Operation management

Operation Management:

Operation management is the activity of managing the resources which are devoted to the production and delivery of products and services. The operational function is the part of the organisation that is responsible for this activity. Every organisation has an operations function because every organisation produces some type of product and/or services.

Operations management is concerned with managing the resources that directly produce the organisation service and products. The resources are generally consist of people, material, technology and information but may go wider than this. These resources are brought together by a series of processes so that they are utilized to deliver the primary service or product of the organization. Thus operation management is concerned with managing inputs (resources) through transformation processes to deliver outputs (service or products).

Overview of Impressive Burger:

Impressive Burger was started business 10-years ago with the aim of providing fast take away food to their customers with the quality food and in less time than that of their competitors. They had achieved in the start of their business when they were able to serve each customer their order within 4-mintutes from a ordering at the till to receiving their complete order to take away. Each restaurant of Impressive Berger offered a simple menu structure with a choice of six set meal options

  1. Burger, Chips & Soft Drink
  2. Cheese Burger, Chips & Soft Drink
  3. Chicken Burger, Chips & Soft Drink
  4. Vegetarian Burger, Chips & Soft Drink
  5. Customers were also offered a choice of size of each meal: Regular, Medium and Large, this size varied only for drink and chips not for burger. Each restaurant has placed their order on the bases on report which is generated by the restaurants own till system. These orders take one week for arrival for shipment.

    The company has grown to chain restaurant operations and 12 months ago management has decided to change in the menu. The company was offered more options for the customers and attract customers seeking healthier options. The menu was increased by further three options:

  6. Chicken nuggests, Chips & Soft Drink
  7. Chicken Salad, Garlic Bread & Soft Drink
  8. Hot Dog, Chips & Soft Drink

Evaluation of Impressive Burger:

Operation management is concerned with the managing input (resources) through transformation process to deliver output (service or goods). There are following input, transformed resources and output for Impressive Burger.

Input of Impressive Burger:

  • Capital
  • Materials (buns, chicken, vegetable, potatoes, spices)
  • Equipment (fryer, oven, microwave and cleaning machines)
  • Suppliers
  • Labour (staff)
  • Knowledge
  • Time

Transformed Resources:

  • The resources that are treated transformed or converted in a process, usually a mixture of material, information and customers. Transformation system
  • Goods
  • Services(frying, cooking, cleaning, customer services)
  • Alteration
  • Transportation
  • Storage
  • Inspection

Output of Impressive Burger:

  • Final products (burger, nuggets, chips)
  • Customers
  • Competitors
  • Technology
  • Suppliers

Overall Functions of Impressive Burger before developing new service:-

  1. Serve Quickly
  2. Higher quality
  3. Simple Menu Options (Burger, Chips and Soft Drink)
  4. Offer choice of size
  5. Serve Orders within 4- minutes
  6. Demand Based Stock

After expending the operation of all Impressive Burger restaurants the following things happened as under:-

  1. Meal options increase on menu.
  2. Number of staff and machinery remained same.
  3. Increased in customer number.
  4. Serving time increased and takes 9-minutes for every order.
  5. Overall profit decreased.
  6. Stock increased by 20%
  7. Increase in waste.

Specific Goals of Expending Operations of Impressive Burger are:

  1. Attract new customers.
  2. Encourage existing customers to visit more often.
  3. Build product loyalty.
  4. Create enduring profitable growth.

The analysiss of factors like Strengths, Weaknesses that provides quality feedback on the resources and capabilities of the organisation.

  • Strengths

The Strength of PLCs include strong product value, delivery speed, customer care and cleanliness and good restaurant environment. The strong .Unique packages and innovative products variety like, chicken burger, cheese burger, chicken nuggets, salad etc are other strengths. Diversification of business, following appropriate human resource policies and focusing on organisational behaviour and managerial expertise are also the strengths.

  • Weaknesses

The of PLCs include the high operating cost, delay in services, low employee productivity, over exposure of brand, compromise in quality in a bid to grow fast, not able to focus on products suitable for health conscious customers, weak marketing, lack of staff and machines.

Functions of Management:

All operations are similar in that they all transform input resources into output product and services. Planning, organizing, leading and controlling all serve an important part in achieving managements vision. Each component is important and one cannot function well without the others. Main function of PLC:

  • Planning:

The first component of managing is planning. A Manager must determine what the organizations goals are and how to achieve those goals.. Setting objectives for the goal and following up on the execution of the plan are two critical components of the planning function. For example, a manager of PLC restaurant will need to have a marketing plan, a hiring plan and a sales plan.

