Human Resource Department ASSESSMENT 2 LEADERS AND OPERATIONS MANAGEMENT [Imran Imtiaz Butt] 01/05/2017 Table of Contents: Table of Content……………………………………………………………………………..…….…………………….. 02 Introduction to key operations of the organization……………….…..…..………………......... 03 External business factors impact upon operational management………………………….… 04 Key operational functions of Starbucks...……………………………………………….….............. 06 Roles of Operations Manager…….……………………………………….….………………………………. 08 External business environment factors..…………………………………………………………...…… 09 How Improvement in operations management can be achieved…………………………… 11 Conclusions……………………………………………………………………………….…………………………. 12 References……………………………………………………………………………………………………………. 13 Introduction to Key Operations of the Organization: The organization has different operations working together in synchronized way to run the business on day-to-day basis. Most organizations have the goal to produce goods and provide services to its clients and customers. To achieve this, the resources should be procured, which should be converted into the desired outputs and to be distributed to the targeted customers. All of these processes can be done with specific operations which are required to manufacture and deliver products and services of the organization to its clients or customers. The efficient operations of the organization form the groundwork of its successful business. Businesses have developed from mechanize procedures with intrinsic errors to optimizing every factor in the boundary of the value chain. The basic target of any business organization is to match the supply and demand, if both are equal then the situation is considered ideal. But having excess supply or surplus production can be costly and wasteful. While having less supply means dissatisfaction of customers and lost opportunity. The key operations of the organization on the supply side are production management, supply chain and operation management, and on the demand side are marketing and sales. Simultaneously, these operations both on supply and demand side can be run smoothly with the support of other operations such as financial operations, office operations and legal operations. All of these operations or departments work together to run the organization on daily basis. Finance and accounting operations provide financial support and accounting services to the organization, it is responsible for capturing financial resources at profitable costs and assigning those resources throughout the company, simultaneously examining investment proposals, perform budgeting and giving funds for other operations. While office management contributes in the operations within the boundaries of office premises, which is the place where the control system of the organization is located, where records are generated for correspondence, management and to run well-organized operations of the organization (George Terry, 1974). On the other hand, Marketing and Sales are responsible for assessing customers’ needs and desires, and then promoting and selling goods and services of the organization. While the most important functions of any organization are its operation and production management which are responsible for producing goods and delivering services offered by the organization. In other words, if organization is suppose to be a car, then operations management is its engine. (Colvin, 2000). The term “Operations” can be defined as the transformation or conversion of inputs into outputs, and the term “management” means to plan, coordinate, organize and control the resources. Combining both these terms, we come to know that Operations Management is the phenomena of planning, coordinating, organizing and controlling the conversion of inputs into output (Slack et al., 2004). Operations and supply chain are fundamentally connected with each other and both are necessary for any organization’s existence. Supply chain is a system of actions that provide a product or service to the consumer. It consists of purchasing the raw materials, then assembling, warehousing, entering orders, distribution and delivery (Gates Gill, 2007). Sometimes, supply chains are also known as value chains, because final value of the manufactured good or service being provided comes along with series from sourcing of raw material to stockpiling to operations and finally passes through distribution channel to the targeted customers (Stevenson, 2009). External Business Factors Impact upon Operational Management and Decisions of Management teams: Many external factors force the operations management to take decision for the betterment of the company. These factors may be environmental, economical, political or social which are essential to be catered accordingly by operations management team so that their operations and supply chain are not being compromised. In the case of Starbucks, there are many different external factors that can impact directly on the operations of the company, such as these factors can affect the ability of Starbucks to purchase their coffee bean crops. If weather affects the crop then prices of the coffee beans would be subjected to change. Cultivation of coffee beans are present in 70 tropical countries which makes in the second most traded commodity in the world, and the suppliers of these coffee beans are very much dependable upon the industries for their revenue, so their bargaining power is very much low (Food commodities, 2010). Starbucks need to use a fixed-fee contract with the suppliers which can be helpful to prevent the organization from bargaining power. However, Starbucks purchase their coffee beans from different countries having different geographic regions to keep away from increment in prices due to weather, economic, political export quota changes. The supply chain of Starbucks is very long, as the coffee is grown outside the United States where most of the Starbucks outlets are present. Starbucks has had to build up the process which protects the operations and its customers’ loyalty. The process starts from the coffee farm to buying green beans to importing the coffee beans to unloading the containers at processing plants, from roasting and packing the processed coffee to serving it to consumers. In order to execute the whole process, we should know the factors involve in the process. To understand these factors, we must understand the supply chain first. It is essential to recognize the factors which affect the process of supply chain. As discussed earlier, there are various issues which can create the impact upon supply chain management. Some of the factors are given