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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Issues on operation management

With historical development, there are different concepts in operation management such as total quality management, supply chain management and inventory management.

Product: Lenovo Vs Dell

i. Quality control management

   The company of Lenovo did experience some quality management problems during the early years of the 21st century that had some mixed results. On the other hand, the company lost a domestic computer contract to its rival Dell to a chinese government agency because the agency viewed quality as having slipped at Lenovo (Saxon 2007). Although Saxon does not specify what the quality management problems were or how they were resolved, the net impact was to lose the potentially lucrative contract. Lenovo has been sometimes criticized for the rather poor quality of the ThinkPad X60 and ThinkPad X300, which also decreased stakeholders' trust and interest.

   Dell may also be facing a problem of quality control. The quality problem relates to low end server, laptops, and desktops, not the high-end server models. Channel checks indicate a noticeable increase in the number of machines that need to be serviced by Dell in the field shortly after delivery, and also units returned to Dell for replacement or repair. For the most part, Dell outsources assembly to offshore partners in Taiwan and China. It is not clear yet if the issues are caused by sloppy manufacturing or design flaws. They suspect the former, and will continue to check field data. In addition, Dell is struggling through early adoption of the Microsoft Vista operating system, and users may not be able to differentiate whether the problems they are having with new laptops stem from poor build quality, design issues, instability in the operating system or incompatibility in application components with Vista. Quality issues with Dell laptops are nothing new-we routinely saw evidence of that last year.

  The rise of problems with low end servers and desktops is troubling and our checks indicate that it is costing Dell money and starting the downfall of its brand. The timing of this quality lapse could not be worse for management, considering the recent announcements about errors in accounting and financial controls. Cost issues and turmoil appear to be piling on to Dell's quality issues from last year, when the company recalled 4.2 million notebook batteries due to fire hazards. For its part, though, Dell has said it has found its response to customers with quality or technical problems.

ii. Supply chain management

  Gerry Smith, president of the Americas Group and executive vice president the Enterprise Business Group in Lenovo had already set a challenge to the teams to focus on the customer outcome of the supply chain and was driving hard from the top to create the customer-centric supply chain. As a result, the employees in the global supply chain team were being challenged to not only accelerate domestic growth with a faster and more cost-effective supply chain, but to also lay the groundwork for Lenovo's expansion by strengthening its global supply network. The challenge is how to quantify qualitative measures and allow them to be a piece of data within the analytics formula. That is definitely the more complicated part. What they try to do is convert the voice of the customer into things like accurate invoicing and reported defects in packaging and delivery process, which you can measure.

  The direct model refers to the fact that Dell does not use the retails channel, but sells its PCs directly to customers through its website, This way the intermediary steps that may add time and cost are eliminated, and Dell is directly linked to its customers. This strategy look very simple but its very hard to adopt and manage such a policy, a very high qualified and experienced staff is required. Dell is not available in retail outlets, customers cannot go to retailers because Dell does not use distribution channels. Customers just can't buy Dell as simply as other brands because each product is custom-built according to their specifications and this might take days to finish. Most of the times it happens that customer is unaware of the specifications of the the materials to be installed so according to him customizing the pc is a big headache and customer will go for simple buying.

iii. Inventory management

  In 2007, Dell attempted to mimic Apple and do a major marketing push during the Back-to-School period in the fall. This strategy backfired on Dell because of supply chain problems with their electronics items suppliers and paint and colour issues that caused customers to cancel orders. Dell suffered a serious setback from May 2003 to June 2005. The company shipped close to 12 million computers with faulty motherboard capacitors ended up melting. Rather than take responsibility and act proactively, Dell chose to deflect blame back on customers. The real problem lay with Dell's decision the previous year to switch suppliers for these parts to a Japanese firm, Nichicon. This firm also supplied the same part to the companies Apple and HP. When they encountered the same problem, they took responsibility and solved the problem quickly, whereas Dell chose to procrastinate and deflect blame to mishandling by the customers.

  Lenovo previous inventory management mode was the Kanban system before 2004 according to manager Zhang. Although the previous Kanban system could minimize the domestic material inventory, but this system through 11 logistics links, involving as many as 18 internal and external units. The operation process was complex and it raised many uncontrollable factors. What's more, most of the international supplier's delivery their materials in Hong Kong warehouse. However, Lenovo's production information system only used in mainland China. Therefore, the statistics from the factory mainland China could not reflect the real supplier delivery rate while others might cause information distortion.

