Operations Management: The Case of Concept Design Services

Introduction

Operations management is directly dependent on a company’s strategy, and this aspect needs to be taken into account when analyzing organizations’ strengths and weaknesses in planning and realising their operations. Thus, operations management is the approach to managing a range of resources that are used to manufacture certain products or propose specific services (Slack, Brandon-Jones & Johnston 2016). It is possible to formulate one of the goals of operations management: to guarantee the manufacturing of high-quality products while using minimal resources and referring to the least possible costs (Haksever & Render 2017; Slack, Brandon-Jones & Johnston 2016). In this context, it is important to focus on the operations strategy that can be defined as an approach to applying certain strategic decisions in the area of managing resources for manufacturing products (Slack, Brandon-Jones & Johnston 2016). Operations strategies are important to be analyzed when it is necessary to understand how certain organizations can use their available resources to compete in the market and win leading positions.

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In the context of this report, the discussion of operations will be based on the analysis of the activities and strategic outcomes of Concept Design Services (CDS). The purpose of this report is to provide definitions for the types of strategies used at CDS and analyze operations supporting these strategies. Additionally, the report is aimed at analyzing the relationship between the three core functions of operations to assist in realising the company’s operational strategies. Certain strengths and weaknesses related to these processes will be defined. It is also important to evaluate the potential impacts of developing the design house partnerships and the collaboration with retailers. Finally, the recommendations for the management will be provided to improve weak manufacturing processes and address the identified challenges in operations.

Strategy Types Evidenced at CDS: Market Requirements

It is possible to identify four specific types of strategies influencing operations management that are based on top-down, bottom-up, market requirements, and operations resources perspectives. CDS’ operations significantly depend on following the strategy grounded in the market requirements perspective because strategic decisions and changes in operations are realised after the analysis of market demands and customers’ behaviors. According to Slack and Brandon-Jones (2018), managers cannot successfully plan operations without analyzing market requirements to determine customers’ demands and priorities for the product development and promotion. This strategy can be defined with reference to the fact that market requirements directly affect operations in terms of influencing quality standards, design and costs (Ávila, Amorim & Ferreira 2019). The analysis of customers’ needs related to price, quality, delivery, innovation, design, and differentiation determines a company’s operations to address these needs in the context of this particular strategy.

It is also necessary to analyze how CDS’ operations have been designed to address the strategy based on market requirements. Products under the Concept brand have innovative designs, respond to the market demand, and are produced within six style ranges and available in 12 colors. The order-winning objective for CDS is to produce innovative and fashionable items differing from competitors’ alternatives in terms of design and colors. Therefore, the manufacturing process is organized in a way to guarantee high-quality molds are used, and machines are standardized to ensure that molds fit all machines. This approach allows for speeding the process of manufacturing Concept products within a short time. Furthermore, to guarantee the production of goods in different colors, the work with molds starts with using light colors and moving to the darker ones not to prevent sequences of operations. Customers’ constant interest in new products and the competition in the market cause the promotion of new development processes, and the time required for testing new molds (24 hours) was added to schedules. Different variants of deliveries are proposed to various customers, including businesses and individuals.

Strategy Types Evidenced at CDS: Operations Resources

CDS is also focused on following the strategy based on analyzing its operations resources. This perspective on an operations strategy depends on the Resource-Based View (RBV) framework and allows for assessing available resources and competencies to form the competitive advantage depending on these aspects (Hitt, Xu & Carnes 2016). Thus, the management of operations directly affects the strategic success of a company in the market. Managers need to determine constraints influencing their strategy about operations as well as to evaluate available capabilities to focus on and use (Bromiley & Rau 2016). Furthermore, much attention should also be paid to formulating the strategy depending on the assessment of intangible resources, which usually include organizations’ relationships with partners and suppliers, customer loyalty, and reputation (Heizer, Render & Munson 2017). In addition, in the context of the operations resources strategy, it is also necessary to refer to the analysis of a company’s new product design, supply networks, job design, inventory, and process technology among other areas.

Certain operations at CDS have been designed to support the realization of this strategy in the organization. Currently, CDS managers assess equipment and machines as flexible in use and appropriate to increase volumes of manufactured products if required. Furthermore, the company has enough resources and capabilities to improve partnerships with Italian and German design houses depending on their design and manufacturing capabilities with the focus on producing fashionable products. CDS also works with high-quality molds made by specialists in South Korea that contribute to the overall quality of their products. Manufacturing and supply services are developed effectively to guarantee the simultaneous work on large orders to address customers’ expectations. However, there are also some constraints to pay attention to while focusing on operations: the lack of warehouse space and the lack of experience in developing products other than plastic ones for industries and households. Moreover, the pick rate assessed for the company is 92% about the availability of finished goods inventory.

