This report discusses two areas that concern a case study of Concept Design Services (CDS). After introducing the report in more detail, section 2 will explain why and discuss how operations management is important to the company before offering recommendations as to how CDS can expand and improve operations in section 3. The report will then conclude by encapsulating the ideas that have been expressed in the report.
According to Slack, Brandon-Jones & Johnston (2016), “operations management entails how organisations create and deliver services and products.
” This very basically describes the purpose of any for-profit organisation, so naturally it is a very important process.
The concept has changed rather dramatically over time, from its craft manufacturing origins to mass production which became the system of choice in the 19th century. However, in the modern age, markets have become highly fragmented and the life cycles of products have reduced. Therefore, systems such as Lean production and Flexible specialisation have allowed organisations to combine the high volume/low cost benefit from mass production with the innovation and quality that was achieved through craft manufacturing.
(The Open University)
This report concerns the CDS case study which . A couple of the companies’ operations strategies will be discussed in the first section to highlight the importance of operations management, as well as CDS’s manufacturing operations and the decisions they made in order to change and improve them over time, as well as the distribution service are of the company. After this the report will explore the options CDS have in terms of improving and expanding on their operations, and the author will make recommendations to that effect.
CDS have implemented a range of strategies that align with the changing landscape of operations management, i.e. the introduction and growing popularity of lean production etc. Slack & Brandon-Jones (2018) describe operations strategy as “the pattern of strategic decisions and actions that set the role, objectives and activities of the operation.” In addition, Skinner (1969) has remarked “when being managed from a strategic point of view, operations should be used as a competitive force in the business”, and this statement is still widely accepted today.
As the CEO of CDS – John Thompson – explained at the beginning of the case study, a strategy the company have implemented is transitioning from an inward-looking manufacturer, to a customer focused “design and make” operation. This means the company now operate as more of a “business-to-business” company rather than a “business-to-customer” company. It is clear from this very bold change in operations that the management of what the company does is important, as they have gone from producing cheap homeware items to making high quality and expensive homeware.
The importance of operations management at CDS was also illustrated by Marketing Director Linda Fleet when she detailed a new strategy which saw the company develop a whole new co-ordinated “concept” range, which offered different aesthetical options. As was mentioned before, operations management systems in the modern age incorporate the concept of producing high variety from craft manufacturing, which was evident here. The decisions made were clearly positive as within a year of launching the “concept” range, 3000 retailers were being supplied with them and it account for 90% of their profits. Without this change in strategy the growth may not have been possible.
CDS also made the strategic decision to make deals with prestigious design houses, where they would design, manufacture and distribute products for them. These partnerships often produced products with very high margins, despite their long lead times.
CDS also showed the importance of operations management to their company by investing resources into redesigning their manufacturing process. Originally, products and components passed to the packing hall after being moulded, where they were assembled, the newer/more complex products however quite often had to return for further moulding once assembled. With an increasing number of products needing several moulding and assembly stages, CDS recognised the complexity this was causing. To solve their problem, they had the idea of devoting a separate cell to these new products with higher complexity until they had “bedded in” as it were.
When CDS began making their higher margin concept products, they decided to dispose of their old, injection-moulding machines and replace them with larger machines that allowed them to use multi-cavity moulds. This resulted in increased productivity as it enabled the production of several products with every machine cycle. The increase in productivity was so great in fact it amounted to 600%, as on the older, smaller machines, with the same labour applied, CDS could produce 3 items per minute as opposed to 18 items on the new machines.
The distribution department of the company also highlights the importance of manufacturing operations. The purpose of this department overall is to integrate the efforts of all sectors of the company (design, manufacturing, sales) and plan the flow from production to arriving at the customer. One of the core responsibilities of this department is scheduling, which is important as good scheduling is the way to keep high plant utilisation, i.e. good productivity. Despite its importance however, the company often cannot stick to the set schedules due to the ever-changing nature of a fashion market. Nevertheless, the company have invested resources into changing the manufacturing setup to improve productivity, so it is clear working at a high level of efficiency is a core goal for CDS.