below: Environmental Uncertainty: Uncertainty in the environment can be associated with the environmental issues which affect the operations of the company (Butcher and Dwivedi, 2009). Environment concerns are the important factor in the comprehension of strategic operations plans. Due to the increase of outsourcing in the industry, this factor must be carefully examined for the operations management (Paulraj and Chen, 2007a). Company Environment: Company environment may refer to the relationship between the suppliers and the company which consist of commitments and level of trust. It is based on the company’s expectation on timely deliverance of raw materials, quality, competitors’ rivalries, and competition in the area. In order to meet the demands, company would go to import the raw material from overseas countries, which can result uncertainty in the working environment (Wu, 2006). However, this type of uncertainty can generate negative impact in the performance of company. But it can be minimized if the operations management develops the strategic relationship with the suppliers (Chen et al., 2004). Governmental factor: Another factor which impacts on the operations of company is governmental support factor which is the degree of support offer by government when any company wants to import raw material from international market. It consists of rules, regulations, scrutiny, policies and recommendations. It is up to the governments of both importing and exporting country to make series of attempts which can encourage the practice of import/export at a level which can boost up industrial sector’s competitiveness in international trading through competent logistics (Elzarka et al., 2011). Overseas factor: As discussed earlier, Starbucks totally depends upon the overseas countries in terms of importing raw materials. Increase in the monetary exchange for obtaining resources from overseas countries initiates complicated issues such as transportation costs, tariffs, language barrier, exchange rates and administrative practices (Quayle, 2006). When requiring raw materials from overseas countries, it is necessary to recognize the subsistence of circumstances such as political uncertainties in other nations that can result in the change of business strategies, incite decisions of no investment, increase the risk in dealing with supplier etc. Some of the other issues which can arise in dealing with other nations are religious issues, limitations of communication, cultural issues and also the mechanism of business operations used in other countries might obstruct the operations and supply chain planning of the company (Bhattacharya et al., 2010). Key Operational Functions of Starbucks: Starbucks coffee passes through varies activities from farm to retail shop as shown in figure 3. In first stage, the green coffee beans comes from the coffee growers situated in various places of the world, and then mediator, and then corporative societies deal with them to distribute further. After that, the exporters acquire the coffee beans and export them to particular location. After the import of coffee beans, it is now store in temporary storage area then move to the roaster mills owned by Starbucks (Hohpe & Wood, 2004). Then the coffee beans are roasted and distributed to different retail shops which end in the hand of millions of consumers. Among these major processes, there are other various processes which guarantee the superior quality of coffee for consumers. Some of the processes are given below: 1. It is necessary for Starbucks to have the submitted material tested for infectivity before it is dispatched. 2. GPS tracking systems are installed in some coffee shipments for Starbucks to monitor the movement of raw material from farm to ports. It is because it gives the surety that the coffee beans are not being tempered or stolen within the route. 3. Starbucks employs thorough quality control measures, the coffee is examined at numerous points, tested at many spots, and sampled several times to make sure that what arrives in retail shops is the exact coffee that purchaser observed at the beginning. 4. Starbucks coffee purchasers have to trek the globe in the hunt for the best coffees available, even in areas where political or economic shakiness result hazards for trekkers. 5. After the coffee is roasted, it will be stored in the warehouse until needed by the production schedule. The coffee is tested, roasted and cupped to make sure it is the same coffee that was purchased. 10% of the bags will be sampled and compared to the flavor report that was made from the point of origin. Once it has passed the taste test, the coffee will be laden into roasting chamber (Schultz & Yang, 2007). Roles of Operations Manager: Operations management inputs, processes and outputs are dynamic factors which change over time through different circumstances. It is the duty of the operations manager to ensure that these dynamics are controlled and planned so that the result matches the desired output. In case of Starbucks, the operations manager should take into consideration that supply chain management is working accordingly and delivers the product in right time, in right quality and at right cost (Heizer, 2006). Some of the roles are given below: Operations manager should know the factors which can accelerate the overall operations with superior results such as Quality, Speed, Dependability, Flexibility and Cost. Planning is the essential part for any operations manager, which is done through taking into confidence the interdependent departments that work together for proper operations. Involvement in the designing and innovation process of the product is the responsibility of operations manager. Taking responsibility in the function of end products, usage of technology in the manufacturing process and designing job involved in final product. Continuous improvement in the operations management is vital for any business operations. It is the duty of the operations manager to locate the weak areas of the whole chain which limits the performance of the whole operations. Operations manager should minimize the communication gap between departments so all can work together for common goal. External Business Environment Factors influencing Decision-Making Process: The entities which exist outside the borders of any organization are fall into external environment factors that can affect the strategic decision making process of leaders and managers. The leadership has little or no control over the external factors but needs to monitor and adapt to the external dynamism through proactive or reactive responses for the