CASE STUDY [30 Marks] A global leading chemical company aimed to define a global digital

operations strategy that would help them to be a first mover and leverage the potential of digital
operations, increasing efficiency while improving customer service performance. Their operations
strategy covering manufacturing and supply chain, developed concepts to implement the strategy,
scanned the market for viable applications and piloted them together with their clients and the
technology provider in lighthouses. Subsequently they support their clients in the global roll-out
phase to ensure a successful implementation. Their comprehensive strategy covers topics such as
horizontal integration and full transparency along the extended supply chain as well as digital
manufacturing topics such as predictive maintenance, augmented reality and big data process
optimisation. The transformation of this global leading chemical company created a great
momentum and mind-set change in the organisation and helped to achieve operational benefits like
lower inventories and increased efficiency in operations.

Source: https://www.strategyand.pwc.com/gx/en/functions/operations-strategy/case-studies.html
Answer ALL the questions in this section.

Question 1 (5 Marks)

Operations or operations management is not only about creating tangible goods in the business
market, but it is more than this. Discuss the scope of Operations Management in its entirety.

Question 2 (15 Marks)

With an aid of a diagram, illustrate and discuss by provision of examples the categories of operations
transformation.

Question 3 (10 Marks)

As seen in the case above, the company aimed to define a global digital operations' strategy that
would help them to be a first mover and leverage the potential of digital operations, increasing
efficiency while improving customer service performance. This requires a lot of decision-making.
With an aid of a diagram identify and discuss at least FIVE (5) key decision areas for Operations
Managers.

Solution:

Question 1

1.0 Introduction

Operations take place in any type of organization; rather it produces tangible products or services.
Das (2015:12) defines operations management as the process of ‘gathering materials and resources
and transform them into finished goods and services through value-adding conversion activities.’ He
further explains that the goal of operations management ‘is to do so efficiently and effectively, so as
to maximize whatever the organization wishes to achieve – profit, low cost, or high customer service
levels.’ The job of an operations management usually covers a wide range of activities; marketing
which involves generating demand, production which is the process of creating the product and
finance that tracks all payment.

1.1 Scope of Operations Management

Operations management is mainly concerned with the transformation process of physical inputs into
outputs desired by customers while achieving the organization’s goals. Operations management
distinguishes itself from other forms of management by this specific transformation process.
Considering a manufacturing sector, like the global leading chemical company mentioned, it is quite
easy to determine the transformation process; resources like materials, labor and capital as inputs,
followed by the designing, planning and maintenance of the operations resulting in a desired output.
Operations management also takes place in the service sector like health care centres. Doctors and
nurses administrating treatment through required equipment and medicines resulting in more
healthy patients as output is another example of transformation process taking place.

The scope of operations management are the achievements of the organization’s various goals like
increased productivity, maximization of customers’ satisfaction, reduction of costs and enhancement
of goodwill and innovation.

1.2 Conclusion
Operations managers have the responsibility of attaining all of these aims by an effective and
efficient use of available resources. The operations transformation is thus categorized for managers
to monitor the progression and having a control over the operations.

Question 2

2.0 Introduction
The transformation process is a set of activities implemented to add value to raw resources into
output and operations management is the studying of these activities so that adequate changes can
be brought to the process ensuring that it runs according to the organization’s specifications and
efficiently. Operations management in the transformation process helps in improving the continuous
activities. Changes brought usually depends on the organization’s actual goals, whether it aims at
reducing its cost of production, improving quality and reliability or even producing at a faster rate.
As mentioned by Bettley and Mayle (2005:14) ‘a positioning advantage must begin with a decision as
to how the company wants to differentiate itself in its chosen marketplace.’

2.1 Categories of Operations Transformation

Figure 1: The transformation process

Source: https://www.slideteam.net/transformation-process-powerpoint-presentation-slide-template.html

Figure 1 shows the details of how the transformation process occurs in general. As we mentioned
earlier, the activities of the company depends on whether they are producing a product or service,
but the core of the transformation process exist in both cases. Changes that operations management
brings can thus be categorized in terms of what the organizations wishes to achieve and these
changes can occur at any stage of production, delivery or even storage.

