Executive summary This report identifies and analyses the management challenges outlined in the case study of Service

Adhesives Ltd. The research draws attention to how Service Adhesives traditional corporate structure, outdated strategies and failure to implement qualitative initiatives leant to their reclining competitive advantage in their industry and the slowdown of their profit margins. The report finds that Service Adhesives prospects in their current operations are limited but with their renewed commitment to effect radical improvements to their organisation then operational excellence is attainable. It is recommended that Service Adhesives revisits the qualitative initiative of total quality management (TQM) as this method encompasses everyone and every function of the organisation. It uses holistic approach to long term success that views continuous improvement as a process and aims to transform the organisation through progressive changes

Table of Contents 1. Introduction......................................................................................................................3

1.1 Background of Service Adhesives..........................................................................3 1.2 Background of operations management..................................................................3

2. Orientation.......................................................................................................................4
2.1 Literature review..................................................................................................4 2.2 Operation design..................................................................................................4 2.3 The purpose of implementing technology...............................................................5 2.4 Human Resource..................................................................................................5 2.6 Methodology........................................................................................................6

3. Presentation of Data.........................................................................................................7
3.1 Managerial challenges...........................................................................................7 3.2 Seeking solutions..................................................................................................8

4. Analysis............................................................................................................................9 5. Conclusion.....................................................................................................................11 6. Recommendation...........................................................................................................12 References..........................................................................................................................13 Appendices.........................................................................................................................14

1. Introduction 1.1 Background of Service Adhesives Service Adhesive Ltd is a mid-sized company that produces specialist adhesives. They produce guaranteed non-toxic and non-irritating adhesives as they are used mainly in the fast-moving consumer goods (FMCG) business. Their organisation structure is evidently a hierarchical one. There is a clear chain of command where the instructions are issued vertically from the top to the bottom. This management system had worked well for Service Adhesive Ltd in their twenty years of existence making them into a profitable enterprise. Their competitive edge and profitability had been preserved by their patented adhesive formulation and their outstanding record in developing new adhesive products. They are currently being challenged as evidenced by the slowing down of the companys profit margins and indications that their competitive edge has been slowly eroded over the years. 1.2 Back ground of operations management The implications for operations improvement are clear. It is even more important, especially when competitors are actively improving their operations. (Slack; Chambers & Johnston 2010, p. 542).Operations management is concerned with the activities, decisions and responsibilities towards the effective managing of the companys resources and transforming them into goods and services at the lowest cost. The activity that transforms the resources into goods and services is called the operations function and the operations manager is responsible for overseeing and managing the resources that make up the operations function

2. Orientation 2.1 Literature review The underlying mission of every organisation however stated is to successfully satisfy and exceed the needs and demands of their customers at the lowest cost. The operations function is central to the organisation because it produces the goods and services which are its reason for existing. (Slack et al, 2010)In order to continue meeting customers demands the operations must continually look at ways of improving their overall function. In short, operations management is employed with effectively managing the: Physical (P) tangible items such as machinery, plant and equipment Financial (F) advises of the ability to finance the business endeavours Human resource (H) the people that staff and operate an organisation

Thus the activity of managing any of the organisations functions are known as managing the operations processes. The operations processes are concerned with transforming resources (inputs) into goods and/or services (outputs). These transactions differ however. There are four known as the four Vs that are core to the processes of all organisations. The volume of their output, the variety of their output, the variation in demand and the degree of visibility the customer has of the product and/or service. Operations managers must first know the organisations business objectives in order to achieve organisational performance. All four dimensions have implications for the cost of creating the products or services. All companies need to manage their operations and the operations manager must first know the business objectives for the planning period. The operations manager must assess if utilization of the company resources are maximised and if needed make corrections and/or adjustments to ensure that goals are being met and carried out within the scope of the companys policy.

