Analysis of Key Factors Influencing Operations Strategy and Effective Operations Management

Operations management is a critical part of the organisation’s process that influences improved performance through the application of effective strategies to achieve excellence and productivity. Therefore, operations management focuses on streamlining activities in the organisation for efficient management of resources to ensure the creation and delivery of services and products and achieve the organisation’s objectives while meeting customer needs in the market. The operation functions in a given organisation is important for the creation of the products and services to meet the demand of the consumers and the organisation benefits from the satisfaction of the consumer needs (Slack et al., 2013). These functions fall into three major categories including sales and marketing, product or service design and development and operations in the organisation. Under the operations function, other important functions are created, including information systems, finance and accounting, human resources and technical support functions.

 The paper will focus on the analysis of the key factors influencing the development of the operations strategy and achieving effective management of operations in the organisation through evaluating the fundamental concepts, tools, and techniques of operations management. It will also pay attention to the application of effective operations strategies to improve business performance based on an exploration of how the product and process design meet the consumer needs and business objectives. The paper will focus on the use of Apollo Tyres Company Limited as the example, Apollo tyre as the product. Apollo Tyres Company Ltd is the eleventh largest tyre manufacturer in the world with 2.28 billion dollars in revenues. The company was founded and incorporated in 1972 and headquartered in Kerala, India. It has manufacturing plants in India, Netherlands, and Hungary. The high focus of the company in improving its operations management has been significant in developing strategy and enhancing performance in the organisation.

Factors influencing operations strategy and effective operations management

The global business environment is highly challenging and complex due to the changing internal and external environmental factors that affect business processes. The organisations must develop and create various strategies and abilities to ensure adaptation to changes caused by uncertain environmental factors. Staying competitive in the market requires the implementation of effective operation management strategies to achieve success (Yang et al., 2011). Therefore, the primary factor influencing operations strategy and effective operations management involves the focus on the achievement of business excellence. Manufacturing companies such as Apollo Tyres Company Ltd focus on various strategies, including production cost reduction, efficient delivery schedules, positive supplier relations, improved manufacturing skills and high productivity of the employees (Nandy, 2011). These strategies and performance management practices ensure the achievement of organisational goals, objectives, vision, and mission.

Furthermore, organisational internal factors highly influence the development of operations strategy and effective operations management. The most significant internal factor involves leadership style of the organisation. Leadership is an important aspect of achieving quality management through fostering organisational stability and achieving operational excellence. For instance, leaders focus on the development of culture, structures, coaching, mentoring, effective communication, motivation, and inspiration to ensure employee commitment to organisational vision and mission (Wahab et al., 2016). On the other hand, poor leadership leads to failure through lack of morale and low productivity in the organisation. Apollo Tyres Ltd uses a transformational leadership approach which ensures the transfer and empowerment of employees to become future leaders to ensure high retention and focus on the organisation’s objectives by the employees.

Secondly, effective human resource practices are essential for the development of strategic operations management approaches in the organisation. Human capital is the most essential asset to organisations through ensuring high productivity (Ravichandra et al., 2015). Therefore, the employees form an effective asset for achieving competitive advantage. The focus of the organisation to meeting the needs of the employees through the creation of adequate compensation practices, employee engagement, capacity development, and improved skills, knowledge, and competence ensure sustained excellence in a given industry. For instance, Apollo Tyres Ltd uses robust talent recruitment, development, and engagement approach that ensure high retention rates of about 90% of the recruited employees.

