Strategic Operations Management: WH Smith's Turnaround Tale

To provide learners with an understanding of the role and importance of operations management (OM) in the efficient and effective production of goods and services. Scenario: WH Smith is a major, well-known and publically-quoted book retailer and newsagent in the UK. Recently it was reported how Kate Swann, the former CEO for the last 10 years, has turned the company around from ? 135m losses to ? 106m profit in a decade. (source: www. theguardian. com/business/blog/2013/jan/23/wh-smith-kate-swann-profit, accessed 1 October 2013) (Also see copy attached)

This is an example of how the principles of operations management can be used to reactivate a firm.

How did she do it? Using the above as a starting point, together with other information sources, which you should research yourself, on WH Smith, you are asked to address the Tasks below regarding operations management. Task 1 (this meets LO 1, ACs 1. 1, 1. 2 and 1. 3) Based on the Scenario, produce a document explaining the nature and importance of Operation Management and its key elements.

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Your document for this Task must include the following elements (among others as you wish): I.

A definition of OM and an explanation of its importance; II. The key elements of OM; III. The need to produce goods or services on time and to cost, with the right quality and within the law; IV. The role of OM in achieving strategic objectives; and V. Produce systems and sub-systems diagrams for any WH Smith operations processes, including a brief explanation of your diagrams. Task 2 (this meets LO 2 ACs 2. 1, 2. 2 and 2. 3) Based on the Scenario, produce a document explaining the relationship between OM and strategic planning.

Your document for this Task must include the following elements (among others as you wish): I.

II. III. Explain the implementation of the “3Es” in WH Smith; Critically review the tension between cost minimisation and quality maximisation in the context of WH Smith; and Assess the importance of the five performance objectives that underpin operations management. Task 3 (this meets LOs 3 and 4 in full) Base on the Scenario, produce a document explaining how to organise and apply relevant techniques in a typical production process. Your document for this Task must include the following elements (among others as you wish): I. II. III.

IV. Comment briefly on the importance of operational planning and control. Explain what linear programming is, and give an example in relation to any part of the operations of WH Smith; Produce a network plan and indicate the resultant critical path for any operation in WH Smith. (for this task, you should include a set of operational outcomes, which are clearly defined). Explain how quality can be defined and maintained. Learning Outcomes and Assessment Criteria In order to Pass this unit, the evidence that the learner presents for

assessment needs to demonstrate that they can meet all the Learning Outcomes for the unit. The Assessment Criteria determine the standard required to Pass this unit. The Assessment Criteria will act as a guide to help you put into context your answers to fulfill the Learning Outcomes. Learning Outcome Assessment Criteria 1. 1 explain the importance of operational management 1. 2 explain the need to produce safely; on time; to cost; to LO 1Understand the quality and within the law nature and importance 1. 3 explain the link between operations management and of operational strategic planning

management 1. 4 produce a systems diagram to illustrate a typical business 2. 1 explain the ‘Three Es’ (economy, efficiency and effectiveness) LO2 Understand the link between operations 2. 2 explain the tension between cost minimisation and management and quality maximisation strategic planning 2. 3 evaluate the significance of the five performance objectives that underpin operations management 3. 1 explain linear programming LO3 Understand how 3. 2 evaluate critical path analysis and network planning to organise a typical 3. 3 explain the need for operational planning and control

production process LO4 Be able to apply relevant techniques to the production of an operational plan for a typical business 4. 1 produce a set of clearly defined operational outcomes 4. 2 produce a network plan and indicate the resultant critical path 4. 3 explain how quality could be defined and maintained. INSTRUCTIONS AND INFORMATION FOR LEARNERS This assessment and the Tasks above are designed to assess your achievement of all four of the Learning Outcomes and associated Assessment Criteria for a Pass in the ‘Employability Skills’ unit of the qualification you are undertaking.

Your tutor/ deliverer will advise you when you should start work on the assignment, the date when you must hand in your completed work and when you can expect to get your mark and feedback on your work. Guidance on this subject is provided on page 1 of this assignment brief. You should make sure that you plan your work carefully, to ensure that you cover all four learning outcomes of the assignment, and complete it within the time limit specified. There is no official guideline wordcount or percentage marking (other than Pass/ Merit/ Distinction/ Refer).

By way of guidance only for this particular assignment, it is recommended that you write a minimum of 2000-2500 words total and match the weighting of your efforts to the wordcount indicated. Your statements in answer to the Learning Outcomes need to be prefixed with the specific Learning Outcome title or at least the Learning Outcome number. This will help you keep on track and should ensure you address the details. You must make sure that you acknowledge any sources you have used to complete this assignment, listing reference material and web sites used.