As an example of Impressive burger approach they set their goals:

  1. Providing fast take away food to their customer quickly.
  2. Higher quality to that of their rivals.
  3. Earning more profit.
  • Organizing:

Managers are responsible for organization of the company and this includes organizing people and resources. Knowing how many employees are needed for particular shifts can be critical to the success of a company. If those employees do not have the necessary resources to complete their jobs, organization has not occurred. Without an organized workplace, employees will see a manager as unprepared and may lose respect for that particular managers supervisory techniques.

As an example of Impressive Burger Company has grown a chain of restaurant operations there is need to be

  1. Required number of staff.
  2. Required equipment or machinery.
    • Leading:

Managing and leading are not the same activity.

A Manager manages employees; this person makes sure that tasks are completed on time and policies are followed. Employees typically follow managers because he or she is the supervisor and in-charge of employees. Employees see a leader as someone thatmotivatesthem and guides them to help meet the firms goals. In an ideal situation, the manager also serves as the leader. Managers who want to lead effectively need to discover what motivates their employees and inspire them to reach the company objectives.

  1. Motivate rude and agitated staff.
  2. Encourage to take complete order.
  3. Proper guidance to staff members.
  • Controlling:

The controlling function involves monitoring the firms performance to make sure goals are being met. Managers need to pay attention to costs versus performance of the organization. For example, if the company has a goal of increasing sales by 5% over the next two months, the manager may check the progress toward the goal at the end of month one. An effective manager will share this information with his or her employees. This builds trust and a feeling of involvement for the employees.

But overall profit has declined dramatically over the last twelve months.

  1. Controlling overall functional activities of PLC.
  2. Controlling cost versus performance of functions of PLC.

Process of Operation Management:

Process of operation management has a very deep impact on the progress of the organization. There are four different processes. All operations processes are similar that they all transform input resources into output product and services. For impressive burgers PLC these dimensions plays an important role for the expansion of business.

  • Volume - Volume has important implications for the way Impressive Burgers operations are organised. The items on the menu are more as compare to the number of staff in the restaurant. Thus because of this there is less chances of repeatability and systemization in the company as compare to other big organization as McDonald and KFC. Like in McDonald there hamburger serve millions of people around the world in a day. The task people doing are repeated again and again by the same person, one person assigned to cooking the burgers, another assembling the buns, another serving and so on.
  • Variation probably the easiest way to measure variation is the ratio of peak demand in a day or a week, to the lowest demand during that day or week. You could try asking the impressive burger manager for this information or (if you have time) make observations throughout the day or even the week. So if the restaurant was busy up to its full capacity for part of the day but at its lowest was only ten per cent full.
  • Visibility This is a relatively simple issue. This means how much your business operation is exposed to the customer. Some customers can ask for the operations to be fully visible to them as they are main personal of operations. For impressive burgers visibility in not an issue for their operation failure as far as I think.
  • Variety There are two important features to measuring variety for restaurants. The first is the range of different foods that the impressive burger serves. One is the number of items in the menu to get an indication of this and other factor is whether the impressive burger will customize food to your customer preference. For example, does it serve burger good, excellent or superb? Does it allow you to choose the whether you want fries or salad? Another evaluation from expansion of business of Impressive burgers can be seen that they have had increased the variety in their menu but they didnt increase the staff with that which has caused them trouble.

Performance Objectives Measurement:

For critically analysis the expansion of the impressive burgers PLC we need to measure some of the operation objective of the company either they perform good or bad.

  • Quality

Obviously every company want to do things right that is a company do not want to make mistakes and want to satisfy their customer need by giving them error free product. So it mean quality play an important role to judge the performance of the company so quality is the primary objective of the impressive burgers PLC so the main measurement of this objectives would be the level of the customer satisfied from the products. Either food freshly made maintain its original taste or not.

  • Speed

Every company wants to build loyalty among the customer in order to increase the number of the customer for this speed play an important part company wants to do things fast, minimize time between the customer asking for products from its order till its receiving. This is one of the problems of impressive burger that after increasing the menu they taking more time to serve the customer this is not keeping customer happy because they have to wait long for their orders.

  • Dependability

A good company should do their work on time and products all time available for the customer. So dependability means that on time delivery in low volume-high variety operation to availability in high volume-low variety operation.

  • Flexibility

You would want to be able to change what you do, that is being able to vary or adapt the operation activities to cope with unexpected circumstance or to give customer. Instantaneous demand changes through volume flexibility are vital if the company is to maintain supply. Flexibility has moved from meaning product flexibility in low volume-high variety operations to volume flexibility in high volume-low variety operations.

  • Cost

Cost plays an important part in the operation management. That they should sell their product on reasonable price they produce goods and service at the cost which enables them to be priced appropriately for the market. Cost, in terms of the unit cost per product or service, varies with both the volume of output of the operation and the variety of products or services it produces. The variety of products or services in low-volume operations is relatively high, which means that running the operation will be expensive because of the flexible and high skill levels employed.

