MGMT20085: Management - Brisbane Outdoor Power Centre Case Study - Business Report Assessment Answer

Management Assignment

Assignment Task

Operations Management Concepts

1 A.

Operations management issue: Strike At Maruti Suzuki’s Manesar Plant

Description

Maruti Suzuki India is a subsidiary company of the Japan-based Suzuki Motor Corporation. The subsidiary specializes in the manufacturing, purchase and sales of motor vehicles and motor vehicle spare parts. The company faced an employees’ strike four times in just five months. The first strike occurred 4th June 2011 for thirteen days (Dabas, Sternquist & Mahi, 2012). The employees went on strike in order to form a new independent union for Manesar facility. The strike led to a stall in the production at the facility. The second strike occurred on 29th, 2011 for 33 days (Dabas, Sternquist & Mahi, 2012). The strike was caused by the management compulsion of employees to sign eh Good Conduct Bond. The strike culminated in the stall of 50% of the facility’s production and the third strike occurred on 15th September, 2011, for 2 days (Dabas, Sternquist & Mahi, 2012). The strike was a support of the striking Manesar facility workers’ strike and it led to the closure of Suzuki’s motor’s operation in India. The fourth strike occurred on 7th October, 2011, for two weeks (Dabas, Sternquist & Mahi, 2012). The company had refused to reinstate more than 1100 contract workers at the Manesar plant. The strike also led to the full closure of Suzuki motor’s Indian operations.

The Maruti Suzuki India subsidiary serves many customers in the South East Asia region. The subsidiary has had a sequence of strikes in the past. The paper will establish the likely causes of the strikes and the liability of the operations and management of the company. Some of the causes of the strikes include good conduct bond, short tea break, disparity between the permanent and the contractual employees, lack of implementation of the labour laws and the agitation for the reinstatement of the laid-off casual labourers. The paper will also highlight the recommendations to the management of Maruti Suzuki India.

Structural Analysis of the problem (Causes of strike)

The Good Conduct Bond aspect entailed the compulsion of the Manesar facility workers to sign such a bond before their entity into the factory. This meant that all the workers who were adamant to sign the Good Conduct Bond were not allowed into the factory. The workers who were locked out of the factory were consequently deemed to be on strike. The workers demanded alterations in the conditions of the bond before they could sign it. However, the Manesar facility management refused to give in into their demands. Therefore, the employees had striking as the only option. Additionally, the short tea break was a great concern for the employees. The tea break lasted for seven and half minutes only. This meant that the workers had just 30-minutes and two 7.5 minute breaks in an 8-hour working day.

According to the workers, such a working schedule was exploitative and inhumane. In fact the situation was unbearable because the supervisors of the workers could order them to remove their safety belts and run a distance of 150 metres to have their tea. Again they were required to run an extra 400 metres to visit washrooms before running back a distance of 550 metres to get back to their work stations. Such a tight workings schedule was de-motivating for all the workers at the Manesar facility. Additionally, the workers were subject to abuse in case they happened to be late for work. The other issue of concern for the workers at the facility was the disparity in the working conditions between the permanent and contractual workers. Such a disparity translated into discrimination between the two groups of workers. First, the remuneration disparity between the unskilled a skilled worker was big.

Unskilled contractual workers were compensated a maximum of Rs. 5,500 while skilled contractual workers were compensated Rs.7,000 (Dabas, Sternquist & Mahi, 2012). The minimum wage for the unskilled worker was Rs. 4,348. On the other hand, the permanent workers were paid Rs.18, 000. The other aspect of disparity is the fact that an unskilled worker was not entitled to any medical benefits attributed to the permanent workers. Additionally, the contractual workers were denied bus services, which is basic element for working. The other discriminatory aspect was the difference in the uniforms used by contractual and permanent employees. Such a distinction fuelled discrimination between the contractual and permanent employees. The contractual workers were also legally required to work for a whole year before they could qualify for permanent status in the company. Additionally, the workers were required to complete a three-year training to qualify for permanent status of employment. The content and design of the tasks of the contractual and permanent workers were the same. In this regard, the company’s management was discriminatory and insensitive to the workers’ welfare. Additionally, the labour laws implementation was lacking in the Maruti Suzuki India Company.

