Understanding Operations, Logistics and Supply Chain Management

This document provides an in-depth understanding of operations management, logistics, and supply chain management. It focuses on the challenges faced by Audi AG and explores theories and principles such as Total Quality Management, Just-in-Time, and Lean Principles. The document also provides recommendations for improving operations and increasing efficiency.

Understanding
Operations, Logistics and
Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction............................................................................................................................1
Company Profile.....................................................................................................................1
Quality Management and theories..........................................................................................2
Just – in – Time and Lean Principles......................................................................................4
Triple Bottom Line.................................................................................................................6
Recommendations..................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Operations management is managing business operations effective in order to achieve
quality and increase profitability. Logistics is defined as process of coordination and movement
of resources from place to another. Supply chain management is the process of handling
manufacturing flow including goods or services like raw material, suppliers, etc. (Copacino,
2019). Audi AG is German car manufacturer that designs, produces, promotes and distribute
luxury vehicles in international market. In this report, introduction of operation management,
logistics and supply chain management will be includes. Selection of issues faced by the
company and relevant theories will be discussed. At last, some recommendations will be made so
that challenges can be solved.
MAIN BODY
Introduction
Operation management is process of managing and controlling operations of business in
order to ensure efficiency and productivity. Logistics is movement of resources from region to
another and to coordinate such activities is objective of this. Supply chain management is
management process to handle production and relation resources so that efficiency can be
increased. All these activities of organisation have basic objective to increase outputs, higher
profits margins, enhance productivity and competitive advantage in the industry.
Company Profile
Audi AG is member of Volkswagen group and deals in manufacturing of luxury cars
and promotes it in international market. It is one of the largest German Auto-mobile brand which
has strong image at global level and has good market share in industry as well (Audi, 2019.).
First topic is Quality Management is process of determining and controlling operations of
organisation so that desired or set standards of quality can be achieved. This is management
process which includes determining policy, systems, planning, measuring, tools, techniques, etc.
to ensure that quality is controlled and managed effectively. It focuses on short and long – term
objectives by implementing quality initiatives in operations with the help of Total Quality
Management. Another is Just – in – Time which was introduced by Toyota corporation to
minimise the cost related to maintaining inventory in company. This is process which will help
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organisation to eliminate need arise to keep stock in business. In this part of operation will arrive
when it is required by manufacturing process to meet demands of customers. Lean
Manufacturing is concern with value of customer in terms of product or services they avail in
market. This helps company to find out what is real value of goods or services that business is
offering in targeted market for customers.
Quality Management and theories
Quality is refer to as inferiority and superiority parameter of product or services
according to the specifications. Whenever, any product or service meet expectations of
customers tends to be qualitative for consumers. Managing this aspect is one of the critical and
significant process in context of Audi AG. Quality can be effectively managed and controlled
with the help of Total Quality Management theory (TQM) and related principles of it. Total
Quality Management can be define as customer – oriented management process which have
basic objective of improving quality of business operations. This is concept which states that
workforce should work in direction of continuously improving services, systems, culture and
processes to ensure that organisation have successful sustainability (Heizer, Render and Munson,
2017). It is the management approach to increase internal procedures and satisfaction level of
customer. If it is implemented with effectiveness can lead to reduce cost of operations and
overall performance will be enhanced. For this Audi AG will apply different principles of Total
Quality Management to create base for quality improvements, are as follows:
Manage Quality: This is one of the important principle that states that it is necessary that
companies realise that there is some problem in business and its operations. Many big
organisation believes that operations are so widely spread that they are not able to control it
effectively. Just in case of Audi AG management needs to understand the problem and find out
solution so that quality can be improved.
Processes are problem: In case if business operations is causing issue in the
organisation then no matter how much management tries to solve this challenge. Changing
employees or providing training to them will never address the issue instead of this, process need
to need so that it become effective (Prajogo, Oke and Olhager, 2016). So there is a need that
Audi AG take corrective actions for processes and operations in the place of personnel.
Identify Cure: It is equally important that organisation tries to find root cause of the
problem and identifies solutions. But just finding out causes or reasons for a problem prevailing
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in business will be the cure. Instead of this company need to find corrective solutions so that it
can be improved. In case of Audi AG it is advice by this theory that it is essential that
management reaches to source and them correct issues that are hindering quality of products and
operations.
Employees are responsible: It is not just the duty of management or managers to
improve operations and quality in businesses. Every employee should be held liable in ensuring
qualitative aspects in products and services (Schönsleben, 2018). Audi AG needs to empower
employee to take responsibilities in order to improve quality so that customers are delighted and
organisational objectives can be achieved.
