Business Development: Strategies for Operational Functions Report

This report provides an in-depth analysis of operational strategies employed by a business, focusing on various functions such as production, supplier management, inventory management, human resources, and financial performance. The report evaluates the implementation of Total Quality Management (TQM) and Make-to-Stock strategies, assessing their impact on cost reduction, efficiency, and meeting customer demands. The analysis includes detailed financial data, comparing revenue and expenses across different quarters and strategies, highlighting the effects of labor costs, inventory expenses, and the adoption of forecasting methods. The report reflects on two distinct strategic approaches, detailing the challenges and successes encountered in each, ultimately demonstrating how effective inventory management and strategic decision-making can significantly impact profitability and overall business growth. The document provides an in-depth insight of how the business has been managed for success.

REPORT

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
REPORT..........................................................................................................................................1
Strategies for different operational functions..............................................................................1
Reflection.....................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business grow when they establish, deliver and support the products and services with
the efficiency. Operations management refer to optimising the business for particular outcomes
through the changes at operational level. Every function of the business is essential and
effectively managing is also for the success or failure of business. Report will discuss about the
management of different organisational functions. It will cover different strategies and concepts
that have been used for the business for effectively managing them. It will be discussing about
the manner which effective implementation of these techniques and concepts will help in
improving the strategies.
REPORT
Strategies for different operational functions
Production process
The company has adopted total quality management process for the business. This has
been used for reducing the wastage to the minimal and ensuring that all the products are checked
thoroughly both at entrance and exits to prevent wastage of time. Later it started analysing
demands and produced according achieving the target results with least wastage (Aubry and
Brunet, 2016).
Supplier management
The previous issues faced with suppliers was getting the orders on time and quality
issues. It was checked and fixed after implementation of TQM. Substitutes were found to meet
the demand on time at the required quality. Also the benefits were gained in trade discounts for
bulk purchases
Contracts and Forecasts
It is also an important function of the management. The demands are required to be
analysed based on the past and current trends. They were assessed using analytical software and
covering the economic situations. It is critical to decision making for starting the production. It is
also essential for preparing the budgets and analysing whether there are adequate resources to
run the business smoothly (Guptaa and Singhalb, 2018).
Human Resources and Capacity planning
The freshers and new staff were recruited in major as they were able at better prices. The
executive and management team is highly efficient. They were prepared for different functions
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through trainings by specialised managers. The employees were efficient and had higher
acceptance that helped in increasing the productivity. The TQM has helped us in managing the
resources more efficiently and accepting only quality materials through high control checks. It
has helped in reducing the wastage and cost to considerable extent. The production is done
assessing the demand that helped to meet orders timely without compromise to the quality.
Inventory Management
The process refers to managing the inventory adequately keeping track over the
movement and meeting the requirements adequately and timely. Initially the we adopted Just – in
– time strategy to avoid the loss of materials and overstocks. We also used Make to Stock
strategy to meet the customer demand and progressively forecasts were made to meet the
demands. It was very critical task as it involves recording all the inventory transactions like
consumption of materials and outputs produced (Moşteanu, Faccia and Cavaliere, 2020). The
supplier was not providing required quantity on time and also the quality sent was not
appropriate at many time which were sent back. Make to stock helped in reducing inventory
mismanagement and quality issues as safety stocks were kept all time.
But it was increasing the holding cost due to which we started forecasting demands and
stocked as per demands. It helped in getting materials timely and also cost benefits were realised
due to this. The costs were reduced and efficiency was increased and also meeting quality
standards.
Analysis
Carrying out the operations it has been analysed that raw materials and labour expenses
are the major costs. Other costs such as inventory management, operations and transportation
costs are subsidiaries to these. The make to stock strategy was effective to keep the production
going without interruptions. Recruiting freshers helped in saving considerable costs and
Trainings given made them to carry out processes effectively. It helped in meeting quality
standards and reducing the raw materials costs.
