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Operations Management

Individual Report- (80%)

Your assignment entails conducting a thorough analysis of a case study and presenting a written report. It aims to evaluate your capacity to grasp OM concepts and apply them in an organisational setting. In this task, you will take on the role of a Chief Technology Officer (CTO). Your critical thinking skills will be essential as you contemplate the ways in which emerging technologies can enhance existing processes within an organisation and the challenges associated with the introduction of technology. Specifically, you must assess the benefits that the new technology can offer and identify any constraints it may impose on the current operations.

You are tasked with providing a recommendation to the executive board regarding the optimal approach for investing in a new technology that has the potential to significantly impact both the operations and the overall image of the company. As part of your analysis, you are required to delve into the concept of process technology and explore why it has gained significance. Your primary objective is to assess a specific process technology, consider potential options, and ultimately make a recommendation to the executive board.

The report should include:

1.   An executive summary

2.   Introduction

3.   A review of capabilities of the technology

4.   Evaluation of different options

5.   Proposed plan and potential improvements

6.   Discussion of potential implementation issues/problems

7.   Conclusions and recommendations to the board

Additional information:

●   In identifying the relevant literature on your selected topic, you can perform your research inquiry using different search engines, including Google Scholar, Web of Science, Scopus, Science Direct and York Library databases.

●   You should aim to include at least 15 key relevant reference and use of a range of recent and quality sources.

●   Recommended word count: 3000 maximum (excluding appendix, and reference pages, etc), typed in Times New Roman 12 points and should follow the good practices of technical report writing.

●   Proper referencing using IEEE referencing must be provided.

Course Tutor for Operations Management: Dr Gayan Jayakody

Course Moderator: Dr Masoumeh Jahani

Operations Management 2023-24

Individual Report (80%)

Criteria

Value

Marks

Comments

Abstract

5%

Introduction

5%

A review of capabilities of the technology

●     Critical   evaluation   of the   potential of   new technology

●     Key advantages    and   disadvantages    of   the proposed technology

●     New developments in supply chain management and its impact on the proposed system

20%

10%

5%

5%

Evaluation of different options

●     List of possible options

●     Comparison of advantages and disadvantages of each option

●     Rationale for selecting the proposed option

15%

5%

5%

5%

Proposed plan and improvements

●     A Work Breakdown  Structure with appropriate activities and key milestones

●     Quantification of potential improvements due to system change

20%

10%

10%

Discussion of possible implementation problems

●     Technology  and process related challenges and proposed solutions

●     People related challenges and proposed solutions

20%

10%

10%

Report layout, quality of writing and

referencing.

10%

Conclusions and recommendations

5%

Total

100%

Case Study: It was two months since Thalia had joined Logaltel, a third-party logistics(3PL) provider owning and operating five large warehouse bases across United Kingdom (each

hosting three to four warehouses). As the new Chief Technology Officer, she had been asked to make a recommendation to the executive board about the best way to invest in new

warehouse technology. Investment that potentially could fundamentally change both

operations and the image of the company. It was made clear tome that, while the senior team very much supported investing in new technology, it did not want to take any

unnecessary risks to the ongoing service provided to our clients(Thalia).

Logaltel delivered inventory management services for its clients, who operated in two types of market. Around 80 percent of the company’s revenue came from the clients that served

business-to business(B2B) markets. These clients required Logatel to receive, store and ship their products stored on pallets. The other 20 per cent (which was growing really fast) came  from those same business clients that also served business-to-consumer(B2C) markets.

Instead of dealing in pallet loads, this service required Logaltel to pick(assemble) relatively

small orders (sometimes containing just a few items or boxes) that needed to be shipped

directly to end customers. The rapidly expanding B2C business had resulted in most local

warehousing managers assigning separate areas of each warehouse to process B2C orders,

although the majority of warehousing space was still assigned to serving B2B operations. The increased complexity of B2C operations had also prompted the development of an upgrade to the firm’s warehouse management systems (WMS). This is the software system responsible

for planning the receiving, storage, picking and shipping operations, the first phase of which had been introduced very recently. It had boosted the performance of both B2B and B2C operations but had been a long and expensive development and implementation process.

New warehouse technology

Under consideration were various innovative technologies that had the potential to automate Logaltel’s currently predominantly- manual operation for picking goods that used a

combination of forklifts, picking carts and staff to pick the items of an order. After a review of available technologies, Thalia shortlisted her two preferred technologies, both involving  types of automated guided vehicles (AGVs). One technology was appropriate for B2B

operations and used driverless forklifts that could store, pick and move pallets around a

warehouse. These could easily operate in the existing warehousing setting, requiring only minor modifications to a warehouse as they interfaced very well with common material-   handling systems (storage shelves pallets, etc.) often found in the industry.

