PGBM03 Operations Management Student ID: - 139143197

PGBM03 OPERATIONS MANAGEMENT

SUBMITTED BY: - PRATIK BHUSAL
STUDENT ID: - 139143197
DATE: - 28/04/2014
SUBMITTED TO: - THORBEN HAENEL
WORD OUNT: 3!022 WORDS
0
PGBM03 Operations Management Student ID: - 139143197
Table of Contents
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Operations Management in Nike Inc 3
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Various stakeholders at corporate level strategy 5
Operations Objectives 6
Ouaty Ob|ectves 6
Speed Ob|ectves 7
Dependabty Ob|ectves 7
Cost Ob|ectves 8
Fexbty Ob|ectves 8
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PGBM03 Operations Management Student ID: - 139143197
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Operatons managers across the word are producng mons of
products amost every day to meet varyng requrements of the customers
and to provde for the webeng of socety. Managng operatons n both
manufacturng and servce enterprses have been evovng tremendous
changes over the years wth many changes n market requrements,
technoogy, gobazaton and customers expectatons of vaue and quaty
(Coer and Evans, 2009, p. 13). As markets have become goba, enterprses
were compeed to keep up to the requrements. Apart from market and
ndustry reated factors and ther mpacts, operatons management has aso
been nuenced by conscousness towards soca responsbty, safety,
energy cost, protecton aganst terrorsm etc.
To keep up to the requrements, operatons management has come up
wth dynamc methods and ehectve busness strateges n many busness
organzatons many wth a vew to provde hgh-quaty goods and servces
so as to provde maxmum satsfacton to the customers. Ths paper presents
a bref report about operatons methods and strateges mpemented at the
organzatona eve n Nke Inc. Ths report w outne the prncpa
operatons functons beng carred out n Nke Inc. and descrptve anayss on
process strateges and operatons procedures empoyed at ts organzatona
eve.
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PGBM03 Operations Management Student ID: - 139143197
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Nke s one of the most admred brands across the word. Nke s a
words No- 1 shoe and Appare Company, headquartered n Beaverton- USA
that desgn, deveops and markets sports footwear, appare and equpments.
It uses ts own reta outets and other thrd party seers across the word for
marketng ts products (Reuters.com, 2014). Nke Inc. has been ranked as
#126 by Fortune 500 Companes accordng to the statstcs carred out n
May 2013 (Hoovers.com, 2014).
When t comes to Nkes market strengths, t has been en|oyng a
strong market poston n varous segments wth ncreasng market share
from 14 percent n 2006 to around 16 percent n 2009. The company has
been hghy successfu n budng stronger brand mage through varous
advertsng and sponsorshp campagns. Its brand vaue has been ncreasng
amost 6 percent year-on-year to reach to a tota of $14,528 mon.
Compared to many other brands and we known names n sports wear
currenty avaabe n the market, Nkes products have aways proved
hghest quaty by ncredby addng to the brand reputaton and brand
oyaty among ts customers across the word (Market ne, 2013).
Operations Management in Nike Inc
In Nke Inc, the operatons management team s concerned wth those
actvtes that enabe the company to transform a range of prmary nputs
such as materas, energy, customers requrements, nformaton, human
sks etc to outputs for the use of utmate customers (Brown, Bessant and
Lammng, 2013, p. 4). As customer satsfacton and meetng the
requrements of other stakehoders are at the very heart of operatons
management, the operatons s not |ust about a mted or specc functon,
but s a company-wde actvty that nks up a number of dherent areas and
utzes these to hep customers meet ther needs.
As Nkes operatons management and ts functona areas are
concerned, t has made sgncant contrbutons to the company and many
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PGBM03 Operations Management Student ID: - 139143197
to ts customers as
we as socety at
arge by provdng
mproved quaty of
goods and servces,
mprovng workng
condtons, utzng
technoogy for
nnovatve products
deveopment and
ncreasng productvty. Nke has been abe to ncrease ts productvty
through measures such as use of technoogy, newer producton methods,
strateges etc (Greasey, 2009, p. 6).
