Management

A concise introduction

by Richard Pettinger

Chapter 13

All managers are involved to a greater or lesser extent with operations and projects, in terms of the demands of their own functional areas, and in terms also of the wider attention needed to business and organisation development, and in maximizing and optimizing resource usage.

The need here is to be able to recognize where the prioritise lie and how to address them . the main issues ion doing this are attending to resources, defining the scales of production required and possible, and then ensuring that there is a good quality and healthy and safe working environment.

The scales of production are normally defined as:
  • unit
  • batch
  • mass and flow
It used to be normal to locate products that gained weight in the production process near to its markets, and those that lost weight during production near to the source of raw materials. With increasing globalization and internationalization, this is no longer a crucial demand.

It is essential to have a clear strategic approach to the supply side however. There are various approaches used, including just in time and the buying up of supply side companies; the critical factor is to ensure that you have as much command over the supply side as possible. Many companies and organisations go into extensive and complex contract arrangements with key and critical suppliers.

With all of this comes a distinctive expertise and set of responsibilities – the demands of each different place of work are different, and so the balance has to be struck between maintaining the highest possible standards of performance, with attending to the particular constraints of the particular situation and organisation.

Case studies and examples

Outsourcing and off-shoring: The best of both worlds: all the outsourcing and off-shoring benefits from a UK base

Much of the debate around outsourcing and off-shoring has taken place with a view to establishing manufacturing, customer service and call centre activities in parts of Asia, Africa, the West Indies and Central America so as to be able to take advantage of the known, understood and believed reduced staff costs and especially wage differentials. However, not every organisation has taken its customer service and call centre activities overseas.  For example, HBOS Plc., the UK bank, has always outsourced its customer service centres in Scotland and Ireland; and many companies are finding themselves thinking beyond the pure reductions in wage and staffing costs when considering where to locate these activities.

The Outer Hebrides is an island chain situated off the north west coast of Scotland.  Accessible by ferry and helicopter services, and also by small aircraft, the main communities are Stornoway, Tarbort, Harris, Leveburgh, Loch Maddy and Benbecula. These communities have existed for centuries, as farming and fishing communities. Only in recent years have they developed other attributes and expectations.   

The need to develop has been driven by a number of causes.  The opening up of the Outer Hebrides as a tourist attraction has led to a small, but regular and more or less assured, stream of tourists wishing to visit what is after all, a very beautiful and remote location of the UK.  The increased mobility has also meant that people who used to remain on the islands and earn a living now have the choice to move away from the islands and take up careers elsewhere, the same as everybody else.  Additionally, this has been fuelled by the fact that the farming and fishing sectors no longer support the numbers of people as in previous times. There is therefore a small but thriving highly educated and high tech aware population in the islands.

In partnership with the Department of Trade and Industry, and the Scotland Commission, the authorities of the Outer Hebrides have created a series of small but very advanced call centre facilities in each of the communities.  The attractions are stated by the Highlands and Islands Agency as follows.

'The Outer Hebrides is a great location for your contact and call centres.  In the Outer Hebrides of Scotland your organisation is able to meet the challenges of today's demanding market place.  The Outer Hebrides has the following specific benefits to offer:
  • low staff turnover means lower retraining and recruitment costs;
  • highly educated workforces with excellent English language skills mean an assured level of service;
  • high specification low cost rental properties which can be accessed at: www.work-global.com/premises;
  • lifestyle choice location where flexible working is a way of life;
  • regular daily flight connections to Glasgow, Edinburgh, Manchester and London'.
So there is plenty of work required, and plenty of expertise to do it, supported by all of the technology necessary. However, all outsourcing potential and proposals beggar the questions:
  • Why outsource work at all; why not do all of the work required in house?
You then have to consider the environmental pressures that exist, and that could potentially exist, as the result of outsourcing activities in these ways? And you then have to be aware that, if these pressures exist when outsourcing in the UK, how much are they compounded when outsourcing further afield?

So there is a very useful and valuable debate to be had around the whole of the outsourcing phenomenon. It is a major factor in the management and development of organisations and management practice at present; and you must have an informed and expert view on the strengths and opportunities, and the weaknesses and threats, that all outsourcing brings with it. You should also note the point in the first chapter above, that a lot of outsourcing tends to go to ‘nice places’ which are good visit in themselves (whatever the merits or otherwise of the business relationship).

Discussion questions

Discuss the advantages and disadvantages of having multiple suppliers for your key resource needs?

To what extent is the food and meat crisis that arose in early 2013 as the result of driving down supply side costs and therefore quality?

In what circumstances is outsourcing operations such as customer services an advantage, and it what circumstances is this a disadvantage?

How can you use project work to develop enduring expertise in your staff?

Why do so many projects come in either late, or over budget? What can be done about this and at what stage of project work should it be done and why?

Web links

You need to be familiar with the main regulatory drives that influence business and managerial behaviour and the ways in which companies and organisations are supposed to conduct their business. The most high profile regulatory approach is the US Sarbanes-Oxley Act 2002, which was brought in to try and ensure that companies worked to a universal set of standards in the wake of the collapse of Enron. The link is:
www.soxlaw.com

You should also be familiar with the links to the regulatory and statutory bodies with which you have dealings as the result of involvement in particular industries, sectors and locations.

You should also be familiar with universal statutory bodies: