Operations Management

Operations Management

Systems thinking and business operations

Operations management generally transforms inputs – capital, labor, information, equipment, buildings, land and materials – into outputs, which are goods and services (McCubbery 2005). Ten years ago, Trendy Garments Ltd (TGL) began as a small garment manufacturer with only ten workers and grew to 90 workers roughly five years ago, and today has more than 150 workers and it produces high quality products. TGL has a competitive advantage by means of controlling the transformation process which transforms raw materials – fabric – into high-quality garments. Controlling the transformation process has made it very hard for rival businesses to manufacture similar quality garments, and this has enabled TGL to garner substantial proceeds from its high quality products – profits that have enabled the company to expand over the past decade, from 10 employees 10 years ago to over 150 presently.

Figure 1: The transformation process

In the transformation process model, the arrow that is indicated as Transformation System is the crucial element in the process model, which would determine how well the company produces goods that satisfy the needs of the customers. McCubbery (2005) pointed out that it does not matter whether a firm is for-profit or not; every organization should try hard to exploit the quality of its transformation processes in order to satisfy the needs of customers. Inputs typically represent the flow of materials as well as data into the process from the environment or outside. The steps involved in processing include the tasks required to effect a transformation of the inputs. The output represents the materials and data that flow out of the transformation process (Armistead, Harrison & Rowlands 2006).

The strategic significance of transforming inputs into outputs which provide competitive advantage in the marketplace is clearly manifested in TGL. TGL is a textile manufacturer and because of the quality of its products, good customer care and innovation, it grew incessantly at a rapid pace and now produces different types of female and male garments. Using the transformation process model, the key operations at the company include the following: inputs – labor, equipment, raw materials, capital, facilities, knowledge and time. Raw materials largely comprise of fabric from the relevant supplier(s). The company’s purchase department places orders for fabric, which are in turn stored inside the warehouse. Storage of materials/goods is also considered as part of the transformation system. The transformation process continues as the warehouse then forwards the fabric onto the department of manufacturing where they are cut and stitched. Knowledge, an important input, comes into play since TGL takes its potential customers’ preferences into consideration when manufacturing garments. During the process of purchasing raw materials, the department of accounts is involved in the handling of purchase orders as well as making payment for the goods. Knowledge is also crucial as the department in charge of marketing gathers knowledge/information regarding the popularity of products, then advices the company on specific types of designs. In addition, the marketing department also advertises and markets the company’s products. Outputs are typically finished garments/cloths which are sold to diverse client base including men and women.

Systems’ thinking refers to a manner of thinking about, as well as a language for understanding and describing the interrelationships and forces which shape the behavior of systems. Systems’ thinking as a discipline is vital since it helps people to find a way in which they can change their systems more effectively (Armistead, Harrison & Rowlands 2006). Systems’ thinking centers on 4 vital concepts which can be used to explain the key operations at TGL. The first concept is that all systems are made up of interrelated or interconnected parts – The connections make the behavior of one part to have an effect on another part. All the parts are connected, and a change to one connection or part affects the whole system. This concept is apparent at TGL in the sense that all the company’s departments are interconnected and they all play an indispensable role in selling the products onto customers. For instance, the department of purchase places orders for fabric, which are in turn stored in the warehouse. After that, the warehouse will forward the fabric for cutting and stitching in the manufacturing department. A change to the connection between the purchase department and warehouse will affect the entire system.

The second concept is that the structure of any given system will determine the behavior of that system – A structure refers to the pattern of part connections. In other words, it refers to the manner in which a system is organized. The behavior of a system is very much reliant on connections than parts since that is what will determine how the parts would work together (Armistead, Harrison & Rowlands 2006). In the context of TGL, the structure is the pattern of how the different departments are connected, for instance, the logistics and the dispatch departments, or the purchase and warehousing departments, and this shows how the system is organized. The behavior of the company’s system depends entirely on the connections of these departments. To understand the system’s gross behavior, it is essential to understand its structure, and to change its gross behavior, it is important to change its structure.

