Managing Operations and Projects

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Managing Operations and Projects

Assignment 1

Student name: Dauren

Student surname: Zhalubayev

Student reference number: 1519874

Date submitted: 30/01/2016

Contents

Introduction

1. Process design, human resources and supply chain management at Lenovo Group Limited: critical analysis and ways of improvement

1.1 Process design at Lenovo Group Limited

1.2 Human resources and job design at Lenovo Group Limited

1.3 Supply chain management at Lenovo Group Limited

2. The strengths, weakness, opportunities and threat of Lenovo Group Limited

References

Introduction

In the modern competitive markets much focus is driven on operations management, which Lima describes as a knowledge area related to improving and managing systems that execute processes for the production and delivery of goods and services. (Lima R.M.) Theory suggests that there is a list of key decision areas of operations management, which in tandem provide an important tool for analysing operations, allowing to focus on specific changes that can be considered to improve the company's performance. Through the case-study of Lenovo Group Limited, this report attempts to demonstrate practical application of three chosen operations decision areas, being 1) process design; 2) job design and 3) inventory management. The individual research has shown that a large number of recent decisions made by the management have been directed to improving the three chosen areas of operations management. The story of success of Lenovo begins with mentioning about the company's humble beginning with the budget of as low as 200,000 CNY whose main business was to distribute foreign computers to the household and install them. Undoubtedly, the transition to a global producer of electronic devices listed in Global Fortune 500, often was a question of adopting to production of new devices to comply with the changing demand for each product segment, which required changing the existing and creating new processes. Human resources, on the other hand, is not directly linked to the production or sale of devices and rendering customer services and hence is referred to a supportive process. However, human resource management is identified as one of the ten practices of Total Quality Management, according to Kanji and Wallace and the fact that Lenovo has over 26 thousand employees across the globe, suggests that job design has been a vital area of focus. (Chittipaka V.) To obtain a picture of overall performance of the company, SWOT analysis will be conducted, allowing to systematically approach strengths, weaknesses, opportunities and threats. In practice, this analysis is more than a tool to analyse the current situation of the company, as it also provides information as to what operation management areas need to be improved and how.

design management lenovo job

1. Process design, human resources and supply chain management at Lenovo Group Limited: critical analysis and ways of improvement

1.1 Process design at Lenovo Group Limited

The growing competition in the computer industry had been forcing Lenovo to constantly reduce cost, improve the product quality and reliability, as well as shorten the product development cycle. This brought the management of the company to new challenges, encouraging the management to undertake fresh aim-oriented tasks. Computer-aided engineering (CAE), a tool for optimizing performance in the product design phase to assess the mechanical behaviour of products under impact and vibration. This allowed the management to detect potential quality problems in the early phase of product development. This has shortened the product development cycle and increased the efficiency of the production process, which resulted in a significant cost reduction. The product quality has improved since the new devices could stand more impact and vibration. However, despite the described improvement, engineers spend around 80 percent of their time on pre-processing tasks that need to be completed before the simulation process begins. Moreover, the quality of pre-process meshing had been considered to be low, but was resolved after the introduction of HyperMesh - a high-performance pre-processing device with visualization functions, as referred by the company director Xen to be “a very important tool for improving the CAE efficiency in Lenovo”. (Altair Engineering)

As such, with the rapidly growing number of clients around the globe, the customer service was torn between being ineffective or inefficient, as the growing number of employees required more staff to be involved in the customer services team. The implementation of ProcessMaker software became the main tool to monitor the workflow. On the other hand, this has become the major business-process management tool that allowed to monitor the completion of operations within each defined business-process within the company. (ProcessMaker)

In terms of manufacturing process designs, when the management decides to purchase or rearrange the position of a piece of equipment, or if there is a change in the way a certain process works, this is considered to be a design decision as it affects the physical shape and nature of the processes. (Slack N. et. al.). Technical Process Analysts of Lenovo have been identifying required changes in the process design to comply with the requirements set by new product designs. New product designs, on the other hand, are dictated by product and manufacturing-based quality requirements. One bright example could be the evolution of Cary Academy's 1:1 strategy, requiring sophisticated tablet PCs. As stated by Sam Morris, Cary Academy's Instructional Technology Director, the main focus ten years ago was on desktop applications, whereas now that is the least the company does. The company's focus shifted on student creativity and individualized learning. Hence, the new Lenovo ThinkPad X200 Tablet has allowed Cary Academy to useas they call it “the leading-edge technology” as a tool to accomplish educational objectives.