Reasons behind the Problems of Impressive Burger:

  1. New Service Development:
  2. Due to development of new services all the schedule and activities of company disturbed. Numbers of operations within the impressive burger increased, but number of staff and machines remained same.

  3. Lack of Proper Arrangement:
  4. Due to fast growing changes, there should be need to arrange staff, equipment, inventory, cleaning services, maintenance etc. But due to lack of proper planning all schedule is disturbed and cause problems.

  5. Reduction of Staff:
  6. As the operation of PLC company increases, there is need to be recruiting new staff. but plc company did not focus on these things. results of less no. of staff:

    • Poor productivity levels
    • Bad feeling among staff
    • Customer complaints
  7. Lack of Training:
  8. Due to increasing customers and functions of PLC there is need to be trained staff. Lack of proper training causes customers unsatisfaction.

  9. Lack of Machinery:
  10. Main problem of the company is that they increase their operation function. But there is reduction of equipments or resources. The staff cannot do anything without useful resources like electrical equipment, fridge, microwave oven, vacuum etc.

  11. Lack of Motivation of Staff:
  12. Motivation encourages staff to do their services properly but lack of motivation from high authority side, the staff dont know how, when and why to do this.

    • Dissatisfaction about the job
    • High level of absenteeism
    • The search for a replacement
  13. Overburden of Staff:
  14. Due to less number of employees, the responsibilities of each staff member become double. For e.g. the person who cooks food, now doing dish washing as well. These type of workload became employees frustrated, irritated and they cant serve customers properly

  15. Time Consumption:
  16. Due to lack of machinery and equipment, the whole process from food making to serving becomes time consuming the order that suppose to be completed in 4 min is now taking 9 min.

  17. Hygienic Problem:
  18. Due to lack of proper staff and equipments, the hygienic problem increases. Because there is not proper cleaning of store inventory, kitchen, bathroom. So that the customer feel uncomfortable to sit on these places.

  19. Lack of Quality:
  20. Quality is consistence conformance to customers expectation, the quality of product decreases day by day due to overall problems.

  21. Incomplete order:
  22. Due to untrained and rude staff the customers order remains uncomplete. This is also the main cause of their operation problem.

  23. Lack of Cooperation and Team Work:
  24. Due to overburden of staffs responsibilities confliction increases within staff members.

  25. Inventory Wastage:

There was great increase in inventory almost 20%.because the orders were not demand based. They ordered inventory without reporting the stock. Due to old and less number of resources the raw material could not be used in output. So there was increase in wastage.

Management of Change:

Impressive Burgers biggest problem was that they were not able to manage the change properly. They were unable to diffuse the change in the staff of the company because of this quality of food went down. Management of change needs good planning and implementation. It should also be consulted with people who are going to be affected by the change. Change has to be measurable, realistic and achievable. Impressive burgers failed to manage the change because they didnt even train their manager for the new things that they are going to bring in the menu. It is not employees responsibility to manage change but just to do his best to perform his job. The real responsibility to manage change is on managers and executive of the organisation they should manage in such a way that staff has no problem with it and they can easily cope with it. As we know that at impressive burger only menu has change but the staff and the machinery has not change this shows the lack of planning in the management `because if you are going to offer more things in menu it is obvious that turnover is going to be high and for that you need more staff and more machinery to deal with the demand. The staffs is getting more rude because they have to more work with same number of resources and because of the increased number of customers the orders are getting mixed up.

Inventory Management and Control:

Inventory or stock is defined as the stored accumulation of material resources in a transformation system. No matter what is being stored in inventory or where it is positioned in the operation it will be there because there is a difference in the timing or rate of supply and demand. With the new menu in the impressive burger plc there has been a problem with the stock been held up more and there is more chances of it getting waste. Following are some disadvantages of holding inventory.

  • May become obsolete as alternatives become available
  • Can be damaged or deteriorate ( age, rot, corrode etc)
  • Could be totally lost or be very expensive to retrieve as it gets hidden among other inventory
  • Might be hazardous to store
  • May take up excessive storage space compare to its value
  • v Invariably involves high administrative and insurance costs

As impressive burgers has started to stock more inventory than before it can be a problem for the company and it will also result in more loss for the company. To deal with these problems they have to make certain levels of inventory in each restaurant.

Inventory to be controlled

The main issue here is how manager discriminate between the levels of control they apply to different stock level items. The managers have to make classification of stock that which one is more important and which one can be kept at the premises. They can also control the inventory by using some of the sophisticated computer based information system which has a number of functions, updating of stock record, the generation of orders, the generation of inventory status reports and demand forecasts. These systems critically depend on maintain accurate inventory records.

