strategic operations management assignment research technique role towards effective business management
Task: How can organisations utilize strategic operations management assignment research methods to establish effective operations strategies?
This strategic operations management assignment explores the role of marketing towards business operations. In terms of Strategic Operations Management, the transformation process and physical layout are important as it is attracted to various market opportunities. In this strategic operations management assignment, the report has represented an in-depth description, key ideas and concepts that inform strategic operations management within a Danish shipping company, Maersk. Along with this, external forces and key operational processes have also been discussed to provide a greater understanding of the industry in terms of strategic operations.
2. Background of the company
Maersk has been one of the largest container shipping companies with a vision to improve life for all with the help of integrating the world. The company is mainly focusing on decreasing the complexity in global supply chains which is negatively affecting the supply chains and making them vulnerable, inefficient and unsustainable. As per the strategic operations management assignment research, the main motive of the businesses is to transform the logistics across continents, ocean platforms, flight paths and networks. It has over 100,000 employees and is located across 130 countries (Maersk.com, 2022). According to a recent report published in January 2022, MSC has taken Maersk’s spot to be the largest container line (Businessinsider.in, 2022). However, the constant effort put by the business is inspiring individuals to do better in a constantly changing world. Moreover, the business also believes in keeping the values constant irrespective of all the challenges.
3. strategic operations managementassignment -External forces
The dependence level of external contractors has been quite significant for Maersk. However, during 2021, the business has been observed to be introducing almost 1300 new colleagues to reduce the dependency (Öz and Gören, 2019). In case of strategic risks, the business has been observed to be facing risks associated with consumer service level mergers and acquisitions, integration, process standardisation and technology, road map and decarbonisation. All these strategic risks associated with current and future business plans and strategies have been influencing Maersk. On the other hand, the operational risks associated with future business plans such as cyber-attack are resulting in data breach.
Figure 1: Maersk’s Key Risks
(Source: Maersk.com, 2022)
Similar to any other business studied on the strategic operations management assignment, the corporate governance of Maersk is also important. The business is observed to be continuously developing the corporate governance in terms of the strategic goals, development and activities. In this case it should be mentioned that the external environment and the input from stakeholders is affecting the business effectively. Moreover, in certain areas, the outcome of the business plans has been identified to be quite uncertain. These mainly include ongoing negotiations with external parties to execute the business plans (Maersk et al., 2019). As a result, it is quite clear that the assumptions can change and the outcome of the business plans can refer in the upcoming years. In the past few years, the competition in the transportation and logistics sector has grown rapidly. As a result, the volumes of business have significantly decreased. This is causing the business an increase in commercial challenges.
4. Key Operational Processes
4.1 Strategic operation and management
Being a large global company, Maersk’s revenue comes from different sources including shipping, APT terminal, Oil production, drilling services and others.
Figure 2: Different sources of the company's revenue
(Source: Maersksupplyservice.com, 2022)
The above picture shows the broad image of the company’s revenue. However, recently the company is solely focusing their strategy in logistics and services. The strategic operations management assignment findings show the recent press releases made by the company show that primary stakeholders, board of directors of the company, had predicted and prioritized their focus on the class transportation and logistics services to make Maersk as an integrated Transport & Logistics company. The above picture also shows that the majority of the revenue is related to logistics services and as per company’s strategy report around 14% of sea related trade is done by Maersk services. Although the overall strategy is not clear, the report suggested that stakeholders mostly consider separation of entities individually to focus on separate entities that can address sustainability, improve agility and focus on CSR values. The company also claimed that there are three ways that are trying to re-innovate the logistics facility of the company, which included joint-ventures, mergers or listing. However, the company also mentioned that depending on the market development and structural opportunities, the final strategic planning will be developing in the upcoming next 24 months (Investor.maersk.com, 2020).
Figure 3: Different strategies use by the company
(Source: Investor.maersk.com, 2020)
For such a global diverse company, the above picture shows different strategies adopted by the company based on their different services.
4.2 Process choice and layout
Understanding the capability of current management requires process mapping to identify different flaws along with opportunities for improvement. Surely for such a broad company where revenue had been subdivided into several aspects, finding flaw is inevitable. However, the princess choice and layout analysis will be focused on more of the broad perspective rather than short term solutions. The first challenges highlighted by the company in the sustainable agile strategic management is commitment of sustainable capital allocations.
Figure 4: Changes in capital investment
(Source: Investor.maersk.com, 2022)
The above figure shows the changes in capital commitment in the last few years by the company.
Figure 5: Outcome of the capital investment
(Source: Investor.maersk.com, 2022)
The above picture is the outcome of that investment in 2020. Clearly it can be seen that all the investment made by the company did not provide sustainable return meaning flaws in the capital investment can be seen.