The operatons management n Nke Inc payed cruca roe n
managng the transformaton of ts nputs n to nshed goods. As depcted
above, the nput actvtes ncude two categores of resources- transformng
resources and transformed resources. Transformng resources are factes
such as budngs, equpment, technoogy, pant, process etc. Transformed
resources are eements that are acted on by the process of transformng
resources. There are bascay three types of transformed resources-
materas, nformaton and customers. Materas are transformed ether
physcay by manufacturng or by ownershp or by storage. Informaton s
transformed by property by possesson, by storage and by ocaton.
Customers are transformed ether physcay or by ocaton or by
psychoogca state (Greasey, 2009, p. 6).
At Nke Inc, the operatons management contrbuted to the success of
ts busness wordwde by managng the resources and networks at a eves
of operatons by provdng what the busness actuay needs to survve and
prosper. Nke nnovated newer knds of products, acheved unque
competences and ganed hgher margns through ts strategc operatons
management. It has been abe to satsfy ts customers by achevng four
4
Soure: Greas!e"# 2009# p$ 7
PGBM03 Operations Management Student ID: - 139143197
basc goas; 1) by reducng the tota costs of producng products by beng
emcent n transformng materas to nshed goods, 2) by ncreasng
revenues by promotng outstandng customer satsfacton by deverng
supreme quaty of goods, reabty etc, 3) by reducng the amounts of
capta empoyed and 4) by provdng the bass of future nnovatons (Sack
and Nge, 2009, p. 3- 4).
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Strategy s one of the most wdey used buzzwords n the area of
busness and management. Strategy s a drecton, vson or management
deas that are deveoped wth a vew to match organsatons resources to ts
changng envronment and n partcuar ts markets, customers and a other
stakehoders to meet a ther expectatons (Greasey, 2009, p. 23). For
strategy desgnng and strategc decson-makng, the management has to
evauate both nterna and externa envronments of the rm. Sack,
Chambers and |ohnston (2010, P. 62) stated that operatons strategy s
concerned about the patterns of strategc decsons and actons that do
generay set the roes, ob|ectves and actvtes of the overa operatons n
the organsaton. Greasey (2009, p. 24) descrbed three basc strateges that
are generay found at dherent eves of an organsaton. They are corporate
eve strategy, busness eve strategy and functona eve strategy.
Corporate eve strategy provdes a ong-term vson and msson wth
cear gudance on varous aspects and actvtes that can satsfy specc
requrements of customers and other stakehoders. Busness eve strategy s
concerned wth the products and servces that are ohered n the market and
are dened at the corporate eve. The thrd eve of strategy s operatona
or functona strategy snce the functons of the busness such as marketng,
operaton and nance etc for ong-term pannng to support the compettve
edge are pursued by the busness strategy.
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PGBM03 Operations Management Student ID: - 139143197
Various stakeholders at corporate level strategy
It s crtcay mportant to recognze each specc stakehoder to the
rm especay whe preparng msson statement, vson and organzatona
goas. Transformng avaabe resources to products or servces that are
capabe of meetng the requrements and expectatons of customers s at the
very heart of operatons management, and therefore, t s mperatve to
understand the needs and varyng requrements of customers. There are
dherent stakehoders and a they mpact organsaton and ts actvtes n
dherent ways. Bascay, there are three groups of stakehoders.
1- Interna stakehoders: Interna stakehoders are rms managers and
empoyees. Empoyees are most mportant part of the organsaton and
they w be generay concerned about certan matters reated to them
such as |ob securty, rewards, recognton, ncentves and more
mportanty |ob satsfacton.
2- Connected stakehoders: They are those partes wth drect connecton to
the rm such as customers, nvestors, suppers, moneyenders etc. They
a do have varyng needs. For nstance, customers are hghy concerned
about quaty, vaue, utty, prce, servce eve, want-satsfyng power of
the goods or servces etc.