The third concept is that system behavior is a developing phenomenon – The way a system behaves, for instance at TGL, cannot be determined by inspecting its structure and parts. This is largely because the parts and structure are continually changing, the parts are tightly coupled, nonlinear relationships exist, time delays exist and the system is self-organizing and adaptive. Upon realizing how complex the behavior dynamics of the system are, one cannot assume that he/she can look at the system and then predict how it will behave. Fourth concept, feedback loops control the major dynamic behavior of the system – Feedback loop refers to a sequence of connections that cause output from a given part to ultimately influence input to that part. Each part of the system is involved in at least a single feedback loop. One way of improving processes at TGL is by ensuring a constant feedback loop between the knowledge processes and the core business processes. Information, experiences and knowledge in and out of business processes should be stored and maintained in the knowledge processes. Knowledge from the processes, in return, should be fed back to the core processes so as to develop them and make them more effective. As such, feedback in process evolvement is significant, for instance, concerning feedback from the customers (McCubbery 2005).

Networking and business gadgets

The network infrastructure of an organization is the basis upon which its IT applications and services reside. Typically, it is the backbone of the network and supports the whole organization with essential elements which allow all sorts of functions such as storage, data processing, voice communications and security. Just like other facets of IT, network infrastructure is always expected to provide a return on investment through its ability to efficiently and quickly deliver new services which drive growth (Peters 2012). For TGL, the new network infrastructure will be an interconnected grouping of computer systems that would be connected via different parts of telecommunications architecture. This infrastructure particularly refers to the organization of its different parts as well as their configuration, ranging from cables, routers, switches, wireless access points, network protocols, network access methodologies, individual networked computers and backbones. The network will have to be flexible, secure and available to provide safe access to the information and applications that the business is built on. Since TGL has branches in different geographical locations, it will be appropriate to create a wide area network (WAN) infrastructure. This will be used to connect the company’s 3 business units in the 2 major cities. This WAN infrastructure will allow information storing and sharing. It will run simultaneously throughout the organization at its different locations/sites.

For this network infrastructure, Ethernet protocol should be used because it is extremely stable and has better bandwidth, flexibility, speed and communication management compared to earlier protocols. The network will be largely wired where safety or high speed is crucial, though there should also be wireless alternatives using Wi-Fi, cellular networks or Ethernet bridges. The network infrastructure will consist of several computers in the business units located in the two different cities, an internet connection and a hub. The hub would link the computers to the network connection. It would also link the different systems to each other. Purpose of the hub is simply to link the computers in the different departments, but it does not restrict the flow of data to and from any given system. To facilitate limiting/controlling access between the various systems and to regulate the flow of information, a switch will be used instead of a hub. This will be used to create network protocols which define the way the systems would communicate with each other (Peters 2012). To enable the network created by these systems to communicate to others through the network connection, a router would be required. A router will bridge the networks and provide a common language for exchange of data, as per the rules of every network. Security of the network should be a major concern when building the network infrastructure for a company like TGL. The architecture should use routers that have built-in firewalls, and software which allows precise user-access control, strictly defined protocols and data packet monitoring. In addition, security should also be controlled by altering network sharing properties on each system which will limit the files as well as folders that might be seen by others on the network.