Staff Management:

Impressive burger PLC has to manage staff properly to make the changes more effective. As we know management has not increase the number of staff people in the restaurant but has increase menu things because of this people has to wait a long time in queue because processing time has increased and staff has also suffering due to this because they have to do more job with same resources. The following are some reasons which I think has affected the staff performance.

  • Overburden on staff: due to less number of employees, the responsibilities of each staff member become double. For e.g. the person who cooks food, now doing dish washing as well. These type of workload became employees frustrated, irritated and they cant serve customers properly
  • Time consumption: due to lack of machinery and equipment, the whole process from food making to serving becomes time consuming the order that suppose to be completed in 4 min is now taking 9 min.
  • Hygienic problem: due to lack of proper staff and equipments, the hygienic problem increases. Because there is not proper cleaning of store inventory, kitchen, bathroom.
  • Incomplete order: due to untrained and rude staff the customers order remains incomplete. This is also the main cause of their operation problem.

Operation Improvement:

There are two different and, to some extent, opposing philosophies on improvement: Breakthrough and Continuous improvement.

  1. Breakthrough Improvement
  2. Breakthrough improvement, or step-change improvement, looks for dramatic changes to the operation. This might involves the creation of a new branch, that total redesign of a computer based reservation system or a total redesign in the method of working. Such changes are usually costly and do not necessarily realise the required improvements quickly. Business Process Re-engineering (BPR) is one such approach.

  3. Continuous Improvement:

Continuous improvement involves a more incremental approach to improvement, concentrating on encouraging many small step improvements. The repeated and cyclical nature of continuous improvement is best by what is called the PDCA(Plan, Do, Check, Act) cycle.

  • Plan - the examination of the current method or the problem area being studied and the formulation of plan of action
  • Do - the implementation of the plan
  • Check - the evaluation of plan against expected performance improvement
  • Act the consolidation or standardisation of successful change and the re- planning, doing, checking, acting of successful change.

Improvement Techniques:

There are many techniques that can be used by organisations to help gain improvement in performance:

  • Flow charts:
  • Flow charts provide a detailed picture of the flows of materials, information or customers. This technique can quickly show poorly organised flows, highlight areas where procedures do not exist, identify non-value adding delays and improvement and allow managers to assess where control and measurement should take place.

  • Scatter Diagrams
  • Scatter diagrams are a quick and simple method of identifying whether there seems to be a connection between two sets of data. It will highlight the strength of their relationship though is not necessarily evidence of a cause-effect relationship.

  • Pareto Diagrams
  • Pareto analysis attempts to identify what is most important and what is less so. It is a relatively straightforward technique which involves arranging information on the types of problem into their order of importance

Total Quality Management:

Total Quality Management (TQM) is arguably the most significant of the new ideas which have swept across the operations management scene over the last few years. TQM is concerned with the improvement of all aspects of operations performance, not just quality. TQM is one of the best known improvement philosophies and involves:

  • Meeting the needs and expectations of customers
  • Covering all parts of the organisation
  • Including every person in the organisation
  • Examining all costs which are related to quality
  • Getting things right first time designing in quality rather than inspecting it in
  • Developing the systems and procedures which support quality and improvement
  • Developing a continuous process of improvement

Conclusion:

I think that impressive burgers are facing this problem just because of bad planning and controlling of change. The management was not able to manage the change properly. I would suggest if they want to expand their business more first they have train their staff properly and provide them with the resources, so they can do their job, before going any further. The problem in their current restaurants can be improved by following the steps mention above. They need to review the staff and machinery of their current stores and also the level of inventory that they have to keep in a store according to the store demand so they can minimize the waste amount. They need to motivate their staff for good service because motivation can come over many problems they are facing.

The continues improvement of the operation could be improved further and extended more if we keep an eye on them and they are following

  • Continues training and development of the employee
  • Motivate the workers in term of rewards including employee of the month, Discount vouchers, free meal of the day and increase in pay.
  • Teach them that the customer is our main priority so deal the customer with pleasant mood and always welcome them with smile.
  • Place the right person at the right position at right time.
  • Teach them that they all are a one team and work like a team
  • v Serve the customer promptly because of that decrease the down time.

Bibliography:

Book References:

  1. Cases in Operations Management (Third Edition)Prentice Hall FT By R. Johnston, S. Chambers, C. Harland, A. Harrison and N. Slack
  2. Operations Management (Critical perspectives on business and management) By Michael Lewis and Nigel Slack.

Internet References:

  1. 1. http://businessmanagement.suite101.com/article.cfm/four_functions_of_management
  2. http://bizcovering.com/management/functions-of-management/
  3. http://forestindustries.eu/de/content/managing-plantation-operations
  4. http://en.wikipedia.org/wiki/Operations_management
  5. http://managementhelp.org/ops_mgnt/ops_mgnt.htm

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