Operations Management in Business: A Volkswagen Company Analysis

This report provides a comprehensive analysis of operations management within Volkswagen, a leading automobile brand. It evaluates the significance of operations management, detailing process models for managing organizational operations. The report discusses the importance of the 3 E's (Effectiveness, Efficiency, and Economy) and the impact of the tension between quality enhancement and cost reduction. It further examines the use of linear programming by Volkswagen and includes a network plan indicating the results of critical path analysis, offering insights into how Volkswagen manages its production processes and strategic objectives. Desklib offers a wide range of study tools and resources for students.

OPERATIONS MANAGEMENT IN BUSINESS
1

Table of Contents
Introduction................................................................................................................................3
LO1............................................................................................................................................4
LO2............................................................................................................................................6
LO3............................................................................................................................................9
LO4..........................................................................................................................................13
Conclusion................................................................................................................................17
Reference List..........................................................................................................................18
Appendix:.................................................................................................................................19
2

Introduction
Volkswagen is one of the leading automobile brands that started operating in the year 1937,
with the aim of manufacturing cars for the German community. In the year, 1953
Volkswagen Motors Ltd started importing their product in UK. After their entry in UK, the
brand kept on earning fame and moved to their headquarters at Blakelands, Milton Keynes.
This assignment will evaluate about the importance of operation management for
Volkswagen Company. Details about process model, for managing the operation of the
organization have been discussed. This report will provide information about the significance
of 3 E’s for the firms and also elaborate about the impact of tension between quality
enhancement and cost reduction. The utilization of linear program by Volkswagen has been
discussed in this assignment. A network plan has been provided that indicates about the
results of critical path analysis.
3

LO1
Introduction
Operation management is the administration and management of business practices that helps
in creating a high level of efficiency in an organization. This process involves the conversion
of raw materials, and labours into products and services in the most efficient manner that will
assist in increasing the profit generation of the company. This essay will evaluate about the
significance of operation management for the Volkswagen organization.
Discussion
Operation management involves the effective planning, organizing and monitoring of the
production and the manufacturing process (Mheducation.co.uk, 2018). Operation
management is one of the most important processes of Volkswagen, as the competition in the
automobile industry is increasing day by day, hence, organizations need to update their
technology and introduce new products in order to gain competitive advantage. The
marketing department of the company conducts market research in order to understand about
the trends and the market demand. Customers are inclined towards new technologies and
want to purchase unique products, so innovating new designs with latest technology will help
the company in attracting more consumers towards their product. The human resource
department is responsible to maintain the workforce of the organization. Operation process
ensures the workforce of the company is being strategically used, and all the employees of
the company are provided tasks as per their skills and knowledge so that the productivity of
the company can be enhanced. Finance department maintains the budget of the company and
allocates the budget for production so that the company as able to generate revenue.
Operation management process ensures that the organizations works as per its vision mission
and achieves their objectives.
The process is helpful at identifying the various techniques that can be incorporated in order
to transform the raw materials to finished goods. Introducing new products will allow the
firm to increase their revenue generation and strengthen its customer base. Operation
management helps the company in monitoring and controlling their manufacturing process,
hence, increasing the safety of the products for the consumers. The process assists the
organization in achieving its long-term goals. Continuous feedback allows the company to
4

improve their process of transformation or to rectify their human resource so that their
operations can be improved, so that they are able to achieve their goals and objectives.
Volkswagen introduces new model as per the demands of their customers (Ramanujan.edu.in,
2018). The operation functions of the organization involves the effective use of human
resource in order to control and monitor the smooth running of the manufacturing process in
alignment with the market demand, that assists in achieving the objective of the company
Human resource department of the company hires staff for warehouse-labour, Factory,
quality department, marketing department, business development and for other requirement
of the company (Bratton and Gold, 2017). Staffs help in the operation of the company, and
works as per the company’s policy in order to achieve the goals and objectives of
Volkswagen.
Operation manager is responsible to maintain the assets of the company that includes tools,
equipments, and other materials that are required in for the production of vehicles. These
assets are effectively used in order to produce services and products for the consumers.
One of the most important roles of operation manager is to maintain the cost of their
products; they are required to maintain a balance between the purchase of raw material, and
other costs that are involved in the production with the revenue that will be generated by the
sale of the product.
In Volkswagen, the operation functions are divided in three basic phases- pre-production,
production and post-production phase. During the first phase, the management creates a
proper plan and aligns the required resources, such as the required workforce, different raw
materials needed for the production process, storage and logistic handling and more such
requirements.
During the production phase, the planned and allocated resources are utilized in order to
transform the raw materials to finished goods that are ready to be supplied to the customers.
In the postproduction phase, the manufactured cars are delivered to the different car
dealerships of Volkswagen so that they can be sold to the customers.
Conclusion
This essay helps in understanding about the significance of operation management. The
different functions of the operation management process have been discussed in details, the
5

essay elaborates about the impact of operation management on the manufacturing process of
Volkswagen.
6