The second technology was more suitable for automating B2C operations. This mobile

robotic fulfilment system enabled workers to avoid the time-consuming and costly activity of walking around the warehouse collecting individual items for customer orders. Instead,

workers could stand in a predefined area while AGVs carried shelved full of items to them. Although offering significant efficiencies, this technology would require a complete

restructuring of B2Cwarehouse areas because it fundamentally changed the way items were stored and transported. Moreover, there were limitations in the size of items that could be

stored on the specialised shelves the AGVs moved around, meaning that traditional

operations had still to be used alongside automated ones for the technology to be practically applicable.

Both technologies had the potential to significantly reduce labour costs and improved

productivity. According to Logaltel’s Chief Financial Officer, both would give a financial

return well within the firm’s minimum requirements based on expected growth projections.  The issue for Thalia was whether to recommend adopting both technologies immediately, or start with implementing just one of them, and if so, which one? Moreover, should

implementation start with a pilot project at one site or be adopted throughout the network of warehouses? In an attempt to summarise the different financial factors at play, Thalia’steam had helped her put together the following table with some key information.

In addition, Thalia had spent a lot of her time talking to different stakeholders in the company, trying to get their views on the topic.

Criterion

B2B clients

B2C clients

Current-

manual

operations

Proposed

technology- driverless

forklifts

Current-

manual

operations

Proposed technology- mobile robotic

fulfilment systems

Forecast growth in orders within three years

Worst case

8%

15%

Average

10%

35%

Best case

12%

45%

Payback period of new

technology

investment per growth scenario

Worst case

22 months

30months

Average

18 months

12months

Best case

14months

10months

Scalability

Would

require

purchasing extra

traditional forklifts

and hiring more

people

Requires

purchasing

driverless

forklifts and integration   with new

WMS

Would require hiring more

people

Requires purchasing extra robots and

integration with new WMS

Picking/shipping accuracy

Acceptable

At least as

good

Unacceptable

Difficult to estimate, probably significantly better

Warehouse modification

needed

None

Minor

Minor

Probably very

significant mods

needed

Disruption during transition period

None

Little

Minor

Difficult to estimate, would need careful implementation

Compatibility with new WMS

Compatible

Compatible

Some

compatibility issues

Difficult to know,

could probably be

made compatible

The warehouse operations manager

Jamal, a Senior Operations Manager with more than two decades of experience, had his own reservations about investing in the B2C part of the warehouse. ‘I have been in the company long enough to know what has always been the thing that actually got us going. For years,

this has been corporate clients that ship pallets in and out of the warehouse. I can definitely  see a certain rise in e-commerce but how sure are we this is going to last?’ Moreover, Jamal was reluctant to rely heavily on any automation solution based on his past experience with

new technologies: ‘All this shiny new stuff, they are simply the new kids on the block. With small exceptions, most of these technologies have failed us time and again. Let alone the

health and safety issues they bring with them. It is not that straightforward to have people

operating side by side with robots. I say, let’s wait for others to use it first. They can prove the technology’s value, then we can simply copy what they do. It’s not that I’m- against us adopting new tech, but I am sure even better systems will be available in the near future’.

The business developer

Martha, the firm’s Business Development Manager painted a very different picture. She

stressed the ‘new’ of the new technology as she was certain it would help business and offers a positive return on investment at the end of the day. ‘This kind of automation is good not only for attracting new customers but also retaining existing ones. Showing around prospective clients in a facility with state-of-the-art equipment often speaks to our ability to offer superior quality services. For existing ones, demonstrating our appetite for innovation shows them that we are always looking for ways to improve our operations and drive down costs that will have an impact on the offering we can provide them. I mean, the financials clearly indicate there is a strong case for adopting both technologies’. Martha also emphasised the importance of looking at what Logaltel’s competition does: ‘We can’t really avoid adopting these technologies, considering the general market trend. Particularly for the high-growth B2C services, we are already late on this. So, the question is really whether we want to be pioneers and significantly benefit from it, or late adopters behaving like copycats’.

The union representative

‘Believe me, we have this company’s best interests in mind when we say we are against the development of these automation technologies’, said Vimal, representing his colleagues at the warehouse. Not only have these technologies yet to prove themselves but they also fundamentally question the role of our warehouse workers and the value they bring to this company. We are proud to have created an en


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