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Operations Management

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Part A: Operations and Corporate Social Responsibility


Operations managers are required to make decisions on strategic and long-term sustainability of
the business to stakeholders, as well as the environment. However, challenges are also
experienced in terms of economic, technological, social, political, and environmental issues.
Decisions made by the operations manager must respect social, political, and environmental
issues (Dunne 2008). Corporate social responsibility (CSR) ensures that organizations introduce
sustainable development goals so that decisions made by operations managers are accepted by all
stakeholders. Corporate social responsibility ensures that organizations become accountable for
economic, social, and environmental impacts based on operations imitated by the organization.
Ndhlovu (2011) define CSR as voluntary actions takes so that there is compliance to minimum
legal requirements. Ethical behaviour when engaging in operations is a critical component of
CSR. In particular, businesses should be committed to the welfare of employees, the society, and
the local community.
According to Manente, Minghetti, & Mingotto (2012), CSR is viewed in terms of management
practices that support high quality products and services, low costs, improved flexibility, and
dependability to the planet. In particular, a focus on competitive advantage has led to new links
between operations management and corporate strategy. Businesses continually look to cots
leadership and product differentiation as part of CSR initiatives that guarantee competitive
advantage. Operations strategy has key concepts that are critical to CSR initiatives of an
organization. Key concepts include: green supply chains, reverse logistics, green goods and
services, and green operations. Stankeviien & epulyt (2014) also write that a sustainable
company understands the necessity of creating and producing environmentally friendly products
and services so that competitive advantage can be achieved based on reputation. Products are a
reflection of social and moral values. In particular, products do not only represent prices and
quality preferences. Business operations in terms of manufacturing, logistics, and supply chains
should adhere to social and moral values that have the greatest benefit to humanity.
The idea of green operations has been incorporated into CSR. Rosser & Edwin (2010) argue that
green operations have a contribution to the environmentally friendly initiatives introduced in
production, manufacturing, logistics, and other operations. Green operations practices should be
implemented in each organization so that sustainability to the environment is achieved. In

addition, green supply chains are introduced so that supply chains contribute to sustainability
goals. According to Amao (2008), the process of choosing a supplier and a business partner
should consider their ability to respect the environment and the society so that sustainability
strategy can be implemented in each organization. Suppliers that do not support green supply
chain designs are neglected by major manufacturers. For example, in the manufacture of vehicle
spare parts, suppliers capable of producing environmentally friendly spare parts become business
partners to businesses committed to sustainability goals. Aspects such as logistics should have
minimum impact to the environment as part of CSR initiatives.
Chaves, Mozas, Puentes, & Bernal (2011) assert that sustainability to the environment is a
common trend in CSR. Environmental degradation in the 21st century has led to widespread
activism against operations of organizations that have direct impact to the environment.
Organizations are required to be responsible and accountable to the environment. Any direct and
indirect degradation to the environment should be compensated by the accumulated capital
obtained by organizations. Sustainability to the environment involves meeting the needs of the
current generation without compromising in the sustainability of resources to the future
generations. Foote, Gaffney, & Evans (2010) write that the extent at which businesses impact
negatively to the environment has been determined through pollution from supply chain and
delivery activities. Waste from organizations, when not managed effectively, are often disposed
to the environment thereby affecting stakeholders. CSR is geared towards reducing global
warming and the effects of climate change. Sustainability of businesses in the long-term depends
on how they avoid emission of hazardous waste to the immediate environment.
Environmental sustainability is not the only trend on CSR initiatives of the 21st century. The
society is viewed as a critical component in the environment in which businesses operate (Kanji
& Chopra 2010). Organizations should accept responsibility for the effects of operations on the
society. The social consequences should be balanced with benefits such as profits accrued from
business operations. At individual levels, persons should be allowed to exploit their talents
without restrictions and stress. At group levels, organizations are required to be honest with
labour organizations that represent the interest of employees. Social responsibility as part of CSR
also incorporates external stakeholders to organizations such as suppliers and trade partners.
Organizations are required to promote economic and social well-being of local communities.