1.2 Human Resources and job design at Lenovo Group Limited

It is often considered that the main focus of operations management is on systems, technology, procedures and facilities - non-human aspects of the organization. However, this opinion would be misleading, as human resource management has its profound impact on the operational effectiveness. (Slack N. et. al.) Lenovo's organizational culture, according to the official website of the company, is referred to as “the company's DNA”. As opposed to `s definition, where organizational culture is “the workplace environment formulated from the interaction of the employees in the workplace”. (Carpenter et. al.) The term “Lenovo Way” is the name for the company's values and business practices, which are embodied in the statement: “We do what we say, and we own what we do”. (Official website) In Lenovo there has been a transition in its organizational culture to a more decentralised way of managing, also bringing the organizational structure from the horizontal to the “flat”. For instance, according to the book written by the management of Lenovo in 1999, previously employees would call their boss “Chief Executive Officer Yang”, showing a very formal approach of interacting with the management. Whereas nowadays it is common for the management team to greet the rest of employees in the lobby, introducing themselves and shaking hands. It could be argued, that this change leaves more focus for employees to perform their tasks, at the same time being motivated by kind gestures of their management.

In Lenovo there is a clear job design, for instance as dictated by ISO 9001 International Quality Management standard, there are written job description supported by block-diagrams, graphically describing workflow processes of employees, forming a part of the company's set of regulatory documentation. Regulatory documentation sets regulations on four levels - 1) company level represented by the company's vision and missions; 2) departmental level, where documents describe activity in each department; 3) on the level of business-processes and 4) as was mentioned before, on the individual level, describing individual day-to-day accountabilities. Apart from that, the company has developed the Balanced Scorecard, which it linked to the Motivation System. The strategic map describes business processes and aims that these business-processes follow. Aims then are cascaded into Key Performance Indicators (KPIs), which are set on four levels: 1) Organizational level, representing organizational KPIs such as the sales volume, sales revenue; 2) Financial KPIs in the form of financial ratios; 3) KPIs for achieving aims of each business-process within the company. An example could be the number of packages made per day by a packer, where packing is considered as a separate business-process, and finally 4) On the level of human resources, where KPIs measure achievement of aims that are pursued by the Human Resource department, such as the actual number of employees compared to the planned.

According to the Sustainability report of Lenovo for the year 2014, which is the most recent today, Lenovo annually commits up to 1 percent of its pre-tax income to social investment programs on the global scale. The company's investments focus on developing three programs: 1) “Next Generation Hope Fund”; 2) “Global Disaster Assistance”; 3) “Community Outreach, Collaborations and Partnerships”. While the first two programs focus on social aspects on the global scale, the Community Outreach, Collaborations and Partnerships focuses on raising employee awareness on their responsibility to share the company's values.

1.3 Supply chain management at Lenovo Group Limited

The most important concept at Lenovo, has been “operating without borders”, which is explained by the company's management as having a “flat” structure and being creative, dispersed and mobile. The strategy behind the company's vast supply chain practices is called “Worldsourcing the Supply Chain”, which pursues the goal of meeting customers' requirements in terms of timeliness, quantity and quality of products supplied. The supply chain area of Lenovo, surprisingly, is closely linked to the product design, as the company sets KPIs to the weight and size of the product. For instance, the “owl wing” technology has allowed to produce advancements in weight and size, as evidenced by the “ultra-light” ThinkPad X300, which during its shipment to the destination place is convenient for its small size and is beneficial in terms of the KPI pursuing minimum physical damage after shipment.

