Market Led And Operation Led

Published Date: 02 Nov 2017

With the increasing dynamism of the external competitive environment and its resultant output of globalization which have been equated by Kofi Annan, the ex UN general secretary as gravity, enterprise is currently been recommended to think locally but act globally as there carry out their business activities.

This report centres on a company called Just Us which operates currently in Novia Scotia Canada with a vision to be a leading business built on quality professionalism and innovation through ownership of social and environmental responsibility, excellent service for its customers whilst maintaining a cordial business relationship with its stakeholder.

It basically offers a large variety of certified organic and fair-trade product such as coffee, tea, chocolate and sugar but coffee is its main product. Currently it’s a leading brand in Novia Canada having a large customer’s loyalty whilst pursuing a differentiation strategy

Just us have plans to embark on commencing its operation in the UK coffee industry with competitor such as Starbuck, Costa Coffee currently present. So a critical evaluation of a suitable operations framework is carried below focusing on strategy, capacity planning and Quality. An integration of its information system with particular emphasis on customer relationship management, supply chain and knowledge management is followed then a conclusion is reached with regards to best practise. Recommendation on how to adequately management its human resource so as to enhance its competitiveness is given.

A Critical Evaluation of the Operation Framework of Just Us

Operations, Strategy and Operation Strategy

In order for Just Us to have a successful venture in the united kingdom, its operational strategy must be spot on in order to achieve a competitive advantage in the industry it intends to operate in, however considering the two words ‘operations strategy’ it looks like an oxymoron as operational can be argued to be related to the day to day running of the business venture. Furthermore it can be argued to be a process of ensuring specific task are carried out effectively and efficiently in the running of the business activity. (Slack et al. 2004) However strategy can be argued to be the direction and scope an organisation takes in the long term which avail it the opportunity to achieve a competitive advantage in the ever changing environment by configuration of its resource and core competence in order to fulfil its stakeholder’s expectation. (Johnson 1997)

However it is pertinent to note that there is a difference between operational and operations as operations relates to the resources required to create goods and service more so operations management is significantly concerned with the organisational resources, however most importantly is the way that an organisation’s operations function manages its scare resources would also affect its ability to meet the objectives of its stakeholder thereby highlighting the essential of operations management in an organisation strategy implementation. (Johnson et al 2005)

Strategy can be classified into three level namely the corporate level strategy, the highest level of strategy and also the master plan for the entire organisation which looks at the industry in which the organisation operates, what competitors might be doing. In fact it set out the long term direction and scope for the whole organisation normally expressed in its corporate vision and mission statement. The business strategy is concern with how a business unit competes in its chosen industry. It looks at how to implement the organisation’s strategic objectives. Finally functional strategy the bottom level of strategy looks at how resources are used to carry out the organisational objectives. It includes how many employee need to be recruited; what is the budget set for energy etc. Though it is the lower level of strategy, it drives the overall success of the strategy as it handles the pivotal structures of the strategy. (Slack et al 2007)

Operational strategy is the pattern of decisions and action strategically inclined which set the activities and objectives of an organisation consistent over time thereby availing the organisation a source of competitive advantage, however the operations strategy of an organisation has a direct relationship with the three classification of strategy. It could surface in a top-down or bottom up process relating to the corporate and business level of strategy. More so it can be developed in order to position its self in the competitive market commonly known as responding to the market requirement (Market led). Finally it can develop as a result of the organisations inherent core competences and dynamic resources. (Slack and Lewis 2002)

Top Down

As Just Us intends to embark on commencing its operations in the UK having being a successful company in Canada, considering that the coffee industry is quite mature, the competitive rivalry is quite high, having a top-down approach to its strategy can be argued to advantageous as it enhances the chances of Just Us having a well co-ordinate strategic plan to this venture as it would have considered all the aspects of strategy and also considered its implications. This approach would give the senior management of Just Us maximum control of the entire operations. It would also result in Just Us being more proactive than reactive. (Hayes et al 2005)

However as advantageous as this may be it is pertinent to note that the coffee industry in the UK is quite dominantly multinational like Starbuck and Costa Coffee who have taken this approach of strategy in the past and later restructured their strategic process in order to embrace current best practice. Such strategic approach consumes time and money more so it encourages a ‘head in the sand’ attitude as whatever is not in the plan wouldn’t be done even though it’s helpful to the strategic objectives. Furthermore it encourages unnecessary beaucracy that could result in Just Us been too slowly to react in an ever changing dynamic environment. (Prahalad and Hamel 1990)

Bottom Up

Despite the advantages of top down approach, it is quite incompatible with the values of Just Us and wouldn’t be favourable to Just Us as it intends to start its operations in the UK. However a bottom up approach to strategy could be argued to be ideal for the investment plans of Just Us.

