Primark. The company I have chosen to look at is Primark, in this report I shall be looking into the operations management. Followed by the inputs, transformations and outputs to the company.
OPERATIONS MANAGEMENT AND DECISION MAKING
The company I have chosen to look at is Primark, in this report I shall be looking into the operations management. Followed by the inputs, transformations and outputs to the company. Then discussing capacity management in terms of what it means and how it affects Primark’s organisation. In this report I shall expect to analyse the operations management according to Primark business, and additionally how it could possibly improve.
As an employee of Primark, I am aware of how it operates internally, and hope to express this information into my report. My main sources of information regarding Primark, is primary data, as I was able to have a detailed discussion with the store manager of Primark, Mr Costello. Furthermore, I have also obtained secondary information from, the Internet and books.
2.0 OPERATIONS MANAGEMENT
Finance, marketing and operations are three major functions of business, in this report I will only be focusing on the operations management aspects of my chosen business Primark. Operations management helps us understand the flow of production, by breaking down the stages, and hence identifies any causes of concern, anomalies or areas of improvement. According to Schonberger & Knod, there is no clear definition of OM, however if you break down the word, you can begin to understand what OM means. Operation can mean a number of things, but I perceive operations as the breaking down of functions. Whereas, management is “a social process, which consists of planning, control, coordination and motivation,” as mentioned in Cole G A (2000). Combining these two meaning, you can clearly identify what operation management is concerned with. Operations management can be found everywhere, as shown in Fig 1.
Primark was first established in Dublin, under the name of Pennies, which, situates itself amongst the retail market in the service sector. Trading in over 125 stores, and currently taking over little woods stores, additionally opening up another 65 stores this year. Primark currently targets the under 35’s, with there up to date fashion conscience clothing lines, at low cost prices encompassing the brand mark “Look Good, Pay Less”. On average each item in store is around £3-4, which compared to other retail stores is exceptionally good value for money. Primark has expanded into many departments including, ladies, men’s, children’s lingerie, nightwear, footwear and home ware. This means it comprises a large threshold population, attracting a high volume of customers. Unlike other stores, Primark has a considerably large selection of lines, and stock constantly changes to meet demand, acting as a high street warehouse.
3.0 MANAGING PROCESS
Operations management is all about managing process. According to Naughton S (2002) OM is the set of activities creating goods or services through transforming inputs into outputs. The model as in Fig 2 can help explain an operating system at any level as mentioned in Wild R (2002) It looks at The Inputs which then becomes processed to form output. Analysing this model helps increase efficiency within an organisation, as it looks at the positives and negative of an operating company.
Inputs are the first part of the structure; it usually forms within a mixture of three categories including materials, information and customer expectations, Vidler C (2001). They vary within organisation; within Primark the main inputs include materials (clothing & furnishing), staff, facilities, knowledge and information (company data), customers, and technology (database & tills). Which would then be shifted to the transformations process.
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3.2 TRANSFORMATION PROCESS
The transformation process is the second stage to the model, as in fig 2. Its concern is to add value to the inputs, it does this in four major ways, as looked at in Jack R, Meredith & Scott M, Shafer (1999). Firstly, in a manufacturing context, it can alter the good, in the sense of changing the physical appearance. Secondly, from transporting it from one place to another, for example each delivery before it reaches the customer is value added. Thirdly, how we store things, the location, i.e a warehouse, fourthly and finally how we inspect. Inspection can be a vital part of quality control, which can help with efficiency.
Within Primark's organisation the initial first transformation, is turning material into stock, followed by transporting the stock, from the global countries into the United Kingdom, Which is then stored in a warehouse. Followed by distributing stock to the individual stores, whereby the prices are marked no more the 50% up. As you can see the transformation process is clearly linked to Meredith & Scott M, Shafer (1999) all these transformations help add value to the stock.
The transformation of information is also of value to Primark. With the use of competitor’s information, market research, accounts information, they can then use this information, by processing it to becoming data, which improves the quality of the company. As well as this, processing customers experiences, for example at the moment Primark store in Manchester are using old tills, if they invested in the new more advance tills, it would mean that it store could operate 1.5 times faster then it is currently at. At Manchester’s best hour in Primark, the store generated around £60’000, this means if the store was to invest in the new tills its could potentially have the capacity to generate up to £90’000, £30’000 more then it is currently at.
According to Jack R, Meredith & Scott M, Shafer (1999) there are two types of outputs, services and products. Services and intangibles you cannot see, touch or feel, services include education, health care, transportation. The issues with services are you may not know what you are getting into when purchasing. For example, when you pay for a massage, it is purely on what you expect to receive. Whereas when you are purchasing a product you are aware of what you are buying, as it is a tangible product you can see it, touch it, and assess the quality and value of it. Tangible products are much easier to assess then services.
Output can be a number of things, within Primark, you would gain customer satisfaction, sales of stock which lead to a generation of income, as well as gaining some sort of wastage, i.e. wastage in plastic bag, tampered items of stock.