Following ThinkPad, Lenovo procures materials and components from all over the world, applying benchmarked practices in supply continuity, cost and inventory management. During the planning process, the planned volume of production is identified, which is one of the inputs for the manufacturing process, which takes place in China, India and Mexico.

Human resources is also closely related to the supply chain management, as “Talent” has been one of the company's four “keys” of success. The Global Supply Chain (GSC) leadership team is believed to be diverse and highly selective in their decisions. The GSC is the supply management decision maker of the company, whereas the procurement and supply chain departments are the key process holders of the supply chain management. (Zapko J.) As the company operates globally, the supply chain decisions must take into account geographical implications of each of the continent, which is why conventional procedures within procurement and supply chain departments may not be applicable. The company uses ISO 9001 international quality management standards, which suggests that the procurement and supply chain processes are described, documented and are drawn in block-diagrams using IDEF notations, moreover, which is also the case with documents describing day-to-day functions of the supply chain staff on the individual basis. However, as the 2014 annual report report suggests, adverse economic conditions may result in postponements and decreased spendings, which may “contribute to potential supply chain volatility”. (Annual Report) This means although the company has a systematic approach to the supply chain management and has a high awareness in terms of clients' preferences and geographical implications, the financial stability also plays a crucial role in the successful operation of the supply chain. For instance, hypothetically, if the procurement department fails to keep the planned Min-Max levels of inventory due to financial instability of Lenovo or its supplier due to the regional economic recessions, Lenovo could fail to 1) produce the planned quantity of products 2) at the planned costs, as well as 3) to fulfil its own sales volumes expectations. As it is assumed that the company uses conventional procedures of procurement and supply management simply adjusted to geographical differences, firstly, the company might need to develop a new system that would allow the procurement department to control its commitments more effectively. The system must identify more critical and less critical materials, as a large number of goods and services in the budget are indirect costs, these will be less critical. Then the company must set planned targets of volumes of critical goods and services, which can be taken according to the contracts held with suppliers. The final step would be to set a monitoring system that would generate from the financial data the actual inventory bought on a monthly basis and compare to the planned inventory for the month. This seems to be a conventional practice, but conventionally the procurement department only monitors Min-Max levels and does not monitor the actual inventory for the month compared to the planned. This could identify contracts that are not following the planned inventory volumes, which could be a signal for the management to review the contract and the supplier's reliability. This approach could be repeated with the customer contracts. Furthermore, although Lenovo has KPI's among its “keys to success”, conventionally, KPIs related to supply management are not monitored on the level of the Board. This could be risky for Lenovo, as the company operates globally and the Board needs to be aware of KPIs of supply chain management. For instance, such indicators as timeliness, number of failed deliveries, number of complaints related to the delivery process both internal and external, planned deliveries versus actual - these could be monitored on the level of the Board to provide higher awareness in terms of supply chain management risks.

2. The strengths, weakness, opportunities and threat of Lenovo Group Limited

As it was mentioned before, SWOT analysis does not only provide a complex picture of the current performance of the company, in practice it is a widely-used advisory tool for decision-makers. To improve the performance, the company management needs to focus on the relationship between strengths and opportunities, as opportunities, arguably, arise from the strengths. In other words, to improve the performance, the company needs to use the described opportunities with the consideration of the strengths it has. On the other hand, threats arise from weaknesses. To improve the performance the management needs to consider the weaknesses and manage the risks related to the described threats.

References

1. Lima R.M. et. al. (2013) “Industrial Engineering and Operations - Special Issue”. International Journal of Industrial Engineering and Management.

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8. Chittipaka V. (2015) “Relationship between Total Quality Management (TQM) Practices and Organizational Performance - An Empirical Investigation”.

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11. Dolald C., Waters J. (2006) “Operations Strategy”. Sengage Learning EMEA

12. Carpenter M. et. al. (2012) “Management Principles”. Flat World Education.

13. http://successstory.com/companies/lenovo

14. http://blogs.wsj.com/atwork/2014/08/25/changing-corporate-culture-is-hard-heres-how-lenovo-did-it/

15. http://www.statista.com/statistics/255256/share-of-product-sales-by-lenovo/

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