Inventory Expenses (Quarterly) – Attempt 1
Quarter Holding costs (in $) Change (in $) Percentage
1 (Jan – Mar), 2020 8755.12 - -
2 (Apr-Jun), 2020 15294.24 6539.12 74.69%
3 (Jul - Sep), 2020 20385.83 5091.59 33.29%
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4 (Oct-Dec), 2020 17443.11 -2942.72 -14.44%
1 (Jan - Mar), 2021 412.74 -17030.4 -97.63%
The additional material cost due to spot purchases in 1st quarter to quarter 4th was –
97.63% at end. Using the make to stock strategy showed significant fluctuation in the 1st quarter
in our favour. The additional costs rose to 74.69% in 2nd quarter. Further applying the strategy
with close monitoring helped to decrease additional costs by 33.29%. Further implementation of
the strategy helped in reducing costs from -14.44% in 4th quarter to around -97.63% at 1st quarter
2021. The adoption of forecasts methods helped to reduce additional cost to -97.63% in 1st
quarter of 2021.
Inventory Expenses (Quarterly) [Attempt 2]
Quarter Holding costs (in $) Change (in $) Percentage
1 (Jan – Mar), 2020 11,590.08 - -
2 (Apr - Jun), 2020 31,182.17 19,592.09 169%
3 (Jul - Sep), 2020 30,461.56 -720.61 -2%
4 (Oct - Dec), 2020 42,709.92 12,248.36 40%
1 (Jan - Mar), 2021 0.00 -42,709.92 -100%
It could be seen in above table that additional costs showed hike of 169% during 1st and
2nd quarter. Moving forward the it was decreased by -2% during 3rd quarter. In 4th quarter it has
been seen that increase of 40% was seen but reduced the additional cost significantly by -100%.
Results in trial 2 are effective as changes in the suppliers and strategies of inventory
management due to adequate stocks and reducing additional costs on spot purchases.
Labor Expenses attempt 1
Quarter Labor Expenses (in $) Change (in $) Percentage
1 (Jan – Mar), 2020 54,330.00 - -
2 (Apr-Jun), 2020 65,880.00 11550 21.26%
3 (Jul - Sep), 2020 71,280.00 5400 8.20%
4 (Oct - Dec), 2020 70,500.00 -780 -1.09%
1 (Jan - Mar), 2021 11,820.00 -58680 -83.23%
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The labour expenses were considerable high. There was significant decrease in labour
expenses by the end of 1st quarter of 2021. The reduced labour costs were achieved by hiring
fresher’s and training them with skills requires to handle the operations in starting.
Labor Expenses [Attempt 2]
Quarter Labor Expenses (in $) Change (in $) Percentage
1 (Jan – Mar), 2020 46,130 - -
2 (Apr-Jun), 2020 62,080 15,950 34.58%
3 (Jul - Sep), 2020 60,680 -1,400 -2.26%
4 (Oct - Dec), 2020 58,680 -2,000 -3.30%
1 (Jan - Mar), 2021 9,780 -48,900 -83.33%
The results of trial 2 did not showed major fluctuations in this attempt. They have
increased in quarter 2 by 34.58%. After that a decreasing trend has been observed in expenses. It
is seen die to initial hiring and the immediate training.
Though the initial training expenses were high but it helped in deriving the benefits
throughout the process. Labour expenses amounted to 54330 in trial 1 and 46130 in trial 2. Major
differences were not recorded adopting the strategy (Maleknejad and Shahabi, 2019).
Revenue Vs Expenses
Quarter Revenue (in $) Expense (in $) Profit/Loss (in $)
1 (Jan – Mar), 2020 47,253.18 113,079.82 65,826.6
2 (Apr - Jun), 2020 65,510.49 113,621.02 48,110.5
3 (Jul - Sep), 2020 142,877.54 128,478.20 14,399.34
4 (Oct - Dec), 2020 1160,03.13 114,260.81 1,742.32
1 (Jan - Mar), 2021 19,780.41 14,220.72 5,559.69
Total 391,424.75 483,660.57 92,235.80
In the trial 1 it could be seen that there is a loss of 65826.6 There were total losses
391424.75, and the revenues were 483660.57. Though the strategy was implemented to reduce
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the additional costs but the efficient strategies but did not helped in reducing the additional costs.
The production was run smoothly. Increase in revenues are seen due to the promotional
strategies.
