MSc in Management 2010-2011 - Essay Example

?MSc in Management OPERATIONS MANAGEMENT ASSIGNMENT Over recent years, a range of new technologies has been introduced to retail supply chains, with the promise of more efficient supply chains and an enhanced shopper experience. Take-up of these technologies has not always been as rapid as predicted (as in the case of RFID and GDSN) in spite of the espoused benefits for managing retail operations, in areas such as improved stock control, enhanced supply chain management and better management of customer expectations. However, other technologies, such as innovative EPoS systems, have made their presence very evident. 1. Describe the range of technologies being used in the modern retail industry (10) The technologies that business uses have a very important impact on operations management. The range of technologies used in the modern retail industries have been from softwares to hardwares. The new technologies require that they become fully integrated into the retail operations of the business for their benefits to be maximized. According to McGrane (2007, p. 50-53), some of the key technologies or technological areas within the range are as follows (McGrane 2007, p. 50-53; EPoS 2007; and Prater et al. 2005): Bar-coding/scanning technology/labelling. Bar-coding, scanning, and labelling technologies have been invented years ago but not all of the retail business operations are using them. Nevertheless, the technologies are expected to be available to business operators in the coming years and there are widespread expectations that the technologies will be improved further and will become in more popular use as we go through current decade (McGrane 2007, p. 52). “Scanners are getting smarter” and “self-scanning will continue to grow” (McGrane 2007, p. 52). The new technologies include a touch screen display, barcode scanner, weighing scales, credit card reader, cash reader and deposit unit. Wireless technologies are even being developed for bar-coding and scanning, making possible for inventory and sales monitoring and sales transaction remotely from the goods that are the subject of a transaction. Epos software & hardware. EPoS systems or Electronic Point of Sale Systems provide a way of dealing with customers that is fast and efficient because they can do calculations or total, issue receipts, keep track of inventories, and monitor sales as the sales transaction is being completed (EPoS 2010). Further, the EPoS systems can also keep track of customer information thereby enhancing the seller’s capabilities to execute customer relation management (EPoS 2010). Moreover, the EPoS systems can also directly interface with the credit card system thereby accessing more information on customers and enhancing the ability of the firm to conduct follow-up sales and strengthen its relationship with customers (EPoS 2010). Simultaneously, the EPoS system can also identify which products are not doing well in the market (EPoS 2010) thereby enhancing a business firm’s ability to make crucial business decisions on what products lines and brands to carry. EPoS systems can make transactions faster and they can be customized to a specific business environment (EPoS 2010). Changing prices, data, quantity and other variables are easy (EPoS 2010). EPoS systems can be operated through keyboards or PDAs or personal digital assistant (EPoS 2010). The systems were designed to be powerful and yet very simple for the business staff to learn and use (EPoS 2010). On the other hand, the EPoS system requires maintenance and backups (EPoS 2010). Data can be backed up off site using another party or service company (EPoS 2010). The backup system must cover “historical backups” in that one can go back to an older backup if the most recent backup is corrupted (EPoS 2010). Periodic updates are necessary and businesses using the latest retail technologies may want to have in-house capabilities to do backups. This also implies that somebody in business must focus himself or herself in data security. Wireless hardwares, softwares, systems, and mobile technology. The use of wireless technology in the retail business is expected to increase in the coming years (McGrane 2007, p. 52). Improvements in wireless technology are expected to open new businesses for the retail industry leading to more benefits for the storeowners and customers (McGrane 2007, p. 52). One type of wireless hardwares are those related to mobile technology. According to McGrane (2007, p. 52), retailers are turning to mobile technology to differentiate themselves from their competitors. However, it is more highly like that mobile technology will be increasingly used and will become common in the retail industry in the years to come and, therefore, rather than a means to differentiate themselves from their competitors, mobile technology shall become ubiquitous in the industry and a tool for a business to remain a favourite among consumers. Credit card technology. Chip & pin technology have been improved so that credit card transactions can be in as short as three seconds (McGrane 2007, p. 52). Needless to say, credit cards are here to say and its use will deepened in the retail industry. Self-checkouts systems. In addition to the barcode, PoS system, and credit card technologies, the invention and further improvement of the self-checkout systems will likely boost further the profitability of retail business as efficiency is improved and labour costs are reduced (even as initial capital requirements and non-labour maintenance costs increase). According to the SelfCheckout.Org (2010), the first to adopt the self-checkout technology were grocery stores, followed by home improvement stores, and then the large public libraries. According to the same organization, the trend continues and large department stores appear to be those next in line to the switch to the new technology. In the self-checkout system, the customer selects the goods he or she is interested to buy and then have the bill on the goods be computed by barcode or computer technology and then pay the goods