The laws bordering on the protection of the rights of the contractual employees were not implemented. This meant that there was intent to exploit the contractual workers. For instance, the company was required to acquire a license from the labour department before employing the contractual workers. The requirement was critical because the department could always cancel any employer’s license when the rights of the employees were abused. Some casual workers were unjustifiably laid-off. For this reason, there was a clamour for the casual labourers’ unconditional reinstatement, by the company employees. According to Prasad (2012), more than 1100 casual workers had been relieved of their duties. The Manesar plant management failed to respond to the workers’ demand hence the strike occurred. The strike spread to all belts of the Manesar plant. The strike continued despite the company’s empty promise of gradual absorption of the casual workers. The company lost because it had projected a 40% increase in the company’s growth during that quarter (Badrinath, Kumar & Dinesh, 2012). The company’s perspective on the strike was different. The company also used a poor management approach of autocracy.

Application of Operation management concepts

The approach increased control of employees will enhance the company has an upper hand in the operation and management of its employees. According to Chicksand et al. (2012), McGregor’s theory-X stipulates that works will avoid work by all means unless they are supervised. In this regard, the new hiring approach will enhance the control of the employees. The employees should also be entitled to adequate breaks between their tight working schedules. Such an adjustment will enhance productivity because it will reduce stress and fatigue. The works will also be motivated through such elongation of work-off breaks. The labour laws should be implemented to enhance compliance with the labour department laws. Maruti Suzuki India should also implement the proposition of the workers on the Good Conduct Bond.

The negotiation on such a document will enhance cooperation and collaboration of the company and its workers in service delivery. The practice of direct hiring will also boost loyalty of the employees to the organization. Moreover, the practice of direct hiring will boost labour flexibility. The management can hire employees on ad hoc basis. The practice will also promote quality service delivery because the management is in control of the workers’. The practise will also boost homogeneity of the workers. The homogeneity will also be transferred to the service delivery. The company management claimed that the workers had breached the agreement they had made in the past. Additionally, the management argued that the strikes were political instigations. The management was also blaming politics for the strikes.

The company’s favourable performance trend was envied by many industrial players. The management claimed that the industrial principles must be applied to enhance the company’s growth and development. The management’s defence on the strike is that the element of the Good Conduct Bond signing requirement was aimed at instilling discipline in the workers. The bond was meant to reduce absenteeism, go-slow tact, and sabotage of production. The management also claimed that the good conduct bond signing was aimed at making employees comply with the production principle. The management also blames the employees for the low production and deteriorating quality of the automobile products. The company fails to justify the laying off of the hundreds of casual labourers. The lack of goodwill from the management was also cause of the strike.