Bottom up approach to strategy is a strategic approach in which the operational strategy emergences through a series of operation experience. This can be decision taken as operational manager respond to the challenges of running a business over time which can now be a coherent pattern recognisable as the organisation operational strategy. It is highly likely to involve an incremental process in which operations manager experiment with new approach to the operations of the organisation otherwise known as emergent strategic approach. (Leonardo Barton 1997)

In 1997 when Just Us was incorporated in Canada, this approach to strategy for its operations have been what have piloted the company with its vision to build a business on quality, professionalism and innovation for the benefit of its entire stakeholder.

In retrospect it has engage in a series of experimental operation project with its vision as a guide and emerged a successful business built on a solid operational strategy. This same approach can be implemented as it embarks to invest in the UK’s coffee industry acknowledging that the industry is already matured more so only a unique strategy is essential to attract a loyal base of customer taking note of the various competitors in the industry. However it is essential to note that the Canadian coffee industry is quite different to the UK coffee industry and success in the Canadian market using this approach doesn’t guarantee a similar succeed, but generally this would be a better approach as compared to the top down approach. It is pertinent to note that it is more inclined to be able to be responsive to the turbulent external environment and also address some of the shortcoming of the top down approach such as a ‘head in the sand’ attitude

Market led and Operation led

Analysing the competitive environment of the coffee in the UK, it is pertinent to note that the competitive rivalry is quite intense with many competitors having little differentiation. It is highly recommended that a market led approach is adopted as it would be of immense advantage to the company especially in fulfilling its corporate objectives of maximizing a competitive advantage.

Nonetheless Draft (2003) argued the resource of a company such as its assets, operation processes, capabilities, information and knowledge within the control of the company enables the company to implement strategies that improves its efficiency and effectiveness. This simply implies that the resource of Just Us is also very essential in its operational strategy. These resources in particular includes its human resources, infrastructures such as it ICT capabilities used in its operations in order to achieve excellences

Capacity Planning

This can be defined as a process of ascertaining the production capacity needs of an organisation in order to meet fluctuating demand pattern of its products or services. It is also the task of setting an appropriate capacity of operation that can effectively respond to the level of demand that would be place upon it. (Slack et al 2007)

For Just Us commencing operations in the coffee industry, the importance of capacity planning cannot be over emphasised as it’s important that appropriate balance between capacity and demand is reached. This is due to its cost implication as any capacity level more than demand would imply under-utilization of that capacity resulting in a high unit cost of the good or service. This would further limit its competitiveness in the industry especially in a matured industry like the coffee industry. However in such a situation all demand would be mate and apparently no revenue would be lost but, that the surplus capacity can result to a cost as the entity would have to accommodate for excess capacity. However excess capacity could enhance the speed of response to customer’s demand and also better the flexibility of the product. (Johnson 2001)

It is highly recommendable that Just Us adopts a pull through system in its capacity planning as this responds to customer demand only when an order is placed thereby making operation’s cost effective and also more competitive in the industry. However haven highlighted the essential for Just us to adequately plan its capacity, it is pertinent to note that a discrepancy normally occurs between the capacity of an organisation and the effective demand from its customers could result in resource not been adequately utilized or demand not been mate. The ultimate goal of capacity planning is to minimise this situation. (Zijm and Buitenhek 1996)

Capacity Planning Options available to Just Us

Level Capacity Plan

This is a situation where the processing capacity of an organisation is set at a uniform level throughout the planning period regardless of the fluctuations that may occur in the demand forecast. This technical implies the same staffing and production level would be maintained irrespective of the demand pattern. Relating to Just Us operations, this can achieve a stable employment which would help staff morale especially as there would be a high level of staff-customer contact, more so there would be a higher level of process utilization resulting in a high productivity with resultant low unit cost. (Weston et al 1999)

However this industry is quite perishable with fluctuating demand over the period. It is not possible to have a flat demand for this product more so producing at a flat pace would end up resulting in a cumulative amount of inventory. In addition this would accumulate to a high cost of operation thereby making it less competitive especially in a matured coffee industry. This would result in productivity with low quality which wouldn’t be appropriate for Just Us in its venture to invest in the industry.

