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BUMGT6935 Operations Management : Strategy Asda Company

Questions:

Topic

Choose a well-known organization (or an organization for which you can easily access relevant information).
 
1.Identify its business objectives and strategy (perhaps as stated in its mission statement).
 
2.Identify its operations strategy by analyzing its actions in the key decision areas of structure and infrastructure.
 
3.Identify its operations performance objectives. (e.g. cost, quality, speed, dependability and flexibility).) What are the organization’s competitive priorities? Assess its internal consistency and its contribution to the organization’s competitive advantage.
 
4.What are the biggest operations management challenges for the organization? What advice would you give to the organization regarding its operations strategy in the future? 

Answers:

Introduction

The objective of the report is to analyze the operational system and management of Asda Company. They have adopted low cost strategy in their business. They have made many changes such as new technology, job design, automation system etc to gain competitive advantage in the industry. But there are certain challenges which have affect their growth. It is essential fro the company to resolve these issues for the long term success on the business.

Operations management is not only concerned with the day to day activities of a company but it is developed to provide long term strategic direction to the business. It helps in the production of goods and services by efficient use of man and material. Business strategy and operational management are dependent on each other (Hillier and Hillier, (2013)). A positive relation between the two is essential for the long term survival of the business. The main aim of the paper is to evaluate the operational system in Asda Company (Asda Boss, (2015)). It is supermarket chain which is located in Leeds, West Yorkshire. They are well known for their low price products and efficiency which provides them a competitive edge in the market. Along with this, performance objectives, competitive priorities and challenges faced by the company have also been included in the report.

1.Business objective and strategy of A

sda

The main objective of Asda is to produce goods and services at affordable price (Asda Operational, (2017)). The company also makes sure that they provide quality goods to the public. In order to accomplish this, they have made significant changes in their operations and planning. They have even included reduction of wastage procedures in the business. It has allowed them to efficiently use their resources and raw materials. Asda has also introduced a new operational system which has ensured synchronization, integration and speed. Synchronization has allowed them to combine all the units together. It has made the entire system fast and predictable. Monitoring and controlling of all the activities is done at the head office (Hitt, M.A., Carnes, C.M. and Xu, (2016)). The company has assimilated their supply chain which makes it easier for them forecasting and ordering of goods. Asda takes into consideration the desires and wants of the customers. They have good quality low priced products. They have been focusing on building long term relations with the customers. Their strategies, plans, mission and objectives are based on this perspective (Monczka and et.al. (2015)).

Mission statements of Asda: To become best value retailer in Britain and to exceed the needs to the customers (Asda Boss, (2015)).

2.Analysis of Operations strategy

Operations strategy helps in providing direction to the organisation. It includes defining roles, objectives, plans and other activities. It is important to have consistency in procedures and actions related to it. This concept was given by Henry Mintzberg. Consistency allow the management to keep a check on the working of various business functions and activities (Krajewski and et.al., (2013)). Apart form this, Organization's operational strategy is dependent on the overall goals and objectives of the business. It includes decisions relating to infrastructure, job design, manpower planning, delegation of work etc. The main aim of Asda is to reduce the cost of the products without compromising with the quality. Some of the steps taken by the company are:

Changes in infrastructure: Asda has adopted automation process in their warehousing and supply chain system. They have started using Management Inflammation System (MIS) and Online Analytical Processing (OLAP) for data analysis, demand forecasting, planning and controlling. New technology has improved speed, reliability and consistency (Slack, (2015)).

Manpower planning: The Company has made sure that they employ highly skilled and knowledgeable people in the organisation (McAdam, Galbraith and McAdam, (2016)). They are provided ample of opportunities to grow and learn. It allows Asda to improve their efficiency and reduction is cost.  

Innovation and delegation of work: Employees are given responsibilities and accountability for many tasks (Talk, (2016)). They are encouraged to complete their work on their own. It promotes innovative culture in the company. It also reduces the workload from other employees which improve effectiveness in the decisions making.

Job design: Job design is dependent on two aspects of Asda:

  • Meeting with the requirements of efficiency, productivity and quality (Talk, (2016)).
  • Providing challenges and job rotation

Services: Asda has reduced their production cost and packaging to provide affordable goods to their customers (Estampe and et.al, (2013)). They take feedback and make changes in their operations to ensure customer satisfaction.

3.Operations performance and objectives

The success of a company is dependent on how well it uses and deploys its resources. There are five operations performance objectives which are given below:

Quality: Adaption of new technology and automation system has helped the company to produce good quality products (Design Support tools, (2017)). It has ensured consistency and chances of errors have also reduced. Asda has been able to provide produce goods and services which have exceeded the expectations of the consumers.

Cost: The main objective of Asda is to produce affordable goods to its customers. Low price and wide range of products has allowed the company to gain competitive advantage in the market (Karlsson, (2016)).

Speed: Asda has good communication channels and supply management system. They understand the needs of the customer and produce goods accordingly. New technology has further improved their speed.  

Dependability: Asda has a competitive position in the market because they have been producing low priced product for a very long time. They are less dependent on the competitors and other published information (McAdam, Galbraith and McAdam, (2016)).