Recommendations

Maruti Suzuki India company should seek licence from the Labour department to assure the employees that their rights are safeguarded. The acquisition of the license will also be a god gesture for the company because of the need for compliance. Such compliance also assures the public that the company is pursuing the interests of the workers. The company should also absorb the 1100 casual workers to enhance cohesion with the other employees. There is need of review of the agreements made in the past with the workers. The review of such provisions will enhance cooperation and collaboration in service delivery at the Manesar facility. The workers should also be allowed to form the workers’ union. The union will enhance better working conditions for the workers. Additionally, the working conditions and terms for the contractual and permanent workers should be harmonized because of the similarity in their job design. Alternatively, the management‘s human resource should review the job design for the permanent and contractual worker. The review of the job design for both sets of workers will ensure that permanent workers task is commensurate with their salaries. Additionally, the job expansion will reduce complaints from the between the two groups of employees on the issue of disparity in working conditions. The Suzuki Automobile Corporation India management should stop forcing the employees to join the Gurgon-based Maruti Udyog Kamdar workers union (Prasad, 2012). The management has control over the union. Therefore, the employees are not likely to receive justice in the union. The company should also adopt direct hiring as opposed to its initial contractual hiring approach. The contracted employees are involved in witch-hunting because they lack the impetus to work. They lack the tenure of service delivery hence they never pursue corporate goals. The contractual employees pursue personal goals because of their short period in the company. The new strategy will reduce strikes because the employees could be aware of their period of service. The employees will be more accountable to their service delivery than before. The management should also have the contractual and the temporary workers train in different institutions. The initiative will ensure that the employees do not operate on mob psychology. The company should also upscale the remuneration of the employees to motivate them. The directly hired employees should be pain Rs.14000 while the permanent employees should earn Rs 35000 (Prasad, 2012). Moreover, workers should receive subsistence wage when they are laid off because employees never anticipate lay-offs. Such a financial allowance will enable the laid-off employees to seek alternative vacancies and sustain their families before securing the new jobs. The management should achieve 70% permanent employment. Permanent employees own the organization and have a security of tenure (Prasad, 2012). The security of tenure enhances performance because of the need for higher earnings form high profits. The Maruti Suzuki India should also hold negotiation between the employees and its management. The negotiations will provide an opportunity for the two parties to air their grievances. The negotiations on the wage adjustment will extend to other issues affecting the employees. The community issues should also be resolved. For instance, the real estate agents are focussed on renting out many of their apartments to the workers. Therefore, the management should also meet their expectations to enhance corporate social responsibility. The vested interests of the community are also valid because it enhances the convenience of the workers. The fact that the villagers were also dependent on the company meant that such strikes and lay-offs negatively impacted on the welfare of the community. The training should also involve ethical elements to inculcate ethics in the workers.

Conclusion

Maruti Suzuki India company is a renowned automobile company. The company had an operational and management problem of strikes. The strikes were caused by good conduct bond signing, short tea break, disparity between the permanent and the contractual employees, lack of implementation of the labour laws and the agitation for the reinstatement of the laid-off casual labourers. The company can allow workers adequate breaks to enhance productivity. The workers should also be allowed to form their union to articulate their grievances. The management should also adopt direct hiring to enhance the control of the employees.

BIntroduction

The Brisbane Outdoor power center is a company with three operational retail outlets, Mt Gravatt, Strathpine and Ipswich. The three retail outlets were managed by Mr. Donald Saxon, Belinda Green and Adam Conte respectively. The analysis will encompass the current purchasing and inventory management processes used by the company, comparative advantages and disadvantages of the processes. The paper will also cover the supply-chain and inventory management concepts, which will boost efficiency and reduce investments and maintain adequate stock levels. Finally, the analysis will highlight the recommendations on the restructuring of the purchasing and inventory functions of the company.

Summary

The company, Brisbane Outdoor power center, was under better management whereby Donald Saxon applied laissez-faire management approach. The management approach entails freedom from government interference in the operations of the company. The purchasing and inventory management practices currently being used by the company are subject to the Laissez-faire management approach. The supply-chain and inventory management concepts are applicable in the ride-on mower supply enterprise. The company’s purchasing and inventory management practice are vital because it enhances efficiency and generation of profits. When the purchasing and inventory systems are flawed there are stalls in the supply-chain processes. According to Zanjirani, Rezapour & Kardar (2011), customer complaints usually lead to tainting of the reputation of a company. For this reason, the company’s consistency in the purchase and maintenance of its stock in all the three retail outlets must be efficient and effective. The three retail outlets are currently operating like three separate entities. However, the bottom-line is the corporate benefits accrued by the corporate company. The company’s growth trend is an indication that the laissez fair management system, which was adopted by the pioneers of the company, is favorable to the company’s operations. The process of supply chain management is poor in the currency scenario because records show that there has been no integration of the procurement and replenishment of stock in the three retail outlets. There has been haphazard requisition of stock and purchases by individual managers on ad hoc basis. However, there has been no systematic track of the purchases and stocks. The organization has thrived based on the delegation of duties and decentralization of power in the management process. The empowerment of the line managers resulted in the success of the Brisbane Outdoor power center over the period.