Globalization is one of the issues that have led to the emergence of the topic operations and
CSR. Globalization refers to increased level of interdependence of countries in relation to crossborder transactions (Oh & Park 2015). In addition, capital flows from one region to another is on
the rise. As a result, business operations have major impacts to the world. Globalization of trade
is considered the principal cause if exploitation and corruption in several countries. However,
globalization is also viewed as a process of spreading prosperity to other parts of the world. CSR
in relation to globalization aims at reconciling globalization trend and impact to societies.
Currently, there is a shared responsibility for all organizations and their operations to be
appropriate to global challenges. Responsibility to humanity and environment does not stop
when a company crosses the border into another country (Bice 2014). Equality in dignity, gender
and respect for women and men, as well as the need to respect shared values and norms form
parts of CSR initiatives in international business operations.
Economic dimensions of CSR have also been presented by scholars. Organizations have realized
the need to make decisions that have no economic consequences. Decisions in the short-term
may prove to have negative economic consequences. However, long-term vitality of such
solutions may lead to economic benefits (Cadbury 2006). For instance, investment into CSR mat
lead to ROI in the long-term but not in the short-term. In stock markets, environmental, social,
and governance issues determine the value of shares of certain organizations. Organizations
viewed to be unethical to the society and the environments have received negative stock
valuations (Brammer et al. 2007). The idea of socially responsible investment has emerged as
a critical component of CSR and business operations in the international market.
Part 2: Operations Management of ASDA
ASDA is one of the biggest retailers in the United Kingdom, with operations across the United
Kingdom. Tesco provides services to millions of customers each day. One of the most critical
aspects of ASDA as a retailer involves online grocery shopping and delivery to customers
(Doherty 2006). The company aims at creating value to the customer through products in retail
stores as well as efficient delivery of products and services. Competition in the retail industry is
based on the need to provide services base on modern online shopping technologies (Christopher
& Peck 2004). ASDAs operations management are viewed in terms of product delivery and
supply chain management.

Operations Transformation Process of ASDA


ASDA experiences stiff competition from other retailers such as Tesco, Morrisons, and
Sainsbury. As a result, retail companies have identified the need to develop operations that can
compete in the market based on the ever changing needs of the customer. ASDA responds to
competition and complexity in the market through and effective operations strategy (Doherty
2006). The operations strategy of ASDA can be analysed in certain aspects such as corporate
strategy, business unit strategy, and functional strategy. Corporate strategy of ASDA involves
establishment of several supermarkets across major cities and towns in the United Kingdom
(Leat & Revoredo-Giha 2013). Several stores established across the United Kingdom ensure that
ASDA increased customer flow to the corporate strategy so that sales and profits are guaranteed.
Competition and saturation of the domestic market is a major challenge. ASDA is committed to
innovation such as online shopping and delivery of products to customers as competitive strategy
(Leat & Revoredo-Giha 2013). ASDA expansion into all part of the United Kingdom can be
related to its commitment to the success of corporate strategy. ASDA majorly focuses on the UK
market without expansion into overseas markets. One of the major disadvantages of ASDAs
corporate strategy involves the inability to compete in the international markets with other
retailers such as Tesco.
ASDA has a business unit strategy and functional strategy that achieves success in terms of
operations management. In particular, ASDA is committed to quality services to the customer so
that they can break into other markets in the United Kingdom. In terms of competition, ASDA is
among major competitors in the UK. A critical component of operations strategy is to design
services and products that benefit the customer. In particular, ASDA introduced the strong
customer focus concept whereby low prices, as well as ASDA card loyalty holders are rewarded
with points (Christopher & Peck 2004). A major competitive strategy involves the use of prices
whereby customers are allowed by ASDA to engage in bulk buying so that discounts can be
given to loyal customers (Leat & Revoredo-Giha 2013). The online delivery system and online
shopping platform also ensures that customers achieve efficiency in terms of product delivery. In
terms of low-cost operations, ASDA created UK product sourcing tem so that they pick food and
non-food products across the United Kingdom. As a result, ASDA ensures that cost-cutting is

