FACULTY OF APPLIED SCIENCES

DEPT. BIOTECHNOLOGY AND FOOD SCIENCES

Operations Management
Assessment T1, Part 2, 60 marks
Group name:

Name Surname Student number Signature

Anothando Goba 230049672

A.Williams
Azraa Williams 230717586

Group task instructions:

Debate the importance of chapters three and seven in groups of 2 and discuss the questions that
follow. Pdf your solution before uploading it into the discussion forum on the Blackboard module page.

Questions:
1. Within operations management, the design of (suitable) goods and services relies on clear
customer requirements and assumes that organisations know their customers and the factors
that ensure customer retention.

Discuss this statement, including appropriate examples to illustrate your view. (30)

2. Materials requirement planning (MRP) as a system furnishes an organisation with critical

Discuss this statement, including appropriate examples to illustrate your view. (30)

Guidelines:

The discussion should be typed (Arial, 10, 1 ½ spacing) using this cover sheet. Include a table of
contents and a reference list. Include, as a minimum, 4 journals and the prescribed textbook in the
reference list for each question.

Areas to improve on: Lecturer Moderator

Presentation and layout (10%)

Content introduction, discussion, overall argument and conclusion (80%)

Referencing, in-text and list (10%)

The CPUT plagiarism and reference policy apply to the assessment.

Goods and service design is an important aspect of operations management that ensures an
organization's long-term success. Customers' demands are important in the design of goods, and
understanding their expectations is critical for providing a successful service. The design department,
separated from operations, ensures that products fulfil client expectations and retention, resulting in
satisfied customers. This technique is based on a thorough understanding of consumer needs,
assuming that businesses know their clientele and the factors that contribute to customer loyalty. The
focus of this essay is to examine and evaluate the importance of precise consumer needs while
designing products and services and to support arguments with relevant examples.

Customer requirements comprise a wide range of factors that influence their preferences, desires,
and satisfaction levels. This includes the entire customer experience, in addition to the actual product
or service. For example, if you're selling automobiles, the most important client needs may be
reliability and durability. The key factors that influence customer requirements in the automobile
industry are the performance of the vehicle, styling and design, safety features, connectivity and
technology, and the comfort and convenience of the vehicle. Toyota uses a customer-focused
strategy and is known for paying attention to the wants and needs of its customers. Toyota gained a
reputation for dependability and durability, resulting in high customer loyalty and repeat purchases
over time. Toyota is noted for building dependable and fuel-efficient automobiles, meeting consumer
demands for dependable and reasonably priced transportation. Tesla prioritizes consumer feedback
to improve charging infrastructure, driving capabilities, and range, demonstrating their commitment to
meeting customer's needs (Robles, 2017). Tesla is revolutionizing the auto industry by enhancing the
customer experience. The electric vehicle company has revolutionized the service process, allowing
customers to pre-order Model 3 models and schedule appointments directly through their car's
console. Tesla's service network sends mobile technicians to customers, ensuring issues can be
identified from a customer's garage, making it a quicker and easier process to deal with issues.
Understanding your consumers' wants is vital for developing a successful product or service business.
(Kruger et al., 2014).

Understanding key consumers, customer groups, and potential customers—understanding the 'voice
of the customer', their short-term and long-term wants and expectations—essentially all improves the
design, production, and delivery processes. Understanding consumer wants is vital for businesses
since it enables them to: customize their products; provide excellent marketing techniques; and
provide excellent customer service. Strategic approaches to satisfying customer requirements are to
gather customer feedback and conduct consumer surveys. Developing a more enticing brand offering,
optimizing your marketing efforts, and informing internal teams to develop data-driven strategies could
improve the design of goods and services in a business. (The Handbook of Technology and
Innovation Management, no date). Designing relevant goods and services requires aligning company
strengths with customer expectations. (Julaeha, 2023).
Planning, idea development, system design, detailed design, testing and improvement, and
production initialization are the six processes in the design process. (Kruger et al., 2014) One of the
fundamental elements of operations management that has a direct effect on the success of a
business and customer satisfaction is designing products and services that are customized to the
needs of the customer. Nike, for example, lets customers use the Nike By You platform to create their
sneakers. Customers can utilize this service to build unique pairs of shoes that reflect their particular
style by choosing from a variety of colours, materials, and design features (Technavio, 2021).
Customized products can help businesses differentiate themselves from their competition, develop a
stronger brand image, and provide a more personalized experience. Essentially Companies may set
themselves apart from their competitors and leave a lasting impact on their customers by providing
unique and memorable items. This can lead to increased brand awareness, consumer loyalty, and
ultimately higher levels of satisfaction. Transforming specified client requirements into product
features, service offers, and overall experiences is a necessary step in the product development and
design process. For example, manufacturers of smartphones or computers customize their designs to
meet consumer demands for sharp looks, innovative functions, and flawless user interfaces (Julaeha,
2023). In the smartphone market, Samsung and Apple have different approaches to assessing client
preferences and needs and implementing design trends. Apple's design language includes clean
lines, straightforward interfaces, and a focus on providing a smooth user experience. Recognizing
growing concerns about privacy, Apple has built technologies like Face ID and privacy-focused
settings into its products. Apple prioritizes client preferences, for example, improving photos and
videos, to fulfil their requirements and desires. Successful smartphone companies are more aware of
their target demographics and market groups. For example, brands like Samsung stress
customisation in their user interfaces, allowing customers to personalize their devices to their liking.
Its target market is wide and diverse, with simple technological interfaces, strong devices for outdoor
enthusiasts, and mid-range phones for consumers on a tight budget. In both smartphone brands and
others, to keep customers loyal to their brand, smartphone manufacturers prioritize aspects including
frequent promotions, customer reward packages (getting a free phone cover), software upgrades,
customer support, warranty plans, and brand reputation.

