Operations management is the practice by which all business practices in an organization are planned and organized in the best way possible to enhance the level of efficiency in the organization. The practice is carried out in conjunction with other leading practices like logistics and supply chain management, use of technology among other practices in order to be effective and efficient in the business. The purpose of this essay is to identify and analyze the effectiveness of applying the aspects of supplier selection criteria, purchasing cost and use of information and technology in operation management of British American Tobacco Company
British American Tobacco is a global group of companies that was founded in the year 1902 as a small tobacco unit but has grown relevantly with time. As one of the leading multinational companies in the world, the company has opened many branches where the products are sold and distributed from (Holden & Lee, 2011). Some of the main products from the company include the different types of cigarettes that are used by over one billion adult smokers in the world leading in more than 55 countries in the whole world. With the increasing market of cigarettes, the company has increased the number of cigarettes produced per year. Example, in the year 2016, the company sold 665 billion cigarettes which were an increase. Manufactured in 44 factories, the firm created job opportunities to the youths helping to reduce the increasing rate of unemployment in the world. The main brands made and distributed by American Tobacco Company include Lucky Strike, Rothmans, Dunhill, and Pall Mall among many others. The company’s vision is to continue leading the next generation in producing a range of products to the customers, with less risk related to the use of the cigarettes produced (Bisson, 2016). The company is highly committed to producing highest standard corporate products starting from how they relate with the respective farmers who produce tobacco, how they acquire the tobacco to their respective production points, the process and also they market the product to reaching the customers. The company is headed by management board and is chaired by the chief executive alongside the finance director and other executives.
Supplier Selection Criteria
British American Tobacco Company main supplying activities include human labor resource, tobacco leafs from the farmers as well as capital from the main investors. The company has relevantly enjoyed long-term relationships with various suppliers from different parts of the world and are committed to ensuring a steady supply of both the products and services. With the rapid changes in the company’s business factors, there has been a need to identify the most competing factor in the market most importantly to help improve efficiency by applying innovations in production and marketing activities (Gilmore et al, 2010). While addressing new changes in the regulatory necessities from the various sets of stakeholders, the company has adopted a group strategy important in helping to improve productivity and responsibility sharing during the process. Supply selection criteria through group strategy relations have been crucial as it has resulted in the achievements of leadership in the global market of tobacco industry thus enhancing supply chain management performance. Applying strategic management approach in supply line through criteria selection, the company is able to reduce the increasing level of complexity and enhance efficiency levels, quality products as well innovativeness among our suppliers. Through this, the company is able to commit to the suppliers on the basis of contract and rates of payments given with incentives. The company’s business principles on efforts put in place to be the best are important to ensure that the strategic measures put in place are in line with the set organizational goals and rules.
Supplier selection criteria advocated in British American Tobacco Company is important as it supports the firms’ main role of valuing the shareholder's ability by ensuring all the acquitted consumers’ preferences are achieved and in the best way possible to also ensure customers retention. Operations management in supply chain management is not only about the procurement activities but it’s also about how the company can increase the value of the products supplied. This is important as it ensures high products are given to the market and the selected suppliers can also be of help in identifying the company’s strengths and weaknesses in the market (Peeters & Gilmore, 2013). The suppliers should have values and principles that are in line with the company’s requirements as they are expected to understand the main aim of promoting their products in the organization. As one of the global contributors in the tobacco industry, the company is bound to protect the interest of the shareholders and the suppliers who are aimed at ensuring that the best comes out of them. To be responsible, full of integrity, honesty, maintain equilibrium in the tobacco industry and also ensure the targeted consumers have their interest ant heart to be fulfilled. As observed above, supplier selection criteria in operations management help to develop a constituent relationship with the customers, suppliers and other shareholders in achieving the company’s set goals and objectives over a period of time. The company should ensure that the level at which the suppliers are selected is in line with the trends developing in tobacco industry and market.
Purchasing Cost Analysis
Purchasing cost refers to the total cost incurred during the process of idea invention, the cost of buying products and services or other required assets important in ensuring that the idea in question has been relevantly developed and give the required results. Example, in the case of an idea of a business set up with a target market, the cost involved in setting up and developing the business is known as purchasing cost (Sigri & Basar, 2015). Purchasing cost analysis is the process by which, the total cost incurred is outlined in relation to the initial cost of an invention to know how the business entity is growing. In our case, British American Tobacco Company 2015 report indicated that the main business strategies put in place have been relevant as it has continued to grow with time. The introduction of group strategy in the business context of the company has been of great impact as it has ensured massive growth and development of the company in all sectors. From customers acquisition and intention to increased production of the tobacco products.