 Physical
A company can choose to bring changes within the physical materials used like switching to another
raw material rather than using plastic. As per Murthy (2005:6) ‘research on materials is necessary to
find alternatives to satisfy the changing needs of the design in the product and availability of
material resumes.’ Physical changes can also occur within the amount of goods produced. Coca Cola
is a perfect example of management changes that helped the company thrived through time. In
1980 Coca Cola was aggressively targeted by Pepsi and needed to find solutions to keep up with the
competition. At some point, Coca Cola offered free drinks to every World War II soldiers and this
brought along the emergence of approximately 65 extra manufacturing sites across the world.

 Locational
Besides bringing adjustments to the physical aspect and quantity, changes can also occur within the
logistics, that is, the transportation and storage of finished goods. Bhattacharya (2014:538)
explained that ‘logistics ensure product availability at the right time at the retail counter at the
optimum costs.’ He further stated that this can be materialized ‘if central warehouses are set-up
with depots located at strategically convenient locations to feed the outlets promptly and in full
capacity.’ Domino’s is a worldwide pizza company that used to face different challenges to be able to
keep up with the dynamic market. They started to change their order and payment methods and
also introduced the new feature of delivery through a vehicle with an integrated oven so that they
can stand out of their competitors.

 Exchange
Exchange concerns mainly retailing operations. Retail businesses may seems to be a simple way of
making business by opening and closing a shop but this also requires good management skills to be
prosperous. Retail operations include stock management, sales policies, customer service and
general management. Tang (2008:48) asserted that ‘while each shop should have a grand plan or
strategy to compete, the daily operations will determine its ability to achieve this strategy.’ Walmart,
one the biggest retailers, proves that minimization of costs can occur by a simple but yet effective
stock management. The company uses two strategies, namely; the vendor-managed inventory
model, which gives suppliers direct access to the real time stock level of the company so that they
can decide when to deliver, reducing risks of stock outs. They also practice the just-in-time cross
docking, which ensure a minimum sized stock resulting in minimization of costs.

 Physiological
As mentioned earlier, operations management does not occur solely in the manufacturing sector but
also concerns the service sector. For example, even though a hospital does not produce tangible
goods, the physiological transformation process on patients results in healthier and satisfied patients
as output. The Johns Hopkins hospital used to experience a high rate of infections. The changes
brought via a checklist mentioning all the steps to adopt to prevent infections and the authority
given to nurses to intervene whether a physician did not abide by the checklist resulted in a zero
rate of infection.

 Informational
Transformation process can also occur in terms of communication. As described by Pyrcraft
(2000:15) ‘some change the possession of the information, for example market research companies.
Some store or accommodate the information, for example archives and libraries. Finally some
operations change the location of the information, such as telecommunication companies.’

2.2 Conclusion

Considering the above mentioned categories of operations transformation, we can have a

perception of the different facets of operations management. However finding and adopting
adequate strategies is not always enough to attain optimum cost, constant monitoring and control
should be entertained so that corrective measures can be applied during the on-going process of the
organization.
Question 3

3.0 Introduction

Operations managers’ responsibilities and roles cover a wide range of activities within the company.
They have their direct attributes like planning, control, performance improvement and operations
process. They also have to interact with other managers from other departments that affect
operations, like finance, marketing, human resources and engineering. Operations managers are
therefore faced to several persistent issues and required critical decision making. Lewis and Slack
(2003:490) stated that ‘while key design decisions are driven by the voice of customers, the planning
process encourages discussions among HRM, operations and marketing decision makers to
understand the implications of their decisions on both service system attributes and customer
benefits.’ The ten major decision areas of an operation manager are as follows:

Figure 2: The 10 Key decision areas for Operation Managers

Source: https://slideplayer.com/slide/6246183/
 1. Design of goods and services
In order for operations to start, managers should be aware of what are to be produced. The design
of goods or services to be delivered should be decided prior to the start of the processes. Most
companies’ product designing is based on market researches, trends and forecasting as the main aim
here is to respond to customer demand and satisfy their expectation.

2. Quality Management
Constant management of the quality of a product or service is the key to customer retention.
Operations managers should therefore be the ones to answer to questions pertaining to quality
management. Organizations usually rely on customers’ feedback to bring innovation and
amelioration to their product or service. Managers should ensure minimal errors when final product
is released on the market.

3. Process and Capacity

Process and capacity refers to the effective availability and if whether the resources will enable the
required production. Operations managers should therefore ensure that there are adequate human
resources as well as materials to achieve the figures set by the organization. However there are
some companies that now distribute workload via internet which does not necessarily affect the
human resource capacity.