Chase Demand

This is actually the opposite of a level capacity plan and is a situation in which the capacity inherent in an organisation is matched to the current level of forecasted demand. It is a challenging capacity planning technique as demand pattern in this industry fluctuates a lot so different resources needs would be required to be able to serve the fluctuating demand. This implies different category of staff would be working in different shift times. Shift pattern would be arranged in such a way to match with the forecasted demand pattern, the use of full time staff, part time staff and subcontracted staff would be have to be considered intently in order to enhance the effective use of the resource available in the company. Overtime, one of the quickest and also convenient methods of adjusting capacity would have to be encouraged. (Buxey 2005)

This would minimise waste as the company resources would be put to adequate use and also satisfy customer demand through the various demand period however Just us would face the challenge of ensuring that the product and service quality are adhered to. There is also an ethical issue that can arise as a result for Just Us, as the idea of responding to the fluctuating forecasted demand pattern with increasing and decreasing the work force can be seen as treating people in a totally unacceptable manner. In fact hiring people on a temporary contract can lead to anxiety in the work place thereby affecting the quality of operations. (Dubois and Oliff 1991)

Quality

Coffee like most products is judged on its quality and also goes a little more because coffee is an everyday commodity. Quality means different things to different people, in fact quality can take different meaning depending on the perspective it is checked from. But for this report, quality would be looked at from a customer perspective and a producer perspective.

From a customer perspective every business organisation produces goods or services in order to be sold to the customer. By this act it then fulfils its ultimate objective of maximizing shareholder wealth. This implies that the customer is king in this relationship and it’s her perception that matter. It is the customer perception of the goods or services can equate to the quality of the goods or service. However certain criteria must be considered by the customer in order to associate a product with a high quality or low quality based on their experience with the product and also what the customer is willing to pay. This could be its fitness for use as the customer must judge whether the product have been able to meet the customer needs, reliability and conformance of the product depending on the segmentation of customer being targeted. (Crosby et al 1990)

From the producer perspective it is important to have some criteria in which the quality of its goods and services are rated. Before a good or service is actually produced, a production process must be put in place and there must be some specification stipulated otherwise known as the quality of conformance however because it’s the customer is king, the customer is the end user of the product, it’s the customer view takes centre stage. (Smith 1993)

Critical Evaluation on Quality

Drawing from the finding of the investigation of the competitor currently in the UK coffee industry in which Just Us would face, it is quite imperative that quality is part of the operation framework strategy with the likes of Starbuck and Costa Coffee already established as quality brand. For Just Us to competitively operate in the UK’s coffee industry, quality of its entire operations must be a priority. There are modern approaches for Just Us to manage its quality.

Total Quality Management

With the matured coffee industry Just Us would be competitively better off if total quality management technique is adopted however it can be argued to a process of ensuring a zero defect philosophy to the management of all resource and relationship in the organisation and also developing a culture in the organisation that encourages continuous improvement as it strives to meet customer expectation. It is pertinent to note that TQM integrates all the quality management efforts of the entire business unit in an organisation and have been responsible for the global success of Toyota. (Boaden 1997)

Just Us, adopting a TQM methodology for managing its quality would improve its systems for production and service delivery, thereby reducing the level of waste in its operations enhancing the quality of its products whilst reducing cost of operation. TQM encourages continuous improvement of its process not as a one-off but as part of the business philosophy. This would be of immense benefit to Just Us as it intends to venture in the coffee that is already mature. TQM encourages getting it right the first time and also zero defects; this would imply adequate training for personnel which could have some cost implication. However implementing TQM into the operations process would minimise the cost of quality such as the prevention cost, inspection cost, internal failure cost and external failure cost in the long run (Dean and Bowen 1994)

