Operations Management and Innovation

This assignment investigates the crucial link between operations management strategies and a firm's ability to innovate. It examines various operations management practices, such as quality management, supply chain risk management, and customer relationship management, and analyzes their impact on innovation performance. The assignment draws upon academic research and real-world examples to illustrate the complex interplay between these factors.

Portfolios

Table of Contents
INTRODUCTION...........................................................................................................................1
PORTFOLIO 1.................................................................................................................................1
1. Preparation of input and output diagram.................................................................................1
2. Key tasks performed by operations manger............................................................................2
3. Description of cost, speed, quality and flexibility in relation to both context........................3
PORTFOLIO 2.................................................................................................................................1
1.Supply network diagram with upstream and downstream echelons........................................1
2. Factors considering the suitable location to expand the business...........................................2
2. Measuring the capacity in manufacturing...............................................................................3
PORTFOLIO 3.................................................................................................................................4
1. Development of production plan for Covolo Diving gear......................................................4
2. Ability of Covolo regarding implementation of chase plan....................................................5
3. (a) Update monthly S&OP with changing plans ....................................................................5
3. (b) Advantages of using S&OP, even forecast changes..........................................................7
PORTFOLIO 4.................................................................................................................................8
4.1: Evaluation of inventory policies at WFA............................................................................8
4.2 Changes in inventory management.......................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
.......................................................................................................................................................11

INTRODUCTION
Portfolio is considered as group of financial assets such as stocks, bonds and cash which are held
by individuals and managed by professionals. There are large number of portfolios which are
designed according to the risk tolerance power of investors. Innovation is important aspect which
helps in international operation of business activities. Present report includes 4 portfolios which
are different from each other. Portfolios one and two are based on two different sectors, mobile
manufacturer and retail store. Mobile manufacturer which is operated in UK is O2 and Retail
store in UK is ASDA. It includes the description regarding, preparation of input and output
diagram, key tasks performed by operations manger, defining cost, speed quality and flexibility.
Also, preparation of supply network diagram and factors which are considered regarding
selection of location (Behrouzi and Wong, 2011).
Portfolio three, includes development of level production plan, ability regarding
implementation of chase plan and advantages of using S&OP. Portfolio four includes, inventory
policies at WFA and recommendation regarding changes in inventory management.
PORTFOLIO 1
Two different sectors are selected from and A and B which are mobile manufacturer and
Retail store. O2 is the largest telecommunication services provider in UK. It has around 484
stores in all over the world. On other hand, ASDA is largest retailer of UK which provides their
functions in more than 642 locations.
1. Preparation of input and output diagram
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It is functional graph which represent about the inputs and outputs which are required in
production of the final products. This model sometimes also includes the stage of storage which
plays an important role regarding the completion of whole process.
Inputs provides the information regarding the flow of data and material which are
required regarding the process of transformation into outputs. So, outputs are such data and
material which coming out after the transformation process. It is used by the manager of both
organisation for structural analysis, process analysis and environmental management.
O2 and ASDA are different sector organisation which posses different input and output
factors.
Input and output factors of O2
Inputs which are used by O2 regarding their production process are raw materials like
battery, keypad, touch screens, processor, RAM, ROM. All such inputs are processed and
converted into useful output which is named as mobile phone.
Input and output factors of ASDA
ASDA is retail supermarket, so the inputs which are used are totally different. The main
input device which is used is barcode scanner which helps in scanning codes on the products and
identification of the prices and other relevant information regarding product as output. It helps in
preparation of the list and database in more quicker manner (Goodale And et. al., 2011).
2. Key tasks performed by operations manger
O2 and ASDA are two different sector organisations but the role of operation manager is
quite common. They perform the work regarding management of the whole operations and
accomplished the goals which are assigned to them. The major two functions which are oversee
by the operation manger is management of raw materials and personnel. The different tasks
which are performed by operations manager of O2 and ASDA are mentioned below:
 Resource management: The manager has the role regarding oversee inventory,
purchasing and supplies. For personnel, the tasks which are performed by them are
determination of needs, hiring employees, planning of goals for individual employee and
monitoring the assignments which are given to employees for their effective completion.