using his or credit cards. There is minimum input from the retail sales staff and there are savings on labour costs. Accountancy and payroll systems and softwares. The technologies that we have discussed are usually linked with an accounting software that is also linked with a payroll system linked with the banks. Labour time usually spent for inventory and accounting are significantly shortened and have become accurate with the new technologies. RFID or radio frequency identification (RFID) in supply chains. Prater et al. (2005, p. 138) described the RFID as a highly compact technology that is about as small as pinhead consisting of two main components: an antenna and a chip that contains an electronic product code. The RFID provides more information than the barcodes. For example, the RFID can provide information what the product is, date and place of manufacture, origin of components, and when they might perish (Prater et al. 2005, p. 138). Unlike bar codes that need a line-of-sight scanning to be read, RFID serves as a tracking devise, broadcasting a radio frequency when they pass within yards of a special scanner (Prater et al. 2005, p. 138). Given this nature of the RFID technology, it is even possible that there can be product security applications of the RFID technology and, thus, the applications of the RFID in the future will cover not only those related to the supply chain. There is also the possibility that there can widespread self-checkout applications of the RFID technology in the near future. Prater et al. (2005, p. 138) reported that RFID technology has been used for several years by Mobil Gasoline’s Speedfast system “where the customers passes a small key fob within a few feet of the gas pump to turn on the pump and automatically charge their credit card” (Prater et al. 2005, p. 138). According to Prater et al. (2005, p. 138), the approach saves time for the customers and lowers costs for the company. RFID technology is relatively resilient to destruction and can be used in harsh manufacturing environments (Prater et al. 2005, p. 138). As for the costs, Prater et al. (2005, p. 138) reported that 10 years ago, the cost of the RFID tags were only $1.00 and the costs went down between 15 and 20 cents in 2005. According to Prater et al. (2005, p. 138), there is a widespread expectation that when the costs are down to around 5 cents, demand for RFID will really take off. As for RFID tag readers, the cost has been anticipated to reach to only around US $150 as of 2004 (Prater et al. 2005, p. 138). The possibilities for further development of the RFID technology are great. It is highly likely that the RFID technology can interface with an inventory, accounting, and other business management system (Prater et al. 2005, p. 138). This can imply faster operations at lower costs and greater profitability (Prater et al. 2005, p. 138). Meanwhile efforts towards global data synchronization through the Global Data Synchronization Network will enhance global trade as well as global organization of the supply chain network. According to the Itradenetwork (2010), global data synchronization is happening in a manner that the Itradenetwork is becoming a GDSN certified data pool. According to the Itradenetwork (2010), one implication of this is that member organizations of the Itradenetwork can now have access to each other’s data and each one can be part of each other’s supply chain. Member organizations of the Itradenetwork have organized themselves such that business data of business organizations that have not published their data to the GSDN can also be accessed through their partners who are members of the GSDN (Itradenetwork 2010). Enterprise Resource Planning System into a single computer system. Botta-Genoulaz and Millet reported (2006, p. 202) that in recent years, businesses have used the ERP software package that “attempts to integrate all departments and functions of a company onto a single computer system that can service all the needs of the various departments. This implies that all the operations management tasks can be executed by an operations management professional using a computer unit. This is highly feasible given internet, network, and video-over-internet technology In conclusion, it is important to study the technologies we use for business, assess their possible implications on operations management, and organize and plan our operations accordingly to be consistent with our technologies. As appropriate, we must use the latest technologies that can promote profitability in our business operations. 2. Analyse the operations management implications of implementing the technologies you have described. Aspects you might consider include better managed inventories, supplier integration, queuing theory and capacity planning. (50) As discuss earlier, the technologies have an important impact on our operations management. The latest technologies are no exceptions. Some of the management implications of using the technologies described earlier are as follows: First, inventories and consumer demand can be monitored accurately. Computer programs have been developed through testing, evaluation, and improvements and are usually more reliable than human computations in the same way that calculators are more reliable than manual computations. Glitches can happen but softwares have also factored in these glitches through automatic backups and controls. Second, “management decisions can be based on solid and current information” (McGrane 2007, p. 50). Actual sales, inventory, and delivery schedule data can be obtained on demand as they happen. Gone are the times when business data can take at least several days to several weeks to a few months before they can be obtained. Technology makes it possible to monitor sales, inventory, and delivery schedule as they happen and as they are in real time. Third, productivity is expected to increase with the new technologies because inventory, monitoring of consumer demand, accounting, and other tasks become easier. They are especially easier because the count of goods is adjusted as they