How TQM can be implemented by Just Us

The philosophy of TQM can be implemented by Just Us taking an approach that focus on meeting the needs of the customer and also exceeding the expectation of the customer. Adequate studies of customer’s behaviour can be obtained from the information system operational in the company or from data mining company. TQM encourages a team approach whereby ownership of the procedure is collectively taken. Just Us must ensure this is incorporated into its recruitment and training of its workforce as TQM is a business philosophy. Furthermore TQM is a business philosophy, the culture of the organisation should be one that encourages zero defect that is getting things right the first time which the six sigma can ensure a systematic total reduction through its DMAIC approach. (Hackman and Wageman 1995)

Information System

A well integrated information system would be essential for Just us especially getting its operations to develop competitively however information system is the makeup of information technology and the people in the organisation activities which supports the operations management in the course of running the business leading to decision making. For long information system have been mistook to be information technology but it is important to note that information technology is an aspect of information system as defined above. It can be argued to be the entire technological gadget both hardware and software that is used in the business process, nonetheless the use of information technology transforms commercial process into e-business. (Yeh et al 2012)

Value Chain

In order to integrate the information system within the organisation operation, it is absolutely important that a perfect understanding of the business process that would be operational in Just Us is obtained.

However Porter’s value chain and value network framework provide a perfect platform that to adequately comprehend Just Us business process intended. Porter (1985) argued that the value chain set out all the activity and process carried out by an organisation which he categorised as primary activities and supporting activities otherwise known as value adding activities and non value adding activities. These primary activities are inbound logistics, operation, outbound logistics, sale and marketing, then service while the supporting activities are firm infrastructure, technological development, human resource management and procurement.

Basically looking at this activity highlighted above, this represent functional unit that would be operational as Just Us intend to invest in the UK, more so an integration of the information system to these various business process would make the operation of Just us competitive especially in the coffee industry. It is essential to note that these functional units must co ordinate their operations if there is to be a successful outcome from this venture. A lack of integration would result in making these individual functional unit become information silo which would be of no good especially as Just Us is about to invest in the coffee industry that is characteristically highly competitive. In today’s competitive environment information and proactive reaction readjusting to reposition your tactics in order to achieve the ultimate purpose of existence and at the same time gain customer loyalty is now the way companies such as Toyota, Harley Davidson has become very successful in their respective industry.

Customer Relationship Management

Research has shown that loyal customer account for 80% of an organisation profit but actually make 20% of the organisation customer population, in fact the cost of acquiring new customer is quite higher than the cost of retaining existing customer however customer relationship management is a process whereby marketing resource are devoted to maintain and exploit the organisation’s existing customer rather attracting new customer. (Hoot 2005)

In Canada Just Us have been able to integrate a effective customer relationship into its operations by making its cafe become a comfortable place that enhance human relationship. More importantly a place where the story behind the brand have been told by a highly trained and committed employee as a result have had competitive advantage. This practise should be continued as it embarks in the UK venture as currently no competitors in the UK follow this approach. In addition an emphasis of delivering a high customer service and commitment should be part of the operations especially tailored to the individual customers.

However as CRM implies a long term relationship with customer, software system such as on-demand CRM software, could be implemented in approximately 3 months. This would record all the relevant information such as customer preference, past purchase and recent undertaking by customer thereby tailoring the operations to better satisfy the customer, and also improve the marketing strategies to its various customers. This has been used by on- line retailer like Amazon in their customer relationship management on which products bought by a customer can be tracked and the stage of delivery process communicated to the customer. In addition recommendation based on customer purchasing history can be made to the customer of which alert emails and instant order update can be sent to the customer on product development and new product.