Revenue Vs Expenses [Attempt 2]
Quarter Revenue (in $) Expense (in $) Profit/Loss (in $)
1 (Jan – Mar), 2020 57,647.59 113,149.56 55,501.97
2 (Apr - Jun), 2020 198,183.12 162,348.07 35,835.05
3 (Jul - Sep), 2020 176,656.75 148,175.68 28,481.07
4 (Oct - Dec), 2020 319,108.19 161,167.89 157,940.30
1 (Jan - Mar), 2021 34,989.03 11,617.50 23,371.53
Total 786,584.68 596,458.70 190,125.98
The total revenues are recorded as 786584.68 and the expenses were recorded at 596458
and profits of 190125.98. have been earned. Implementation of strategy was effective at initial
stage. The adoption of Make-to-Stock enabled to keep expenses under control and running the
productions smoothly. Use of JIT incurred loss as the spot purchases were overcharged by the
suppliers. On the other Make-to-Stock strategy helped in keeping stocks reducing the additional
costs. It helped in moving the up the profit levels. The drastic change in results and revenues
were seen due to reduced premium costs for revenues and higher revenues by meeting bulk
demands.
Reflection
Strategy 1
The game consisted of number of operations to run the business like labour usage,
inventory management, machinery upgrades and the transportation of the finished goods. The
strategies play an important role in determining the effectiveness of the processes. They are
implemented with long term perspective. Material costs, holding costs and lead time of suppliers
impacts the production process. The orders were placed as 65 contracts due to the effective
marketings on the basis of raw materials and the production process (Guicciardi, 2020).
The orders were affected by high raw materials cost due to spot purchases for meeting the
production requirements instantly. Just in time increased the cost of purchases and also they
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charged high prices. The suppliers also made quality compromises to meet the demand. Keeping
stocks helped in meeting the production requirements and made orders beforehand to negotiate
the prices with suppliers. The workers were hired and effective trainings were provided and
monitored the processes to avoid the wastage.
It helped in reducing the raw materials cost and finished goods cost at considerable level.
Also the effective forecasting helped in managing the inventory levels and meeting the
production requirements. It reduced the additional costs and helped on providing timely orders
satisfying the customers.
Strategy 2
In the second strategy some changes were made that helped in achieving adequate profits.
In the first attempt JIT did not worked out for the benefit and resulted in increased material costs.
This caused to shift the strategy to make to stock strategy. It helped in keeping the stocks in
advance analysing the future requirements. It helped in making bulk purchases reducing cost of
materials and also in availing discounts. The forecasts were made considering the market trend.
The adoption of strategy helped in meeting the quality standards and to meet the demand
of customers timely at reduced costs. It smoothly turned the losses to profits in second strategy.
All the 62 orders were met on time. This provided that profits could be made by effective
inventory management and meeting the customer demands on time with good quality of products
and services.
CONCLUSION
It could be evaluated from the above that there has been significant change in profits. The
orders made in strategy were not fully met as the delay in production process and low quality. It
made to suffer losses. On the other in strategy the adoption of make-to-stock strategy helped in
getting good quality raw materials at appropriate costs. This enabled to meet all the orders timely
and earn adequate profits.
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REFERENCES
Books and Journals
Maleknejad, K. and Shahabi, M., 2019. Application of hybrid functions operational matrices in
the numerical solution of two-dimensional nonlinear integral equations. Applied
Numerical Mathematics, 136, pp.46-65.
Moşteanu, N.R., Faccia, A. and Cavaliere, L.P.L., 2020, August. Disaster Management,
Digitalization and Financial Resources: key factors to keep the organization ongoing.
In Proceedings of the 2020 4th International Conference on Cloud and Big Data
Computing (pp. 118-122).
Guptaa, P. and Singhalb, N., Digital Marketing Synergy for Management Integrated Functions
and Operations. INTERNATIONAL JOURNAL OF TRADE AND COMMERCE-IIARTC.
Aubry, M. and Brunet, M., 2016. Organizational design in public administration: Categorization
of project management offices. Project Management Journal, 47(5), pp.107-129.
Guicciardi, D., 2020. System and Method for Enhancing and Sustaining Operational Efficiency.
U.S. Patent Application 16/732,705.
[Online]. Available through : <>.
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