The customer wants Six basics things according to Knod E M, Schonberger R J. (2001) Increased quality, service and flexibility, along with decreased cost response time and output variability
From the stock point of view, Primark fulfils this criterion; they offer good quality and wide selection of products, at low prices. Additionally, forecasting fashion trends means they are able to meet response times following demand. In relation to this, Primark does offer a service, mainly found at the tills, and it the only time, when the customer interacts with the inputs of the employees. This is why its important to show a high standard of service when serving the customer, as it adds value to the customers experience of shopping in Primark. All in all breaking down the process helps you to understand the company more effectively and hence analyse its activities.
4.0 CAPACITY MANAGEMENT
Primark is one of the biggest retailers in the UK clothing market, currently with the acquisition of little woods, its capacity has now increased to 3.55 million sq ft, increasing space, has generated a higher capacity level. Currently store improvements are not highest priority, the main initiative here is to expand into new locations, to merely increase reputation of brand awareness and low cost items. Hence increasing attractiveness and furthermore sales.
When looking at the store in Manchester, is one of the biggest operating stores. Nevertheless, the store still has room for expansion. At the moment, the store operates on two levels. There is also a third floor (warehouse) as well as a lower floor (TK MAX), which they could possibly expand into. If need be the manager of the store, would prefer, the space of the lower ground floor, as there is already easy access to the floor. Having said this though, this is only an idea they could pursue if needed.
4.1 FORECASTING DEMAND
Primark is able to forecast demand based on past experiences and also, take into account issues, which may fluctuate demand such as competition in the market, weather, cost, and supply. There are several steps, which may influence their approach to forecasting. Firstly, includes measuring aggregate demand and capacity, secondly identifying the alternatives and capacity plan, thirdly and finally choosing the most appropriate capacity plan base on past events as discussed in Slack N, Chambers S, Johnston R. (2004). Primark has incorporated this strategy by employing specialist, which look at the future, market trends, of the following seasons, and predict next year’s stock in advance. They base this looking at fashion trends and past events, furthermore, they provide a high stock range and therefore there are many alternatives to people’s tastes.
This stock comes from across the globe, and is purchased based on the best price concept and delivered in mass to keep costs down. The stock is delivered into the main warehouse in Reading, where it then can be distributed to the stores by means of lorries and trucks. In terms of capacity, a store can order which lines it wants. Whereas companies such as Next may order a mass amount of particular stock and have high levels of unsold items. All of Primark’s stock is listed on a database, which records, how much stock there is in the warehouse and shop floor, the cost, as well as sales of stock. This is very beneficial to the company as all Primark store, have a integrated system which allows them to follow the operations of the company in terms of its in and out bounds. From this, senior employees are then able to distinguish what stock they require, and can also tell, which lines are doing particularly good and bad. For those that are doing well, they could place another order, which would then be despatched within then next two working days. Depending on the line, the stock can be held from 1-3 weeks, obviously something’s are going to go much quicker than others, for example women’s clothing, whereas, home ware maybe in the warehouse for longer.
4.2 UTILISATION OF RESOURCES
In order to utilise space, they have effectively designed a system, which can adjust to the store requirement see fig 3. Fixtures are easily moveable, and therefore the layout of the store can be change according to their needs, for example as the summer is coming up they have moved the t-shirt and bikini section which were predicted to become increasingly popular, to the front of the store, placing the jumper and coats to the back. Within the company there are people who can forecast demand, for example during the start of the school term they would order more white shirts, trousers and socks, and strategically position it in the store so, that when consumers come in, there are other items which complement the product influencing the purchases.
Primark's escalators are located in the middle of the shop floor, therefore meaning that those who want to go upstairs have to go to the middle of the store, which allows the customer to look at other products. Hence utilising resources and available space.
Another way in which they utilise resources is, renewing items, for example left over hanger could be reused. Lights are dimmed after closing time, machines are shut down to save electrify, which all helps to save on costs.
Looking at the utilisation of resources you can clearly see that they have carefully looked into making the most of the assets.
4.3 YIELD MANAGEMENT
The company also looks at capacity control, by getting rid of old stock, in terms of approaches your could say its implemented a first in first out policy Naughton S (2002). With regards, to its lines that produced less sales, Primark’s policy, believes in getting rid of it old stock as soon as possible. Instead of being left in the warehouse for the next season’s sale, and taking up space, it reduces the item to try and get a sale hence clearing space for the next batch of stock. In each section in Primark stores, there is at least one reduced rail, which would be marked down. This method of reducing products, helps attract more attention to surrounding items in store, in affect draws in custom.
In addition to this, it does operate in a just in case situation, where they increase stock, in order to sell more, however the problem associated to this is ordering too much which could lead to increased expenses. However the database is able to identify which lines have been doing well, and fir example, if a Primark store in London had an item which did particularly well they could then notify other stores, which could then be aware of what to expect.