The WAN technology to be used should be packet switching. This is a technique whereby network devices share only one point-to-point link in transporting packets from a source computer to a destination computer across a carrier network. Typically, statistical multiplexing is employed in order to allow the devices to share circuits. Examples of packet-switched WAN technologies that could be used by companies such as TGL include Switched Multimegabit Data Service (SMDS), X.25, Asynchronous Transfer Mode (ATM) and Frame Relay. Technological devices/gadgets include the following: WAN switches, modems, access servers, channel service unit/digital service units (CSU/DSUs) as well as ISDN terminal adapters. A WAN switch refers to a multiport internetworking gadget that is used in carrier networks and they usually switch such traffic as SMDS, X.25 and Frame Relay. An access server serves as a concentration point for dial-in and dial-out connections. A modem is a gadget whose purpose is to interpret signals that are analog and digital in nature, and allows transmission of data over voice-grade telephone lines. Typically, at the source computer, signals that are digital are changed to a structure appropriate for transmission over analog communication facilities and at the destination computer, the analog signals are returned back to their digital structure. A CSU/DSU refers to a digital interface device, which generally adapts the physical interface on data terminal equipment (DTE) gadget to the interface of a data circuit-terminating (DCE) gadget. Moreover, it provides signal timing for communication between these two gadgets. The ISDN terminal adapter is a gadget used in connecting ISDN Basic Rate Interface (BRI) connections to different interfaces.

TGL and organizations like itself need different automated systems at various departments in order to provide different levels of functionalities. For instance, the systems used by the senior level management would typically be for long-term decision making. Automated systems at the company would definitely improve efficiency and effectiveness. Integrating the systems with one another can lead to explosive energy and vitality in the firm. Internet sites and/or software programs are a great tool to organize activities such as bookkeeping, sales analysis, manufacturing, sales tracking, selling, accounting among others into systems. In addition, they can also be used to coordinate and integrate the existing systems together. The integration framework, enterprise application integration (EAI), comprises of a collection of services and technologies that form a middleware to allow integration of applications and systems across an organization. This integration leads to efficiencies within the company. EAI is typically the process of linking various applications and systems in a single organization so as to automate and simplify business processes to the greatest possible extent (Peters 2012). EAI should be used in integrating all the systems with one another at TGL in order to enhance effectiveness and efficiency.

E-business and business operations

An e-business is simply a firm which has a presence online. Different individuals and organizations often choose dissimilar levels of e-business. There are companies which would only use email for communication and do not require a website, while others operate more or less entirely online (Weill & Vitale 2007). Currently, there are several models of e-business that could be considered when determining the level of e-business that is right for a company like TGL. A vital point to be considered is the difference between operating an e-business and using a website in promoting a company’s traditional business. Typically, an e-business model holds that revenue is generated as a direct result of conducting various parts of the business online as opposed to simply using the internet as a promotional method. TGL specializes in making and selling garments and the appropriate e-business model for it is the storefront model, which will allow it to sell its garments on the Web. Basically, this model combines transaction processing, information storage, online payment as well as security to allow traders to sell their products through the internet. It is a basic form of e-commerce that lets the seller and buyer to interact directly. Most companies that use the storefront model are B2C – business-to-consumer organizations. In supporting this model, the shopping-cart technology is suitable for a company like TGL. Shopping cart is one of the frequently used e-commerce enablers, and it allows customers to accumulate products they want to purchase as they continue to shop. A product catalog supports the shopping cart and is usually hosted on the server of the merchant in the form of a database (Weill & Vitale 2007). A shopping cart is one of the ways of carrying out transactions online, and is an effective method of selling and buying items on the internet. In this storefront model, the company can combine several methods of purchasing in order to give its customers a wide range of options.

A suitable online portal (website) design features/functions include the following: First is filter products option – When a user clicks on a particular category, he/she is overwhelmed by the high number of products displayed in front of him/her. When the visitor is on the category page, it is important to provide them with options to filter products according to such things as prices, brands, color and features. A good product filtering system allows visitors to have a great experience since the time they spend in choosing a product could be drastically reduced. The second feature is comparing products. Using this feature, a user might come up with the best item to purchase. He/she could easily compare products on the basis of parameters such as the pricing, features and product ratings. Comparing items might bolster the visits and in turn the sales and revenues for the website. Third, several product images and image zoom. One of the major weaknesses of an online store is that the user is unable to get the actual feel of the item. As such, it is vital to provide as many images of the product as possible, and they should have alternate views. For companies in the clothing industry such as TGL, it is essential to have the product images with models trying them out, and this would allow visitors to identify themselves wearing that item. JQuery image plugins have to be used to zoom in the product when the mouse hovers on the image to make it easier for the user to see all details of the item they wish to purchase (Weill & Vitale 2007).