Flexibility: Asda has ensured flexibility in their operations. They have good sales forecasting system. They have the ability to change their production and its volume (Hitt, M.A., Carnes, C.M. and Xu, (2016)). Furthermore, they have wide range of goods for the customers and they keep on adding new ones.

Competitive culture in Asda

Competitive priorities are chosen on the short or long term goals of the company. It helps an organisation to decide its approach towards their customers. For example, Mercedes Benz produced high end luxurious cars for upper level customers (Karlsson, (2016)). Similarly, Asda has also defined its competitive priorities which differentiate it from its competitors:

Customer satisfaction: Asda has kept their customers at the center of the business. They use various communication channels to understand the preferences of the buyers. Their mission statement also reflects the intention of the company (Mahadevan, (2015)). Asda sell those goods which add value to the customers. It has been a competitive priority for them.

Low cost: Asda has been able to maintain good position in the market because they sell affordable goods. They have made significant changes in their operations management such as changes in technology, supply chain management, warehouse automation, changes in packaging etc.

Quality: Even though Asda sells good at low price but they have ensured that they maintain same level of standards in their products (Asda Operational, (2017)). They have made strategies and plans to produce excellent quality of goods and services.

Internal consistency and competitive advantage

Internal consistency and support is essential for the development and growth of a business. Planning is not useful without proper execution. Hayes and Wheelwright has given four stage model to study the internal support (Estampe and et.al, (2013)). It includes internally neutral, externally neutral, internally supportive and externally supportive. Asda Company has been performing well because they are getting good support internally. They have maintained strong control and discipline in their operations. New processes and technologies ensure that there is no deviation from the standards set up by the company. It has allowed them to focus on their competitive priorities which include low cost production, high quality and satisfaction of the customers (McAdam, Galbraith and McAdam, (2016)).

Strengths of Asda

  • Economies of scale
  • Improved tracking and ordering system due to change in technology
  • Price leadership
  • Effective control and recording system
  • Inventory, storage, supply and inventory management

Weakness of Asda

  • Problems in increasing the revenues
  • Slow growth due to cost cutting
  • No control over distribution channel
  • Lack of expertise

4.Operations management challenges in Asda

Asda has been among the largest retailer in the country but they have been facing certain issues in their company. They have adopted the strategy of low cost high quality products. But they have been struggling in increasing their revenues (Hillier and Hillier, (2013)). They are price leaders in the market. On the other hand, Tesco and Sainsbury are focusing on revenue and sales generation. They have good PR and marketing campaigns. Apart from this, Asda has standardized products in the market. They have not been able to adapt to the changing requirements of different regions. Furthermore, the biggest challenge for Asda has been their employee retention. They have lost good and skilled employees in recent few years (Asda Boss, (2015)). It has stared affecting their efficiency due to lack of experience from the new staff. It is important fro the company to resolve these issue because it has affected their business. They have all the KPIs and competitive performance objectives. But lack of execution and planning has allowed other competitors to take advantage.  

Advice to the management

It will be beneficial for the management of Asda Company to focus on long term survival of the business. They have to improve their marketing and communication channels. They have adopted good strategy which has made them price leader in the market (Asda Operational, (2017)). But they have to work on their controlling and review procedures. It has been ineffective for them. They need skilled workforce and more investment to attract customers. This will benefit them in improving their operational performance.

Conclusion

Operational management is an important element for a business. Asda has improved their performance due to changes in their plans and related activities. It has helped them to grow. But they should cope up with the emerging challenges in the business. Proper monitoring and controlling is required for the future.

References

Books and journal

Asda Boss. (2015). [Online]. Available through: <https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11345991/Asda-boss-This-will-be-the-toughest-ever-year-for-supermarkets.html> [Accessed on 5th April 2017]

Asda Operational. (2017). [Online]. Available through: <https://sustainability.asda.com/operational-0> [Accessed on 5th April 2017]

Design Support tools. (2017). [Online]. Available through: <https://www.ifm.eng.cam.ac.uk/research/dstools/quality-time-cost-flexibility/> [Accessed on 5th April 2017]

Estampe, D., Lamouri, S., Paris, J. L., & Brahim-Djelloul, S. (2013). A framework for analysing supply chain performance evaluation models. International Journal of Production Economics.142(2). 247-258. 

Hillier, F. and Hillier, M., (2013). Introduction to management science. McGraw-Hill Higher Education. 

Hitt, M.A., Carnes, C.M. and Xu, K., (2016). A current view of resource based theory in operations management: A response to Bromiley and Rau. Journal of Operations Management. 41(10). p.7e109. 

Karlsson, C. (Ed.). (2016). Research Methods for Operations Management. Routledge. 

Krajewski, L.J., Ritzman, L.P. and Malhotra, M.K., (2013). Operations management: Processes and supply chains (Vol. 1). New York: Pearson. 

Mahadevan, B., (2015). Operations management: Theory and practice. Pearson Education India. 

McAdam, R., Galbraith, B. and McAdam, M., (2016). The role of Lean at the interface with between operations management and applied services within a large aerospace organisation: a boundary spanning perspective. Production Planning & Control. 27(15). pp.1298-1311. 

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning. 

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., (2015). Purchasing and supply chain management. Cengage Learning. 

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd. 

Talk, O. M. (2016). Operations management. 

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