3- Externa stakehoders those partes who can mpact the organsaton n
other ways, many government, potca partes etc (Greasey, 2009, p.
25).
Operatons management ams to acheve ong and short-term
successes of the organsaton. For these goas to be acheved, the man goa
of the rm shoud be to satsfy a the needs of stakehoders, many of
customers to get hgh-vaued goods and servces. As far as Nke s
concerned, the man customers are externa customers. Nkes customers
across the word are hghy concerned about quaty and vaue for shoes,
sportswear and other appares.
Nke Inc ams to brng nspraton and nnovaton to every athete
across the word (Nkenc.com, 2014). Its products are desgned and
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PGBM03 Operations Management Student ID: - 139143197
deveoped wth hghest possbe nnovatve technoogy and the company
constanty ohers hghest servce standard so as to bud oya customer
reatonshp around the word. As ths s one of the man goas of the
company, operatons management s partcuary concerned about mprovng
operatona emcency so as to ensure customer satsfacton.
Operations Objectives
Operatons management s concerned about transformng nputs n to
outputs by usng physca resources wth a vew to provde the desred utty
to the customer by meetng organsatona ob|ectves of ehectveness,
adaptabty and emcency. Hezer and Render (2009, p. 13) argued that
operatons management s experencng modern trends from varety of
forces such as gobazed trade, transferrng of deas and products and
money at eectronc speed. These trends are goba focus, |ust-n-tme
performance, suppy chan, rapd product deveopment, mass customzaton,
empowered empoyees, ethcs and so on.
As the busness envronment s argey nuenced by a number of
chaenges and trends, operatons management requres tghty dened set
of ob|ectves that are quaty, speed, dependabty, exbty and cost.
Ensurng customer satsfacton s one of the most sgncant targets of
operatons management. The ve basc operatons performance ob|ectves
can aow the organsaton to measure ts operatons performance n
achevng strategc goas ncudng ensurng of customer satsfacton. These
ve basc operatons ob|ectves are ustrated beow:
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Ouaty s undenaby one of the most wdey used buzzwords n
busness academcs. Most mutnatona corporatons mantan a speca team
of management for ensurng and assessng quaty on a reguar bass. From
operatons management perspectves, quaty s descrbed as an mportant
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PGBM03 Operations Management Student ID: - 139143197
functon that necesstates three types of quaty costs- preventon, apprasa
and faure costs. Preventon costs are those costs expended n an ehort to
prevent dscrepances n operatons. Costs ncurred for quaty pannng,
supper quaty survey etc can be consdered as preventon costs. Apprasa
costs are those costs that are ncurred n the evauaton of product quaty
and n detectng dscrepances. Faure costs ate those costs that are ncurred
as a resut of dscrepances, ether nterna faure costs or externa faure
costs (Neey, 2007, p. 70).
Ouaty accordng to the operatons management perspectve s reated
to how cosey the product or servce meets the speccaton requred by the
desgn. Ouaty undoubtedy represents a ma|or part of compettveness.
When a rm meets quaty requrements, the products or servces t ohers
woud aso meet ncreased dependabty, reduced costs and mproved
customer servce (Greasey, 2009, p. 28). Nke, for nstance, has ganed
wder reputaton for that t has aways been successfu n mantanng quaty
for ts shoes and appares. The company has mantaned a quaty assurance
and quaty contro team to consstenty revew the quaty measures and
resove ssues n a way to reduce customers compants regardng quaty.
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Tme s another mportant matter of concern for operatons
management. One basc assumpton s that there shoudnt be much tme
deay between a customers request and recevng that product. Tme s
consdered as a source of compettve advantage and the basc measure of
operatons performance (Neey, 2007, p. 71). |ust-n-tme manufacturng has
ganed consderabe attenton n recent years. It s purey based on the
assumpton that the producton or devery of the goods or servce ether too
eary or too ate w be wastefu ehort. The operatons management shoud
want to do thng fast by mnmzng the tme deay between a customer
askng for goods or servce and the customer recevng them.
