Relationship between Operation Management Functions and the Competitive Success of the Organisation

 Relationship between Operation Management Functions and the Competitive Success of the Organisation 




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Introduction
The operation department in any organisation is among the most vital organ. It essentially tells the value the organisation put in the customer in the products and services they offer. It is the core of the organisation and the reason why it exists. Everything else in an organisation degenerates from the activities or functions of this department (McGraw 2009, p. 22). The operation functions in one way or another contribute highly to the competitiveness of the organisation in its industry of operations. This is because the department usually incorporates consumer needs in developing a product or service in order to satisfy the consumer as well as make profit. In some industries like the transport industry, the operations interact with the consumer hence being in a pole position to make or break the relationship between a consumer and the organisation (Ray 2005, p. 15) 
Competitiveness in business is the ability to gain an upper hand over others in satisfying consumer needs and getting a positive feedback for it through loyalty. In most cases, being competitive is associated with success in the area of operation (McGraw 2009, p. 35). This is the reason why success in the operations functions will translate to the overall success of the organisation in achieving and surpassing set goals. This topic will compare the service industry and the products industry operations functions and their effect on the organizations’ competitiveness. 
There is an argument that services should be treated differently from manufacturing largely relies on service’s unique characteristics (Ray 2005, p. 28). These include customer inseparability, consumption and production, intensity of labour; perish ability, heterogeneity, intangibility and influence. The combination of these characteristics makes service industry unique and management of service operations difficult. Intangibility is usually recognized as an important comparison between services and goods (McGraw 2009, p. 47). This also makes the manner in which the operations departments in the respective industries function differently.
Virgin Airways versus Toyota Automobile
Virgin Airlines is a firm in the service industry offering travel services using airplanes to various destinations in the world. The firm competes with various organizations even state owned corporations. This puts it in a tight spot where it has to ensure that it retains its customer and adds more in order to remain in business. Toyota automobile on the other hand, is a product selling organisation that makes automobiles and sells to its customer to satisfy their needs as well as make profit. The automobile industry is highly competitive, and with many alternatives around, only the best remain in business. Toyota has managed to lead this industry for quite some time mainly because of the close cooperation between research and development department and the operations department. 
The Effective Product/Service Design Model (EPSD)
The EPSD model formulation integrates customer preferences and the elements of ensuring that the production process is implemented within the set framework of identifying profit maximizing product profiles, which can be produced at a different operating difficulty level. An overview is presented in the figure below. The formulation builds on the choice patterns of customers from one more market segments. The market share of each product or service offered is a function of customer choice patterns, product/service attributes, and the attributes of those offered by competitors (Ray 2005, p. 34). The diagram also shows that the production cost can be thought to be a function of the product or service and process attributes. In addition, the product/service and process attributes together determine operating difficulty level, which is an aggregate measure of production capability. For instance reducing the number of skilled workers can reduce production cost. However, this could result into the making of products that do not satisfy consumer needs thus reducing profit. Similarly, increasing product variety can impact both cost and production complexity, thereby making it relatively difficult to meet market needs.
The effective product/service design model: Figure 1
















Figure 1
Toyota Automobile
Developing and sustaining supplier relationships
Toyota automobile depends on suppliers to produce high quality products on short notice and deliver them reliably on point of use. The company enjoys significant competitive advantages from their established networks of superb supplier relationships (Schneider 2003, p. 29) The effectiveness of a reputable supplier relationship is that it helps reduces the cost of ownership. This represents the total cost of acquiring goods, materi