 Financial management: The other key functions which are played by operations
manager are budgeting, cost control and contributes in keeping the organisation
financially strong. Such management of supply chain helps both the organisation
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regarding minimisation of cost of production. It helps in improvement of the efficiency of
organisation regarding business forecast, sales report, financial statements in
maximisation of results.
 Goal setting: Operation manger has the role regarding setting of goals and objectives and
establishment of various policies for function of different departments. It helps in
effective establishment of procedures and their effective use. For ex, the duties which are
performed by operation manager are sales forecasting and planning of sales promotion.
3. Description of cost, speed, quality and flexibility in relation to both context
All the four factors cost, time, quality and flexibility are important concepts require to
oversee by the management of both O2 and ASDA. It helps in achievement of their
predetermined targets and improvement of their profitability.
O2: Mobile manufacturer
It is telecommunication organisation where consideration of such factors helps in
improvement of the quality of their products and satisfaction of the demands of different
customers. Such factors are defined below:
 Cost: It is important factor which includes the different dimensions regarding
manufacturing cost, value added cost, selling price cost, running cost, service cost etc.
Determination of cost helps in ascertainment of the profitability which is associated with
their products.
 Time: It includes about the duty of management of O2 is to complete the production of
mobile phones on time and timely delivery to the end customers. It helps in performance
of functions before due date.
 Flexibility: It is important for organisation to attain flexibility in their operations. It helps
in satisfaction of the varying demands of customers. The factors where O2 is need to
attain flexibility are material quality, output quality, new product as per customer
requirements, modification in existing products etc.
 Quality: O2 is need to focus on the quality of their products. Under this, management
need to focus on durability of their products and additional features in their mobile
phones which makes their products different from their competitors (Gunasekaran and
Ngai, 2012).
ASDA: Retail store
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 Cost: Management need to focus on development of good supply chain which helps in
delivering of their final products to end customers. It helps in saving of cost.
 Time: ASDA need to focus on timely delivering for their products to different stores in
worldwide.
 Flexibility: Management of ASDA needs to attain flexibility of in their different options.
It helps in improvement of performance and satisfaction of the different requirements of
customers.
 Quality: ASDA needs to main the quality of their different products like grocery, general
merchandise, financial etc.
PORTFOLIO 2
1.Supply network diagram with upstream and downstream echelons
Upstream echelons: It refers to the materials which is used in production process and the
process of extract them into final output is known as Upstream. This is the stage where the
managers finds the raw material which is suitable for manufacturing quality products and then
extract them into final goods which are deliver to target customers. It in includes flow of
information from lower to top authority.
Examples of upstream:
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Flow of information: It is the process of transmitting information from lower to top
authorities in form of issues or problems, suggestions etc. through which the management can
make an effective decision (Kim, Kumar and Kumar, 2012).
Material flow: In this, the movement of goods from primary goods to final goods that are
to be delivered to the targeted customers. For example in mobile industry, raw material includes
plastic, glass, silicon etc. are useful in manufacturing mobile product.
Downstream: This is the stage at which the company finally sell their product to
customers. This is the production process that involves processing raw material into finished
product. It also includes the flow of information from top level to middle and lower level
management.
Examples of downstream:
Flow of information: It is the process of transferring information from top to lower level
management in the form of giving orders, providing solutions, policies etc. which guide
employees to perform in right direction.
Material flow: In this, movement of final goods to targeted customers after completing
process of manufacturing. For example in mobile industry, the final products such as smartphone
are directly sold to the customers.
2. Factors considering the suitable location to expand the business
There are several factors which need to be determine before searching new location to business.
Such factors are as follows:
Distance to the customers and suppliers: The company first need to find out the location
where they can easily get raw materials from their suppliers which reduces transportation costs.
Iut also help them in delivering products to the customers through which the customers can
easily get their products without facing difficulties.