Additionally, the company has an effective communication process coupled with yearly training and development of employees to improve the innovative ideas in the organisation. However, poor human resources management leads to low productivity and affects operational processes due to high resistance levels in the organisation. On the other hand, external factors also affect operations management and strategy in an organisation. The most significant external factors involve competition and innovation in the market that influences the performance objectives of the company to achieve sustainability in the market. For instance, Apollo Tyres Ltd is currently positioned eleventh in the global tyre manufacturing industry. Therefore, other companies including MRF Tyres, Continental Tyres, CEAT Tyres, BOSCH among others have high standards of performance objectives that out-compete Apollo Tyres in the market, leading to high customer loyalty and attraction to their brands. Achieving high-performance objectives in the market is also influenced by technology and innovation approaches of the company ((Wahab et al., 2016). The performance objectives that influence operational success and excellence in an organisation include quality, speed, dependability, flexibility, and cost as presented in the diagram below;

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Quality: It focuses on the organisation doing the right and moral thing as avoiding errors to satisfy customer needs. Apollo Tyres Ltd focus on quality has led to the development of environmental friendly processes to achieve customer attachment and ensure sustainability in the market. Apollo Tyres Ltd also produces high quality tyres that has created a loyal customer based to the product.

Speed: It involves the minimisation of the time between the customer order and delivery of the product, ensuring availability and faster delivery. Apollo Tyres Ltd uses a simple supply chain management and logistics approach to ensure short time between order and tyre delivery. It also uses high motivation of employees to increase commitment to productivity.

Dependability: It focuses on doing things perfectly to ensure the customers obtain their goods and services in time. The Just in Time production system applied by Apollo Tyres Ltd ensure that employees from different operation units work together in teams to ensure delivery of tyre and tube products are scheduled.

Flexibility: It focuses on the ability of the operations used by an organisation to change based on the unpredicted business environment. Apollo Tyres Ltd encourages creativity in the organisation to develop a wide range of tyre and tube products to increase variety for the customers. Apollo variety of products include Dunlop, Apollo, Vredestein, Maloya, Regal and Kaizen that enlarges customer choices.

Cost: It implies the use of effective cost strategies to achieve profits from the services and products in the organisation. Apollo Tyres Ltd uses a price competitiveness strategy to increase affordability. Additionally, Apollo Tyres Ltd focuses on the use of low-cost production processes to ensure high margins in sales and increase profitability.

Product and processes design and how they meet customer needs and business objectives

Product design

The primary products for Apollo Tyre Ltd consist of the tyre and tubes. The tyre and tube manufacturing process involves undertaking in-depth research and focusing on the design capabilities that capture the customer needs in the market. Apollo Tyres Ltd uses innovation in its state of the art manufacturing plants located in India, Hungary, and Netherlands to provide the customers with the high-quality tyres and tubes. Technology and innovation is core to the tyre making process based on creating the best design (Kalpakjian et al., 2014). Apollo Tyre designing approach involves the use of computer simulations that combines vehicle specifications such as usage, type and mathematical calculations to develop a prototype based on the consumer desired characteristics. The simulation is run of the appropriate amount of time through tests, inspections and quality checks to ensure the final product provide the consumers with the highest degree of efficiency, comfort, performance, safety, and reliability (Gurumurthy and Kodali, 2011). After the tyre design and simulation, the company uses over 200 raw materials including pigments, bead wire, rubbers, process oils, carbon black etc. in a radial tyre manufacturing process to create the ultimate product based on customer requirements. The radial manufacturing process is as represented in the diagram below;

Processes design

Different process are significant to the achievement of business objectives of Apollo Tyres Ltd. These processes influence the development and transfer of the finished products to the market and gain profits for the company. The operation management processes ensure the effective use of the available resources to develop outputs that are significant in fulfilling the business objectives based on defined market requirements (Terwiesch and Cachon, 2012). These processes include product development, human resource management, accounting and finance and logistics.

The product development process involves the creation of the tyres and tubes that offer the best value for customers in the market. Adequate investment in manpower and raw materials ensure the creation of a variety of Apollo branded tyres and tubes that customers can choose. Secondly, the human resource management process ensures the availability of highly competent, skilled and experienced workforce to take responsibilities in different departments, but committed to one goal of making Apollo great in the global market. Apollo Tyre Ltd, Human resource department focuses on the search for appropriate talent and implementing training and development initiatives to ensure they have the best experience and skills to meet the customer demands (Voss, 2010).

