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Operations Management for Competitive Advantage

Introduction

When working as a manager in any large trading organization, it is essential to understand the strategy of the corporation to achieve maximum production efficiency and evaluate current results. The purpose of operations management is a competent approach to organizing and planning the activities of all production structures, including marketing, sales, etc. Therefore, to ensure a strong competition in the market, it is important to pay attention to some rules that this type of management implies and strive to comply with the basic provisions and norms of such an approach. It is especially significant when it is about reporting to the Board of Directors since any changes that are made to the work of a particular company must necessarily be approved by senior management.

Optimal Choice from the Point of View of the Board’s Member

The Board of Directors that receives proposals to improve production from several departments at once is forced to carefully consider specific positions to make the correct decision. According to Khanna (2015), management can rely on subordinates, but the entire responsibility for insufficiently effective work lies solely with the leadership. If the Board of Directors receives three proposals for improving the sales system of widgets from three different departments, its members will have to find an optimal decision that can contribute to not only increasing sales but also minimizing production costs. Probably, it would be more logical for the Board’s members to support a proposal to reduce production costs.

The fact is that modern digital technologies are quite popular and have a demand in the market. As Bromiley and Rau (2016) note, to find a sufficient number of consumers, there is no need to invest exclusively in advertising campaigns; it is essential to produce goods in demand. Thus, widgets, as a rule, keep up with customers’ needs, and clients know about these products; hence the decision to promote the marketing line will not be the most correct one. Reducing production costs, on the contrary, will save a significant portion of financial resources and help develop other areas of the company’s activities.

Main Points in Support of the Changes to the Operations Process

From the point of view of the need to reduce production costs, the work process should be organized in such a way that the company could spend less money on the production of widgets and at the same time be able to sell the goods in the same volume. According to Heizer and Render (2011), the task of an operations manager’s job is to improve the ratio of inputs and outputs and control the level of expenses. In case the cost of producing goods is large, there is a need to try to reduce this price. Consequently, specific changes in the process of widgets production will make it possible to significantly increase profits by saving money.

Also, it is essential to strive to ensure that all the participants in the working process are aware of the need to reduce the cost of goods production. As Heizer and Render (2011) claim, the initiative of one employee cannot be useful enough to achieve a positive result of the changes. With the support of both management and colleagues, it is possible to reduce unnecessary costs and at the same time turn the organization into a more competitive one. In case some measures to reduce the cost of production are not undertaken, there is a risk of a significant loss of profits.

Scenario for the Marketing Proposal

In order to increase the sales of widgets by 50%, it is necessary to develop an appropriate marketing program. It is possible to attract potential customers through discounts and promotions, for example, offer buyers to purchase goods on special coupons. Small discounts on products can become a significant source of profit because, as practice shows, such offers help to generate interest among consumers and achieve higher demand in the market. According to Brown, Bessant, and Lamming (2013), clients actively buy certain goods if they have the opportunity to get particular benefits. The task of sales managers is to give customers the opportunity to believe that they purchase goods at a discount. Perhaps, a successful scenario will be the drawing up of a special program of bonuses for customers and the possibility of purchasing widgets in accordance with this program.

Scenario for the Finance Proposal

If it is a question of reducing financial expenses, it is also required to think out the whole algorithm of actions correctly. For example, according to Hendricks, Hora, and Singhal (2014), the price policy largely depends on the interaction of representatives of this or that company with other organizations that supply consumables. When achieving a reduction in the cost of purchasing these things, financial resources will be spent in a smaller amount. Also, Slack, Brandon-Jones, and Johnston (2013) note that restructuring the financing system in accordance with the needs of the market can be of significant use in budget planning. The higher the current demand is, the easier it is to draw up an approximate sales plan. Consequently, financial costs can be reduced by planning production volumes and properly organizing the supply chain.

Conclusion

Thus, operations management is a rather successful approach to the organization of the company’s work, and reporting to the Board of Directors requires the creation of specific scenarios. The possibility to improve the performance of the corporation and increase its competitiveness in the market depends on the quality of implemented changes. Any initiatives require planning and accounting for current market needs.

References

Bromiley, P., & Rau, D. (2016). Operations management and the resource based view: Another view. Journal of Operations Management, 41, 95-106.

Brown, S., Bessant, J. R., & Lamming, R. (2013). Strategic operations management (3rd ed.). New York, NY: Routledge.

Heizer, J., & Render, B. (2011). Operations management: Flexible version (10th ed.). London, UK: Pearson.

Hendricks, K. B., Hora, M., & Singhal, V. R. (2014). An empirical investigation on the appointments of supply chain and operations management executives. Management Science, 61(7), 1562-1583.

Khanna, R. B. (2015). Production and operations management (2nd ed.). Delhi, India: PHI Learning.

Slack, N., Brandon-Jones, A., & Johnston, R. (2013). Operations management. London, UK: Pearson.