Characteristics of land: The company should search those location where they can buy
or lease land at reasonable price. The manager also required to focus on such areas where they
can get power and water easily which help them in executing business operations.
Access to the transportation network: The company can search location where they can
easily access transportation network so that they can smoothly deliver their product to large
number of customers (Lee and Carter, 2011).
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Labour availability: The manager should focus on searching such location where they
can easily get huge workforce which contribute their efforts in executing business operations. In
addition to this, the transportation facility to staff is also available which attracts large number of
candidate to apply for the job in company.
Assessing risk: There are several factors which may affects the business operation of
company such as changes in market demands, changes to the transportation network, changes to
transportation infrastructure, workforce availability etc. Thus the manager need to keep focus on
such factors and put their maximum efforts in mitigating such risk in an effective manner.
2. Measuring the capacity in manufacturing
Capacity is defined as the capability of things whether that is machine, work centre, or
operator that how much time they produce required product. Some companies which don't have
any supply chain improvement as a core business enterprise strategy are generally avoids the
measurement of capacity as they assume that their existing facility are enough to produce enough
quantity.
Companies measure capacity in different ways using, as a measure either:
 the input
 the output
 the combination of two
For example, a mobile industry calculates capacity based on the amount of product they
produced in one month. The companies generally uses two measures of capacity, theoretical and
rated. The theoretical capacity is defined as the maximum output capacity that does not allow for
any downtime while rated capacity is the output capacity which can be used for the purpose of
calculations as it is based on long-term evaluation of the actual capacity.
Capacity strategies:
There are three basic capacity strategies which can used by different organisation when they
consider increased demand (Lin, Chen and Kuan-Shun Chiu, 2010).
The lead capacity strategy: Such strategy help in adding capacity before the demand
actually occurs. It is generally adopted by company when the demand on the manufacturing
plants are not so great. It also help company in gaining competitive advantage so that they exist
in competitive market world for longer duration.
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Lag capacity strategy: This strategy will be adopted by company when the demand of
product has actually occurred. As adopting such strategies will not provide guaranteed for
success but instead there are various companies which are adopted such strategies. Through
such, the company minimises the risk and maintain healthy relation with their bank and other
investors.
Match capacity strategy: This strategy in generally adopted by company with a motive of
increasing capacity in smaller increments in order to coincide with the increase in volume.
Through this method, the company tried to reduce the over and under capacity so that they can
able to implement corrective actions.
PORTFOLIO 3
1. Development of production plan for Covolo Diving gear
Covolo diving gear arrange semi annual meeting with their senior staff members which
helps in starting of their first monthly S&OP meeting. The management of Diving group
prepares the sales forecast with the helps of different authorities of their company. Due to such
planning diving group attains large number of benefits in their operations and improve their sales
figure.
Level production plan
Planning: This includes about the determination of resource capacity which helps in
meeting of the different demands over an intermediate time horizon.
Objectives
 Preparation of plan which helps in effective allocation of resources
 preparation of economic strategy to meet demand
Production plan
It helps in variation of level of inventories regarding maintenance of even production
level during given period of time. The results which are derived by diving group through
preparation of plan is facility restraints and meet seasonal demand (Melville, 2010).
Month
Sales
forecast
Production
Plan Inventory
Sep 30000 31500 1500
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Oct 31500 31500 1500
Nov 35000 31500 2000
Dec 37000 31500 7500
Jan 22000 31500 2000
Feb 18000 31500 15500
Mar 17500 31500 29500
Apr 27000 31500 34000
May 38000 31500 27500
Jun 40000 31500 19000
Jul 42000 31500 8500
Aug 40000 31500 0
Total 378000 378000 148500
Advantages and Disadvantages of production plan
Advantages
The advantages which are gathered by Covolo diving gear through preparation of
production plan is mentioned below:
 Resource allocation: The process of aggregate planning helps in effective allocation of
different resources to different areas. It helps in maintaining smooth transition of
production capacity with the changing demand over the period of time. It contributes in
minimization of cost while schedules are changed, it helps in improving efficiency.
