“Our reputation rests on bringing these products to market in a timely, reliable and environmentally responsible manner” (Overview 2008).
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Reputation in business is an important contributor to its success. The manner in which a company carries out its operations is vital to developing a good name. The role of the operations function refers to something beyond the obvious responsibilities and tasks (Slack, Chambers & Johnston 2002).Operations management is described as the organization of processes used to produce and distribute products and services (McNamara 2008).
There are five main objectives of operations management. These are quality, speed, dependability, flexibility and cost. A successful operations management system is one that meets these objectives. The system is only successful if there is cohesion among all the stakeholders relevant in the business. These are the customers, suppliers, shareholders, employees and the society at large (Slack, Chambers & Johnston 2002).
Success is measured using key performance indicators. These indicators measure progress made towards achieving the organizational goals. The key aspect of good key performance indicators is that they must be quantifiable and specific (Reh 2008). An example of a good key performance indicator in a school is the number of graduating students that get employed two months after graduation. The number of graduates is a measurable quantity. The number of those graduates that actually get employed is the specific goal that the school uses to measure its success. A good organization management system will ensure that the strategy the company puts in place to achieve competitive advantage are achieved.
To better understand operations management, a study of the shell company in Australia shall be looked at. This will offer a practical insight into how operations strategies are used to achieve the objectives set out in achieving the set out key performance indicators. As a practical example, the Shell Corporation shall be used. The company is a leading supplier of petroleum and petroleum products in the world. In Australia, supply 25% of Australia’s petroleum requirements (Overview 2008).
Quality is the first objective in measuring the success of a good operations system. Quality affects the company both internally and externally. Externally, delivery of quality services ensures that the customers’ needs are satisfied. This is done by ensuring that the company provides high quality products suited to the clients needs. Their products must also be in constant supply. There should be an avenue through which customer queries can be addressed.
Internally, delivery of quality services ensures that the operational costs are kept low. Quality service will allow the company to concentrate on its core business of supplying fuel rather than taking time to solve the problems brought on by low quality work. In this case, sales will be the key performance indicators (Reh 2008). The company should gauge the quality of the services they offer in terms of the profits they make in terms of dollars per year. This is a specific performance indicator. The profits will compare the sales the company makes and the operational costs. The company can use these figures to identify the key areas of the business that are not doing as well as they should be in terms of quality.
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The second objective of operations management is speed. For shell, speed is a factor when it comes to delivering their products to the market. An efficient delivery system will ensure that the goods get to the market on time. The supply will also be constant. The overall cost of delivery will be reduced if the system is made more efficient. In this case the key performance indicator will be the amount of petroleum and petroleum products it is able to supply within a specific period.
The company also has some refineries (Overview 2008). The turnover at the refineries will determine the ability of the company to meet the market demands. This turnover can be measured in terms of barrels of oil. To ensure that the company has sound operation systems in terms of speed, it should ensure that it has sufficient amounts of products to supply to the consumers. It must also have extra amounts in store in cases of emergency e.g. crude oil shortages.
Dependability is an important measure of successful operations. A company must be able to earn the trust of all its stakeholders. Customers will be loyal if they can trust the company to provide them with quality products in time and in sufficient quantities. This will translate into increased revenue generation for the company. Other stakeholders include the society and investors. Investors will choose to partner with a company if viable opportunities to make money are available. The company has partnered with organizations such as Ferrari to produce high quality petroleum products (Overview 2008).
The number of profitable partnerships such as these determines how well the operations of the business are doing. They translate into improved efficiency of operations (Slack, Chambers & Johnston 2002). Since there is cost sharing in such partnerships, the overall expenses for the company reduce. This will result in higher profit margins.
Another objective any successful operations management system must have is flexibility i.e. the ability to adapt to change. A company must always have set guidelines that help it meet any concerns presented by the market. The partnership Shell has made with other companies to improve its product range shows that it is willing to be flexible. For shell, their flexibility is seen in their continued development of new innovative products to meet the changing needs of the consumers (Overview 2008).
The last measure of operation management success is cost. The cost of doing business will have an impact on the company’s profits. The costs incurred can be measured in terms of actual amounts of money. A company that is making a sizeable profit at the end of each year can be said to be successful in their operations systems (McNamara 2008). The profits must be steadily increasing.
For a company like shell, developing a system by which their business is run ensures efficiency in operations. The guidelines to these systems are set in the company’s code of ethics, business principles and code of conduct (Overview). The company relies on these guidelines to ensure that they run an efficient business. To measure the success or failure of an operations system, specific and quantifiable goals should be set for each activity that is undertaken (Reh 2008). It is vital for a company to carry out it operations in a timely, reliable and responsible manner. This kind of operations will result in developing a brand that will be success in business.
McNamara Carter 2008. Operations management. Free management library. Web.
Overview. 2008, Shell in Australia. Web.
Reh, FJ 2008 How an organization defines and measures progress toward its goals, About.. Web.
Slack, N Chambers, S & Johnston, R. 2002, Operations management (4th Ed) Financial Times Prentice Hall Harlow, England.