The capacity of organizations to regularly meet and surpass consumer expectations is closely related
to customer retention. Businesses gain a competitive edge and cultivate a devoted customer base by
creating products and services that meet customer needs. A company should be concerned about
retaining its customers, as it can produce superior relationship dynamics. Because it costs less to
retain customers than to acquire new ones, organizations have recognized customer retention as a
primary goal of relationship marketing (Piskar and Faganel, 2009). According to Kotler (2009),
providing great customer value is the most crucial factor for businesses looking to achieve high levels
of customer loyalty. Kotler emphasizes that businesses that focus a lot of time and energy on bringing
in new clients rather than keeping hold of their current clientele have demonstrated high levels of
customer loyalty. Furthermore, businesses have historically placed more of a focus on closing deals
than developing long-term partnerships, on pre-selling and selling rather than on providing after-sale
customer care. (Smith and Chang, 2009)
Customer retention is crucial for businesses to improve their customer loyalty and satisfaction.
Kotler's five steps for reducing customer loss include defining and measuring retention rates,
identifying causes of attrition, estimating profit loss, determining the cost of reducing defection, and
listening to customers. (Kotler, 2009). By following these steps, organizations can build strong
relationships and develop a plan to build better relationships with their existing and future customers.
By following these steps, businesses can ultimately enhance customer retention. (Sibanda and
Ndhlela, 2015) The hospitality sector serves as an excellent example, with hotels customizing their
offerings to meet the preferences of particular customers. In the hospitality industry, customized
welcome notes, preferred rooms, and behaviour-based recommendations are provided. To learn
about each guest's unique preferences, including preferred in-room amenities, pillow types, and room
temperatures, hotels can leverage data analytics and guest profiles. A more customized experience
can also be enhanced by personalized contact via emails, mobile apps, face-to-face meetings, and
loyalty programs. Another great example is Ikea, which is a low-cost, high-quality furniture and decor
brand that has a loyal customer base due to its customer support and customer success strategies.
The company provides interactive design tools on its website and produces video tutorials on
YouTube to help customers visualise and assemble popular products. In the automotive industry,
another example is how FordPass is a tailored app that delivers information specific to a car, such as
maintenance reminders and personalized responses. Customers can use the app to make
appointments and earn rewards; this thus increases customer retention in the Ford car business.

The main factors that influence client loyalty and retention are quality and value. Product quality refers
to how well a product meets the needs of its customers. Value: By keeping the prices competitive
and/or offering discounts, you may ensure that your customers come back. Offering competitive rates
and enticing discounts in comparison to market trends is another important component in attracting
repeat purchases from existing clients. If a customer is satisfied with the product, they will repeat the
purchase rather than buy from someone else. Convenience and ease: Most of today's shoppers
choose fast and easy delivery alternatives. They prefer a variety of options, such as free or rapid
delivery. Dedicated and personalized customer service may make or break a client retention strategy.
Trust, transparency, feedback, and improvement. Recognition, Rewards, and Loyalty Perks: Loyalty
programs are critical to consumer retention. (Parsin, 2023)

Customer-centric design is a viewpoint that prioritises the customer during the decision-making
process. It entails knowing their needs, tastes, and desires and creating products and services that
reflect those insights. However, this strategy is not always simple to implement. One of the most
difficult aspects of customer-centric design is determining what customers want. Customers are
complex individuals with preferences and expectations. It can be difficult to collect precise and
complete information about their needs and objectives. Furthermore, client needs are continually
changing; therefore, firms must adapt and change their plans regularly. Resistance to change is an
additional prevalent obstacle to implementing customer-centric design. Shifting to a customer-centric
strategy necessitates a cultural shift within the organization. Overcoming this reluctance requires
excellent communication, leadership, and a clear understanding of the benefits of customer-centric
design. To understand how customers' needs are changing, organizations need to use data analytics,
consumer feedback channels, and market research. If this is not done, products and services might
be designed poorly, which would lower satisfaction with them and retention. (Krugerral., 2014 )
Customer-centric initiatives, utilising customer-centric design, aim to enhance customer satisfaction,
thereby ensuring the success of these initiatives through the use of specific metrics. Metrics that
measure consumer satisfaction, loyalty, and advocacy are increasingly meaningful in this setting.
However, determining these intangible characteristics can be difficult and may warrant the use of new
methods and methodologies. Despite these challenges, strategic planning and customer-centric
design can enhance a company's reputation, profitability, and services, ensuring businesses meet
their customers' needs and desires. (Tsymbal, 2023)

In conclusion, the text emphasizes the importance of understanding and meeting customer needs in
the design of goods and services to ensure long-term success. By aligning company strengths with
customer expectations, businesses can differentiate themselves, enhance customer loyalty, and
ultimately improve customer retention. Customer-centric design, although challenging to implement, is
crucial for businesses to adapt to changing customer needs and preferences, ultimately leading to
increased customer satisfaction and success. Examples from a range of industries, including the
automotive, hospitality, smartphone, and sneaker industries, highlight the dynamic nature of this
relationship and the necessity of constant effort to remain aware of how customers' requirements are
changing. The capacity to create and provide products and services that customers find appealing
continues to be essential to an organization's success in an ever-changing business environment.
 The role of Materials Requirement Planning (MRP) in managing a successful manufacturing
process

Material Requirements Planning (MRP) is a standard supply planning approach designed to assist
organizations, particularly product-based manufacturers, in understanding inventory requirements
while balancing supply and demand. Businesses utilize MRP systems, which are subsets of supply
chain management systems, to efficiently manage inventories, schedule production, and deliver the
correct product—on time and at the best price. (Jenkins, 2020)

Material Requirements Planning (MRP) systems allow for the timely delivery of both purchased and
internally created components and subassemblies, right before they are required for the next step of
production or shipment ensuring that cash is not tied up in inventory. This strategy enables managers
to track orders throughout the manufacturing process, assisting purchasing and production control
teams in ensuring that the correct supplies are moved to production or distribution stages at the
appropriate time. MRP works on the assumption of fluctuating demand, aiming to reduce stockouts
and prioritize streamlining the supply chain. It is based on realistic demand estimates for each product
and a detailed bill of materials (BOM) for each component or subassembly. By calculating
requirements week by week, MRP allows managers to predict probable delays or shortages and alter
release dates to meet delivery deadlines. However, for MRP to be implemented successfully, all staff
members in all jobs must adhere strictly to the rules. They must regularly enter updates into the
system and make choices based only on data from the system to avoid mistakes building up in the
system's memory.

Material Requirements Planning (MRP) works by systematically addressing three essential concerns:
what materials are required, how much is required, and when they are needed. It begins by reverse-
engineering a final goods production plan, resulting in an extensive inventory list of the
subassemblies, parts, and raw materials required to meet the planned manufacturing schedule.

In essence, MRP serves as a technique for identifying the resources and components required to
make a certain product, assisting corporations in inventory management while ensuring supply and
demand are balanced. By processing raw data, MRP provides managers with useful insights into their
labour and supply requirements, ultimately increasing production efficiency.

The inputs for an MRP system encompass the Master Production Schedule (MPS), Inventory Status
File (ISF), and Bill of Materials (BOM). The MPS delineates the quantity and timing of end products to
be manufactured, derived from customer orders and demand forecasts. The ISF provides current
information on inventory levels, locations, and statuses. The BOM furnishes an exhaustive list of raw
materials, components, and assemblies indispensable for production or repair.