The current purchasing and inventory management processes

The company adopts laissez-faire-based purchasing and inventory management processes. The approach is based on the private expectation and design of the inventory level required. Donald Saxon adopted such an approach to delegate all responsibility and roles to the three major retail outlets of Brisbane Outdoor power center. Consequently, the retail outlet centers could own their underperformance and failures. In the same breath, such an approach will promote competitiveness in the operation efficiency of the ride-on mower supply business. In fact, Ipswich retail outlet had a wide range of ride-on mowers. The retail outlet favorably handled its deals with customer because of its customer choice. The three retail outlets could sell the stock they independently order.

The replenishment of stock is independently done in each retail outlets. In this regard, it is possible for the management of each outlet to account for the flow of stock and purchase requisitions. The process also avoids confusion and complexity of consolidation of the processes. The independent purchase and inventory management of the retail outlets also avoids overreliance of some outlets on account of shortage of operation resources. For instance, Ipswich could be disadvantaged by the two retail outlets because it performs better than them. The performance is acumination of branding, marketing and quality customer service. The approach is akin to horizontal integration theory. The theory also underscores the same goals of avoidance of coordination inefficiencies and handoffs. The allowance of the retail outlets to make purchases underscores the principle of laissez-faire.

According to Zanjirani, Rezapour & Kardar (2011), the Laissez-faire system reduces the costs of stock-holding because there is easy monitoring of stock unlike the case of centralization of stock and purchasing system. There is application of the vendor-managed initiative. The system also boosts accountability and reduces stock-holding costs. When suppliers are compelled to keep stock of their supplies there is efficient management of stock and purchases. The retail outlets could undertake reconciliation of their records with the records of their respective suppliers. In this case, any anomaly could easily be discovered in advance and remedial measures taken. The vendor managed initiative is subject to the laissez-faire management approach whereby regulations are kept at bay hence allowing a free management style. The system also boosts the collaboration and cooperation between the retailers and their suppliers. The negotiations are also made easy.

Comparative advantages and disadvantages of the processes

The decentralized purchasing and inventory management system accrue various benefits and challenges. The centralized purchasing and inventory management system also poses various challenges and accrues benefits to the users. The centralized system enhances control and quick decision making on the requisitions made. The economies of scale in purchase are achieved in a centralized purchased and inventory management scenario (Ambe & Badenhorst-Weiss, 2012). The participation incorporate social responsibility is also easy compared to the decentralized purchasing and inventory management system. It is easy to obtain qualified personnel in purchasing and inventory management aspect, in a centralized system. Moreover, the layout of the stores is better in a centralized system. There is an elimination of duplication of effort because an item is bought for the use of all the retail outlets. There is overall operation cost reduction. There is also purchasing policy uniformity, which earns an organization reputation and recognition.

The system enhances objectivity in the process of managing inventories and purchases. This notwithstanding, the centralized system enhances bureaucracy and rigidity. There are also multiple priorities, which lead to confusion during implementation process. There is a loss of business focus in a centralized purchasing and inventory management system. Additionally, there is heavy initial investment in a centralized purchase and inventory management system because of the need for reliable Ethernet serves. There is a stall of the entire company operations in case of a systems break-down. There is also a delay in the receipt of materials, which inconveniencies the various retail outlets. The system is also ineffective because it cannot guarantee emergence requisition of supplies. The replacement of defective ride-on lawn mowers cannot be prompt.

The decentralized purchase and inventory management approach accrues many benefits although it causes some challenges to Brisbane Outdoor power Centre Company. There is minimal blocking of working capitals. Additionally, it is easy to effectively participate in the local market compared to a centralized system. Additionally, misunderstanding in management is minimized under the system. The decision making is easy because of the size and operation scale of the retail outlets. The initial cost of establishment of the system is low because of its size and operation capacity. There is no risk involved in the transportation of materials from suppliers to the retail outlets. There are no bottlenecks in the supply of the ride-on mowers hence generation of high sales within a short duration of time. According to Bakker, Riezebos &Teunter (2012), the decentralized purchase and inventory system has many challenges including lack of control. It is also difficult to enjoy the economies of scale and consequent cost reduction. The system never attracts skilled personnel in purchase and inventory management. Efficiency lacks in such a system because of lack of specialization. There is not regulation of the purchase policy. Such a situation is risky because of the need for quality operations. Sarkis (2012) asserts that quality is evaluated in sync with the prevailing purchasing and inventory management regulations. The management by walking around approach adopted by Green Belinda is also good in the context of the Ipswich retail outlet and the other outlets because it enables the manager to have a first-hand experience of operations at the periphery level.