Three Core Functions

Three core functions that manage critical processes in any company are marketing, product development, and operations. The marketing function is characterized by promoting a firm’s products to target consumers in a variety of markets with the focus on addressing customers’ needs and expectations (Slack, Brandon-Jones & Johnston 2016; Wilkinson, Armstrong & Lounsbury 2017). The purpose of this function is to attract the customer’s attention to the product and provoke their purchasing behaviour. The product development function includes developing and modifying products to stimulate customers’ interest in products and requests (Chikán & Sprague 2019; Slack, Brandon-Jones & Johnston 2016). The operations function is the most important one as it is associated with creating products attractive to customers depending on their demands (Hill & Hill 2017; Slack, Brandon-Jones & Johnston 2016).

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At CDS, all three functions are closely related to each other. The marketing function was responsible for evaluating market trends and concluding that Focus products should have been replaced by Concept products that were more attractive to wider customers. Furthermore, marketers provided designers with tasks to develop stylish products to cooperate with design houses and formulated tasks regarding changes in products to manufacture for the operations function. Depending on the results of marketers’ analysis, specialists responsible for the product development function focused on creating Concept and “design house” products and began to order innovative molds from South Korea. Specialists from the operations function were provided with new molds to use and change their working processes to guarantee the production of high-quality Concepts products that vary in their forms and colors. Thus, the operations function directly depends on the marketing and product development function.

Potential Strengths and Weaknesses

Although the work of three core functions in their relation to each other guarantees the manufacturing of high-quality products, there are also both strengths and weaknesses in their cooperation. Marketers at CDS are effective and successful in analyzing market tendencies to focus on promoting products that are most fashionable and meeting consumers’ demands to increase the company’s profitability. Furthermore, specialists responsible for the product development function can be viewed as skilled and knowledgeable to develop innovative and attractive products to address customers’ needs (Slack, Brandon-Jones & Johnston 2016). Moreover, strong features include the ability of the manufacturing and operations functions to comparably quickly change the production process to address market trends, and the use of larger machines for multi-cavity molds allowed for increasing productivity.

However, there are also weaknesses in the communication and cooperation between the core functions at CDS. Firstly, marketing forecasts are often not accurate enough, and this aspect influences the scheduling of operations at CDS, leading to short-term unplanned changes that affect processes. Negative outcomes include effects on efficiency, utilization, and scrap rates (Slack, Brandon-Jones & Johnston 2016). Secondly, specialists from the product development and operations units need to agree on schedules to be able to test new product molds without affecting productivity. Thirdly, problems in forecasting orders and scheduling also influence deliveries of products and customers’ satisfaction levels (Ansoff et al. 2018; Khanna 2015). Finally, CDS suffers from the lack of warehouse space, however, while working with design houses, it is expected that CDS uses only their resources to create products, including their call-center, distribution, and warehouse resources. These weaknesses need to be addressed by improving the communication between different departments of CDS.

The Design House and Manufacturing Operations

The focus on strengthening CDS’ alliances with design houses can lead to significant changes in manufacturing processes and other activities in the company. The first change will include the growth of the company’s design unit and the focus on the product development function to design and develop innovative products to address new partners’ requirements (Slack, Brandon-Jones & Johnston 2016). The key challenge in this area is the necessity of hiring more skilled designers and specialists in product development (Harmsen, De Haan & Swinkels 2018). Manufacturing operations will be changed in terms of addressing the necessity of producing more goods (Luchs, Swan & Griffin 2015). It is possible to expect that new machines and new molding forms will be required. As a result, the used machines will be adapted to new molds or will be replaced with alternatives. Furthermore, it will be necessary to improve working processes to guarantee the production of the high number of goods for design houses along with Focus and Concept products.

There is also a risk that new products developed in the context of collaborating with design houses will be more complex than existing ones, and they will require more time to prepare machines for using molds according to new specific settings. The time required for testing and changing new molds needs to be taken into account when developing schedules related to manufacturing processes (Slack, Brandon-Jones & Johnston 2016). Additionally, despite CDS’ design and manufacturing competencies, the collaboration with design houses can lead to the necessity of developing and producing extremely new products that are not typical of CDS and not associated with the company’s core expertise. This situation can potentially lead to significant changes in manufacturing processes concerning replacing the currently used machines and molds, revising schedules, training, and educating employees (De Toni 2016). Such changes can lead to unexpected decreases in productivity levels and increases in defects in products.

Major Retailer Services and Manufacturing Operations

Another category of CDS’ collaborations includes the focus on major retailer services. Thus, CDS cooperates with supermarkets and retail chains as a partner that is responsible for providing products which address all possible customers’ expectations and needs. This practice influences manufacturing operations through changes in the activities of CDS’ marketing department (Karlsson 2016). Thus, marketers at CDS are responsible for analyzing the data presented by supermarkets to decide what products to manufacture and supply for a concrete case depending on customers’ interests (Slack, Brandon-Jones & Johnston 2016). Depending on marketers’ predictions, the manufacturing unit of the company receives the order for producing a certain number of required goods from the category of plastic household products.