are sold and inventory data are adjusted as the goods are sold. Sales and even tax accountability data also become available as the goods are sold. There is no need for several recordings and computations to take place because all these are done automatically by softwares. Fourth, the technologies are allowing consumers to self-service themselves not only in picking out the items they like but also in billing themselves and paying the bills. Gone are the days when it is ALWAYS required that a sales clerk check on the goods item by item, type the cost of the good item by item, total the goods and pack the goods. Now it is possible for consumer pick out the goods, billing is automatic, and payments can be done through credit cards. These save on labour costs as well as improve accounting accuracy. Fifth, the new technologies allow the retail business manager to deploy more workers in the frontlines of sales and reduce the manpower for recordkeeping, inventory, and stock purchase decisions. This follows from the fourth point. The automation that technologies made possible allow the operations manager to deploy labour where human creativity is needed most: improving systems, monitoring reviewing systems, identifying systems error and inadequacies and developing systems, and installing improved systems. Of course, another way of looking at this point is that business operations managers should focus more on this dimension of the business. Sixth, because computations by new technologies are accurate, manpower for supervision or allocations for supervision time can be reduced. Related to the fifth point, this means that skilled labour can be deployed to where they are most needed. Both the labour force and the operations manager can focus their energies on the most creative part of business which were identified in the fifth point. Seventh, several sources indicate that the new retail technologies imply a large capital investment (EPoS 2010). This means that start-up capital for business systems that employ the latest technologies is relatively large compared to retail businesses that do not use the latest retail business technologies. This means that a large part of operations management is capital management than labour management. This implies that the operations manager must safeguard the value of capital, keep it running, and keep capital valuable. This means that a large bulk of operations management will have to be involved with maintenance and security of assets. Eighth, although one staffing implication of the new technologies is that that many of the workforce can be deployed in the frontlines, the drawback is that key personnel may have to be deployed in data security even if third party data security companies are tapped. This implies that a change in the profile of the labour force that will have to be managed by the operations manager. This probably requires new skills to which the operations manager should be prepared for. Ninth, RFID or radio frequency identification technologies will most likely become an important part of supply-chain management in the coming years. This is indicated by the study of Prater et al. (2005). For instance, as of Wal-Mart has required their large suppliers to implement radio frequency identification (RFID) on every box and pallet shipped to Wal-Mart. Prater et al. (2005, p. 134) also reported that the US Department of Defense, Procter and Gamble, and a significant European retailer also adopted the RFID. Most likely, a number of retailing firms are already utilising the RFID system in their supply chain and the number will most likely increase in the coming years. According to Prater et al. (2005, p. 134) RFID provides an opportunity to reverse the trend of increased inventory levels and related costs among the retail supply chains. The authors also mentioned (2005, p. 135) that the RFID “provides a framework of supply chain management in the grocery industry, and outlines the major operational requirements that any new system must provide”. Prater et al. (2005, p. 135) pointed out that the grocery industry had been using the RFID technology to reverse its decreasing profitability in the face of stiff competition and “inefficiency”. The RFID technology is being seen as a critical component to significantly reduce inventory levels and significantly reduce trade promotion costs given the reduction of necessary inventory levels that retailers must maintain without the RFID technology (Prater et al. 2005, p. 134). Tenth, RFID technology will enable management of the supply chain from the distribution centres (Prater et al. 2005, p. 137). This is because RFID promotes control over the product even without physical contact, handling efficiency, rapid identification, and information sharing on the location of supply. This also imply that the operations manager can also manage operations from anywhere but, of course, the operations managers must be located in the most critical parts of business. Technologies also allow the operations manager to monitor and manage several parts of the operations simultaneously. Eleventh, the technologies discussed in number 1 will most likely lead to better managed inventories because the actual status of the inventory can be monitored continuously. Prediction of inventories can be more precise because we are able to know within a few strokes on the keyboard or PDA the volume of the inventories. We should be able to predict with more accuracy when the inventories can run out and when the inventories should be replenished. Twelfth, supplier integration will be faster with the new technology. According to Awad and Nassar (2010, p. 1), Supply Chain Management (SCM) “facilitates inter-enterprise cooperation and collaboration with suppliers, customers, and business partners”. Supply integration “involves not only implementing enterprise resource planning systems and ensuring they communicate or interface” but it also involves integrating enterprise resource planning with supply chain management systems as well as with customer resource management (Awad and Nassar 2010, p. 