Measuring Quality: This is one of the important principle laid down by Total Quality
Management in improving qualitative factor in business operations. Theory believes that
effectiveness of quality management systems can be measured by analysing desired results. This
will help Audi AG to set future goals in seeking perfection and make sure that each functional
unit is working in direction towards it.
Continuous Improvements: Applying Total Quality Management is just not the task
which can be done only once in organisation. This process does not stop with the last phase of
implementation, instead it should be continuous process in operations. Audi AG need to ensure
that improvements occurs continually so that customer satisfaction can be increased.
Long – Term Investment: Issues arise in business and its operations can be fix over –
night or in one slot. On the other hand Total Quality Management is investment of long – term
and designed accordingly to bring success and improvements (Baker, Croucher and Rushton,
2017). Audi AG need to develop skills and empower employees to come up innovative idea for
business issue of managing quality.
It is important that business and employees are ready to bring changes and improve quality of
processes and products. This requires commitment of every employee and management to
remove barrier and work collectively to enhance quality. It is needed that there should be proper
training given to employees to change their attitude and working culture of Audi AG. It is
customer – focused process which requires continuous improvements. This approach also
requires regular monitoring and controlling actions by management to correct deviations in
quality. After applying Total Quality Management Audi AG will be able to see changes in
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awareness about qualitative aspects in working culture of business. Teamwork will improve and
there will be continuous improvements in terms of quality in operations.
Just – in – Time and Lean Principles
Another topic is Just – in – Time and Lean Principles which need to apply by Audi AG
so that it can help it in reducing cost and increasing sustainability in industry. These are
principles that helps organisation to decrease operating and manufacturing cost so that company
can have competitive advantage in industry.
Just – in – Time is a strategy related to production process by reducing inventory cost
with the help of estimating demand of customer accurately. This is management approach, firstly
developed by Toyota manufacturing to meet demand in minimum number of days. The main
focus is to identify and correct factors that create hurdle in process of production. It provide
assistance in preventing excessive storage of stock so that manufacturing function can be
smoothly carries out (Christopher, 2016). This approach has main objective to increase turnover
of stock and decrease holding of inventory and related cost. There are elements involved in Just
– in – Time are:
Continuous Improvements: In this fundamentals of issues are identified and tries to
eliminate activities that does not add value to product. Systems should be simple so that they can
understood easily and manageable without any complexity. Layout should be product oriented so
that less resource are spent on materials and equipment.
Eliminating Waste: Main objective of Just – in – Time is to eliminate waste by making
supply chain effective in its processes and delivery (Alicke, Rexhausen and Seyfert, 2017). In
starting it can be done by reducing inventory and increasing efficiency of production, this can be
done by Six Lean Principles.
There are different advantages and disadvantages of implementing Just – in – Time systems in
Audi AG. Some of them are as follows:
Advantages: This system is effective in keeping cost of inventory upto minimum level by
eliminating waste. Only important resources are stores in warehouses that are required for
production process thus requirement of working capital is less. It leads to products of higher
quality with the help of continuous improvements in operations of business.
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Disadvantages: This approach can make business to highly depend on suppliers for raw
materials and other resources which can create a problem. This is not effective in case of meeting
higer demands than estimated by department which can lead to negative brand image (Taticchi
and et. al., 2015). This can lead to higher cost of transportation as transaction will be frequent
which can also lead to environmental issues.
Lean Principles encourages practice of continuous improvements and is based on basic
ides of respecting individual at workplace. There are different 5 principles that comprise
approach of Lean Principles, explained as follows:
Define Value: Value can be define as amount that consumer pay in exchange of products or
services (Mangan and Lalwani, 2016). This first principle is concern with identifying customer
value so that goods or services delivered by Audi AG so that it can meet expectations of
consumer. This can be done by tools like interview, web analysis, market trends, surveys, etc.
Map the Value Stream: The second principle is identifying value stream, in this all activities
that works in direction of providing value to product of Audi AG. Such operations are identified
which does not add value to end product and eliminated to ensure qualitative aspects in the
operations. This will help in reducing cost of production and meeting expectations of customers.
Create Flow: This includes removing activities identifies ad waste in above principle so that
production functions can be run smoothly. The strategies to create flow is breaking down steps
and create cross functional departments.
Establishing Pull: Storage of stock is treated as one of the biggest waste in manufacturing
industry and to overcome Audi AG need to adapt this principle. For this concept of Just – in time
will be applied so that resources are procured at the time of production and demand is meet on
time. By following this company can ensure that manufactured products are effective in
achieving expectations of customers.