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PGBM03 Operations Management Student ID: - 139143197
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As Greasey (2009, p. 28) noted, dependabty refers to persstenty
meetng a specc target of devery tme for a product or servce to a
customer. It can be dented and measured by the percentage of customers
who receve a product wthn the devery tme promsed. Dependabty can
be mantaned ony f the operatons management acheves speed and tme
targets. When the management can mantan dependabty, t w certany
ead to better customer servce and mproved customer satsfacton because
of that he can trust that the product w reach to hm when expected.
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Costs n operatons ncudng both vsbe and nvsbe have become
hot topcs of debate among academcans n nance management. How
dherent costs mpact the operaton ob|ectves s an mportant matter of
concern. Cost s that part of nance that s requred to acqure nputs and to
manage the transformaton of nputs to outputs to make nshed goods or
servces. As far as compettve advantage s consdered, keepng costs ower
than that of compettors n the ndustry s one of the most crtca ob|ectves.
Greasey (2009, p. 31) argued that a rm woud be abe to generate more
prots than ts compettors when t keeps ts costs base at east equa to the
costs of compettor or to hod a consderabe porton of market share f prce
s ower than ts compettors prce.
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Fexbty refers to the abty of an organsaton to qucky change what
t aready does or to adapt to changes when t requres. It w be possbe
when a rm s abe to oher a wde varety of goods or servces to the
customer and to change these oherngs qucky. Customers needs, wants and
specc requrements are constanty changng due to a number of factors
such as gobazed markets, nformaton technoogy, competton etc and
therefore organzatons are aso requred to change ther oherngs accordng
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PGBM03 Operations Management Student ID: - 139143197
to the changes n customers requrements. A rm needs to be exbe
accordng to any one or more of the foowng cafeteras:
1- Products or servces- t s requred that a rm must be abe to respond
qucky to changng customers needs and wants by oherng them new
desgns, new products, new technoogy etc.
2- Mx- The rm s aso requred to provde a wde range of products or
servces.
3- Voume- The rm needs to be abe to ncrease or decrease output n
response to changes n demands.
4- Devery- The rm needs to react to changes n the tmng of devery of
goods or servces.
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To desgn a product or servce s merey to conceve the genera ook,
arrangement and workngs of that product or servce before t s created. It s
one of the most essenta eements n deveopng a product or servce to
dever a souton that the customer n the market expects. The process of
concevng a new product or servce nvoves bascay three tasks; product
deveopment, process deveopment and process desgn. Product
deveopment s creaton of a new product whereas process deveopment s
somethng reated to deveopng a producton method. Process desgn s
reated to desgnng of new equpments and materas requred for producng
a product accordng to a pre-determned process.
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PGBM03 Operations Management Student ID: - 139143197
Due to changes n
customers needs and
tastes, companes are
requred to deveop new
desgns to meet varyng
requrements of
customers and therefore
nnovatve desgn has
become an mportant
aspect of compettve
advantage. Rapd
deveopments n computer-aded desgn (CAD), computer-aded manufacture
(CAM) the nkng of desgnng and deveopments of products wth atest
technoogy and a myrad of other nnovatons to factate product desgn
have postvey mpacted compettve advantage (Pfeher, 1995, p. 7).
Nke has aways been strvng for mantanng superor quaty n
desgn. The decson on materas-choce has been taken by consderng
product quaty, customers concerns and broad soca responsbty aspects.
Nkes choce of materas has envronmenta mpcatons for water, and,
energy, greenhouse gas emsson, chemca use and sod wastes. Materas
n Nke footwear and appare products are brought from around 900 dherent
materas-vendors, but t doesnt drecty source wth these vendors snce the
company s very partcuar about desgn and speccatons. Nke focuses on
process desgn and vaue chan to drve sustanabty mprovements n
materas. Nkes operatons management desgns ts shoes and other
products wth very detaed matera-speccatons and by provdng these
teams wth detaed nformaton requred for materas. For ths purpose, Nke
has ntroduced Consdered Desgn n 2006 to enabe product creaton to
easy compare materas and make nformed and sustanabe choces durng
the desgn stage (Nkeresponsbty.com, 2014).