 Reduction in future uncertainties: Huge role is played by planning regarding reduction
of future uncertainties. It helps in reduction of defect rates on the production line. By the
use of such plan, provisions are made to make their future operations more better.
Disadvantages
 Lack of Reliable data: The production plan is prepared on the basis of assumption, so
the data provided is not much reliable regarding future oriented decisions.
 Time consuming process: The utility of production plan is diminished due to the factor
of time period because planning is time consuming process. Due to the process of delay
lots of opportunities are lost by diving group (Moutinho, 2011).
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2. Ability of Covolo regarding implementation of chase plan
Chase plan: It is considered as important planning method which includes the
maintenance of stable inventory level with the varying production to effectively meet out
different demands.
The company cannot introduce a pure chase plan because the total demand in the month
of Dec 16 may16, jun17, july 17 and Aug 17 are much higher than the maximum capacity of
total production of 35000.
3. (a) Update monthly S&OP with changing plans
Planning horizon: It means the amount of time which is required by group to look into
future while make strategic plans. It has huge importance regarding update their S&OP monthly.
Patricia, noticed that the forecast of sales from Sep to Nov is good but after that there is
huge fluctuation in last four months. To overcome from this problem, need to update production
plan on continuous basis. It helps in removal of the large number of fluctuations in forecast and
make more efficient plan (Nath, Nachiappan and Ramanathan, 2010).
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Year Month
Sales
forecast
Sept 30000
2017 Oct 31500
Nov 35000
Dec 37000
Jan 22000
Feb 18000
2018 March 17500
April 27000
May 28000
Jun 40000
Jul 42000
Aug 40000
Total 368000
Unit cost 74.5
Unit time 0.25 Hours
Hours per
month 160 Hours
Hiring cost per labor $
Firing cost $
Stock holding cost $
Beginning employees $
initial inventory $
plant capacity $
It is a level plan which is uses as a constant workforce in every month in order to fulfil
the demand.
Step 1: Calculate average demand and workers required per month:
Average demand: Total demand –Total Inventory level /Number of months
: 368000-10000/12
: 29,833.33 units
Worker required: Average demand / (Number of working hours per month/units production time)
: 29833/ (160/0.25)
: 46.61 = 47 workers.
Year
Mo
nth
Sales
forecast 50
Regular
production
Hiri
ng
Firin
g
backord
ers inventory
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Sept 30000 47 29833.33 -3 3 166.6667 10000
2017 Oct 31500 47 29833.33 0 0 1666.67 -1666.67
Nov 35000 47 29833.33 0 0 5166.67 -5166.67
Dec 37000 47 29833.33 0 0 7166.67 -7166.67
Jan 22000 47 29833.33 0 0 -7833.33 7833.33
Feb 18000 47 29833.33 0 0 -11833.3 11833.33
2018
Mar
ch 17500 47 29833.33 0 0 -12333.3 12333.33
Apri
l 27000 47 29833.33 0 0 -2833.33 2833.33
May 28000 47 29833.33 0 0 -1833.33 1833.33
Jun 40000 47 29833.33 0 0 10166.67 -10166.7
Jul 42000 47 29833.33 0 0 12166.67 -12166.7
Aug 40000 47 29833.33 0 0 10166.67 -10166.7
Total 368000 358000 -3 3 10000.03 166.633
Units cost 74.5 1250 500 0
Cost 26670997
-
3750 1500 0 1333.064
Total 26672331
The company can produce a total of 35000 per month.
Total per unit costs will be: 35000*12= 420000 units per year.
3. (b) Advantages of using S&OP, even forecast changes
Sales and operation planning: It is integrated process in business which is used by the
manager for continuous achieving focus and alignment of the different functions of the
organisation. It helps in completion of the work in systematic manner (Subramanian and
Ramanathan, 2012).
Advantages of S&OP
There are many advantages are gathered by Colovo Diving group through adoption of
S&OP planning, even the changes are happen in forecast. Such advantages are mentioned below:
 It helps in better customer service, lower inventories and highering the profit abilities.