Figure 6: Cash flow
(Source: Investor.maersk.com, 2022)
The reason behind such losses cannot be pinned down by lack of capital because the above picture shows the increase in cash flow of the company meaning lack of capital is not the issue here. The second challenge highlighted on this strategic operations management assignment regarding the company is the carbon footprint and cost, blank sailings, and equipment shortages, resulting in long lead times. This is related to the cargo transportation process that is currently going through these types of challenges. On top of that the company also acknowledge that transportations hubs in Vietnam, Laos, Thailand, Malaysia, and Singapore are going through issues related to cross-border land transportation handling and distribution management system along with an experienced logistics partner to develop a robust model and implement it successfully (Maersk.com, 2022). Hence, based on the highlights issue an overall process map can be developed that can show the current capability of the strategic management process and its impact on the future.
Figure 7: Process flow chart
(Source: Developed by author)
The above figure is a strategic operations management assignment flowchart diagram that shows effectiveness of current strategic management found through concatenation of different documents, new later release by the company.
4.3 Managing services, service quality and focusing services
Being such a large-scale company, quality is everything that the company currently stands for. Hence from the leadership to carry a responsibility and to maintain high standards, quality management process involved in every part of the company. There are eight principles had been used and one important digital tool had been adopted by the company.
Figure 8: Eight principle adopted by the company
(Source: Maersk.com, 2022)
The above picture presents those eight different principles adopted by the company as an integral part of the quality management process. Relationship management includes maintaining transparent reports regarding quality standards and focusing on international quality standards to maintain relationships between customers and employees. In order to handle these eight different principles, the company uses Maersk Flow, a digital tool that had been designed to help small scale customers. Introducing digital quality management tools is an integral part of the company’s strategic management plan because handling such a large cargo network on such a global scale the company often needs to deal with small scale customers. With the increment of the number of customers, the company also needs to make sure that the second principle that is customer focus can stand through. These digital tools also address commitment from leadership and employee commitment and engagement principles under different principles of the company.
4.4 strategic operations management assignment - inventory, tactics and MRP/ERP
On this strategic operations management assignment it is clear that technology is considered to be a key differentiator when it comes to inventory control. Maersk is seen to be committing to remain strong for 2022 as well. In 2022, the inventory replenishment will also be supporting goods trade. However, the channel shift to e-commerce has high chances to persist (Alger et al., 2021). More commonly, for Brazil and China, the risks to outlook are increasing. During the past 12 months in 2021, the global supply chains were observed to be affected severely. In 2021, it has been also observed that some of the goods were not transported due to unmet demand. As a result, this affected the business to transport these goods in 2022, together with the normalisation of inventory levels. Moreover, the increasing e-commerce and inventory replenishment requirements are estimated to be high in demand.
Figure 9: Market Growth by Trade
(Source: Murray et al., 2021)
The core ESG commitments of Maersk are categorised in 14 sections. The categories mainly cover all material responsibilities, opportunities and risks across the social, environmental and governance dimensions. Moreover, the business also makes sure that the material cyberattack through increased threat intelligence and response capabilities can be avoided.
4.5 Multi-Tier Sustainable Supply Chain Management
According to a panel discussion held by Maersk, the business is highly concerned in protecting the earth. Moreover, the Senior sustainability advisor at Maersk even stated that solutions can be identified by impressing the challenges (Maersk.com, 2021). The entire strategic operations management assignment team of the organisation takes tremendous efforts continuously to provide dynamic and sustainable supply chain solutions. The company is observed to have a dedicated decarbonization function specifically for decarbonisation agenda.
Figure 10: Merger & Acquisitions
(Source: Zieliski, 2018)
In certain scenarios, the supply chains have been found to be complicated. This is the main reason for the business to design the supply chain management services to help with the logistics complexities (Brown et al., 2018). The strong supply chain backbone provided by this company has expertise in global infrastructure which allows businesses to exceed customer expectations. The broad range of value-added capabilities in this company also allows businesses to achieve objectives with speed, reliability, resilience, agility, sustainability and cost efficiencies (Thomsen and Kavadis, 2022). Moreover, the business also believes in maximising sustainability with the help of focusing on partner operations suppliers. Collaborating and communicating the targets directly increases the chances of providing transparency across the entire network, which also drives improvements towards long term performance goals. This is how the experts in this company handle the logistics processes, which allows businesses to have more time to concentrate on the core business.
4.6 Capacity and scheduling
During 2020, the supply side of the logistics was continuously disrupted due to COVID-19 pandemic. In this particular phase, the business faced a huge shortage of capacity where the air capacity and availability of containers remained tight (Chen et al., 2022). In 2021, in order to ease the congestion impact and support the consumer demand, the business increased the capacity by 6.4%. Here the motive was to help the consumers to mitigate the issues.