The supply-chain and inventory management concepts

The supply-chain and inventory management concepts, which will reduce cost by enhancing maintenance of adequate stock-levels, include just-in-time principle. The principle enhances a reduction in cost of inventory management. The strategy requires the company to supply a product only when it is ordered. Consequently, there is zero-stockholding cost for the company. Additionally, there is predictability of the sales returns. For instance, the Brisbane Outdoor power center will capitalize on such a model because it specializes in the supply of ride-on mowers. The mowers can be supplied on ad hoc basis. According to Barney (2012), the inventory management approach also reduces the possibility of stock-out and staling of operations. The other method is Kanban system. The system enhances supply-chain management. The Kanban indicates the points with problems. For this reason, the strategy improves the supply-chain management. The new management can adopt a safety stock management. Such stock will serve as buffer in cases of emergencies. According to Houlihan (2013), Inventory planning should be incorporated into the sales and operations of the retail outlets. The distributed order management tools can also be adopted to enhance efficient flow of stock. The inventory optimization software can also be used to enhance efficient monitoring of stock. The use of such a software will enhance the monitoring process because automation. The application of the first-in-first-out inventory management method will also enhance better inventory management. The stock items received in the early periods are the first to be dispatched. Such a process reduces obsolete of stock items. Moreover, the method is practical and logical. According to Gimenez, Vaart & Donk (2012), Pareto analysis is required in the management of inventory and supply-chains. Such an analysis will boost sound decision making pertaining to the selling f the ride-on mowers of Brisbane Outdoor power center. The supply-chain management will be improved through the adoption of the Push-pull strategy ( Sana, 2013). In this case, push is applied at the initial stages of a supply chain while pull is applied in the tail-end of the supply chain. Moreover, cost reduction will be achieved in the Brisbane Outdoor power center setting through the strategy. Cost can be reduced because the strategy will enhance objective purchase of the ride-on mowers. The cost reduction can also be enhanced through the ease of transportation of the ride-on mowers. The location advantage of the retail outlets enhances the cost saving on transportation.

Recommendations on the restructuring of the purchasing and inventory functions

The purchase of Brisbane Outdoor power center is a good move by Belinda green. However, there is need for the adoption of many purchasing and inventory management strategies to boost the performance of the outfit. The company has growth prospects. The restructuring of the systems applied in the purchasing and inventory management will entail cost-benefit analysis. The analysis will enhance objectivity of the processes involved in the purchasing and stock processing. Belinda must adopt the just-in-time approach to enhance profitability. The method will also enable her to minimize stockholding costs. The adoption of the First-in-First-out approach will also enable Belinda to have up-to-date stock to avoid outdating of items. The management of the new outfit will also be improved to enhance an efficient purchasing and stock management. The maintenance of buffer stock is also vital to cater for emergence orders. There is need to adopt a centralized system of purchasing and inventory management because it accrues many benefits to the investor. Belinda will benefit from such a system because of ease of control, standardization of procedures, quality services, and economies of scale, qualified personnel and reduction in overall cost of operation. There is no duplication of effort in such a scenario.

Conclusion

Brisbane Outdoor power Centre Company’s growth trend is attributed to the application of the laissez-faire management approach. The analysis has highlighted the current purchasing and inventory management processes. Additionally, the paper focused on the comparative advantages and disadvantages of the processes used in operations. The supply-chain and inventory management concepts were highlighted to enhance improvement in the purchasing and inventory management and supply-chain management. Appropriate recommendation like the adoption of centralized purchasing, inventory management and supply-chain management has been highlighted in the paper. The adoption of the recommendation will enhance growth prospects for the company.