The assignment result will be published on BITE’s Moodle online education materials platform, normally within 6 weeks of the submission date. If your assignment is assessed as referred, you will be notified with an indication of the areas to be addressed. You may resubmit an assignment, or submit a new assignment, on a further two occasions during your period of registration as an Institute learner with Edexcel. If there is anything in these instructions or in the assignment itself which you do not understand, please seek guidance from your tutor/ deliverer. Merit grade Descriptors

For learners to achieve a Merit they must: Identify and apply strategies to find appropriate solutions Indicative characteristics Learners must demonstrate that: An effective approach to assignment planning, study and research is in evidence Evaluations and judgements, using evidence, have been made Problems with a number of variables have been considered Select/design and apply appropriate methods/techniques A range of relevant theories have been included Relevant theories and techniques have been applied to the case study A range of different sources of information have been used

The selection of methods/techniques of analysis and use of source material have been justified Information/ data has been synthesised and processed Present and communicate appropriate findings The written assessment is coherent, shows logical development and a sound understanding of theories, concepts and research evidence The written assessment demonstrates that an appropriate structure and approach has been used The written assignment demonstrates a writing style appropriate for audiences both familiar and unfamiliar with the subject. The written work is clearly written and technical language

has been accurately used Distinction grade Distinction descriptors For learners to achieve a Distinction they must: Indicative characteristics Learners must demonstrate that: Use critical reflection to evaluate own work and justify valid conclusions. Conclusions have been arrived at through synthesis of ideas and evaluation of research evidence and have been justified The validity of results has been evaluated using defined criteria Realistic and informed recommendations have been proposed against defined characteristics for success Take responsibility for managing and organising activities.

The written assignment shows excellent planning, is organised coherently and is clearly expressed Independence of thought and gathering of research material has been demonstrated Material used has been clearly understood and well organised The importance of individual and group behaviour in organisations and its management has been recognised and addressed Demonstrate convergent/lateral/creative thinking. There is evidence of self-generated ideas with evaluation Convergent and lateral thinking are evident in the written assignment Creative thinking is evidenced with unfamiliar material. Problem-solving is in evidence

Innovation and creative thought are in evidence Receptiveness to new ideas is evident Ideas have been generated, evaluated and informed decisions/ recommendations are made. Case Study: WHSmith • WH Smith: Kate Swann turns ? 135m losses into ? 106m profit in a decade One of the UK's most highly regarded – and highly paid – retailers achieved success by going against the grain WH Smith chief executive Kate Swann favours the old retail adage: sales are vanity, profits are sanity. Photograph: PA When Kate Swann arrived at WH Smith in 2003, there was a widely held view that the chain's days were numbered.

A decade on, she has turned losses of ? 135m into a profit of probably ? 106m this year, and shares that were languishing at 250p are now changing hands at 650p. Swann is now one of the UK's most highly regarded – and highly paid – retailers. Yet she has achieved this remarkable feat by breaking many of the "rules" of running a successful high street retail business. When Swann announced she was pulling out of selling music and DVDs because the profit margins were thin and getting thinner, rivals thought she had taken leave of her senses – she was instantly kissing goodbye to about 30% of Smith's turnover.

On a same-store basis on the high street, WHS now sells roughly ? 65 of goods for every ? 100 of custom seven years ago. The demise of Zavvi and HMV in the face of online competition shows it was a brave – and correct – decision. Swann favours the old retail adage: sales are vanity, profits are sanity. By focusing on profitable sales and cutting costs relentlessly, she has boosted profit margins – according to analyst Nick Bubb by an almost incredible 15 percentage points. While other retailers have been pouring resources into

the digital world, Smith's big online strategy is its Funky Pigeon card site. Instead, Swann plans to open more shops, even though they are, to be frank, deeply unpleasant places to shop, stuffed with stock and screaming promotional banners. While the supermarkets have to tread carefully in the products they offer and have been targeted for displaying sweets at the checkout, Smith's has sold stationery aimed at teenagers and young women adorned with the Playboy bunny motif and Swann's checkout assistants attempt to force-feed the nation giant bars of Galaxy and chocolate oranges.

Her secret? Maybe it's the low profile. While many rivals enjoy the limelight, holding forth on the woes of the economy, the lack of women in the boardroom and political issues such as the in-out debate, Swann says nothing. She doesn't give interviews. On Wednesday, at Smith's AGM, a shareholder stood to offer thanks for her transformation. Asked to respond, she merely said: "Thank you, let's move on. " No doubt she will. There will be a queue for her services.