LO2
Introduction
This essay will evaluate about the significance of 3 Es- Effectiveness, Efficiency and
Economy with respect to the organization. Effectiveness allows the organization in
understanding about what has been achieved by them. Efficiency is measured by comparing
the input that was required by the manufacturing department to the output that is provided by
them. Importance of five performance objectives has been discussed in this essay.
Discussion
The management of organization needs to ensure that all the required assets have been
acquired in the correct proportion, at the perfect time and at the correct price. The operation
manager is required to ensure that the assets are being used in the most accurate way and the
operational activity takes place within the budget that has been allocated. This allows the
organization keep a check on the procurement of assets for economy.
The number of resources required by the manufacturing unit, timely up gradation of various
tools and machines, timely delivery of cars to the dealerships with the help of proper logistic,
measures the effectiveness of Volkswagen. The efficiency of the organization is determined
by maintaining the supply time with the help of adequate human resource that complete the
production process. Economy of scale of the firm is measured by the cost of labours, cost
incurred on machines, logistic delivery costs and other costs that are involved in the
production process. These three factors are important to determine the alignment of the
operation functions with the goals and objectives of the organization. Thus, the three Es assist
in the monitoring and evaluation process and improves the production process of
Volkswagen.
The effectiveness helps in measuring resources so the company will be able to calculate all
the resource and will be able to maintain their budget, the efficiency helps the organization in
maintaining their operation in a smooth way so that they can increase their performance.
Increasing efficiency will help in increasing the business of Volkswagen. The economy of
scale allows the organization to maintaining their budget they can get the knowledge about
the expenses, so the company is able to generate profit revenue. The three E’s allow the
7

company to work in alignment with their objective so they are able to enhance their business
by achieving all the objectives.
As the competition in the marketing is increasing, the customers are having a number of
options to choose from. If the expectations of the customers are not met or there is any
decline in the quality of the products then the customer switches to some other brand. Hence,
a well-established brand cannot afford to be ill reputed by their customers and thus they are
required to maintain the quality of services offered by them.
Maintaining a balance between price and quality is essential for Volkswagen, but due to
changing business environment, issues such as shortage in supply of good quality raw
materials, increasing cost of raw material, changing demands of the vendors, and other such
problems are faced by the production manager of Volkswagen. In order to maintain margins
so that they are able to achieve the objectives of the company and fulfil the demands of their
customers by offering them products of superior quality as compared to their competitor.
It is observed that due various reasons some of the organizations offer low quality products to
their consumers, so that they are able to enhance their profit revenue. Customers who are
interested in purchasing low quality products, due to low market price encourage companies
to continue manufacturing low quality products. This scenario increases the tension of
maintaining the balance between quality maximization and cost minimization. Cost price can
be reduced by using raw materials that are low priced as compared to regular good quality
raw materials, but this can reduce the quality of the product.
Volkswagen is one of the leading brand and the customers have trust in their services due to
the high quality that is provided by them through premium pricing, as their production cost is
high. The operation manager of the company coordinates with mangers of other department
in order to maintain the cost of the company so that they are able to maintain the balance
between cost and quality.
The five performance objectives- speed, quality, flexibility, dependability and cost and the
impact of these objectives on the operational aspect of the organization. The quality of the
products can be measured by the reviews that are provided by the consumers about the
product. Quality products meet the expectations of the consumers and strengthen the relation
of the consumers with the Volkswagen. The speed can be measured by analyzing the delivery
of the products to the dealership or the consumers (Cws.cengage.co.uk, 2018). The
8

availability of product plays a vital role in attracting consumers towards the brand. Speed
helps in determining the efficiency of the Volkswagen. Dependency factors helps in
determining if the customers can trust and rely on the organization. Volkswagen keeps their
commitments and thus, has earned the trust of their consumers. Flexibility helps in
identifying the potential of the company to change and adapt as per the requirement of the
consumer. Volkswagen changes their strategies in order to survive in the changing business
environment.
Cost factor helps the company in maintaining a balance between the cost and quality.
Volkswagen provides their consumers with quality products at the best price possible.
Consumers receive value for their money thus, are loyal towards the firm.
Conclusion
The essay provides details about the significance of three E’s for Volkswagen, the importance
of maintaining balance between the cost of the products and the quality of the product has
been discussed in this essay. The five performance objectives helps Volkswagen in order to
measure their performance and a per the result the organization can improve services; this
will allow the firm to increase their business.
9

