Operations Management within organisations

The main aim of Operations Management is to help organisations to produce value added services. In times of recession, value added activities become increasingly important because there is the need to make the very best use of limited resources (Brown et al., 2013). Organisations have not only to be concerned with managing costs but managing of value is important as well in order to avoid incurring non-value added activities, such as slow delivery speed and lack of flexibility. According to Qrunfleh and Tarafdar (2014) the critical issue that organisations have to deal with is how to organise and fit together the different activities in order to produce efficiently. Therefore, the three dimensions of the OM function play a crucial role in organising the operations. Table 2.3 illustrates them briefly.

1 Design The structure and configuration of supply chains

2 Planning and Control The optimisation of the product and/or service delivery

3 Improvement The sustainable competitive advantage

Table 2.3: The three dimensions of the OM function

The first dimension is the design, which is considered as the first step in achieving the competitive advantage. Design has been defined as a set of decisions made for structuring and configuring the supply chain (Chopra & Meindl, 2006). Hill and Hill (2012), and Slack

et al. (2010) reported that there are numerous decisions related to design including location

decisions, layout and capacity decisions and selection of suppliers. Having designed the supply chain, the next step is to optimise the product and/or service delivery according to customer demand. Therefore, the role of OM is to prevent any deviations by managing the designed capacities, inventories and quality (Bamford & Forrester, 2010). Finally, the third main dimension of the OM function and its role is to generate and sustain the competitive advantage. The literature is rich in improvement approaches, tools and techniques; the most popular are Total Quality Management (TQM), Lean thinking, Six-Sigma and Business

47 Process Re-engineering (BPR) (Antony et al., 2007; Bamford & Forrester, 2010; Goetsch & Davis, 2014).

All the above elements demand Operations Management to be seen within a strategic context. This is necessary if organisations hope to compete in such volatile markets where key performance indicators for any operations system, such as speed, reliability, quality, inventory management and a range of other operations capabilities have to be in place (Bamford & Forrester, 2010). The following section analyses the role of Operations Strategy in manufacturing and service settings.

Strategy in manufacturing settings

As mentioned previously, operations take place in manufacturing and service settings. In a manufacturing setting perspective, strategy can be termed manufacturing strategy. Many researchers from all over the world established manufacturing strategy as a core topic in Operations Managements (Hill & Hill, 2012; Nahmias & Olsen, 2015). It has been estimated that, over the last 40 years, 250 scientific papers on this particular theme, have been published in over 30 major journals (Dangayach & Deshmukh, 2001). Hayes and Wheelwright (1984, p.30) explained the manufacturing strategy content: ―Manufactory

strategy consists of a sequence of decisions that, over time, enables a business unit to achieve a desired manufacturing structure, infrastructure and set of specific capabilities‖.

Werbach (2013) stated that an organisation has to be ready to meet future opportunities. By doing this, a well-established strategy is required in order to manage operations. Companies with a formulated operations strategy achieve higher business performance than those without it, and they have more opportunities to return on sales (Lechner & Gudmundsson, 2012). Not only can operations strategy be used to create new opportunities and target new areas but it can also be used to support the already-devised business strategy of gaining a competitive advantage (Spender, 2014).

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Strategy in service settings

Similar to operations firms, operations strategy has a vital role for service organisations in terms of the strategic positioning of the offer to customers. For example, Singapore Airlines has been awarded for service excellence ‗in an industry whose service standards are tumbling‘ (Heracleous & Wirtz, 2010). High-performing organisations have stronger relationships between their operations strategy and operations activities than low-performing ones (Brown et al., 2013). Operations strategy identifies a balance between quality of service and cost, where the most effort is required.

Heskett et al. (2008) found that there are major elements that make an organisation successful. Initially, satisfied employees produce and deliver quality services; for example in the Mexican-style restaurant chain, Taco Bell, it was found that the outlets with the highest rates of staff retention outperformed those with high staff turnover (Zornitsky, 1995). As a result, satisfied employees influence customer satisfaction by offering quality services. Heskett et al. (2008), in their research found this evidence in Chick-Fil-A, Bank of Ireland, MCI, Swedbank and AT &T Travel. Ultimately, satisfied employees achieve more profits and growth. In order to offer high quality services, an organisation, apart from keeping its employees satisfied, needs to consider what its competitors do well and which practices can be adopted. A good tool for achieving this is benchmarking against ‗best practice‘ of its competitors or other companies that have dealt with similar difficulties (Wong & Wong, 2008). For example, the NHS in the UK used Benchmarking within transport companies in order to improve the movement of people with the service (Brown et al., 2013).

The following section will present one of the main aims of Operations Strategy, the competitive advantage, discussing how organisations can differentiate themselves from their competitors. Gaining a competitive advantage will be analysed through the lens of the Resource-based View (RBV), which is the strategic management theory adopted by this research.