cost planning map and risk response plan among others for accomplishing success in all projects (Milosevic, 2003). Role of Operations Manager Operations manager plays a significant part as they are responsible for ensuring that operative approaches are introduced so that organisational services function to its maximum efficiency. The major role of operations manager in an organisation is to manage logistics, develop budgets and records and control the administration of employees. Operations manager performs cooperatively with other divisions of organisation. With respect to customer delay time, the role of operations manager is to implement measures in order enhance the performance so that services are provided immediately, supervise the customer service departments and measure that they are fulfilling the satisfaction goals of customers (Johnston, 1999). For increasing the supply chain agility, operations manager has the responsibility of organising every inbound and outbound logistics appropriately. Operations manager is liable for maintaining accurate inventory and productivity level so that it can increase the operational efficiency. Proper management of inventory as well as appropriate utilisation of raw materials and other resources can help to reduce the cost which is one of the most significant problems identified in ASDA. Use of Management System in ASDA ASDA uses ‘ICON web based system’ for better operations management which lets the company to have a particular location where all the measurement and cost information can be stored. This management system not only provides access of information to the suppliers of ASDA but also ensures reliable information regarding the raw materials requirements of the company. As a result, it increases the smoothness of operations by reducing the probability of confusion. Any kind of changes in the ‘ICON web based system’ is updated to the whole organisation swiftly so that people can get only real time data and take proper actions accordingly (ICON, 2012). Conclusion The above discussion focuses on the problems identified in the process of operations management followed by ASDA. Three particular problems were recognised which were considered to be immensely significant for the company in order to maintain proper management and provide solutions of the identified problems which would help the company to enhance its functions related to the operations management. The improvements in the mentioned functions would facilitate a smooth and proper functioning of the business operations for ASDA. The initial problem identified with regard to the processes followed in the operations management was the aspect of reverse logistics. The company was witnessing problems in managing the process of return of products from the customers to the suppliers as well as the manufacturers. A detailed discussion regarding the process and the nature of problem has been made above, which helped in finding few recommendations for getting rid of the problems faced. The company was suggested to maintain a structured and an organised process with regard to the management of the returned goods. A definite process or system needs to be planned by the company for receiving the returned goods based on the stated problems by the customers. The nature of disposal was essential to be identified for the company in this regard for returning and bringing the components used in the production of the returned product again forward in the supply chain. This needs to be done for realising the value of the returned products by ASDA. The second problem identified was with regard to the waiting time of the customers. The suggestions made in this regard were to make the environment of the waiting area appealing and soothing for the customers so that the customers do not get bored. The transactions made between the company and the customers were suggested to be made interesting so that the customers remain involved and do not face problems. The third problem identified was regarding requirement of increased agility in the supply chain. The recommendations made in this regard were to enhance the information flow, to select the best possible and fast mode of transportation and to make appropriate choices regarding the suppliers. Therefore, the made recommendations would help the company to enhance and find solutions to the problems faced in its operations management. References Amini, M. M. & Roberts, D. R., 2012. Reverse Logistics Process Reengineering: Improving Customer Service Quality. The University of Memphis, pp. 31-42. Akabo Media Ltd, 2011. ASDA Looks for Greater Supply Chain Agility. News: Grocery. [Online] Available at: http://www.supplychainstandard.com/liChannelID/23/Articles/3547/Asda+looks+for+greater+supply+chain+agility.html [Accessed February 15, 2012]. California State University, 2012. Waiting Line Models. Elements of Waiting Lines. 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