Supply Chain

The value chain have been linked to the supply chain as both slow the process by which input passes through before it get to the final customer however the value chain lay more emphasis on adding value in all the business process inherent in an organisation. It is thus a broader platform when compared to the supply chain though both show the movement of input (raw material) to the final customer. The supply chain doesn’t look at how value is being added, however it can be seen as encompassing all activities that is associated with flow and transformation of goods or services from the input stage to the final customer with the information associated with the flow. The supply chain begins with the supplier of raw material basically the input referred to as the upstream member of the supply chain and passes through the internals who add value to the input respectively. This could be the warehouse, the factory were the input are transformed and further passed down through intermediaries which may be distribution channel to the final customer normally regarded as the downstream member of the supply chain. (Andersen and Larsen 2009)

Just Us intended supply chain for operation in the UK is basically going to be same as the supply chain in Canada where its raw materials are going to be sourced directly from fair-trade producer though its production outfit would should remain in Canada in order to stabilize operations in the UK and monitor quality in its production unit. Processed input would be transported by air to the UK to be sold at its various shops on a retail and whole sale basis. Though a couple of stores would be opened to act as a pilot scheme to stabilize its operation

Supply Chain Management and Integration

This is a management process that focuses on integrating the flow of goods and services whilst managing the associated information through the supply chain network in order to ensure absolute responsiveness to the customer’s needs and lowering the cost of operation. This requires a close relationship, collaboration, co-operation and communication among the member of the supply chain more so a share of information about customer of which it is pertinent to note that trust must be existence in the relationship. Integration of the information system within Just Us operation’s can be effectively done with the help of information technology which ensures the supply chain is effectively managed. The supply chain is an essential part of the business process with the same objective of providing the customer or end user with an excellent customer service. It is pertinent to note that information system and information technology ties these processes together and integrates them into the supply chain. This is an essential area that must be given absolute attention as Just Us intends to embark operations in the UK. (Russell and Taylor 2009)

Collaborative Planning, Forecasting and Replenishment (CPFR)

This is a situation where two or more companies in the supply chain network integrate their individual demand forecast in order to come up with a single plan for ensuring that customer’s demand is adequately mate. Here the participating companies share information such as past sale trend, demand forecast, which promotes a co-ordinated joint demand forecast planning more so it doesn’t require the use of electronic data interchange as it a can be sent manually or over the internet. This would be important for just us as it intend to set up operation in the UK as this would help in adequately forecasting the demand because of this type of collaboration with its supplier more so this would reduce the effect of bullwhip and reduce operation cost. (Russell and Taylor 2009)

Enterprise Resource Planning

This software helps integrate various component of an organisation especially the supply chain process. This is done by sharing and organising information with the supply chain member with its major function to integrate the functional aspect of an organisation and also integrate with parties outside the organisation such as its supplier. This integration is done in such as way that all the transaction in the organisation is sync to other aspect and also with the supplier that for instance sale of a product register automatically in the accounting ledger, inventory ledger and signal the supplier when a product need replenishment.

This process would completely integrate the operation process of Just Us connecting all the functional units to operate as a collective unit and most importantly link its supplier to its operations, thereby providing customer with an excellence service and enhancing its competitive advantage however it is pertinent to note that this is extremely complex, expensive and time consuming to implement. (Rainer and Cegielski 2012)

Extranets

This is a connection of intranet of different businesses which are secured and private where the business partners can gain restricted access to relevant information that can improve sale, enhance customer service and also the supply chain network. The prime purpose is to foster integration and collaboration between and among business partners. The use of an extranet would avail Just Us the ability to build close relationship with its supplier as there would be able to integrate their effort in order to gain a competitive edge in the market. The extranet would improve the operational process and information flow across the business partner thereby enhancing its ability to meet customer’s need. (Boddy 2008)

Knowledge Management and Integration

The knowledge that an organisation possess can be a resource that an organisation controls which would be difficult for competitor to copy and so become a source of competitive advantage, however it is important that all knowledge must be recorded and readily available for use by the organisation. The knowledge possessed by Just Us would be of immense important as it intend to invest in the UK, however knowledge management is a collection and shared experience store up in the system, routines and activity across the organisation. This involves the process of identifying knowledge, capturing it, sharing it, distributing it and maintaining it. (Armistead1999)