4.4 TYPE OF DEMAND
I would say that Primark has a mixture of seasonal, weekly and daily demand. According to Slack Chambers & Johnston almost all products and services have some sort of seasonal demand. Christmas in Primark’s, Manchester store was one of its busiest generating sales of over £1 million per week. Primark, forecasted and managed this demand, by increasing staff at tills there was a packer for every cashier, increasing supply of staff on shop floor and the warehouse, as well as increasing stock by receiving more deliveries, up to 8 per day furthermore filling shelves and rails. making sure there was always supply to fit demand.
On average the stores is at its busiest during the weekend. This is why, Primark tends to accumulate more staff during it peak hours between 11-4pm.
4.5 HUMAN RESOURCE MANAGEMENT
Human Resource Management is concerned with “activities within the company involving the acquisition and utilisation of human resources” as describes in Murdrick G Robert, Render B, Russell R S. (1990). Capacity is a major influence within HR, it ties in with the nature and culture if the company. Or example, within manufacturing of cars, technology is becoming increasingly more dependant and therefore the need for staff is continually reducing. In addition to this, companies may have to look at their clients, as in Primark they are aware that shop floor would become very messy if there were no staff to tidy up, and therefore they are able to forecast how much staff is required.
If you have ever shopped in Primark, you may notice how cultural the employees are. Primark has invested a large sum of money into their HR department. They believe in “equal opportunities.” as mentioned in the Primark handbook. They employee people from all sorts of backgrounds, with the initiative of developing their skills, adapting them to a “fast-moving, people orientated fashion environment” . At the moment Primark's organisation employee over 15’000 people, which is expected to rise to 24’000 over the next year.
As an employee I was involved, in a comprehensive induction within a group of 10, which included an outline of the company and how it operates, in addition to this we were given a brief talk about the rules and regulations, and furthermore, given an opportunity to experience what it is like to work on shop floor. I must admit, Primark's induction was one of the best I have been to since I have started working, as they were very thorough and also exceptionally friendly covering all the information I needed to know as a new starter. This programme as discussed with the store manager, aims to introduce them to the company and increase positive thinking, which in return had lead to a lower turnover than previous years.
If for any reason there was a shortfall within members of staff, for example unauthorised absences, Primark could easily adjust by shift people from one department to the next, in general the skills are similar and therefore transferable. Furthermore, employees are always will to do over time and hence, they never short of employees.
In my opinion Primark's operations is working perfectly fine, if I could suggested any improvement to the company, it would address the issue of turnover. Primark is a low skilled job, where skills can be easily transferred onto the next employee. However trying to maintain staff by keeping up moral, would keep recruitment and selection cost down, and therefore provide money for other improvements.
In the possible future, the could look into developing by expanding into a e-retailing developing a website, increasing the range of consumers across the world. In addition to this, they could also look into catalogues, which would also broaden their scope of clients.
As a result of this report I have established that Operations Management is a set of activities, creating, implementing and improving. OM is a vital ingredient to all businesses without it; companies would be less efficient, operations looks at the inputs transformations and outputs, over a time scale. Analysing the outcomes through feedback, there able to plan for future short and long-term plans. It helps to Implement support and drive strategic decision. Looking at Primark you can clearly see how operations can be connected to other departments.
Primark continuously thrives on improvement, and innovation, it highly believes in forecasting as you can clearly see in their stores when looking at the latest fashion trends. Following demand help them remain competitive in such a highly competitive market and the cost advantage of the products gives it that extra “value added” quality that consumers value.
It can be concluded that after assessing Primark's capacity management, it obvious to me that they have spent time in looking and developing their stores. There innovative approach to managing capacity has lead to a higher efficiency of the company, which is the reasoning behind why Primark's success.
Primark Hand Book
Cole G A (2000) Management Theory and Practice. 5th Edition. London Letts.
Knod E M, Schonberger R J. (2001) Operations Management Meeting Customer Demands. 7th edition. New York. McGraw Higher Education.
Murdrick G Robert, Render B, Russell R S. (1990) Service Operations Management. Boston. Allyn and Bacon.
Naughton S. (2002) Operations Management in a Week. Essex, Hodder & Stoughton.
Slack N, Chambers S, Johnston R. (2004) Operations Management. 4th Edition. Essex. Prentice Hall.
Vidler C (2001) Operations Management Studies into Economics and Business. Oxford. Heinemann.
Wild R (2002) Essentials of Operations Management. 5th Edition. London. Continuum.
Jack R, Meredith & Scott M, Shafer (1999) Operations management or MBA’s. New York. John Wiley and Sons.
Fig 1. Illustration taken from, Slack N, Chambers S, Johnston R. (2004)
Fig 2. Illustration taken from, Slack N, Chambers S, Johnston R. (2004)
Fig 3. Illustration taken from,
Here's what a teacher thought of this essay
**** This essay improves as it goes on. Towards the end the writer is really getting into well applied detail on how Primark operate. It starts off poorly with many sweeping statements and irrelevancies.