1). It should be easy to see why the technologies discuss would enhance supply integration. Through the technologies we have identified, assessment of consumer needs becomes easier as well as accurate and we can factor in the information to guide suppliers on the specifics of customer needs. The supplier integration system can be computerised based on the technologies discussed. Thirteenth, given the technology identified in number 1, addressing the concerns of the Queuing theory can be better addressed: “mean waiting time, mean system response time, mean utilisation of the service facility, distribution of the number of customers in the queue, distribution of the number of customers in the system and so forth” (Willig 1999, p. 4). Further, these concerns can be addressed simultaneously and at great speeds through computer softwares. The demand for skills that are able to compute these will not be large because computer softwares can handle the computations of data required and/or prescribed by Queuing theory. Fourteenth, given the technology discussed in number 1, addressing the concerns of capacity planning should be easier. Fuller (2005, p. 13) explained that capacity planning refers to the capacity forecasting techniques used by managers to plan future capacity to meet local demand and to procure the needed inputs to procure this demand at optimum costs. Given the technology discussed in 1, demand can be projected versus the rate of replenishment of inventories and based on the information, appropriate decisions can be made on whether to expand or maintain capacity and if capacity should be expanded, determine the appropriate action. Finally or fifteenth, given the technology discussed in number 1, the implication for the operation management professional is that operations management can one day be computer-based. The operations management professional executes field visits but he or she can rely on the computer to inspect various sales or PoS via video-streaming over the internet. The operations manager will have a good grasp of data because he can view the sales in real time or as they happen and the data can also be organized into tables and graphs quickly or even in real time. He or she can also see the inventories in the same manner. He can also verify data through the inspections of sites and on-site reports because he or she can view the various plant or retail sites remotely through CCTV cameras and video streaming over the internet. 3. What are some of the broader business challenges to successfully implementing technologies to improve retail supply chains? (20) Adoption of the latest technologies can improve profitability but adoption of technologies is not always easy. Some of the broader challenges to successfully implementing technologies are as follows: First, we must study the characteristics of the technology. Is the technology relevant for our business? Is it likely to make our business organisation competitive or to be at par with others? Is the technology likely to be one of those that will likely persist in the coming years? Is the technology likely to be one of those that are the most advance for at least a few years in the industry? Second, we must assess if adoption of the technology is within the affordability level of the company. Some of the technology can be very expensive and, thus, immediate adoption may not be advisable. Third, we must find out what the trends are in the technology itself. Some of the technologies become obsolete too fast. Should we wait a little bit more for the most recent technology to mature or should we adopt the technology now? This may be an appropriate question to ask given a fast developing technology. What are the price trends for the technology? Are prices dropping too fast? Should we adopt the technology now or should we wait a little more when prices are low enough? Will waiting until prices go down bring benefits or is immediate adoption of the technology the more appropriate? Fourth, we must assess the workforce requirements of the technology. Do we have to train our workforce on the technology? What will be the workforce implications? Will we have to fire employees or simply retrain the current ones? Will we have to simply redeploy the workforce or reassign them consistent with the new technology or do we have to look for skills outside of our workforce. These are very important questions to ask. In general, however, many technologies can be adopted by simply retraining the workforce. In some cases, firing employees may not be needed as corporate growth is expected anyway. The new technology can reduce cost and allow the same volume of labour to do a lot more tasks or work and firing may not be necessary as the company is expected to grow anyway. Unfortunately, there is also the possibility that technology can make some sectors of the workforce redundant and reassigning the employees to new tasks or new job description may not be an option. Fifth, we must of course assess the supervision structure and identify operations management appropriate to the technology. We must assess how labour and company structure will have to be organized in adopting a technology. For example, it may happen that the new technology may some of the workforce assigned to inventory redundant and the appropriate decision may be to assign the redundant workforce to handle sales. Now how do we supervise sales operations in a fully computerized system? Maybe supervision as well may have to be simplified or reduced and management have to focus on the summary reports produced by the technology. Perhaps, the monitoring of the summary reports can be handled by the former supervisor and operations manager should focus on identifying operational problems and trouble-shooting and seeing to it that the system is working well. Sixth, based on the foregoing, we must develop a supervision and operations management plan given the technology as well a training program for the adoption of the technology. Probably, every member of the managerial, supervisory, and rank-and-file labour force have to be trained on the adoption of the technology. Seventh, dry-run the use of the technology and identify problems and improve the supervision and operations management system given the technology. Finally and eight, implement the supervision and operations management system given the new technology and conduct regular evaluations on the technology that may or may not coincide with the regular management evaluation. It may be advisable to hold frequent evaluations during the first weeks of implementation of the technology. 