Operations Management

Introduction

This report will show how Sainsburys have used performance management to increase their ability to provide a quality service and gain a competitive advantage, it will also show how systems have been implemented to achieve this and what Sainsburys have changed in recent years to achieve the competitive advantage it was looking for, The main area Sainsburys have changed is there Supply chain which had a cost gap of around Ј60 million. It will also look at how the operations functions carried out by Sainsburys can be linked in with other areas of the business like Finance, Human Resource Management and Marketing. The main contents of this report will be based on the theory about performance management; it will start with a section explaining what the theory is and how it is generally applied in business. It will also contain my own experiences and insight into how operations have had an effect from my own viewpoint. It will have a conclusion on how I believe my experiences of operations management has helped me and or hindered Sainsburys. There will also be a report conclusion showing how I think Sainsburys operations strategies have evolved over time.

Theory

This section will be looking at the theory which will be applied to Sainsburys and how it can be applied in this way. The main theories I will be looking at will be Capacity management, Open Systems, Quality Management, Performance Management and how Socio-technical Systems can be implemented into Sainsburys business.

Capacity Management

The meaning of capacity itself is being the ability to produce work in a given time, must be measured in the unit of work. There are three main types of Capacity management when looked at through operations. These are

* Potential Capacity

The capacity that can be made available to influence the planning of senior management (e.g. in helping them to make decisions about overall business growth, investment etc). This is essentially a long-term decision that does not influence day-to-day production management

* Immediate Capacity

The amount of production capacity that can be made available in the short-term. This is the maximum potential capacity - assuming that it is used productively

* Effective Capacity

An important concept. Not all productive capacity is actually used or usable. It is important for production managers to understand what capacity is actually achievable.

There are constraints on capacity management and these are normally Time and Capacity. Time may be a constraint where a customer has a particular required delivery date. In this situation, capacity managers often "plan backwards". In other words, they allocate the final stage (operation) of the production tasks to the period where delivery is required; the penultimate task one period earlier and so on. This process helps identify whether there is sufficient time to meet the production demands and whether capacity needs to be increased, albeit temporarily.

Capacity is a factories ability to produce items explained as follows, consider a factory that has a capacity of 10,000 " machine hours" in each 40 hour week. This factory should be capable of producing 10,000 "standard hours of work" during a 40-hour week. The actual volume of product that the factory can produce will depend on:

- the amount of work involved in production (e.g. does a product require 1, 5, 10 standard hours?

- any additional time required in production (e.g. machine set-up, maintenance)

- the productivity or effectiveness of the factory.

Open Systems Approach

Below is a definition of how open systems can be explained in a business by Ludwig von Bertalanfty.

'Organisations are open systems (like organisms) and must have an appropriate relationship with the environment if they are to survive'.

The open systems approach is based on the concept that the organisation is an Open system with the primary work group as a sub-system of the total organisation. The reason why Ludwig von Bertalanfty said that open system organisations are like organisms is because they are engaged in active transactions with the environment.

The Diagram on the next page is a visual example of the explanation below,

Raw materials or customers form the input to the organisational system and finished goods or services form the output. The environment through competition will influence the feedback that the organisation receives which will then be processed to either improve the goods or service before it is reproduced to allow the cycle to begin again. The changing economic situation, changing values in society, new alternative products or services and many other factors demand adaptation within the organization if it to survive.

Quality Management

The totality of features and characteristics of a product/service that bear on its ability to satisfy stated or implied needs. BS 4778 (1987)

Working definition: "FITNESS FOR PURPOSE"

Many people have come up with methods and statements which are available to businesses to look at and use to keep on top of quality management, the people who will be mentioned will be Deming, Crosby and Ishikawa.

Deming emphasises the statistical control of Quality in all stages of production, maintenance and service.

 'The analysis of errors, for either type or cause, will help control errors.'

 'You cannot inspect quality into a product; you must build in quality right from the outset.'

Below is the Deming/Shewhart Cycle.

Crosby had four absolutes which he believed you needed to fulfil to achieve quality they are as follows,

 definition of quality is conformance to requirements