The distribution department was also important due to the amount of responsibility they hold handling the deliveries made by large customers. They have a standard delivery timetable that is used for most orders, but CDS offer an express delivery option for those who wish to pay a small premium. A study that was made into the companies’ orders showed that interestingly, almost 40% of the deliveries that went the express delivery route were initiated by the company rather than the customer. This expresses that CDS are very committed to keeping good operations management as they are willing to absorb costs so that important customers are kept satisfied.
In order to improve on their current operations, CDS could adapt to become more like Dunelm, the largest homeware retailer in the UK – 2016/17. (Retail Economics) Dunelm have in the past stated that their strategic objective is to “improve operating leverage and efficiency”. In addition, they have developed their business to be “agile and scalable”, which allows them to adapt for changing demand etc. (Dunelm) Although there are examples of measures implemented by Dunelm that could potentially have a positive impact on CDS, there is an example that the author believes would be the opposite. The first section of the report detailed the “concept” products strategy that was introduced by Linda Fleet and how variety was a core value of this. Dunelm however included simplifying to one brand for both tech and supply chain efficiency. Whilst there are positives to be had in this, the success of the “concept” products for CDS and the fact that they generate the lion share of CDS’ profits means it would be foolish for them to change a system that is working so well. Furthermore, the report did mention examples of CDS making improvements to their operating leverage and efficiency, but if they could improve further it would only be a positive.
Dunelm have also used tech in multiple approaches to improve their operations and service. For example, in 2015, they worked with systems integrator Tryzens to overhaul and re-platform their eCommerce system. In addition, Tryzen developed a new bespoke order management solution, whilst linking everything to their existing SAP and other IMS’s. (Sillitoe, 2016) As the case study fails to mention CDS’ online presence, one of the main recommendations the report has to make for them to expand, is to improve their online system/s. Due to the ever-increasing influence the web has on business trends, it is of vast importance that companies put themselves in the best position possible to benefit from these trends. Online homeware sales were forecast in 2017 to rise over a five-year period especially as companies such as Very.co.uk and Wayfair.co.uk invest in improving the convenience aspect to achieve shorter delivery times at a lower cost. (Cision)
Due to the demands of trend-hungry millennial shoppers, it appears that several fashion outlets such as Primark, New Look and Zara are ready to cut a slice of the homeware market. As traditional homeware brands do not seem to appeal to the younger generation with their collections, the aforementioned brands have already established their own ranges with ASOS another brand that plans to muscle in and claim their share. (Sutherland, 2018) Due to the case mentioning that CDS are already very well regarded in the homeware industry and must have well over 3000 retail outlets partnered, another recommendation this report makes is for them to offer their services to the fashion outlets that are intent on taking their own share of the market. As these fashion outlets seem to think they would be able to appeal to the younger generation much more strongly than the traditional companies are doing, it makes sense that CDS would manufacture the products for them as they have extensive experience producing “high quality, stylish designs”.
An important way that CDS could improve their operations is by employing ethical practices. The global fashion industry is on track to consume over a quarter of the world’s annual carbon allowance by as early as 2050 (York, 2018), and the slight benefits free online delivery offers to customers, definitely does not outweigh the devastating environmental impact. There is a growing trend within the homeware industry of newer, smaller companies turning their backs on unethical labour practices. The founder of ethical homeware company One Nine Eight Five, Eleanor Nadimi, hand draws and digitally alters most of her designs and enlists small UK suppliers to make her products. (York, 2018) Whilst it would not be possible to suggest CDS exactly follow the methods of these smaller companies, if they could improve their manufacturing methods/operations to a more ethical standard it would improve their operations in the viewpoint of others. This illustrates the fact that in order to improve as a company, Concept Design Services need not only take inspiration from companies that are larger than them to improve their operations and manufacturing etc. but following in the footsteps of small companies such as One Nine Eight Five can add an element to the company that makes them appear more rounded as a whole.
In conclusion, this report has hopefully put across ideas that illustrate why and how operations management is important to Concept Design Services and explored options that CDS could potentially adopt going forward. Several strategies CDS have utilised, such as their “concept” range and the partnership deals they made with design houses were discussed. In addition, the report touched on how their manufacturing operations were innovated, i.e. the introduction of new machines that increased productivity . The author also suggested that CDS could mirror the operations of larger/successful companies such as Dunelm etc. or even branch out their operations by partnering with fashion outlets that plan to produce their own homeware ranges.