As started in the 2015 report of the company’s development, since the year 2011, a massive rate of growth has been observed as the company increases the number of shareholders globally resulting in increased rate of cigarette chain supply in the market. From 34% in 2011 of cigarettes selling globally to 45% in the year 2015 respectively. This is a great improvement in a season of approximately 4 years showing a positive purchasing cost index thus giving an inspiration to the company’s future growth abilities starting with the years that follow respectively. This has been a positive move revealing that the ideas used in the purchasing of products and also the procedures put in place are relevant enough to enhance growth (International Business Publications, 2015). British American Tobacco Company as a global leading company in the tobacco sector has been crucial in ensuring the price measures put in place by the legal authorizes do not affect the customers but instead ensure they endorse the move or the aspect. Revenue constitution has also been a key effect in purchasing cost analysis, the amount of revenue incurred by the company annually illustrates the company’s level of production important in also understanding the key needs of the people in relation to what they are given by the company. The rates of revenue exchange grew from 5.4% in the year 2015, and the price mix to 5.9% from 4.2 %. With the operating margin growing up to 160 bps, it was a very great achievement bearing in mind that the rates of foreign exchange were very unfavorable at the time. All these achievements by British American Tobacco Company management illustrated that the business strategies by the company are strong enough and most favorable for development.
Purchasing cost analysis applied in British American Tobacco Company is favorable only in times when the company is doing well in the market, when the strategy put across tends to be favorable and with the ability to give positive results and when the suppliers follow the expected strategies. There are various purchasing tools that can be used at any given time to help analyze the rate of development or stagnation of the company maintains a high rate of confidentiality of the business information (In Leppan, In Lecours & In Buckles, 2014). One of the main tools used is keeping a record of all the direct costs enhanced during service and product delivery as well as the process of production. Some of the direct cost are reduced by simply putting measures to promote the normal rate incurred of resources such as supplying equipment’s and staff care operations among many others.
ICT for Purchasing Operations
These are operations involving the use of information communication technology that has relevantly developed with time. In the contemporary society today, the rising trends in ICT have relevantly influenced massive growth and development of social institutions including the business sector, schools, health care system as well as the manufacturing sector among many others (Rahman, 2013). British American Tobacco Company has enhanced the use of ICT in operations management to enable development of the company , some of the ICT tools in a business include use of the telephone, mobile phones, routers, tablet computers or rather a computer in this case important in conveying and receiving messages to enhance communication, data collection, analyzing and storage. All these tools have a positive impact on the business important in operations management as follows;
- Helps in improving service delivery to the target consumers or rather the customers. In the contemporary society today, many business owners tend to improve their businesses by ensuring that, the needs of the customers and their expectations are relevantly identified by ensuring their main service givers are well versed with adequate skills of customer services (Saravanan & Saravanan, 2010). Most of the skills and services are given by the use of the current ICT tools in the market. Example, communication means and also methods of data analyzing and storage.
- ICT implementation in the company helps to improve the rates of competition in the market. This is as a result of high production and good quality products. The rate of development increases making it easier for the company to fill in the market gaps relating to tobacco products. This keeps the customers on toes of ensuring that the company that takes care of their needs also helps help them grow should be made the best by ensuring they grow with it.
British American Tobacco Company should ensure that the relevancy of the operations management sector is greatly enhanced by implementing more ICT tools in their daily production activities. Cigarettes and other tobacco products in the market have a high rate of consumption globally illustrating that the rate of production should relevantly match with the increasing rate of consumption (Great Britain., Vaz & Stationery Office (Great Britain), 2014). This is important also to ensure growth and development of British American Tobacco Company as well as the international tobacco market and can only be enhanced by adopting more technical tools relevant in enhancing the market even into better heights. Examples of these tools include the adoption of mix marketing team’s tools that is done online by use of the marketing software, use of technological production machines as well as the inspection tools that have been introduced in the market. Operations management is key for the business or any organizations development and with adoption and implementation of ICT tools, it gets even better.
Operations management is very important for a business, organization or company’s development like in the case of British American Tobacco Company. Being a global tobacco company that has relevantly developed with time emerging as the most influential unit for the international market, operational management aspects have been key in enhancing development in that they ensure all the activities carried out are in line with the organizational set goals. Supplier selection criteria ensure that the right supplying agent is enhanced and understands the company’s values and principles for development. Carrying out purchasing cost analysis helps the company’s leadership analyze the rate of growth if any and a number of losses made if any at a specific period. ICT factor has been very important in improving the level of production in the manufacturing industry and should be highly enhanced by the relevant experts. All business developers should ensure that the rate at which change is influenced in a business also in the same way productivity and development is also influenced.
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