Thirdly, accounting and finance processes focus on the provision of relevant data from financial analysis and performances to ensure the Apollo Tyres Ltd management take the best action and employ decision making approaches significant to the company growth. Lastly, the logistical processes in the company ensure the coordination of timely production of tyres and tubes and the timely delivery of the products as per the customer requests. Additionally, logistical processes ensure the creation of effective supplier partnerships and management approaches to ensure the consumers gain the company products from convenient regions across the globe (Mani et al., 2015).

Application of operations management and strategies

Operation management and strategies are highly significant in organisations for planning and controlling of different departments and business functions within the organisation. The significant applications of operations management include capacity management, supply chain management and quality management. Capacity management involves the maximum level of the value added by an activity over a given time that the manufacturing process can achieve based on normal operation conditions (Slack et al., 2013). However, the capacity management of the manufacturing process is highly influenced by the fluctuations in the demand for products. Therefore, during the high demand, operation managers’ focuses on increasing capacity for the products while low demand period can be accommodated based on the company capacity availability. For instance, based on the increasing demand for automotive vehicles across the globe Apollo Tyres Ltd invested over 600 million dollars in 2017 to increase the capacity of its production plants in Chennai and Hungary to expand and meet the needs of the fast growing global populations. Therefore, capacity management is highly beneficial to Apollo Tyres through increased efficiency and cost-saving opportunities as a result of effective planning to accommodate customer demands.

 Secondly, Apollo Tyres benefits from reduced risk to performance due to the effective management of resources and assessment of the impact of changes in the company. However, capacity management requires high-cost investment during high demand periods but can lead to loss of company finances in case of short periods of demand. Therefore, poor planning and short demand cycles in the market affect the application of capacity management. Over expectations and poor forecasting by the capacity management team can lead to a lot of financial loss by the company.   

 Another, application of operations management involves supply chain management. Supply chain management involves a holistic process which ensures the interconnection of the organisation to the suppliers through a downstream and upstream linkage process to ensure value to the consumers based on efficient production and delivery of consumer products and services (Slack et al., 2013). Apollo Tyres Ltd is committed to the application of a simple and straight forward supply chain management to prevent complexities. Its supply chain is consumer-centric in that it moves from product design, product planning, sales analysis, manufacturing and distribution for faster delivery. The application of the integrated supply chain management at Apollo Tyres has been the core strategy towards achieving a competitive edge in the market through effective quality control of its products and commitment by the key players to the Apollo Tyres vision and mission.

Furthermore, the supply chain management has been beneficial in ensuring controlled cost, thereby reducing the risk of financial losses to the company. Apollo Tyres involves the application of an integrated supply chain management that is beneficial in increasing revenues through focusing the company assets to development of quality products, increase the market share and enhance the operation profits. However, the application of the supply management strategy to operation management also faces challenges that Apollo Tyres must be aware of to increase operational efficiency. Supply chains are faced by the challenge of excessive regulations from different regulatory institutions that require high investment to achieve compliance. For instance, Apollo Tyres must comply with the environmental regulations on emissions and waste management and at the same time ensure the development of quality products to the customers. Moreover, supply chains are vulnerable to collapsing in case a player withdraws or errors at the initial point can affect the whole system and bring down the company. Despite, these challenges effective combination of capacity management and supply chain management strategies has been core to the achievement of operation management excellence at Apollo Tyres Ltd through influencing the quality planning, control and decision-making.

Conclusion

Operation management is a significant process for achieving organisational excellence through strategic planning and effective decision making. Achieving operational excellence of the organisation is influenced by internal and external factors that in turn improve the organisation’s competitive edge through focusing operational objectives including quality, speed, flexibility, dependability, and cost. The orientation of different business processes, including human resource management, logistics among others and product development processes, including design and planning to these operational objectives ensures the achievement of sustained competitive advantage in the market. Operations management ensures the coordination of different applications such as capacity management and supply chain management for smooth flow of company operations to achieve business objectives and meet consumer needs. The application of operations management at Apollo tyres Ltd has been influential in the achievement of sustained competitive advantage in the tyre manufacturing and sales industry.

References

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