2.2 Operations design Customer demands dictate the configuration and shape of the product. Operations managers in essence are designers as they are responsible for managing the design of the processes that shape the products and services and also the operations that supply the products and services at a high standard. Futuristic assumptions made regarding the level of future demand are used to design the supply network. Supply network design is the most strategic of all the designs because of its significant impact on the strategy of the organization. (Slack, chambers & Johnson 2010, p. 142). The supply network design determines: How the network will be configured Where each part of the network will be located What physical capacity will each part of the network have

Futuristic assumptions are derived from forecasting. Forecasting is the process by which organisations analyse relevant data and graphs to influence future business decisions (San Juan 2012). 2.3 The purpose of implementing technology Process technology has the potential to improve the operations performance measures of the processing system by way of: Quality not prone to human error Speed processes flow faster Dependability - would depend on the reliability of the new system Flexibility mixed flexibility determined by task used for Cost in the long run the new technology should pay for itself

2.4 Human Resource The final chapter addresses the profound effect the management of human resources have on the operations function. People are an integral part of almost every part of an
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organisation but the way in which human resources are managed has a particularly relevant effect on the operations function. The operations manager has to strategically place the right people for the job, in the right place, and at the right time. Few companies understand which employees are essential or how best to structure their work force (Bratton & Gold 1999). 2.5 Methodology The case study approach was used in this particular assignment to analyse Service Adhesives attempts to implement qualitative change through improving their operation processes. The challenges they encountered were identified from the information presented and after careful assessment and evaluation a number of recommendations are now being proposed based on the literature exposed to in this course, reviews of peer journal sand other open source information.

3. Presentation of Data 3.1 Managerial challenges The high turnover rate of staff indicated that the staff lacked job satisfaction. The exigencies of fluctuating demand orders forced short term contract of foreign staff and brought with it additional challenges of language communication barriers. There were issues with the short term staff not adhering to quality procedures or to written material, all of which was written in English. Conversely as in the case of Service Adhesives Ltd, difficulty in communication led to the production of sub-standard products by the short term contract workers. Although the quality of their product was compromised management continued to use migrant labour as the migrants were hard working and saved costs. However, tensions arose between the permanent and temporary staff as the permanent staff perceived their jobs to be threatened. The initiatives of modern operations philosophies did not propel the business forward. Interestingly senior management in their review of the companies performance appears to have not grasped the reason for the failure of these initiatives. It is evident that the change management effort employed was not effective. Some senior managements perception of staff as being of below average skills and motivation, and very reluctant to change (Slack, Chambers & Johnston 2010). This no doubt hindered managements approach to implementing the quality initiatives. Training and education was therefore an important component which seemed absent in Service Adhesives approach to raise the standard and quality of their production processes. Some senior managements negative perception of staff might suggest that the company excluded lower level staff from the decision making processes.

3.2. Seeking Solutions Concerned about their failed initiatives Service Adhesive Ltd took an active positive step when they began on site visits to companies with similar profiles and to customers. It was on this venture that they observed the operations of one of their larger customers. The companys processes though not significantly different from Service Adhesive Ltd were observed to run more efficiently and effectively. Areas which caught their attention were the cleanliness of the plant, the flow of materials, purposeful staff that seemed efficient and motivated. The company employed the team based approach and had reengineered their operations and were on their way to becoming a process enterprise. Reengineering is a systematic starting over and reinventing the way a business gets it work done. (Hammer & Champy 1973). Service Adhesive Ltd was impressed with the methods employed by their customer in their operations. The positive benefits of team work evidenced by the organisational cohesiveness made them realise it was time for change. Their strict traditional hierarchy structure now seemed out-dated. The long established operating procedures, rigid chain of command, five layers of operational management in their traditional top down structure had to be remodelled. They accepted that it was time to adopt a new organisational culture. They recognised that the traditional, hierarchical structure which they had always prided themselves on was no longer a fit for their organisation if they wanted to be relevant in a competitive industry.

