Operations Management in Tesco Essay

In order to define why Operations Management is needed in an organisation knowledge of operations management is required. Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It includes the responsibility of ensuring that business operations are efficient by using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs in the forms of materials, labour, and energy into outputs in the form of goods and/or services. Operations management is about how organizations produce goods and services. Everything you wear, eat, sit on, use, read or knock about on the sports? eld comes to you courtesy of the operations managers who organized its production’ (Slack, N. , et al. , 2010) We have chosen Tesco PLC as it is not only one of the largest food retailers in the world it is also successful in selling its many other products including insurance and financial services. Tesco sets its performance objectives with the following categories of people in mind; the first are the customers because these are the main people that bring in revenue to the organisation. Then there are the suppliers; the operations section depends on these people to perform adequately. (Tesco, 2007) There are also the employees; these are the people who carry out the operations and working conditions in the operations section must put this category in mind. The community is also affected by operation processes especially if the goods disseminated by the process affect the environment. Lastly, there are the shareholders who expect that the operations section is effective stock that they can be able to earn a higher return on their investments. All of the above groups have been included in the performance objectives of Tesco to a large extent. Some of these performance objectives include; (Slack, N. , et al. , 2007) Speed; Tesco recognises speed as one of the major performance objectives in operation. Speed in this case is the time spent between a request for a specific item by a customer and delivery time. The Company values this because customers can get what they require when they need it. This constitutes a respectable record and makes them come back for more business. It has been incorporated in its day to day services by andling customers in a fast manner when they are purchasing items at the store, store attendants are taught to be prompt. Secondly, when they are purchasing a product or service over the phone, customer assistants are to deliver First Call Resolution. Thirdly, when customers are online they are saving valuable time that may be wasted in queues to make payments or when trying to move from one aisle of the store to the next to find a particular item, they can simply do this by selecting the items they require from Tesco’s official Website. Tesco, 2007) Quality; in production this performance objective takes precedence over all other objectives. The product offered by any given company must meet international or local standards in order for it to be a quality good. This is important to a company for two main reasons. The first being if a product or service falls within the customer’s expectation, then they will be satisfied and will be willing to come back for the same. The company will therefore make more profits or generate more revenue. The second reason why quality is such an important performance objective is that it helps the company to achieve effectiveness through reduction of costs, increasing dependability and speed. This will occur if the goods are of good quality. The organisation will then be able to spend time on other aspects of production rather than correcting mistakes. (Slack, N. , et al. , 2007) Tesco ensure that all goods especially foodstuffs are in top notch conditions to ensure that they incorporate this performance objective. This is normally done by effective selection of suppliers for the company. Weiss & Mark, 1989) Besides this, Tesco ensures that goods do not sit too long on shelves or in the warehouse. To prevent the sale of substandard goods expiry dates are regularly checked and to ascertain the quality of the products Tesco performs audits on its suppliers to check; the capability of the factory: that hygienic conditions are incorporated in food preparation; the quality management systems of the supplier and the supply chain management. If these aspects are fulfilled then Tesco will conduct business with them and display their items in their stores. This means that only the best quality goods are chosen in this case. (Tesco, 2007) Cost; this is a performance objective that is largely dependent on the other performance objectives. If an operation is dependable, fast, flexible and full of quality then fewer resources will be spent trying to rectify mistakes. This will directly affect the finances needed and overall cost in the process. It can then be said that cost falls under the four other types of performance objective and it is best not to consider it in isolation. (Slack, N. , et al. 2007) By ensuring that all other performance objectives are met Tesco ensures that this performance objective is incorporated and therefore Tesco improves efficiency in all processes. Flexibility; this is essential in ensuring that operation processes are effective. With flexibility a company can adjust to changes in external factors that may require different aspects of the product. In relation to this, flexibility may come in a variety of forms. It may involve a change in the amount of products the company dispenses, this will normally occur after an external reason has prompted a reduction or increase in the amount of product. Flexibility also applies to the way products or services are delivered. This may be in various forms such as changes in delivery or payment systems used which are influenced by advances in technology and/or competitors. Lastly, flexibility may also mean a change in the types of products or services offered in relation to changing customer preferences. This performance objective is also essential in determining how some other internal factors flow. With a flexible operation system, responses within the organisation will be fast and the overall process will be more efficient. Enhanced flexibility will enhance dependability within an organisation because the speed will have been improved. Lastly, flexibility also affects the amount of revenue generated within the company as the way time is spent within the organisation is affected. (Slack, N. , et al, 2007) Tesco incorporates flexibility by continuously introducing new products in order to meet with changing customer preferences. An example would be the introduction of Tesco’s own product brand name. These products include nearly all foodstuffs and now clothing and electrical goods. To further expand Tesco now sell insurance and provide financial assistance with loans and credit cards. During certain times of the year, Tesco will increase the amount they stock of certain items to compete with demand. One such example is ice cream; this will be in large stock during summer months and low stock during the winter months. Tesco has also shown flexibility by the way it has been engaging in a number of mergers and expansion programs. Tesco has shown that it is flexible in terms of locations as it has a large number of stores found outside the UK. This was in response to increased globalisation and technological advancements. (Hogan, 1998) Dependability; this may be defined as an organisations ability to deliver goods, services and time. An organisation must establish as a dependable system in order to succeed. As a performance objective it is very important as it defines the image that the organisation presents to its customers and whether the customers will continue to purchase their goods or services. If the company is very dependable then their revenue will increase and vice versa if they are not dependable. Dependability brings stability to the organisation and means that resources can be spent on improvement instead of on fixing mistakes. (Slack, N. , et al, 2007) One way that Tesco has implemented dependability is by ensuring that its delivery system is top notch meaning that its customers get their goods on time, every time. (Weiss & Mark, 1989) This is especially in regard to provision of insurance. The Company makes sure that customers wait for too long, if applicants are not viable, then Tesco informs them as soon as possible so that they do not have to waste time waiting unnecessarily. To conclude, it can be seen that Tesco is an extremely successful organisation that has extracted the necessary resources to succeed from new technology and finances. Tesco’s operations management is very effective with a highly structured distribution chain for its products and services and a highly structured way of choosing its suppliers who ought to have ability to deliver. (Tesco, 2007) Trough this Tesco has become very profitable and is ever expanding.