LO3
3.1) Assess how linear programming adds value to the Volkswagen production process
Linear programming is the process of achieving the best possible outcome in a mathematical
structure the needs of which are represented by linear relationships. Linear programming is
also known as a particular case of mathematical programming (Vanderbei et al., 2015). It
represents confined optimization course that share certain characteristics, which helps to
identify the drawbacks of the organization that can be solved by using linear programming.
Linear programming can be used by the executives of Volkswagen to evaluate the volumes of
the production and the prices, provided the limitations that will be helping them in the
achievement of the profit maximization purpose of Volkswagen. Application of linear
programming to the business environment of Volkswagen with the provided resource of
limited constraints, are expected to earn the result of the process of production. The timeline
to achieve the result will be providing the project executives and business managers of
Volkswagen to evaluate the business hindrances in a real and appropriate manner.
The application of this process will bring out the true and genuine picture of goal
achievement. Hence, linear programming helps in providing an accurate evaluation of
business problems and an analysis of external trade factors to gain maximum profits by using
minimum cost in production (Dantzig et al., 2016).
Volkswagen should use four main components in its structure of linear programming model.
1) Objective: It represents the principle for which Volkswagen was started on the very first
place. Objectives direct and administer the behaviour and actions of the business
organization. Objectives are something, which business organizations want to achieve in
their long run. It is the principle motive of running the business. In this case the
consideration of the Volkswagen will be taken in, as to objectify its very purpose it is
important to analyze its objectives. It is generally understood that trade units have one
single objective of making profit. However, it is not the only objective of Volkswagen.
While pursuing the principle of making profit, business units must keep the interest of
their owners in view. However, any business unit cannot overlook the interests of its
customers, employees, the community, and the interests of society as a whole.
10

.
2) Decision Variables: It is quantity of business resources that are controlled by the decision
makers of Volkswagen. For example, management of employees, labors scheduling, and
amount of raw material resources needed in the production of Volkswagen, etc. It is an
essential factor to identify the hindrances recognized by the linear programming structure
model of the business of Volkswagen.
3) Constraints: The business plan of Volkswagen must be realistic and genuine in nature. It
is important to have a detailed outline of business limitations, constraints, drawbacks and
hindrances. Volkswagen must critically evaluate its size of market, availability of supply
and nature of demands in the market to tackle the constraints.
4) Parameter: Depending on its products, Volkswagen must evaluate its parameters for
effective conduct of business. The important business parameters are: price of the
products, efficiency of employees, trust of the clients and impeccable design and quality
of products.
3.2) Evaluate critical path analysis and network planning
Volkswagen has many different projects that are planned by the managements and authorities
in order to increase the business of the organization; these projects maybe complex and
sensitive to time. In order to complete the project, it is necessary that all the activities should
be well planned (Cimt.org.uk, 2018). On proper analysis and understanding about the
different activities, it becomes easier to analyze how these activities are interdependent on
one another.
After analyzing all the dependency the timeframe and the best methods and techniques in
order to complete those activities can be determined. Critical Path Analysis is one of the best
management tools that can be used in order to achieve effectiveness and efficiency.
An analysis of the supplier of Volkswagen will help in understanding about the critical steps
List of activities Duration Dependency
A. Purchase of
technological
mechanisms
2 months A
11

B. Recruiting skilled
candidates
1 months -
C. Supply chain
initialization
2 months A
D. Marketing activity 3 months B
E. Training program 2 months B,C
F. Production and
Supply of product
2 weeks B,C,D
Table 1: An analysis of the supplier of Volkswagen
(Created by the learner)
Network analysis allows Volkswagen to reduce the risk of managing complicated projects. It
provides the management with an overview about the various steps that will assist them in
taking better decisions. All the dependencies of the project can be understood with the help of
network analysis. The critical aspects of the project are analyzed with the help of critical path
by following the path that assists to accomplish the objective in minimum timeframe.
3.3) Justify the need for operational planning and control with reference to capacity
planning, inventory planning, project management and quality assurances, in the
Volkswagen production process and system.
Operational planning and control ensures that the operational activities of Volkswagen work
in alignment with the goals and objectives of the organization. According to the market
demand a proper production plan is created, that provides detailed information about the
resources and the timeline so that the production can be timely achieved. Without planning
and control method, the estimation of production cost becomes very difficult.
Capacity planning: This process helps in determining the production capacity that allows
Volkswagen to meet the changing demand for their products.
Inventory planning: This process allows Volkswagen to determine their optimal quantity and
helps them in maintaining their production timing (Triqui Sari and Hennet, 2016). This
process is focused to align the plan with the capacity of the organization to produce goods
and increase their sales.
12