It is stated by the managers of the company, that the product range to address this demand should not be extremely significant in comparison to other Concept products. Therefore, manufacturing processes can remain unmodified to address retailers’ orders. However, it can be a challenging task for the manufacturing department to prepare a great number of ordered products within a short period of time if these volumes were not reflected in the previously developed schedules (Starr & Gupta 2017). From this perspective, much attention should be paid to analysing the data given by retailers on their customers’ expectations and purchasing trends to make accurate forecasts and plan activities for the manufacturing department in the most efficient manner.

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Recommendations

The first step in addressing the challenges faced by the management of CDS about developing new partnerships is the focus on overcoming weaknesses in operations and the communication between the core functions at CDS. The important primary step is the improvement of marketing forecasts depending on the data they receive from retailers in the context of supportive relationships with supermarkets. Marketers should also be trained regarding the analysis of regular market data to predict customers’ demand for Concept products within a short period of time (Fredendall & Hill 2016). As a result, the scheduling of operations at CDS will be improved. The second step is the improvement of communication and data exchange between the specialists from the product development and operations units. The company’s interest in developing new innovative products will lead to testing more new moulds and other tools for production, affecting schedules and employees’ productivity (Slack, Brandon-Jones & Johnston 2016). Therefore, much attention should be paid to planning the use of machines by operations and product development units for their purposes during weekdays and weekends.

It is also recommended to improve CDS’ approach to delivering their products as they are responsible for on-time deliveries in relation to different types of customers. Thus, more resources should be invested in supporting this function to guarantee customers’ and businesses’ satisfaction (Anand & Gray 2017). Additionally, it is possible to recommend expanding areas and building new facilities for CDS to address their problem of the lack of warehouse space. While cooperating with design houses and collaborating with retailers, CDS will potentially increase their production levels, and limited warehouse spaces will affect this progress negatively (Slack & Brandon-Jones 2018). The efforts made to address these specific weaknesses in CDS’ operations will contribute to the further development and growth of the company to increase its profitability and influence its reputation in the market.

Recommendations (cont.)

To support certain changes in CDS’ activities and strategies that are caused by cooperating with design houses and retailers, it is necessary to recommend alterations for manufacturing operations in the company. The purpose of this activity is to contribute to productivity and high production levels meeting the market demands (De Boer 2018). The first recommendation to consider is to increase the number of large moulding machines that are currently used in the company and can be viewed as flexible for manufacturing different types of innovative products (Slack & Brandon-Jones 2018). In addition, it is also important to analyse the cooperation with design houses in order to decide on purchasing other modern machines that can be used for the production of the most advanced goods to address customers’ needs.

The next recommendation is associated with changes in planning and scheduling production processes to guarantee the availability of inventory. The exchange of reports between the Marketing Department and the Supply Services Planning Manager should be on-time and regular to ensure all processes are planned concerning the current marketing goals (Slack, Brandon-Jones & Johnston 2016). The planning and production of Focus products are effectively organized at the current stage, however, additional improvements are required for the category of Concept products. Besides, more specialists should be added to the team responsible for planning and production operations for ensuring the completion of orders for design houses and retailers.

The expansion of the range of proposed products will also be associated with selecting more specialists to work as managers responsible for the planning and production of specific groups of goods. Furthermore, it is also recommended to extend the team of designers working in the company to guarantee their work will address the expectations of CDS’ partners from design houses. As a result, the provision of educational education and training for specialists working in different departments of CDS is also recommended as one of the important steps to follow.

Conclusion

Operations management can be viewed as critical to make sure that all resources in a company are used to their maximum extent to achieve its strategic goals and objectives. At CDS, its core functions, including marketing, product development, and operations, are closely connected and directly influencing each other. On the one hand, this approach allows for collaboration between departments and units to reach the targets. On the other hand, if the work in one of the departments is affected or has weaknesses, this situation negatively influences planning and procedures related to the work of other departments. CDS needs to pay much attention to improving the exchange of data and resources between the functions to achieve strategic goals.

Design house collaborations, as well as the focus on major retailer services, provide CDS with a range of opportunities to increase the volume of products they manufacture and improve their position in the European market while affecting customers’ loyalty. However, the current resource base available at CDS can be discussed as not enough to change its operations according to the needs related to these collaborations. Therefore, it has been recommended to focus on expanding material resources and assets of the company to become prepared for increased production volumes and more strict quality requirements. From this perspective, to act according to the company’s growth strategy and goals, it is necessary to improve inventory, facilities, planning, scheduling, and data exchange at CDS. These steps are essential to guarantee that the company will reach its goals without decreasing the quality of products or increasing the number of possible defects because of the lack of available resources.

Reference List

Anand, G & Gray, JV 2017, ‘Strategy and organization research in operations management’, Journal of Operations Management, vol. 53, pp. 1-8.

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