Figure 11: Deployed Capacity and Major Market Disruptions
(Source: Park and Li, 2021)
Considering the logistics industry developments, it was observed that the warehousing capacity was not in the spending patterns. For instance, in the USA, the shortage of truck drivers affected the manufacturing and retail supply chains. In November 2021, the capacity of air cargo was estimated to be 7.6% below the 2019 levels. Looking ahead, there is a little possibility for the business where the capacity constraints will abate. However, the business has been identified to be optimistic about the growth in demand for solar energy (Oxelheim, 2019). Moreover, it is also expecting an increase in the shipment capacity, which will be able to provide strong support for the global shipment growth in the next few years.
4.7 Strategic operations and innovation
Maersk is observed to be adopting strategies that promote extraordinary growth and shifts the demand. For instance, the ESG strategy of Maersk includes strategic targets that are quite impressive. In case of the environment, the business has committed to provide 100% green solutions to consumers by 2040. Moreover, by 2025 the business has aimed to create an engaging environment for all the colleagues to ensure that individuals can thrive at work (Alger et al., 2021). By 2020, the business will be procuring sustainability by operating on the basis of responsible business practices.
Figure 12: Strategy of Maersk
(Source: Murray et al., 2021)
The main motives of these strategic targets are to track and drive the progress of the leaders and the frontline teams. In terms of navigating risks, the business is observed to be focusing on supporting the strategic objectives to ensure longevity in the long term.
In conclusion, it can be stated that Maersk has been observed to be the first biggest container line in the world for decades. However, MSC has taken its position by adding more container capacity. It has been quite clear that the strategic processes of Maersk are constantly focusing on expanding and improving the business. During the COVID-19 pandemic, even though the business faced tremendous shortage levels, the business is still prioritising on the important issues and focusing more on providing transparency. Therefore, it can be concluded on this strategic operations management assignment that the constant provision of convenient solutions will be able to manage the current shortage of containers.
In order to prevent the risks associated with strategic operations such as risks in customer service level, mergers and acquisitions integration and decarbonisation, it is advisable for the business to make a business plan so that the issues can be managed. For issues in customer service level, the business is advised to utilise the metrics appropriately (Brown et al., 2018). This will allow the business to understand the important insights about the business. In case of preventing issues with mergers and acquisitions, the company is advised to focus on strategy, diligence and change management. A comprehensive merger and acquisition integration framework will be able to strongly address the issues. On the other hand, decarbonization has been identified. One of the critical issues for the business. In this strategic operations management assignment case, the business is advised to have a vision in line with the ambition of its customers. Here a road map will be able to help the business.
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Brown, S., Bessant, J. and Jia, F., (2018). Strategic operations management. Routledge.
Businessinsider.in, (2022). Maersk is no longer the world's largest container line as MSC takes the top spot. Available at: https://www.businessinsider.in/thelife/news/maersk-is-no-longer-the-worlds-largest-container-line-as-msc-takes-the-top-spot/articleshow/88729819.cms[Accessed on: 22/06/2022]
Chen, W., Botchie, D., Braganza, A. and Han, H., (2022). A transaction cost perspective on blockchain governance in global value chains. Strategic Change, 31(1), pp.75-87.
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Maersk, J.L., Johannessen, H. and la Cour, K., (2019). Occupation as marker of self: Occupation in relation to self among people with advanced cancer. Scandinavian journal of occupational therapy, 26(1), pp.9-18.
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Maersk.com, (2021). Creating a sustainable supply chain to protect the future of your business – Panel discussion. strategic operations management assignment Available at: https://www.maersk.com/news/articles/2021/06/10/creating-a-sustainable-supply-chain[Accessed on: 22/06/2022]
Maersk.com, (2022). Improving efficiency and saving costs with a strategic partnership. Available at: https://www.maersk.com/news/articles/2020/12/18/improving-efficiency-and-saving-costs-with-a-strategic-partnership [Accessed on 20/06/2022]
Maersk.com, (2022). Our history. Available at: https://www.maersk.com/about/our-history [Accessed on: 22/06/2022] Maersksupplyservice.com, (2022). Quality. Available at: https://www.maersksupplyservice.com/quality/ [Accessed on 20/06/2022]
Murray, A., Kuban, S., Josefy, M. and Anderson, J., (2021). Contracting in the smart era: The implications of blockchain and decentralized autonomous organizations for contracting and corporate governance. Academy of Management Perspectives, 35(4), pp.622-641.
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Thomsen, S. and Kavadis, N., (2022). Enterprise Foundations: Law, Taxation, Governance, and Performance. Annals of Corporate Governance, 6(4), pp.227-333.
Wills, L., K., (2022). Maersk Flow launched to help control flood of information. Available at: https://www.freightwaves.com/news/maersk-flow-launched-to-help-control-flood-of-information [Accessed on 20/06/2022] Zieliski, P., (2018). CORPORATE GOVERNANCE IN THE DIGITAL ERA–THEORETICAL CONSIDERATIONS.
ZeszytyNaukowePolitechnikiCzstochowskiej. Zarzdzanie,strategic operations management assignment (29), pp.217-225.