The Material Requirements Planning (MRP) process consists of four critical steps that are necessary
for effective production management. The process begins with predicting demand and identifying the
necessary resources using the Bill of resources (BOM). This stage is breaking down demand into the
specific raw materials and components needed for manufacture. Second, MRP compares this
demand to current inventory levels, ensuring optimal resource allocation. MRP aids in the efficient use
of resources to satisfy production needs by comparing demand to available inventory. Third, MRP
assesses the time and labour required for manufacturing, establishing deadlines for production
operations. This ensures that production schedules are in sync with demand, and resources are
allocated efficiently. Finally, MRP continuously checks production processes for faults and
immediately notifies managers of any delays. To guarantee efficient operations and prompt product
delivery, it also suggests backup strategies for meeting production deadlines. All things considered,
the MRP process simplifies production management through precise demand estimation, optimal
resource allocation, production activity scheduling, and proactive problem-solving.

Primary reports such as planned order schedules, order releases, and modifications to planned orders
are among the outputs of MRP. These reports approve order placements, provide crucial information
about upcoming material orders, and indicate any changes or cancellations. In addition, secondary
reports estimate future inventory requirements, address significant concerns like delayed orders or
excessive scrap rates, and offer insights into system performance
control reports, planning reports, and exception reports. MRP improves overall operational
performance by facilitating efficient production planning and inventory management through such
outcomes. (MRPeasy, 2018)

David Kruger, Roy Ramphal, and Mark Maritz, authors of Operations Management, owe the success
of MRP to being logical by nature. To fully understand how the logic of an MRP system works, we will
inspect a hypothetical example from the Harvard Business Review:

According to a master production schedule created for the upcoming year, it is learned that a
company wishes to supply a yo-yo to a customer in seven weeks.

The bill of materials informs the company of the components they’ll l need, which include two wooden
sides, one wooden peg, a length of rope, and a cardboard box with written directions. The company
does not have any stocks or open orders for these parts, according to the inventory status file, except
for one wooden side that is now in stock. The lead times for procurement are as follows: five weeks
for sides; one week for pegs; one week for string; and four weeks for boxes. Furthermore, we are
aware that the toy's actual assembly will take a week. We will thus need everything in time for
assembly during the sixth week to ship during the seventh.

While ordering all these parts would not be too difficult at this time, if the company did, next week,
they would have a peg and some string that would be kept in stock for five weeks. One toy doesn't
matter, but what if this were an order for fifty thousand toys? All the stock kept in storage would
increase warehousing costs in addition to the cash being tied up in inventory instead of circulating
within the company to improve other processes.

So rather than placing an order for everything at once the MRP system moves backward from the
delivery date. Since every component will be required by week six, it can easily determine the best
time to place the orders by deducting lead times. This offset lead time will lead to scheduled orders for
one wooden side the following week, a box the week after, and the peg and thread three weeks after
that, all while netting out current inventory balances. In turn, we can see that our delivery would be
two weeks late if the sides need red paint, which has a three-week lead time, and no paint is
available. If this is the case, the MRP system will alert managers of the issue as well as propose a
contingency plan such as arranging for a later delivery date for the yo-yos or speeding up the paint
and coating. If a contingency is implemented it is extremely important to only change one part of the
manufacturing process so as not to disrupt the system. (Miller and Sprague, 1975)

This example highlights the critical nature of MRP systems for businesses as it gives them visibility
into the inventory needs that are required to meet demand.

By utilizing MRP systems businesses may efficiently optimize production schedules and inventory
levels. This knowledge is extremely advantageous as it helps avoid typical mistakes like ordering
excessive inventory, which raises carrying costs and takes up cash that could be used for other
purposes. Additionally, MRP helps companies steer clear of circumstances in which a shortage of raw
materials prevents them from meeting demand, which can result in lost sales, cancelled contracts,
and out-of-stock problems. Furthermore, by averting interruptions that can postpone sub-assembly
builds and ultimately lead to higher production costs and lower output, MRP is vital to preserving the
efficient operation of production cycles. The value of MRP resides in its capacity to increase
operational effectiveness, reduce expenses, and guarantee prompt product delivery to satisfy
consumer demand. (Jenkins, 2020)

Businesses can benefit greatly from the use of Material Requirements Planning (MRP) systems in
many ways, including increased productivity, better quality control, and higher customer satisfaction.
MRP systems minimize interruptions and increase overall productivity by automating inventory
management, which also streamlines procedures and guarantees consistent stock availability.
Additionally, by removing the need for labour-intensive inventory inspections, MRP systems lower
administrative expenses. They also make it easier to conform to quality management standards like
ISO9001 because of uniform procedures and accurate data. In terms of client satisfaction, MRP
systems give real-time inventory information and early warning systems for possible delays, which
instil confidence in supply reliability, especially in the face of supply chain difficulties. Furthermore, by
collecting data in real time, MRP systems let firms analyse success more accurately and make quick
adjustments to inventory management techniques. (Anon, 2022)

These benefits can be observed in many companies by comparing their success before and after the
implementation of MRP software.