Research has shown that 20%-30% of organisational resources are wasted because senior management are not aware of the knowledge inherent in their organisation. This is consistent with Lew Platt, ex- chief of Hewlett Packard articulated saying ‘if only HP knew what HP knows, we would be three times as profitable’. However as Just us have been operational since 1997 in Canada, there is definitely knowledge that have been accumulated over the years the organisation is aware which have given it competitive advantage. This can be classified as explicit knowledge and are already accumulated in the organisation’s technological infrastructure. It is pertinent to note that the explicit knowledge is already integrated into the information system of the organisation. However despite it competitive advantage of Just Us in Canada, there is knowledge within its employee’s individual brain and is not readily available to Just Us, this is known as tacit knowledge. It is important that Just Us explores the tacit knowledge of its work force as it prepares to invest in the UK, then make it readily available (explicit) thereby integrating it into its information system. Just Us can explore these tacit knowledge by encouraging socialisation which is basically the sharing of knowledge through social interactions, then analysing the knowledge obtained and finally recording it into the database, making retrieval of the knowledge possible. (Grant 1997)

Recommendations

Haven elaborated suitable operations framework and integrated the information system that would propel Just us to competitively develop and run its operations as it intends to venture in the UK, the importance’s of human resources shouldn’t be ignored as there are fundamental to any organisation’s success in the competitive environment. For Just Us to enjoy the anticipated level of success in this venture its employee’s must be adequately managed. Below are some recommended approach to manage its employee

Task Culture

Culture can be argued to be people’s way of life; however in accordance’s to financial concepts, an organisation is seen to be a separate legal entity from its owner. In this respect in every organisation there is a way things are done, which can be argued to be its culture or style of operations. Just Us would enhance its competitiveness by adopting a task culture which basically establishes team to achieve specific task. This also encourages staff empowerment as the emphasis is on getting the job done rather than sticking to the job description whilst also motivating employee towards achieving organisational goals.(French et al 2011)

Commensurate Pay Package/Benefit System (Reward)

Reward is very important especially in the relationship between an organisation and its employee. It is important that Just Us takes this on-board especially as it has to adequately manage its employee in order to achieve a competitive advantage. Just us has to built a reward system that acknowledge its staff in both extrinsic and intrinsic way. This would actually result to a better appreciation of its human resource, thereby giving them a sense of belonging in the company, more so this would prevent dysfunctional behaviour arising.

Transformational Style of Leadership

Transformational style of leadership is concern with doing the right things. It basically takes a long term vision in its way of operation, building power from personal relationship and charisma thereby enabling a climate of trust in the workplace. Basically people would follow a leader that inspires them and things can be done by injecting enthusiasm and energy. It’s very important that the manager which would manage the employees be transformational leader as there would be able to manage the workforce with their personality. (Kelloway et al 2003)

Involvement of Employee in Decision Making

It is important to note that this is one of the philosophy of total quality management, however as there would be a high ratio of staff-customer contact. It is extremely important that the employee’s are involved in the decision making process that would affect their jurisdiction. This enhances ownership of the task and breeds a sense of belonging and appreciation in the mind of the employee.

Performances Measurement (Appraisal)

As Just Us intends to venture into the UK, the essentials of its employee can’t be over emphasised, more so management of its employee can make a difference between the venture being successful or failing to be competitive. It is essential that it employees are appraised on their performances with in a particular time interval so that areas that needs improvement can be sorted, however the area appraised must be within the control of the employee.

Conclusion

In my opinion despite the coffee industry is matured and characterised with intense competition, Just us can still set its system and operation in such a way that it can earn an above average return on investment, however a caution approach must be take.

In the design of its operation framework, it strategy should be an emergent strategy (bottom up) with skeletal plan already made but should go with a highly flexible mindset so as to adopt to the competitive environment. The importance’s of quality must not be ignored as noted earlier as every product is judged by the quality which makes the differences between a successful product and a failed product. More so TQM should be considered intently because of its inherent advantage.

In terms of capacity, Just Us should consider a mixture of all the capacity planning technique mentioned above as this enhances its flexibility in operation and it’s competitive however ethical elements should be also considered as well.

Finally the importance’s of information system can’t be ignored and all aspect of it especially information technology must be integrated into the whole operation of Just Us so as to ensure a co-ordinate operation. Nonetheless the human resource is pivotal to this venture and must be adequately managed to enhance their contribution towards competitively running of the broader operations.