achieved in relation to food and non-food products as well as expansion into other business
models such as e-commerce.
According to Xie & Allen (2013), ASDA also ensures that the delivery system and an innovative
supply chain form part of operations in the United Kingdom so that quality customer service can
be achieved. ASDAs delivery system is based on online ordering and home delivery services.
The distribution process is efficient so that product delivery meet consumer needs. Investment
into online food shopping enables ASDA to reduce time taken to serve the customer. However,
service costs have increased because of home delivery services provided by the company. Online
food sales at ASDA have reached over 200 million pounds. The home shopping system
developed by ASDA ensures that there are high levels of revenues and improved customer
loyalty to the better customer service.
Trade-off analysis of operations performance objectives
Efficiency of operations is a major concern for ASDA. In the process of increasing the efficiency
of service delivery and save costs, ASDA developed a distribution system whereby the
companys own fleet, transports products to domestic customers. The distribution system also
ensures that goods from suppliers reach the retailer at the shortest time possible. Efficiency in
service delivery and distribution of products is achieved through the use of ASDAs trucks
(Annarelli & Nonino 2015). However, there is still need for improvement so that the distribution
systems compete with Tesco as the largest retailer in the United Kingdom. In some cases, ASDA
may not have sufficient fleet to deliver and puck up goods from suppliers. In some regions of the
UK, ASDA has few trucks thereby leading to dependence on suppliers.
Cost reduction at ASDA is achieved through lean management as part of operations
management. ASDA ensures that new technologies are introduced to integrate lean management
into the business strategy. Investments in technologies such as RFID ensure that product tracking
information through the supply chains is achieved through bar codes (Leat & Revoredo-Giha
2013). As a result, cost saving is achieved when technologies are used to reduce the levels of
employee performing manual duties. The automation of processes within the supermarket and
supply chain is a major costs cutting initiative.

In terms of dependability and flexibility, ASDA has introduced the online shopping system.
Home shopping through e-commerce platform developed by the company ensures that customers
depend on ASDA to provide efficient and quality services in terms of product delivery (Tidy et
al. 2015). Flexibility is achieved through home delivery systems achieved through ASDAs
trucks. The online food shopping system, as well as the home delivery service work together to
achieve dependability and flexibility.
ASDAs Corporate Social Responsibility
ASDAs sustainability approach relates to respect to the environment. Reduction of food waste in
ASDAs stores and supply chain is part of CSR initiatives. Green operations concept of CSR is
applied at ASDAs. In particular, ASDA ensures that they support nature and community
projects. In terms of nature, ASDA supports tree planting across the United Kingdom and
countries such as Costa Rica (Asda.com 2015). Projects such as Nature and community ensure
that ASDA works together with stakeholders to protect and preserve biodiversity in Costa Rica
and the United Kingdom. Green operations also ensure that ASDA tackles food waste. An
innovative way of reducing food waste involves donating to charity or reducing the level of stock
at distribution centres across the United Kingdom.
Energy efficiency is another aspect of ASDAs CSR. In each year, ASDA invests over 10 million
pounds in improving the energy use so that carbon emissions can be reduced. ASDA is
committed to reduce effects of global warming and climate change as current sustainability
issues surrounding CSR. ASDA reports that since 2005, the company has managed to reduce
energy usage by 33% in existing and new stores (Asda.com 2015). Reduced energy is aimed at
reducing overreliance on fossil fuels as well as energy conservation for the benefit of the wider
United Kingdom. In addition, reduced energy ensures that ASDA reduces costs associated with
energy.
Lean management/production technique
According to Tan (2011), Lean management/production is part of the operational management
techniques and theories used by managers to improve efficiency within the organization. Lean
management refers to removal of unnecessary processes as well as avoid waste. The elimination
of waste ensures that organizations create value to the customer. ASDA uses lean management to

analyse the supply chain. In recent years, ASDA has introduced the concept of continuous
replenishment so that customers achieve efficiency. The continuous replenishment system
ensures that real time information is provided to the supply chain system so that point of sale
data is used to determine the level of inventory and supply to be ordered by ASDA from
suppliers. Through continuous replenishment system, ASDA achieves the flexibility of
replenishing goods at several intervals within the day depending on how consumer place orders
on the online home shopping system. Constant and continuous replenishment is part of lean
management strategies introduced by ASDA as an improvement to the supply chain.
The main benefit of lean management through continuous replenishment relates to reduced
inventory holding. ASDA does not hold large volume of inventory because of costs associated
with warehousing and risks such as products becoming obsolete. The need to guarantee the
quality of food products as well as reduced costs motivates the adoption of lean management
through continuous replenishment. Since food products are highly perishable, ASDA
acknowledges the need to hold the least inventory at the shortest time possible. ASDAs reforms
into the supply chain are described as pull system but not push system. Stone (2012) write
that the pull system is motivated by retailers so that replenishment of products is done on a
continuous basis based in the demands of the customer. In competitive retail market, continuous
replenishment as a strategy of reducing inventory levels is a major competitive advantage.

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