Fourth feature is product description, which should be targeted and persuasive. The presentation of the description needs to be distinctive and make a good impression on the visitor. Fifth is product navigation, and this is of extreme significance for any website. For instance, there could be a horizontal menu for categories and mega drop down menus specifically for sub-categories. Images could also be put in the menu itself. Sixth feature is an auto-complete search which would help users to get exactly what they need. Seventh functionality is a shopping cart which is visible all the time. This is a basic need of an e-commerce site, and when a visitor buys an item, she/he needs to see whether it has been added or not. The visitor should also be able to see all the products he/she has put in the basket so far (Weill & Vitale 2007). As such, there needs to be an area on the website where the shopping cart is visible all the time.

For the past two decades, e-commerce has been very important in international business development and distribution, and with the World Wide Web, any person can become a worldwide merchant of services and goods (Richardson 2010). However, despite the many advantages of e-commerce, there are also some disadvantages associated with it. The first drawback is with regard to starting the business. The fundamental problem with e-business is that anybody could start a business, and it provides the expediency to any crook/fool to start a business then create a website which sells bad products and eats up the money of customers. Because there is generally no standard guideline in this type of business, it is impossible to keep a constant check (Richardson 2010). Second is about product quality. This is the major problem with e-business because the visitor/customer can neither see the product physically nor touch it, and thus, can never be certain of its quality. The customer obviously does not have a direct interaction with the sales representative and as such, cannot know the cons and pros of the item. Third drawback is the website being prone to hackers. Because the seller is basically selling via a website, there are some miscreants who might take control of the seller’s website and do unlawful activities.

Other drawbacks to the company as a supplier include technical limitations such as insufficient telecommunications bandwidth, high costs of creating and maintaining the site, complexity in integrating e-commerce infrastructure with the existing organizational information technology (IT) systems and some protocols are not yet standardized in many countries. Moreover, software tools are continually evolving, they are not fixed. The non-technical drawbacks include fear of customer that his/her personal information would be used wrongly, rules and regulations, lack of trust and user resistance for instance fear of customer payment information not being secure. Drawbacks of support services such as financial costs and sourcing technology support in foreign languages. There is also lack of accessibility outside suburban and urban areas which affects universality of e-business. Others are; people being resistant to change, individuals not used to being paperless/faceless or using non-physical transactions. Moreover, higher staff training is needed by the company (Richardson 2010).

Problems that could arise from transacting with this e-business company include delays of goods. Even with express shipping, e-commerce websites generally take a lot longer to deliver the goods physically to the buyer compared to a physical store. An exception of course is in the case of digital products such as a music file or an eBook. In addition, e-business does not allow one to experience the product/item before buying. For instance, one can neither check how the shoe feels on his/her feet, touch the fabric of the garment that he/she wishes to purchase, nor can one test a perfume before buying it. In most instances, customers want to experience the item before buying it but e-business does not allow that. Another problem that could arise is with regard to security. When one makes an online purchase, he/she has to provide at least his/her mailing address and credit card information. In most instances, e-commerce websites can harvest other information regarding a user’s online behavior and preferences, and this could result in credit card fraud or even identity theft (Richardson 2010).

Reference

Armistead, C., Harrison, A., & Rowlands, P. 2006. Business Process Re-engineering: Lessons from Operations Management. New York, NY: Cengage Learning

McCubbery, D.J. 2005. Operations Management: The Input/Output Transformation Model. Boston, MA: Hard University Press

Peters, C. 2012. Networking 101: Understanding Your Needs and Options. Crescent City, CA: SAGE

Richardson, W. 2010. Benefits and Limitations of e-business. Retrieved from http://www.witiger.com/ecommerce/benefits-limitations.htm

Weill, P., & Vitale, M. 2007. Place to Space: Migrating to E-business Models. Boston, MA: Harvard Business Review Press