4. What challenges do rapidly evolving shopper and consumer expectations place on retail operations? (20) . Consumer behaviour has been changing. They are no longer contented in companies that deliver or produce inexpensive products. Instead, they want value for money. In general, products must be inexpensive compared to the rest. Alternatively, however, the products can cost more but the additional expense must be justified with greater product value. The more expensive products must be associated with higher product quality or higher value embodied in the commodity or ambience associated with the commodity. Thus, the same product will cost more in a five-star hotel compared with products purchased from a grocery store. The same products can cost more if bought in a place where the movie stars also shop or where the big stars also dine. In addition, shoppers and consumers expect products that do not destroy the environment or have the lowest negative environmental impact. They also expect the companies that produce the products they consume to be treating their employees well and to adhere to corporate ethics and corporate social responsibility. Thus, even if there is great comfort or monetary savings in shopping in specific shops but when those shops are known or have been discovered to be mistreating its employees, consumers may decide to refrain from patronizing the said shops. Feminist groups may decide boycotting the establishment if the store has a reputation for discriminating women. Consumers may not buy from the establishment if the shop has been exploiting women or hiring child workers. Child labour may not be happening in the United Kingdom but it can be just as bad if one of the branches of the company abroad is utilizing child labour. In other countries, religious groups can call for a boycott of the company or may refrain from patronizing a company if senior officials of the company have images that they are engaged in illicit affairs. A large section of the consumers prefers companies that are “environment-friendly”. Consumers may boycott companies known to use packages believed to have large contributions to “global warming. Consumers, for example, patronize those companies that recycle or use recycled materials. Consumers can be attracted to patronize companies that plant trees or have a lower “carbon footprint” than companies that are not committed at all to protecting the environment. Consumers can be attracted to patronize companies that “have social responsibility” or those that support causes, clean up its dirt or mess, or support charities or environment projects. In sum, shoppers and consumers expect retail firms not only to offer value for their money but also to become responsible as corporate citizens that do not damage the environment nor harm or put individuals at a disadvantage. A similar idea runs through the work of Norman and MacDonald (2004). Angell and Klassen (1999) had a similar idea and the term they use for a similar perspective is “integrating environmental issues into the mainstream”. Corbett and Klassen (2006) used a slightly different term or “environmental excellence as key to improving operations”. From a supply chain perspective, Linton et al. (2007) calls this as “sustainable supply chains”. Thus, in a sense, operations management must involve some public perception management on the company. Business operations managers must contribute something so the public can have a positive perception on the company. At the same time, business operations managers have a role to play in leading the company to take the track of a socially responsible and environment-protecting corporate citizen. References Angell, L. and Klassen, R., 1999. Integrating environmental issues into the mainstream for research in operations management. Journal of Operations Management, 17, 575-598. Awad, H. and Nassar, M., 2010. Supply chain integration: Definition and challenges. Proceedings of International MultiConference of Engineers and Computer Scientists 17-19 March 2010, Vol. I. Hong Kong: IMECS. Botta-Genouulaz, V. and Millet, P., 2006. An investigation into the use of ERP systems in the service sector. Production Economics, 99, 202-221. Corbett, C. and Klassen, R., 2006. Extending the horizons: Environmental excellence as key to improving operations. Manufacturing & Service Operations Management, 8 (1), 5-22. Epos, 2010. An introduction to the Epos systems. Available from: http://www.epos.co.uk/ [Accessed 7 March 2011]. Fuller, J., 2005. Operations research and operations management: From selective optimisation to system optimisation. Journal of Business & Economic Research, 3 (7), 11- 16. Itradenetwork, 2010. ITN data pool synchronization and GS1 resource center FAQ. Available from: http://www.itradenetwork.com/html/GS1_FAQ.htm [Accessed 8 March 2011]. Linton, J., Klassen, R., Jayaraman, V., 2007. Sustainable supply chains: An introduction. Journal of Operations Management, 25, 1075-1082. McGrane, E., 2007. Future trends in retail technology. ShelfLife (January), 50-53. Norman, W. and MacDonald, C., 2004. Getting to the bottom of “triple bottom”. Business Ethics Quarterly, 14 (2), 243-262. Prater, E., Frazier, G. and Reyes, P., 2005. Future impacts of RFID on e-supply chains in grocery retailing. Supply Chain Management: An International Journal, 10 (2), 134-142. SelfCheckout.Org, 2010. Self checkout. Available from: http://selfcheckout.org/ [Accessed 7 March 2011]. Willig, A., 1999. A short introduction to Queuing theory. Berlin: Telecommunications Networks Group, Technical University of Berlin. Read More