Managing Your Company’s Operations Article

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Managing your company’s operations

Efficiently managing operations enables firms to gain a competitive advantage by creating cost leadership, quality superiority, flexible response to customer needs, and getting products and services to any market as quickly as possible.

Author: Cme

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For any firm to optimise on supply chain performance it is crucial to share information and synchronise decisions. To be competitive in an industry it is vital for the company to forecast demands in advance for the upcoming quarters, ideally 2 upcoming quarters. For these reasons most successful companies focus on simultaneous pricing and production planning, where both the marketing and operations departments make their decisions together, taking into account potential revenues and incurred costs.

Efficient supply chain processes are usually centralised to its production and sales strategy, which is common in large organisations. However, it is the smaller organisations that have an advantage of responding to consumer needs more rapidly due to more flexibility. By concentrating on smaller demands it is possible to deliver customer orders from the designing stage to the customer within a fortnight. This efficiency does not just reflect well on an organisations customer base but reduces inventory costs for the company itself. In order to plan ahead more strategically, smaller organisations must be able to incorporate all its departments in the planning process to work simultaneously, hence be able to respond to market demands and changes quickly.

The purpose of running a highly sophisticated and accurate supply chain is to allow a company to offer its consumers the latest products in the market at the most affordable prices, requiring the company to exert strong influence over all stages of design, production, distribution and retailing.

Products should be designed by a company’s commercial team in a highly interactive environment with market specialists remaining in close contact with its sales team to monitor demand and sales of particular products. While buyers should keep control of procurement and production planning, in order to keep close track of shortages and oversupplies.

In addition to internally running the organisation one also needs to explore its external sources and opportunities which may arise and assist in further improving a supply chain process. It is now a global trend for most companies to only focus on approximately 50% of its total production while outsourcing the remaining 50% to external suppliers with planners deciding over make or buy options based on speed, cost-effectiveness and capacity. Internally produced items permit faster response to market changes and demands and allows for greater control over speed in the supply chain.

While efficiency is key to successful supply chain operations, it goes hand in hand with efficient distribution systems as well. Products unlikely to reach its consumers on time defeat the purpose of a well-organised supply chain process. One such example of a well integrated supply chain process and distribution channel is Zara. Zara owns one the most sophisticated and advanced automated systems ensuring packing and shipment is completed within 8 hours. Contractors would then collect the merchandize from the centre and deliver it to stores across Europe, or to airports nearby, from where they would be flown across the world to reach their consumers.

Hence, highly integrated supply chain systems allow companies to maintain low inventory, while enabling them to maximise profit on its capacity to react quickly to new market trends, thereby avoiding overproduction.

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Managing your company’s operations