4. Analysis To understand the operations at work in Service Adhesives Ltd we should look at the four Vs to plot the processes within this enterprise. Service Adhesive Ltd is a company whose process components contain the characteristics of repeatability of task, systematization of work and standardization of production which specifies how each task should be carried out. The repetitive nature of production and the high volume requires customised and specialised equipment to be used to produce at a low as possible unit cost. They produce a wide variety of adhesives for the fast moving consumer goods industry (FMCG) It is evident therefore that a high degree of flexibility and varied skill sets on their production lines will be required to meet the wide ranging demand. High variety is a challenge as it limits specialisation and standardisation of production. A number of production lines will have to be employed which may be costly at start up but should in the long run their will benefit from economies of scale. Service Adhesives Ltd had high variable demand. They hired contract staff to deal with fluctuating demand. This marked variation of demand required the operations process must have the ability to respond to changing levels of demand. They have a low visibility operation since there appears to be limited exposure to its customers by staff. This therefore means that the operation processes and eventual product quality will speak and reflect the company. As a measure low visibility operations requires the setting up of a feedback system to evaluate the product acceptability and performance by customers. It is evident that the flow of information lacked flexibility owing to its rigid centralised decision making structure. This would make the company slow to respond to changes in the environment and result in an increasingly non-competitive organisation.
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Senior management knew they had problems and had made attempts to fix them by adopting a number of best practices such as TQM (Total Quality Management) and Lean. No indication is given to how organised and committed they were during the implementation process but the application of these initiatives should have been complementary to an actual manufacturing strategy. How can a company expect to achieve any sort of competitive advantage if its only goal is to be as good as its toughest competitors? (Haynes & Pisano 1994). Manufacturing strategy utilizes the skills and capabilities of its work force enabling the realization of their objectives through an organised systematic process of planning, goal setting, execution and of course feedback. Service Adhesive Ltd used contract labour which did increased productivity but introduced other challenges, which brought tension among its staff. It is essential therefore that a proper system be put in place for the incorporating of new staff in such an environment. The supply network includes all aspects of the operations, customers, suppliers, process technology, products, services, the layout and flow, the people, the jobs etc. The strategy employed in the network design will shape and form the network. An ineffective supply network design can contribute to the reclining competitive advantage. Some firms have completely changed the dynamics of their industry because of the competitive advantage theyve been able to gain in the supply chain. (Shapiro & Raman 2000). Service Adhesives Ltd did not have an effective supply network design which would have maximized their productive capacity, thus their profit margins began to decline in the face of increased sales revenue an as a consequence experienced decreasing competitive advantage and high staff turnover.

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5. Conclusion Critical to Service Adhesives Ltd survival is a change to some of their work flow processes led by a change in management traditional style of leadership which would facilitate the move towards maintaining their competitive advantage. They are still a profitable entity but their profit margins are dropping and their lead in the industry dwindling. What once worked is now becoming redundant. Any business that wants to survive must be able to move with the times and adapt to increased globalisation. They had prided themselves on their traditional hierarchical structure and were blind to the negative impact on their employees and their operations. Minimal or out-dated strategy was employed in their operations and questionable attempts were made to implement quality initiatives. Positive inspiration came from the benchmarking of operations in companies with similar profiles and one or two of their customers. This approach inspired the desire for deep change. For successful implementation the foundation must be laid by senior management of a clear vision for future processes and business strategy which is critical to any reengineering initiative.

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Recommendation A revisit of TQM is required. TQM is a major change and major change requires commitment from all parties involved as change from tradition is usually met with strong resistance but Service Adhesive Ltd, armed with renewed enthusiasm and commitment; implementation will be given the respect it deserves.TQM is described as: the art of managing the whole to achieve excellence a long-term process so patience is required. Strategies are customer and data driven. seeks to eliminate waste and inefficiency continuous improvement prevention customer driven leadership problem solving high employee participation

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References
Hammers, M 2005, viewed 8 March 2013 http://hbswk.hbs.edu/archive/4927.html Hammers, M & Stanton S 1999, Operations management learning materials, Australian Institute of Business, Adelaide. Haynes, R & Stanton, S 2000, Operations management learning materials, Australian Institute of Business, Adelaide. John, B & Gold, J 1999, Human Resource, viewed 9 March 2013 p://www.palgrave.com/business/brattonandgold/docs/bgcha02.pdf San Juan, R 2012, Gaebler Venture, viewed 13 March 2013 http://www.gaebler.com/Forecasting.htm Shapiro , R & Raman, A 2000, Supply network design, viewed 13 March 2013

http://hbswk.hbs.edu/item/1802.html Slack, N, Chambers, S & Johnston, R 2010, Operations Management, 6th ed. Prentice Hall, London.

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Service Adhesives4Vs

Low

Volume

High

Specialized adhesives

High

Variety

Low

Non-irritating and non-toxic

FMCG - predictability of demand unstable

High

Variation

Low

High

Visibility

Low

Customer Interaction

Figure 4.1 Source developed for this research.

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Supply Network Design- Layout and Flow

Process Design

Supply Network Design

Layout And Flow Design Job Design Process Technology Technology

Operations Strategy Operations Management Improvement

Productive/ Service Design

Planning and Control

Figure 4.2 Source developed for this research.

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