survival of the organizations. Every organization faces environmental continuum ranging from stability to dynamism. These factors affect the decision making process by leaders and managers in terms of environmental dynamism, hostility, opportunities, threats and uncertainty (Priem et at., 1995). There are many external environmental factors interrupting the organizational process: Figure 4: External Environment factors role in decision making Related Industries: Leadership and management should have a proper knowledge of their competitors over their marketing strategies; size of the organization; skill pools and the shared areas where they sell similar products. Global Context: Due to the globalization, decision making process can also be affected with the offshore developments. Customer Preferences: Due to the shrinkage of the communication gap between communities, the domino effect can occur if the trend due to the change in customer preferences. Demography: Changes in the demographics of the market with respect to age population, ethnicity, cultural changes, social or economic changes can create a major impact upon the operations of the company. Skilled Workers: If the shortage of skilled workers occurs due to the change in trend which result in the drop of certain skill acquirement in community, then it will create a adverse effect in organization related to this particular skill. Leaders and managers should forecast the scenario and should create proper opportunities for people to acquire such skills. Raw Material: Starbucks totally rely upon the import of coffee; any disruption in the supply chain due to any reason can totally halt the whole operation of the company. Finance: Investments, available funds, savings, or stock market shares are included in this factor. Leadership and management should analyze the financial aspect of the company before making the decisions for new startups or expansions. Technology: Examination of technology used in production, supply chain or other operations of the company is included in this section. New technological tools, machinery, high-tech industrial equipments, modern methods, IT, advances in semi conductors, internet, automations are all those elements that can force the leadership and management to brainstorm and to think that how their operations can be improved with these advancements. Law and Regulations: All organization must work according to the legal system set by the governments, new laws and regulations are the factors that influence on the decision making process of leaders and managers. How Improvement in Operational Efficiencies can be achieved: Although Starbucks has a propel of metrics for assessing supply chain heath and performance, it concentrates on four advance-level classes to make steadiness and equilibrium in all over the global supply chain team: safety in operations, service computed by on-time delivery and order fill rates, total end-to-end supply chain expenditures, and company savings. The last one means to cost savings that come from areas outside logistics, such as research and development, marketing, or procurement (James, 2010). But every organization has some slackness over improving the efficiencies of the operations. There are nine attributes of the Leadership and Management which are required to improve company’s operational efficiency. Navigation: (Proper navigation of the complexities of issues, opportunities and problems which can affect the company’s profile of distribution) Strategy Making: (Setting up goals and designing a long term course of action synchronized with organization’s objectives) Entrepreneurship: (Exploits and indentifies opportunities for new services, innovations and new markets) Mobilization: (Proactively sticks the stakeholders with common agenda and creates capabilities and resources to get things done quickly with the achievement of objectives) Talent advocacy: (Attracts, develops and preserves talents to make sure that the people with best skills and motivations to meet company’s needs are in best place at best time with respect) Captivation: (Creates commitment and passion towards a common objective) Global Thinking: (Gathers information from different sources around the world to create diverse, well-informed perspective that can be used to optimize organizational performance) Drive for Change: (Builds an atmosphere that embraces change and makes change to improve and also helps the others to accept novel ideas) Enterprise Guardianship: (Provides support to the shareholders value and recommendation by taking courageous decisions) Conclusions: From the above report, it is crystal clear that Starbucks believes in the superior quality and service reliability rather than cutting cost. Starbucks invests in the premium price of superior quality coffee beans and Starbucks manages the supply chain from farm to retail shops so that reliability, quality and taste would not be lowered. Starbucks never involved in aggressive marketing campaigns but heavily depends upon the word-of-mouth and its reputation. But increase in the number of competitors such as McDonald’s and Dunkin’ Donuts, is now an alarming situation for Starbucks. Now World economy is going down and its competitors are offering similar products with minimum price which is suitable for most of the people who do not wish to spend extra dollars on any other products (Adam III, 2011). Starbucks can now lower its prices if it improves its supply chain more and more which can save many unwanted expenditure. Identification of gaps between current performances and then it should be properly documented, analyzed and targeted for improvements. Induction of new talented recruits will allow the Starbucks to stay focused on its supply chain mission of delivering products with superior quality of service at lower possible cost. Try to cut costs through unwanted store keeping. Starbucks can expand its network by providing its special products on lower prices for short period so that more people can have the experience and can become the devoted customers forever. References: Bhattacharyya K, Datta P, Offodile O. THE CONTRIBUTION OF THIRD-PARTY INDICES IN ASSESSING GLOBAL OPERATIONAL RISKS*. Journal of Supply Chain Management (2010) 46:25. Chen IJ, Paulraj A, Lado AA. “Strategic purchasing, supply management, and firm performance”. Journal of Operations Management (2004) 22:505-523. Colvin , Geoffrey . “Managing in the Info Era.” Fortune, March 6, 2000 , pp. F6–F9 Dwivedi A, Butcher T. Supply Chain Management and Knowledge Management Elzarka S, Tipi N, Hubbard N, Bamford C. 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