An effective business organization is an essential component of guaranteed success because only when there is the systematic planning, a strong corporate culture, and mindful leadership is it possible to achieve commercial results. From what has been said, it is evident that if a company shows an imbalance in one of the components, it almost always becomes the cause of an organizational crisis. In particular, ineffective management by the leader or a business system based on the spontaneity and enthusiasm of the initiators becomes a predictor of failure. Although deviation from business management standards may lead to short-term success, it will prove to be a poor strategy eventually. This paper explores FIT’s hypothetical case, a small market segment that manufactures goods for the tourism industry. The head of the company, Omar Goller, can be described as a proactive inventor whose impulsiveness can be a problem for effective communication and business processes. The proposed case study has already shown that Goller’s corporate decisions resulted in the lack of a structured supplier management system, which is a critical problem for companies. The focus of this essay, therefore, is to look deeply into the case of FIT and to discuss theoretical paradigms that are applicable to this enterprise.
The Basis for Setting Up Production
As has been shown, Omar Goller is in a permanent search for the best innovative solution that will bring success to the company. It is clear from the text of the training material that success, in this case, means not so much a tremendous increase in the profitability of the business but rather a reputational gain for the company. One can assume that for Goller, the most important point is not the money as the final product of the commercial activity, but rather the idea. This is probably why Mr. Omar quickly abandons some unfinished projects in order to initiate new ones since the man is guided by impulsiveness and emotion. While this may create an attractive marketing image for the company, when it comes to organizational planning, this approach is doomed to fail (Lewis, 2020). To put it another way, Goller’s enthusiasm is both an asset to FIT and its main problem.
It is the recognition of the existence of the problem and the definition of its theoretical framework that is the primary step in any organizational change. Goller’s proposed Wagon concept is a promising invention that has the potential to bring both financial and reputational benefits to the company. However, it requires the establishment of operational processes within the company, including the development of vendor management and changes in FIT leadership. These actions, in reality, are only consequences of a global foundation, namely the recognition of mismanagement. Goller is forced to admit that his current presence as a director is having a detrimental effect on the company, destroying its prospects from within.
Once this is accomplished, that is, when Goller admits to a radical organizational problem, change may await the company. In particular, several outcomes are anticipated, depending on what the director chooses as the optimal operating strategy. First, Goller could step down as managing director, delegating that authority to more responsible leaders. This is an effective method in management theory that Bill Gates, Jack Dorsey, and even Jeffrey Bezos (Lisa, 2021) once used. It is impossible to ignore the complexity of the reasons why CEOs voluntarily left their positions, but it is also impossible not to assume that one factor was a mismatch between their perceptions and expectations of the director job and what constituted success for the company. To put it another way, Goller may have been too proactive for the adequate operational functioning of FIT, and so he should have been replaced. On the other hand, Goller may have completely reconsidered his experience leading the company, conducted a questionnaire review among employees, examined the company’s economic and reputational dynamics, and concluded that he needed to change. If Goller is not ready to lose his director position, the man needs to change his area management strategies in the company to achieve the necessary goals and stop creating disruptive effects.
Effects of Operational Management
It is easy to see that this paradigm change is directly associated with a change in the system of operational management, which can create a competitive advantage for the company. In short, competitive advantage should be understood as the presence of such characteristics or attributes of the company, which allow it to win against rivals in the industry market qualitatively. This can be represented either by the presence of a highly skilled workforce and the participation of outstanding talent in project development, access to patents, or company resources. Right now, it seems that the apparent advantage for FIT could be a unique car design, but to achieve this outcome, the company needs to rethink its operational management. In particular, three strategies of the theory of competitive advantage through operational management must be considered.
First is low-budget leadership, which seeks to provide highly efficient management of the company’s operational processes through the creation of a low-cost production system. In this case, FIT is encouraged to expand production in order to produce products at a lower cost, which in turn affects the ultimate cost to the consumer. However, with respect to FIT, this strategy seems impractical because achieving large-scale production in a small segment company environment seems impossible. Second, it is a differentiation strategy in which the company produces products that are qualitatively different from its competitors. For FIT, this strategy turns out to be effective because the company’s commercial product is a unique, inventive development. Finally, there is the strategy of focus, in which the company focuses on a narrow segment of the target audience, such as tourists with a car. However, this is quite a risky path, as it means that the FIT must have enough resources to cover a narrowly focused production with no backup plans.
From what has been said above, one can conclude that Wagon’s production scheme involves risks and the need to invest in organizational restructuring. One solution to this transformation could be to move to a new system of organizational structuring, in particular a functional approach. Prior to this, it seemed that crucial decisions in the company were made solely by Goller as the sole managing person in the company. While this can sometimes be effective for expanding firms, this structure proves unhelpful. Responsibility for decisions may be too great, while effort on the part of Goller proves disproportionate. A functional organizational structure turns out to be effective because it seeks to create a system of hierarchical responsibility in FIT. In more detail, the company is formally divided into departments (finance, R&D, administration), with individual managers who lead projects to completion (Edwards, 2020). In this case, Goller does not have as much responsibility for the implementation of the entire Wagon production scheme, and thus fewer decisions are dependent on him. Meanwhile, a system of responsibilities is created in which any deviations from budgeting are managed in advance with contingency plans and sanctions.
Consequently, the transition to a new organizational structure paradigm will trigger operational transformations within the company, as a result of which FIT is expected to be able to achieve the desired results more painlessly. More precisely, the company will solve the inefficiency of centralizing corporate power at Goller and set up local workgroups to solve specific tasks. As a result, Wagon’s production should become easier and more accessible, as the replacement of the organizational structure will lead to the solution of the previously identified difficulties. It is fair to admit, however, that such a system could lead to production delays due to the lack of centralized process management.