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PGBM03 Operations Management Student ID: - 139143197
As detaed above, the operatons ob|ectves such as quaty, speed,
dependabty, exbty and cost are to be consdered n product desgn,
deveopment and process deveopment. For product desgn and process
desgn, the operatons ob|ectves are as outned beow:
Ouaty- the typca process desgn ob|ectves w be to provde approprate
resources, capabe of achevng the speccaton of product or servces, and
to make error-free processng.
Speed- The desgn ob|ectves w be to compete t wthn mnmum
possbe tme and to make output rate approprate for demand.
Dependabty- the typca desgn ob|ectves w be to provde dependabe
process resources and to provde reabe process tmng.
Fexbty- the desgn ob|ectves w be to provde resources wth an
approprate range of capabtes and to factate easy changes between
processng states.
Cost- the desgn ob|ectves w be to provde approprate capacty to meet
demands and to emnate process wastes n terms of excess capacty, n-
process deays and n-process errors etc (Sack, Stuart and |ohnston, 2010, p.
89).
Product and process desgns are crtca components of transformng
nputs to outputs. Use of nnovaton and technoogy for desgnng and
performance ob|ectves are ma|or consderatons many because of that
meetng customers needs and wants n a way that they are fuy satsed s
at the very heart of operatons management ob|ectves.
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In product and process desgns, human capta s an nevtabe power
snce deas, knowedge and experence can pay crtca roe n product
desgn and process desgns. The roe of decson makng, smuatons etc n
product and process desgns has been we documented, but how human
capta, many represented n terms of taent, sks, knowedge, nnovatve
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PGBM03 Operations Management Student ID: - 139143197
deas, wsdom etc of peope n an organsaton can contrbute to the
compettve advantage needs to be hghghted.
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Based on Nkes exampe of operatons management, ths paper has
crtcay assessed the operatona methods and strateges adopted at
organzatona eve to make Nkes shoes and appare the most reputed
wordwde. Ths paper has dened prncpa operaton tasks and anayzed the
process strateges mpemented n Nke Inc. operatona ob|ectves are
ustrated n deta and a process n terms of operatons ob|ectves s
expaned to show how t heps n the achevement of operaton ob|ectves.
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Brown, S., Bessant, |. R and Lammng, R., 2013, Strategic Operations
Management
Routedge
Coer, D.A and Evans, |. R, 2009, Operations Management Cengage
Learnng
Greasey, A., 2009, Operations Management, Second Edton, |ohn Wey &
Sons Ltd
Hoovers.com, 2013, NI!" Inc# $ompany In%ormation, Retreved from
www.hoovers.com/company-nformaton/cs/company-
proe.NIKE_Inc.095b58e0d70133d6.htm
Market ne, 2013, $ompany &ro'le( NI!" IN$, Market ne, EBSCO database
Neey, A, 2007, Measuring &er%ormance) the operations management
perspectives, ed.
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PGBM03 Operations Management Student ID: - 139143197
Neey, A, Cambrdge Unversty Press,
Nkenc.com, 2014, Consumer Ahars, Nkenc.com, Retreved from
http://nkenc.com/pages/consumer-ahars
Nkeresponsbty.com, 2014, &roduct *esign + Materials, Retreved from
http://www.nkeresponsbty.com/report/content/chapter/materas
Pfeher, |, 1995, $ompetitive ,dvantage -hrough &eople) .nleashing the
&o/er o% the 0ork
1orce Harvard Busness Press
Reuters.com, 2014, &ro'le NI!" Inc# 2N!"N3 Retreved from
http://n.reuters.com/nance/stocks/companyProe?symbo=NKE.N
Sack, N and Nge, S, 2009, Operations Strategy, Pearson Educaton Inda
Sack, N, Stuart, S and |ohnston, R, 2010, Operatons Management, Sxth
Edton, Prentce Ha, Pearson Educaton, Inc
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