Uniqlo is a clothing brand which originated in Japan in 1949 as a textile manufacturer. It is an international brand with presence in 1000 and above stores in the world. With an aspiring objective of keeping up 5 trillion yen in deals by 2020, Uniqlo will be one of the 21st century's best associations to observe. The company has planned to develop itself as the principal outline retailer in the United States, with new stores opening throughout the country with the quick pace in recent coming years. Uniqlo has its own standing in the market which is recognized as a reliable brand. A continuous awareness of changes in trend, diverse variety and testing of traditions is benchmark achieved by Uniqlo.
The focus of the report is on operations management of Uniqlo. 4 V analyses is undertaken to know the various dimensions of a brand. Thereafter 5 key operational objectives are discussed in order to describe its current structure of operational management. Uniqlo key issue like inventory and quality is discussed in detail. In last the recommendation to Uniqlo operations management team is analysed.
4 V's analysis of Uniqlo organization:
The Four V's in the business operations of Uniqlo is described as follows:
Volume dimension: The volume dimension of Uniqlo operations is the key factor to analyse how their business activities are organized. A good example of Uniqlo brand as they interact with their customers, know the daily promotions, faster transaction facility at the time of registration, clothes must be folded quickly. The essential important thing to be considered in volume dimension is the repetition of the same process due to a similarity in process. Efficient staff and effectiveness in routine procedure add an important mark in volume. Economies of scale are achieved at certain price level and also the experience of doing the thing over and over increases the competitive advantage to the firm.
Variety Dimension: Uniqlo offered a variety of items available with the selection of width and variety. The brand made its products according to the demands and requirements of the customer. Uniqlo offers an efficient service with a wide variety and flexibility is which help in increasing the customer base. Recent examples of variety are the availability of 80 colors in polo t shirt available all time in stores of Uniqlo, Uniqlo premium jeans made up of selvage denim (unique cloth imported from the mill of Hiroshima) and many more practices shows their variety in products.
Variation Dimension: The variation dimension of Uniqlo identifies styles within the product categories which do not have the tendency of going out of fashion and finding out ways to create levels of differentiation in these styles. If Uniqlo has a high variation in demand than greater flexibility will be required by the company to achieve the required capacity level and fulfilling demands. The target will not only be on improving capacity levels but also changing capacity according to fluctuating demand level without incurring an extensive cost. More variation leads to low volumes in stores, incurring a high unit cost.
Visibility Dimension: The visibility dimension refers to the consumer ability to watch, track their experience or request through the operations procedure. A superior visibility measurement helps Uniqlo to find out the bundle of customers or retail location where the customer's purchases product over the counter. Uniqlo has made it convenient for all the clients through full-scale execution of web based sales.
Operational performance objective
Quality: Quality of a brand is more important than a specification. This objective defines how well a product in market performs according to its specification. The appealing features of a product, its reliability, durability and so on is also considered important while evaluating quality objective.The quality objective emphasis on the product desirability in the market amongst customers. This objective helps the company to standardize the quality of a product which is acceptable to customers.
Speed: It defines the rate at which Uniqlo is generating sales and how often a product is delivered. Speed reflects how fast a firm gives responses to its customer requirement. Speed also refers to issues in the time required by Uniqlo to manufacture a product and develop a new product. Shifting by Uniqlo to digital marketing enables the company to speed up business cycle, and reduce production issues. This enables Uniqlo to deliver exact product desired by the customer and in expected delivery time. Speed is important internally as well in reducing inventory and risks. In addition, the speed with which item can be made and delivered to business sectors is directly connected with the speed with which items can produce money flow
Dependability: It is a quality aspect describing reliability, certainty feeling, consistency related to products and production process. Dependability also leads to developing goodwill of a company. It adds important value in Uniqlo and has a direct effect on cash flow and profitability as well. Dependability has two effects- internal and external. Internal has effects cost factor of Uniqlo and external effect is related to customer satisfaction with the brand. Dependability is easily measurable, unlike quality. It increases delivery speed of a company like Uniqlo
Flexibility: Volume, variety, process and service/product are four dimensions in flexibility operation management. It is very crucial objective affecting various dimensions of business. Flexibility speeds up response time to customer and production department. It also saves the time of Uniqlo by helping in speeding in response time. Uniqlo provides flexibility in the product by making available new and modified product each time. . Flexibility is also the ability to produce various products and services altogether without incurring a huge additional cost.
Cost: It is one of the major operation objectives especially for companies where competition is cut throat. The above objective is achieved by cost advantage in the production process by cutting the operation cost of the product in order to keep competitive price while receiving the return on investment as well. If cost is managed properly then high quality, dependability, flexibility, and speed can not only bring external reward but also improve operation cost.