Critical Production Processes
The production and further sale of Wagon products have the potential for enormous success for a company only if the use of established operational processes is assured. This applies not only to abstract steps, whether recognizing the need for change in general or changing the organizational structure but also to managing the more tangible phases of production. In particular, creating a seamless conveyorized Wagon production cycle requires an established system of suppliers, ensuring smooth production at the plant (scheduling work shifts based on profitability to cost ratios), conducting marketing and economic research, and unloading goods into warehouses. In this system, it is impossible not to consider the need for intermediate and final quality control, which becomes especially relevant in the context of the inventive concept of FIT. Quality control should carry out the examination of the absence of defects among the products, the total compliance between the declared characteristics of the Wagon and the actual functionality, and the requirements of environmental safety of production.
The final quality of the product is influenced by all the previous factors, starting from the procurement of raw materials from suppliers and ending with the implementation of marketing campaigns to promote and position the product on the market. To ensure high product quality, the entire Wagon production journey must be fragmented into separate critical processes, each of which is measured using unique KPIs. More specifically, examples of KPIs for supplier management might be adherence to deadlines, the percentage of expected rejects, and the rate of receipt of raw materials. For engineered product assembly, these KPIs might be total production, the number of products assembled per day, or adherence to health and safety standards. Individual KPIs exist for any critical project, and by strictly adhering to them, the expected quality can be achieved because all possible difficulties are covered. In this context, it is proper to emphasize that a combination of quality control systems proves to be the most advantageous option. Check sheets create a culture of results checking, flowcharting creates a logical sequence of internal operations, and the CE diagram allows to trace the cause-and-effect relationship between them in order to prevent problems in subsequent stages if defects are found in previous ones.
In terms of established quality management standards in production, the company must adhere to universal standards like ISO 9001 and automotive system standards like IATF 16949, which govern quality management in production. Ensuring internal control is an important step, but working to meet external standards is critical to FIT. It enables rigorous product quality management and follows stringent requirements for document and asset management, audits, and integration of information schemes. To put it another way, when a company decides to control quality not only with its own resources but also by ensuring compliance with international standards, it dramatically increases the quality of the output.
Supply Chain Management Policy
As has already been investigated, the current supplier management in FIT is proving to be ineffective and based solely on the impulsiveness and spontaneity of the leader. This agenda must be radically changed, and below is an algorithm of actions that will summarize a transformed supply chain management policy in the company. First, a new management goal must be clearly defined. While in the past, it may have seemed that the goal of using suppliers was to get products, this paradigm must shift to getting high-quality raw materials from suppliers on time. Second, the functional roles in the company must be firmly assigned so that if a mistake is made, costly troubleshooting issues can be avoided. Third, operational processes must be optimized as much as possible so as to arrive at a balance of benefits and costs, at least overall.
SCM of Wagon Production is based on a consistent system of links between the supplier and the end customer. Raw materials for production (metals, paints, rubber) arrive at suppliers through their developed organizational channels, after which the supplier offloads the purchasing material to FIT’s production warehouses. Production is carried out within employee shifts and without exceeding job titles, after which products are distributed to retail stores, reaching the customer. Inventory management plays a not insignificant role since the company must always have access to a certain amount of purchasing material in the event that a supplier is unavailable. Inventory creates strategic value for FIT, which means effectively ensuring that it is stored correctly is a priority. This is a standard SCM system that finds its application in the case of FIT as well (Fernando, 2021). Its modifiability lies in the fact that a network of suppliers can be used instead of a single enterprise in order to protect against contingencies. In addition, distribution can be done in person or through an intermediary: the second method will reduce organizational logistics costs but will naturally increase the final cost of the product to the customer. Thus, at the stage of SCM restructuring, the company leader must take care of all the needs of stakeholders and choose the best supplier management strategy.
Lean Production Policy
Sustainable development of a modern company turns out to be impossible without following the main social and economic trends relevant to the agenda. Among them, for example, there is a strong tendency to create waste-free production and optimize spending, called lean production. For FIT, which deals with the sports tourism industry, concern for nature is a critical component of its production philosophy. The company understands the importance of environmental protection for customers and is aware of the responsibility for the environmental damage created, so the use of Lean principles is an integral step of operational transformation.
First of all, an organizational environment is created in which the company creates less waste. Although it is not possible to completely get rid of waste in an assembly plant, residuals can instead be used for recycling and reuse. For example, rebar and pieces of metal that are not used now can be recycled for use next time. In addition, planning and budgeting are mandatory components of lean production as a basis for the systematic reduction of deleterious effects. This includes, among other things, the creation of a sustainable work schedule, in which the shift schedules of work teams and leaders are known in advance, which meets occupational health and safety requirements. This rigorous planning makes sense to simplify the company’s operational processes, not only to meet the interests and needs of stakeholders but also to delegate responsibility in the event of violations in a fixed manner. These steps are not exhaustive, but they cover the need for the lean philosophy to reduce value-added procedures. Then, following all of the principles, guidelines, and rules listed above is expected to allow FIT to arrive at the desired success.
Edwards, J. (2020) Creating an organizational structure.
Fernando, J. (2021) Supply chain management.
Lewis, J. (2020) The disadvantages of impulsive management.
Lisa, A. (2021) Jack Dorsey and other high-profile CEOs who stepped down from their companies.