 It contributes in the development of overall communication over the different
departments of diving group
 Management attains the better control over the different functions of business
 It helps in creation of link of sales with the operations and finance activities.
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PORTFOLIO 4
4.1: Evaluation of inventory policies at WFA
Issues related to stock at WFA
 Reduction in stock of sanitation equipments and supplies
 Shortage of copper wire and sealant
 Storage of dehydrated food for more than 12 months old
EOQ: It is order quantity which helps in minimization of the total holding costs and
ordering costs.
EOQ = SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per Order)
Item usage Order quantity
Sealant 3200 1000
Copper pipe 4600 50
Portable generators 4 1
4.2 Changes in inventory management
Inventory management: It is effective process which includes the adoption of different
approaches which helps in management of stocks in proper manner in regional stores. Large
number of benefits are derived by WFA through adoption of adoption of effective EOQ model
like removal of the complaints of stores regarding shortage of products, better services to society
for their well being etc.
Recommendations
 Maintaining proper list of such products which are highly shortage in market and increase
number of supplies. For ex, copper pipe, sealant etc.
 Focus on their ordering time through implementation of EOQ model (Tang and Musa,
2011).
 Proper monitoring on the foods which are of perishable nature. It helps in providing such
products to their customers before their expiry date.
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CONCLUSION
It has been concluded from the above report that, there is huge contribution of
consideration of the factors which are present in business environment regarding expansion of
their business operation for O2 and ASDA. There are many functions are performed by operation
manger like management of raw materials and personnel which helps in growth of organisation
and improvement of their profitability. Two different streams are included in supply chain
management which are called as upstream and down stream. Upstream helps in identification of
material input for production and downstream includes about the place of production and their
distribution in market.
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REFERENCES
Books and Journals
Behrouzi, F. and Wong, K.Y., 2011. Lean performance evaluation of manufacturing systems: A
dynamic and innovative approach. Procedia Computer Science. 3. pp.388-395.
Goodale, J.C. And et. al., 2011. Operations management and corporate entrepreneurship: The
moderating effect of operations control on the antecedents of corporate entrepreneurial
activity in relation to innovation performance. Journal of operations management. 29(1-
2). pp.116-127.
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and
analysis.International Journal of Production Economics. 135(2). pp.687-701.
Kim, D.Y., Kumar, V. and Kumar, U., 2012. Relationship between quality management
practices and innovation.Journal of operations management. 30(4). pp.295-315.
Lee, K. and Carter, S., 2011. Global marketing management.Strategic Direction. 27(1).
Lin, R.J., Chen, R.H. and Kuan-Shun Chiu, K., 2010. Customer relationship management and
innovation capability: an empirical study. Industrial Management & Data
Systems.110(1). pp.111-133.
Melville, N.P., 2010. Information systems innovation for environmental sustainability. MIS
quarterly. 34(1). pp.1-21.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Nath, P., Nachiappan, S. and Ramanathan, R., 2010. The impact of marketing capability,
operations capability and diversification strategy on performance: A resource-based
view. Industrial Marketing Management. 39(2). pp.317-329.
Subramanian, N. and Ramanathan, R., 2012. A review of applications of Analytic Hierarchy
Process in operations management. International Journal of Production
Economics.138(2). pp.215-241.
Tang, O. and Musa, S.N., 2011. Identifying risk issues and research advancements in supply
chain risk management.International journal of production economics. 133(1). pp.25-
34.
Terziovski, M., 2010. Innovation practice and its performance implications in small and medium
enterprises (SMEs) in the manufacturing sector: a resource‐based view. Strategic
Management Journal. 31(8). pp.892-902.
Volberda, H.W. And et. al., 2013. Management innovation: Management as fertile ground for
innovation. European Management Review. 10(1). pp.1-15.
Online:
Inventory management. 2018 [Online]. Available Through:
<http://searcherp.techtarget.com/definition/inventory-management>
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