Key issues in operations management:
Quality management: Various customers will have distinctive demands, so a working meaning of quality is a customer choice. While considering quality layout, production and company itself must be given importance. In combinations of all measures, it starts with an evaluation of what the customers require, then making an elucidation of this information into distinguishing conclusions in which products of organizations should adjust. Some of the outputs may be lower quality, loss in business, commitment, decreased benefit and increased costs. Regardless, extraordinary quality has particular expenses, like neutralizing activity, evaluation, and disillusionment. The most effective way to deal with issues related to defects is to settle them in one time when they arise. This will surely decrease the cost of good quality as time moves. Inability to meet quality issue is harming Uniqlo image, reputation or leads to negative feedback. In the manufacturing field, the nature of crude materials or equipment is influencing the entire assembling process. Uniqlo is not removing is defects and loopholes on time, due to this incurring other potential expenses. The quality issue is incurring some as Uniqlo outsources its generation to accomplice production lines, quality control is difficult and a critical factor. Quality provided by Uniqlo is good but is not meeting the customers' expectations, as the price is very high. Uniqlo has the corporate social responsibility towards its society which it needs to adhere in order to grow and survive smoothly. As Uniqlo is not maintaining its quality of products it is facing extreme criticism in the market. Customer satisfaction must be a prior goal for Uniqlo to retain its customer market and to attain a competitive advantage over its competitors. Uniqlo business will decrease if the unsatisfied customer will do negative publicity regarding its product and services. Generally, a longer dissatisfied customer switches the brand and will not recommend other to use. The other dimensions of the product include performance, special quality, durability, reliability and so on. If in Uniqlo brand clothing defects are found in items sold by the Group, for example, using of dangerous materials or poisons, sub-standard cloth and many more, then it may require worldwide item recalls, or remuneration for mischief to the health of consumers, which may negatively affect income, and also harming customers' trust.
Uniqlo, high-quality clothing brand products are available at reasonable price and affordable. Customers' complaint regarding quality of the brand is conveyed to the concerned department and desired the course of action is taken. But the durability of the product according to the customer is as not per the desired requirement. Zara is the main competitor of Uniqlo so to compete in the market quality of clothes should be reconsidered.
Inventory management: Nowadays companies have moved to demand driven rather than plant level production. The demand is driven focus increases cost for Uniqlo production process, as trend changes every day and fulfilling all demand at low cost is impossible. Due to change in fashion, the inventory management has become a key issue of concern for operations management team. A failure to deliver an item of operations may harm the image for the brand in customer mind. For Uniqlo inventory management issue is significant as it delivers products worldwide and the slowdown in operation process will lead to decrease popularity amongst people. Change in technology and demand also increases cost as the additional cost will be incurred by Uniqlo to fulfill recent demand. As for delaying delivery Uniqlo either will request manufacturing item at higher cost or delay production which will reduce revenue.
Incompetent Labour and Staff: Inventory operations management is a procedure for arranging output operation. Each assignment and activity is needed to be done by the Uniqlo staffs which affect the stock and additionally the transportation lead period and other aspects. In this way, the information what one ought and effect of staff activities on the shop are affected by Uniqlo . The effect of this activity of Uniqlo will have on the framework and physical stock ought to be clear to the agent. It is observed that procurement department operations are continuously evaluated by an auditor. In case of Uniqlo absence of head during these operations lead to the unsatisfied response from the customer. As the staff and employees are insufficient to respond to customer inquiries, Uniqlo is losing its valuable customer to competitors.
Inadequate training: When an inventory management is handed over to another party on a contract basis then both customers, principal, and other party starts initial processes and document them in the Standard Operating procedure. When business in future changes existing, SOP adopted becomes out-dated. Then new parties by Uniqlo are searched and are required to learn without giving any SOP training. With this procedure they generally have less knowledge than require, so more prone to issue in inventory management.
Measures for improvement in operating performance:
Business Process Reengineering: It involves basic redesigning of main business processes to attain improvements in productivity and quality of the product. For BPR implementation uniqlo should enhance its quality. They should adopt a typical value system that gives more importance on customer requirements. Uniqlo for adopting BPR should reduce organization inside layers and redesign structure for wasteful activity. They can reduce their manufacturing cost in order to provide good quality in lesser cost. Their qulity can be enhanced by using high quality raw material and improved technology.
Six Sigma approach: Uniqlo for successfully implementing this approach should empower its inventory management to reduce the harm caused due to inventory management. It helps in achieving targets with increase in quality and without increase in cost. Employee's problem-solving skills are enhanced as by they can independently alleviate problems related to inventory. Uniqlo can use six sigma approaches to increase the quality of its products by applying efficient leadership and reducing waste. By this they can reduce the customer complaints by significant amount. Customer main complaints are due to defective quality of product and if Uniqlo improves this it will be beneficial both for organisation and Uniqlo adopting six sigma approach will help in reducing waste, improved inventory management, and higher quality of products. Investing in six sigma approaches proves beneficial both for organization and employees in terms of quality and inventory management.
