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Case Studies for Operations

ROLECorporate Social Responsibility (CSR)

In 2012, Apple donated $2.5 million to the Australian Red Cross to aid relief efforts after Hurricane Sandy.Bakers Delight donates their remaining stock daily to nursing homes.

Operations Qantas; Contributes most directly to business resources Normally employs majority of labour resources Consumes majority of business expenditure Interfaces most directly with the business customer/client Utilises and is responsible for the largest proportion of business

Product/service differentiation

Aldi reduces expenses (no free shopping bags, staff that are flexible, less human resources, products from Canada delivered at a lower cost.) Aldi is time effective, the conveyor belts are designed to go fast and employees are able to quickly put the goods into bags.

Cost management (cost leadership)

Woolworths manage to minimise costs in operations through judicious placement of regional distribution centres (RDCs) – these centres are used for storage and distribution. Lower cost on land, modern information technologies and logistic processes

Myer demonstrates cost leadership in its supply chain management. In 2006 Myer had 500,000 stock keeping units (SKUs) or product lines. It went through a cost leadership transformation through the introduction of eight local and international distribution centres (DCs), which invested in IT, transformed operational processes and employed new staff. By March 2009, the company achieved cost sayings 50 per cent from using the DCs. Acquisition and freight costs fell 20 per cent even though greater volumes were being sources. “Cost is an important factor in any business and efficiency within the supply chain has been critical in reducing costs”

Economies of scale/cost management

The Holden car plant at Elizabeth, South Australia – economies of scale due to mass production.

Customised Goods In McDonalds in Srilanka, there is fried rice in the menu because majority of the Srilankan population eat rice.iTunes – by using iTunes, customers pay for and download the songs they want – this is different to the purchase of a CD where some of the songs may not be wanted by consumers. Also Sanity store allow their customers to browse through thousands of songs and create their own CD.

INFLUENCESGlobalisation The entrance of Samsung into the Global Market was a threat to Apple. In 2013,

Samsung launched their Galaxy S4 which was more successful than the iPhone 5s. Nike, McDonalds, Starbucks are globally recognised business.

VieAccounts Pte – Chin & Morrissey Accountants (Australia) have formed a partnership with VieAccounts Pte in Ho Chi Minh City in Vietnam. As international accounting standards become more globally integrated, there can be significant similarities between accounting systems amongst nations. The alliance between the Australian partnership and the Ho Chi Minh City-based private company has

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drawn clients from Australia, New Zealand, Vietnam, Cambodia and Laos. The software used in taxation is adapted for very minor variations between certain taxation decisions depending on the national jurisdiction to which it is being applied. This standardisation of services assists with quality controls and cost management (from Business in Action textbook)

ASICS, the sporting shoe manufacturer designs in products in Japan but has product manufactured in China for a global market.

Imitation, innovation and supply chainApple is considered a highly innovative company because of its famous product range. Apple has been successful at harnessing innovation, marketing innovative products and aligning innovative processes in such way as to mass produce innovative products at low cost. Apple’s online ordering and its distribution strategy means there can be a global release of new products in multiple markets around the world simultaneously.

Refer to TESCO below (an example relevant for globalisation & technology)Technology “TESCO is the world second largest retailer after Wal-Mart. It has pursued an

aggressive overseas expansion strategy into Eastern Europe, China, South Korea and the US. TESCO sources its products internationally and always buys in large volumes, which has helped keep costs down. Significant cost savings are made through managing the supply chain effectively. TESCO introduced a club card where it collects data from consumers when they use it to purchase items. The data is then used to alter the amount and range of products on offer, build loyalty and develop promotions that target specific groups. Through this use of technology TESCO has remained the leader within the UK market” (CSU extract)

Woolworths have improved their supply chain management. They were able to improve efficiency and make savings of over $7 billion in a period of eight years. In Woolworths, processes and systems will be required to;

Replenish stock on the shelves of their retail outlets Replenish stocks available at their distribution centres (warehouses) Deliver stock to their retail outlets

Technologies Woolworths has; IT system called StockSmart forecasts when stock needs to be replenished

in its distribution centres. Woolworths’ distribution centres use a wireless network which allows the staff to use handheld devices to receive instructions on what goods in the warehouse that need to be located and transported to a particular Woolworths supermarket.

A system called AutoStockR is used to forecast when supermarket shelves need to be replenished with stock.

(efficiency) Transport management system (TMS) supports the movement of products into distribution centres and out to retail stores and provide reporting on transport performance

Woolworths’ Project Refresh focused on;• Allowing consumers to dictate what they wanted• Developing the skills of staff• Redesigning the organisational structure of the business

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• Making improvements to the cost of doing business• Ensuring that IT systems were consumer focused.

Project Refresh was successful and the cost savings from better supply chain management were used to lower prices. This led to higher sales, increased market share and higher returns for shareholders.

Quality expectations

Due to high positioning, the quality of Apple’s products are expected to be higher compared to other products in the market. It is expected that businesses with a ‘premium brand’ has good quality inputs to create their final product.

Cost Based competition

Tasmanian footwear group, Blundstone outsourced its manufacturing operations to Asia due to high labour costs in Australia.

Government Policies

Businesses doing practices that does not affect climate change. There is a levy applied on business in the ration in which produces carbon as a by-product of operations.