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Seek Perfection: First four steps in Lean Principles will help Audi AG to reduce waste and be
cost-effective in production processes (Grant, Trautrims and Wong, 2017). Lean thinking and
continuous improvements need to be include in working culture of business. Employees should
tries to pursue perfection in every task so that quality can be enhanced and company is able to
meet expectation of customers.
Triple Bottom Line
It is theory that suggests companies to focus on different aspects like social, environment
and economical of the organisation. The basic idea behind this concept is to look beyond just
earning profits and tries to improve social and environment positive impact of business. The
elements are as follows:
Social Impacts: This is concern with treatment that company does with its workforce which also
have impact on community in society. This states that Audi AG should produce that safe and
secure vehicles which does not harm customer in terms of health. Management of Audi AG
should look into HR practices so that there is no discrimination and competitive wages or salary
are paid. This factor also ensures that there are proper arrangements of safety and security,
flexible working hours (Trkman, Budler and Groznik, 2015).
Environmental Impacts: Global warming is one of the biggest environmental issue that need to
be address by organisation to reduce the negative impacts. Audi AG should design its operations
in such a way that wastage of natural resources while manufacturing vehicles is less and it is
sustainable in nature. This need to ensure that management of Audi AG closely so that company
has positive impact on environment and it will result in increase in brand value at global level.
Economic Impacts: This takes into consideration the external impact on economic factor related
to society. In case of Audi AG employing regional and local suppliers for raw materials will
provide benefit to local community by increasing their standard of living and increase their
consumer spending as well (Hugos, 2018). This factor ensure that economic benefits are
generated for individuals in society.
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Applying triple bottom line will help organisation in increasing its reputation, recruitment
and retaining talented workforce, improved productivity and customer loyalty. This will also
help Audi AG to get skilled and talented workforce and will be able to retain them for long. This
will also ensure that brand image of company is enhanced at international market as company is
engaged in activities related to social and environment benefits.
Recommendations
It can be recommended from above discussion that Audi AG can manage quality and
different approaches of management effectively. In case of managing quality company can apply
Total Quality Management and its principles so that quality factor can be maintained in
operations and products. This will organisation to find out solution for problem, taking corrective
actions, empower employees, continuous improvements, etc. which create culture of improving
qualitative factor in operations. Just – in – Time is another approach that focuses on increasing
cost related to storage of stock and waste inventory. This will make Audi AG more cost –
effective and thus can become leader in respective industry. Lean Principles will help in finding
out waste activities that does not add value to end product and eliminate them. This also ensure
that production functions runs smoothly by creating flow in steps that makes addition in
qualitative aspect of product.
CONCLUSION
It can be concluded from above report that operations management is managing operation
of organisation in effective manner so that customer expectations can be meet. Logistics is
concerned with controlling and moving actions of resources for company in different region.
Supply chain management is managing flow of products or services that are included in
production function. Quality management is concern with activities that focus on increasing
qualitative aspects with the help of Total Quality Management and its principles. Just – in – time
is helpful in reducing cost of inventory and Lean Principles comprises of seeking perfection with
continuous improvements.
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REFERENCES
Books and Journals
Copacino, W. C., 2019. Supply chain management: The basics and beyond. Routledge.
Heizer, J., Render, B. and Munson, C., 2017. Operations management. Sustainability and Supply
Chain Management, 12th Ed., USA.
Prajogo, D., Oke, A. and Olhager, J., 2016. Supply chain processes: Linking supply logistics
integration, supply performance, lean processes and competitive
performance. International Journal of Operations & Production Management. 36(2).
pp.220-238.
Schönsleben, P., 2018. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
Baker, P., Croucher, P. and Rushton, A., 2017. The Handbook of Logistics and Distribution
Management: Understanding the Supply Chain. Kogan Page Publishers.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Alicke, K., Rexhausen, D. and Seyfert, A., 2017. Supply Chain 4.0 in consumer goods. Mckinsey
& Company.
Taticchi, P. and et. al., 2015. A review of decision-support tools and performance measurement
and sustainable supply chain management. International Journal of Production
Research. 53(21). pp.6473-6494.
Mangan, J. and Lalwani, C. L., 2016. Global logistics and supply chain management. John
Wiley & Sons.
Grant, D. B., Trautrims, A. and Wong, C. Y., 2017. Sustainable logistics and supply chain
management: principles and practices for sustainable operations and management.
Kogan Page Publishers.
Trkman, P., Budler, M. and Groznik, A., 2015. A business model approach to supply chain
management. Supply Chain Management: An International Journal. 20(6). pp.587-602.
Hugos, M. H., 2018. Essentials of supply chain management. John Wiley & Sons.
Online
Audi. 2019. [Online]. Available Through:
<https://www.audi.in/in/web/en/customer-area/news.html>
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