Total quality management: TQM is basically concerned about continuous changes in work, from strategic planning to elaborate execution of target. Uniqlo can adopt this practice to continuously increase output in every part of work as it on regular basis to enhance capacities of machines, individual, inventory, and quality. The five important territories for Uniqlo to improve are ability change request era, supply era, innovation, operations and individual's capacity. Uniqlo can adopt this approach in order to enhance weaken area like defective guidelines for product inventory management and quality. The issues in quality can be increased by improving the quality of raw material required for its product. And inventory issue can be resolved by reducing inventory levels. Uniqlo can control mistakes in inventory management from happening and where mistakes reiterate, stopping generation till the point that the procedure can be remedied, to keep the product out of defects.
Lean: Lean is a methodical strategy for squandering minimization inside an assembling framework without sacrificing profitability. Uniqlo can consider reconsideration by reducing overburden and waste in inventory management. Working from the viewpoint of the customer, Uniqlo should consider an item or management, selling is an activity or process that a client pays for. So Uniqlo should adopt Lean to manage quality and control over it.
For managing inventory: Lean should be practice to control production. Uniqlo should produce products by removing all the defects in production system like hiring competent staff, providing enough training to handle errors in machinery and many more. Other practices like planned production according to market trend should be practiced in order to reduce waste and resources of Uniqlo.
From above analysis, it can be concluded that an operation manager should consider various factors while producing a product. They should take a decision regarding production when they researched about demand for a product in a market. Uniqlo should keep in mind the four main operational dimensions: variety, volume, variation, and variety. Uniqlo should evaluate its decision on basis of cost and quality of the product as well. Strategies adopted by the company should be unique and innovative in order to remain competitive in the market. The main objective for Uniqlo should be speed, quality, dependability, flexibility, and cost. Uniqlo also faces operational issue mainly inventory management and quality management. An operational manager of Uniqlo should take some major measures like BPR, TQM, 6 sigma approaches and much more to resolve all the issues concerned. Uniqlo as clothing brand is very famous in Japan so to become more famous importance to operation management should be given.
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Sadikoglu, E. and Zehir, C. Investigating the effects of innovation and employee performance on the relationship between total quality management practices and firm performance: An empirical study of Turkish firms. International journal of production economics,vol 127, no 1, 2010, pp.13-26.
ElMaraghy, et al, Product variety management. CIRP Annals-Manufacturing Technology,vol 62, no 2, 2013, pp.629-652
Stadtler, H, ‘Supply chain management: An overview. In Supply chain management and advanced planning’,. Springer Berlin Heidelberg, 2015, pp. 3-28.
Kim, D.Y, Kumar, V and Kumar, U,’Relationship between quality management practices and innovation’. Journal of operations management, vol 30,no 4, 2012, pp.295-315.
Gunasekaran, A, Patel, C and McGaughey, R.E, ‘A framework for supply chain performance measurement’. International journal of production economics, vol 87,no 3, 2004, pp.333-347.
Luthra, S.,V. et al, ‘Barriers to implement green supply chain management in automobile industry using interpretive structural modeling technique: An Indian perspective’. Journal of Industrial Engineering and Management, vol 4, no 2, 2013, pp.231-257.
Taticchi, P,Tonelli, F and Cagnazzo, L. Performance measurement and management: a literature review and a research agenda. Measuring business excellence, vol 14, no 1, 2010, pp.4-18.
Tang, O. and Musa, S.N.’ Identifying risk issues and research advancements in supply chain risk management’. International journal of production economics, vol 133, no 1, 2011 pp.25-34.
Subramanian, N. and. Ramanathan,R. A review of applications of Analytic Hierarchy Process in operations management, International Journal of Production Economics, vol 138, no 2, 2012, pp.215-241.
Sodhi, M.S., Son, B.G and Tang, C.S,’ Researchers' perspectives on supply chain risk management. Production and operations management’, vol 21,no 1, 2012, pp.1-13.
Caro, F. and Gallien,J.’Inventory management of a fast-fashion retail network: Operations Research’, vol 58, no 2, 2010, pp.257-273.
Krajewski, L.J, Ritzman, L.J and. Malhotra. M.K ‘Operations management: processes and supply chains’, New York, NY: Pearson, vol. 1, 2013, pp 50-100.
Trkman, P, The critical success factors of business process management. International journal of information management, vol 30, no 2, 2010, pp.125-134.
Barratt, M., Choi, T.Y and M. Li,. Qualitative case studies in operations management: Trends, research outcomes, and future research implications. Journal of Operations Management, vol. 29, no 4, 2011, pp.329-342.
K. Baird, k. Jia Hu and R. Reeve. ‘The relationships between organizational culture: total quality management practices and operational performance’. International Journal of Operations & Production Management, vol. 31, no.7, 2011 pp.789-814.