Operation Management: The Importance of Operations to Business

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Do You Think Marco Van Hopen Understands the Importance of Operations to His Business?

Marco Van Hopen understands the importance of operations as he notes that the company is experiencing a considerable growth but there are a number of issues which can be handled when the company will become “organized” (as cited in Chambers & Johnston, 2009, p. 29).

The company was founded in 1999 and it was a small organization. However, the company has grown into an organization with sixteen full-time employees and more than twenty part-time employees. Van Hopen notes that it is difficult to predict the costs and profit, which is inappropriate for such a big company. Van Hopen also claims that they have developed trustful relationships with their clients and it is crucial to meet their clients’ expectations.

Remarkably, Marco Van Hopen is enthusiastic about the change, though he still does not know how to plan and implement the change. For instance, he understands that production services are more profitable, but he is still indecisive as for the development of this part of the business. On the one hand, he claims that this area has a great potential as more and more clients need these services.

On the other hand, equipment hire and sales is more predictable and, hence, it is a safer area. Therefore, he does not want to change the major focus of the company. He also states that the company needs certain restructuring which will enable employees cooperate more efficiently (Chambers & Johnston, 2009). This collaboration will help the company reduce costs and potentially increase profits.

What Contribution Does He Seem to Expect from His Operations?

Firstly, Van Hopen wants to take control over the costs. Thus, he states that reorganization of certain processes can help reduce the costs, “by working together more we could increase our ability to take on more work without increasing our cost base” (as cited in Chambers & Johnston, 2009, p. 29).

Notably, costs reduction is one of the key elements of operation management (Slack, Chambers & Johnston, 2010). Marco Van Hopen expects to get larger revenues as a result of the operations management. He notes that improvement of their operations will lead to new contracts and, as a result, to larger revenues. Admittedly, this is one of the core goals within operations management (Greasley, 2007).

Finally, Van Hopen expects that they will be able to achieve the goals mentioned above without large investment, though he understands that certain amount of funds will be spent to carry out the change. Nonetheless, Van Hopen seeks for ways to reduce costs and increase revenues with minimum investment. One of possible ways (according to Van Hopen) is restructuring the organization. This is quite a cost-effective way to make the organization more efficient and competitive.

The Supply Network for AAF and AAF’s Position within It

To consider the supply network for the company, it is possible to exploit the principle of three levels of operations management analysis, i.e. the level of supply network, operation and individual process (Leseure, 2010). It is possible to note that there are two major operations, i.e. production services (installing equipment, design, etc.) and equipment hire and sales (see Fig. 1). The operations are somewhat intermingled as customers often order equipment as well as production services from the company.

There are different suppliers to the company. These are often other companies providing equipment hire services and selling equipment. Remarkably, AAF keeps close relations with these companies and often supplies them with certain equipment or provides some services. This collaboration is very important as it helps the company remain competitive.

Supply Network

Fig.1. Supply Network

As far as customers are concerned, the company provides services to other production companies as well as to end clients. Thus, Van Hopen notes that production companies often address AAF and order certain equipment which is further sold to end clients (Chambers & Johnston, 2009). The company has recently started cooperating with end clients that find it easier to work with AAF directly as the latter provides equipment as well as production services now.

What Are the Major Processes within AAF, and How Do They Relate to Each Other?

It is possible to point out major processes within AAF, i.e. production services and design, equipment hire and sales, and administration (see Fig.2.). Notably, the process of production and design services are closely connected with the process of equipment hire and sales. This link can be explained by the fact that customers who order equipment tend to order design, installation and maintenance of the equipment (Chambers & Johnston, 2009).

Operational Level

Fig.2. Operational Level

It is possible to analyze these processes with the help of the 4 Vs of the company’s processes (see Fig. 3). The process of equipment hire and sales is characterized by high volume as the company provides a wide range of products and services in this area. It is necessary to note that AAF tries to use only advanced and up-dated equipment (Chambers & Johnston, 2009).

Therefore, the variety of this process is quite high. Notably, variation is not very high as the process of placing orders is similar even though different products may be provided. Finally, visibility of the process is rather low as it is quite difficult to predict the number of contracts in this area (compared to the number of contracts for installation which can be foreseen as many company’s clients request installation services along with equipment).

As for design, this process is characterized by low volume as these services are only becoming popular (Chambers & Johnston, 2009). Since every project is unique, variety of design is very high. However, variation is lower as these services are ordered by clients who get equipment from the company. This is why visibility of this process is high. Thus, it is easy to predict how many contracts there can be as in the vast majority of cases the number of design orders depends on the contracts on equipment supplies.

Vs of the Company

Fig.3. 4 Vs of the Company

Production services are very similar to design process as these two processes are often interrelated. At this point, it is necessary to note that theatrical groups are often the company’s clients. Equipment and especially design and production play a very important role in the creation of a performance (Stuart & Tax, 2004).

Therefore, these clients are often involved in the four processes of the organization. The process of production services is characterized by low volume as the services are quite new to the company. The variety and variation are high as each project is unique (though variation is a bit lower since customers often order equipment, design and production). Visibility is also very high due to the points mentioned above.

Administration is the last process to be discussed with the help of the 4 Vs dimensions. It is necessary to note that administration process is rather difficult to analyze within this framework. The process is of high volume as each client may get a variety of services and lots of invoices can be sent.

Administration is also characterized by high variety and variation as each invoice and each operation as well as service can be different. Finally, visibility of this process is quite low as the growth of the company has led to certain obscurity. For instance, Van Hopen claims that it is essential to improve the processes within the company (Chambers & Johnston, 2009).

It is possible to take a closer look at the administration process within AAF (see Fig.4). The administration includes storage, workshop, design employees and the crew. Van Hopen stresses that the employees do not cooperate close enough. In other words, there is little understanding of the processes and the goals set. More so, there is almost no cooperation among the parts of the organization.

There should be more cooperation between the employees as this will help them complete more complex tasks within reduced time spans. This is vital as the company is growing and more employees will be hired. There is a need in a specific structure with certain communication channels.

Process Level Analysis of Administration

Fig.4. Process Level Analysis of Administration

In conclusion, it is possible to note that administration processes require restructuring. AAF has grown into a big company that has loyal clients. These clients expect high-quality services within the allotted period. This will become possible if the company will have a well-structured administration processes.

Reference List

Chambers, S., & Johnston, R. (2009). Operations and process management: Principles and practice for strategic impact. Essex, UK: Pearson Education.

Greasley, A. (2007). Operations management. Thousand Oaks, CA: SAGE.

Leseure, M. (2010). Key concepts in operations management. Thousand Oaks, CA: SAGE.

Slack, N., Chambers, S., & Johnston, R. (2010). Operations management. Essex, UK: Pearson Education.

Stuart, F.I., & Tax, S. (2004). Toward an integrative approach to designing service experiences: Lessons learned from the theatre. The Journal of Operations Management, 22(1), 609-627.

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