Service: Amazon vs Lazada

i. Payments, claims and refunds

  Amazon had been operating in several parts of the world for several years. However, despite the variety of payment methods from regioun to regioun, Amazon is mostly tied to some form of credit card payment. While this works in much of the Western world, credit card adoptation is low in Asia which presents a challenge for many Asians looking to use the service. One of the major perks of purchasing items on Amazon is their generous return and exchange policies. While they do a pretty good job of carrying quality items, they are very flexible to allow for return and exchange on almost any items. They are also known for quickly sorting through customer complains and concerns- a fact that breeds tremedous trust among users. And, perhaps, at the end of the day, this is part of what makes Amazon the King of ecommerce. While their prices and products may vary, everyone likes to be able to efficiently and freely return the bag that was the wrong size.

  As a company that's founded in South East Asia, Lazada meets the needs of its customers by offering a cash-upon-delivery option for its customers. This is a major reason for growth in Asia as few of their users have credit card access. On the other hand, Lazada cannot manage to keep up with the kind of quality customer service that Amazon provides. Both because they are a newer, and therefore more limited in terms of financial flexibility and human resources, and servicing needs in Asia, where customer service standards don't generally meet those common in the US, Lazada still has much to develop in terms of the customer satisfaction. There have been many customers who have complained that the officials from Lazada don't respond quickly enough to their issues and take quite a long time to solve these issues too. Lazada has been working on these issues and they are gradually improving but they still  have to work out before they can compete with the standards set by Amazon.

ii. Pricing

  Pricing is good on Lazada. They may seem a bit high compared to other websitesor local shops. But you need to realize there are coupons available on Lazada, you just need to find them. For an example, some products such as the RAM above can be taken as an example. Apply a coupon and you will beat the competition in most cases. Some people may ask, 'Why are the prices shown high in the first place? It is because Lazada is giving us a coupon?' The answer is 'NO'. Lazada charges 3rd party sellers for every single order by a percentage (ranging from 2% to 15%) and also charging the merchant for shipping for the 1st kg which is the reason you would have to pay a low shipping fee or no shipping at all. Lazada beats the competition if you find a deal or a coupon. Lazada won't always show you coupons. You just need to find them.

  Amazon doesn't have the lowest prices across the board, which may not surprise industry insiders but might surprise Amazon shoppers. Instead, according to Boomerang's analysis, Amazon identifies the most popular products on its site and consistently prices them under the competition. In one example, Boomerang observed Amazon testing price reductions on a $350 Samsung TV ' one of the most popular TVs on Amazon ' over the six months leading up to Black Friday. Then, on Black Friday, it dropped the price to $250, coming in well below competitors' prices. But when it comes to the HD cables that customers often buy with a new TV, Amazon actually pushed up the price by 33 percent ahead of the holidays. One reason is that the cables weren't among the most popular in their category, meaning that they have little impact on price perception among shoppers. Secondly, Amazon most likely figures (or knows) it can make a profit on these cables because customers won't price-compare on them as carefully as they would on more expensive products.

iii. Industry control management

  Amazon has had its fair share of controversies. For instance, in 2011 the employees of the company also known as 'Amazonians' complained about the poor working condition at company warehouse. Amazonians had complained about conditions that were too hot and about managers who would not allow the doors to be open as they were afraid of theft. Other controversies include demanding hours and physical labor, rigorous theft prevention measures and contract workers versus full time employees.

  Lazada on the other hand is, at the moment, much smaller than Amazon. Therefore, it can easily manage to keep high standards in almost every field. Similarly warehouses of Lazada are yet to be a center of any controversy as it's considerably much easier to manage them. However, it's also worth it to note that in the regions that Lazada operates, the expectations for conditions of workers are much lower and protests of workers compesations and conditions are very rare.

iv. Supply chain management

  Amazon currently operates in more than 16 countries of the world. The countries from which Amazon recieves the largest number of sales are: U.S, Canada, UK, Germany, France, Italy, Spain, Japan, China, and India. In general, people in more than 100 countries around the world have bought goods from its marketplace but this doesn't necessarily mean that Amazon officially operates in those countries. For example, customers can order from Amazon for shipment to Vietnam, they pay expensive shipping rates and don't have local payment options. As Amazon is expanding, they're trying to appeal to more distant markets such as offering free shipments to Singapore if $125 worth of items (that qualify) are ordered.

  Lazada is still in the phase of evolving and only operates in 6 countries. These countries include: Indonesia, Malaysia, Philippines, Thailand, Vietnam, Singapore. While Lazada is quite popular and well-used by those living in these countries, it's reach is limited and few outside of the region even know about their existence.

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