The case study dwells upon the operational management and the changes in the Hagen Style company, one of the most successful direct marketing organizations in Europe. The company deals with a wide range of products, which, among others, include kitchen equipment, small gadgets and salad bawls. The case outlines the current operations in the company and looks at the potential changes and adjustments, which would have to be done in the operational setting of the firm in case of switching to alternative sales channels, such as TV and the internet. The goal of this document is to answer two questions: Why is operational management important for this company? And Why Hagen Style can be considered a successful business? Additionally, this work will look at the operational network of the company from the perspective of the 4V´s model.
Why Operational Management is Important?
It is evidenced from the case, that Hagen Style as it is today, is one of the most effective direct marketing companies. The organization works with over 7,000 “active” representatives, who are overall responsible for creating a link between the final consumer and the company by placing and controlling the delivery of the orders. Often, the orders coming from the representative are consolidated for several customers and, thus, the volume of the order lots is generally lower than it could potentially be in case of direct customer sales through alternative distribution and retail channels. Taking into consideration current operational setting, it is possible to conclude that the procurement and distribution networks of the organizations are totally dependent on the accuracy and efficiency of the sales representative with regards to their order placement capability. Today, based on the case, the company accepts the orders from the representatives in a traditional manner through filling out the paperwork on a weekly basis, as well as through innovative for the company internet order interface. The above setting makes the company operate without any physical store or location, which would enable direct contact with the client (Sadler 2003). These “invisible” organizational and operational designs place a lot of pressure on the reliability, quality and efficiency of Hagen Style in delivering on their commitments, made to the clients through the sales representatives. That said; effectiveness and efficiency of the operations in the company are critical for the success and sustainability of the business in general (Simchi-Levi, Kaminsky &Simchi-Levi 2003).
Why Is Hagen Style a Successful Business?
Based on the facts of the case, the management of the company is proud of its distribution centers (DCs), which are considered a good example of an effective setting for direct marketing company. The accuracy and level of automation, which the company managed to achieve through the years of its operations allowed improvement of the operations, which resulted in cost reduction and overall effectiveness of the operations. As a result of the lean operations in the DCs, the company reached lower per unit cost and, consequently, higher profitability. Additionally, lean operations and strict quality control at distribution centers allowed for a lower percentage of errors in the delivery of the orders, which positively affects the experience of the customers with Hagen Style and, as a result, brings a positive image to the organization (Monczka, Handfield, Giunipero & Patterson 2011). With the above considerations in mind, it is possible to conclude that the company runs cost-effective operation and is profitable. The reputation of the Hagen Style among the customers is positively affected by the effectiveness of the operations, which makes it a successful corporation.
The 4V´s Model suggests that the operations of the company should be evaluated from the perspective of four constructs: volume, variety, variation and demand, and visibility. There are various ways to approach this analysis, but one of the most transparent is to rank each of the operations on the scale of ‘1’ to ‘5’, where the ‘5’ is the highest. Before moving to this step, however, it is critical to identify the key operations. Based on the facts of the case, it is possible to outline four major operations (Wallace 2004):
- Order placement;
- Automated Packaging operation;
- Manual Packaging operation;
- Downstream logistics;
The table below illustrates the ranks of each operation, based on the four criteria of 4V´s model:
Based on the analysis, all the operations at Hagen Style are aligned and illustrate the high level of volume and variability while the variation and demand are leveraged by the automated packaging and distribution processes. The company has very low visibility as the major part of the operations is done outside of the physical setting and the DCs have to deal with a large number of orders, placed by 7,000 representatives. The volume of the orders, however, is not ranked as ‘5’, as the potential of the increase is significant n case of switching to direct interaction with the customer, when the orders can be placed through the phone or the internet by the final consumer (Peng 2014).
Peng M. (2014). Global Strategy. 3rd Edition. Mason, OH: South-Western Publishing. Print.
Sadler Ph (2003). Strategic Management. 2nd Edition. London: Kogan Page Limited
Monczka R., Handfield R., Giunipero L., and Patterson J. (2011). Purchasing and Supply Chain Management. London: South-Western Cangage Learning. Print.
Wallace T. (2004). Sales & Operations Planning: The "how-to" Handbook. 2nd Edition. Cincinnati, OH: T.F. Wallace & Company. Print.
Simchi-Levi D Kaminsky P Simchi-Levi E (2003). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. New York, NY: McGraw-Hill Professionals. Print.