Paddock Gear & Engineering, a Zimbabwean supplier to blue-chip companies (most reliable and
valuable companies) in the power transmission sector, faced challenges with maintaining control over
shop floor operations and ensuring quality control standards as it expanded to meet growing demand.
This struggle extended to tracking job profitability, which refers to tracking the success of each job
individually and how they contribute to profit, for the company's director. To address these issues,
Paddock implemented an MRP system, consolidating various aspects of production management into
a single suite. This integration included manufacturing instructions, sales orders, work orders, batch
traceability, and job costing. With the MRP system in place, critical information regarding
manufacturing jobs became easily accessible, from job status to associated costs. According to David
Markle, the company's founder, and director, adopting MRP software alleviated workload pressures,
reduced costs, and impressed both customers and assessors. Markle estimates that the MRP system
has effectively saved the company from needing to hire two additional full-time staff members. (Bland,
2021)

Control valve manufacturer Northvale Korting (UK), which serves a variety of industries including the
automotive, petrochemical, and marine sectors, discovered that its antiquated IT infrastructure was
lacking in features that were necessary for present corporate operations. To bridge this gap and
improve inventory control and operational control, Northvale decided to switch to an MRP system. The
MRP system was smoothly incorporated after a two-month implementation phase and comprehensive
staff training that lasted ten days. This all-inclusive system took care of important aspects like
inventory management, batch procurement, sales order processing, and shop floor data recording.
Northvale has seen significant improvements in job costing, operational effectiveness, and cost
reduction as a result of implementing the MRP system, highlighting the many benefits of this
technological advancement. (Bland, 2021)

Although manufacturing is the most common industry in which MRP systems are used and
implemented it is also invaluable in other sectors, like the food industry. Firstly, MRP ensures efficient
inventory management by accurately tracking ingredients, components, and finished products,
thereby minimizing waste, and optimizing shelf life. Secondly, MRP facilitates batch traceability,
enabling quick identification of the source of any product issues, which is crucial for food safety and
regulatory compliance. Additionally, MRP helps in just-in-time manufacturing, allowing food
companies to minimize inventory levels while maximizing product freshness, which is vital in
maintaining quality and meeting customer expectations. Moreover, MRP systems assist in capacity
utilization and maintenance planning, ensuring smooth production operations and preventing
unexpected downtime. Overall, MRP plays a critical role in enhancing efficiency, quality control, and
compliance within the food industry, making it indispensable for businesses operating in this sector.
(Lauri, 2020)

Thus far this paper has discussed what MRP is, why it is important, its benefits, and its impact on real-
life businesses as well as various industries. But to have a comprehensive understanding of the
system we must also acknowledge its limitations and flaws.

The strong dependence on the accuracy of the supplied data is one major disadvantage. Inaccurate
order numbers, ineffective inventory management, and scheduling delays can all result from
inaccurate data entering the system. Furthermore, the adoption of MRP systems is made more
complex and expensive by the need for substantial database maintenance. Additionally, many
organizations find it expensive to deploy an MRP system due to the significant initial investment
necessary. Notable drawbacks include the inflexibility of production scheduling and the propensity to
store more inventory than is necessary. Finally, while MRP systems provide answers for inventory
management, an integrated Enterprise Resource Planning (ERP) system may be more
comprehensive or adaptable. In general, MRP systems offer useful features for inventory
management; nevertheless, companies should consider these disadvantages against any potential
advantages before deciding to implement them. (Kenton, 2024)
In conclusion, Material Requirements Planning (MRP) systems are essential tools for contemporary
companies, providing a systematic approach to resource allocation, production scheduling, and
inventory management. MRP helps businesses satisfy customer demands, cut costs, and improve
operational efficiency by continually evaluating demand, optimizing inventory levels, and streamlining
production processes. Although MRP systems have certain limitations, such as problems with data
accuracy and initial investment expenses, these are outweighed by the advantages they offer in terms
of higher customer satisfaction, more productivity, and better-quality control. Production management
has been transformed using MRP systems, as evidenced by real-world examples from a variety of
industries, such as manufacturing and food production. This has led to operational excellence and
ensured corporate success in the current competitive environment.

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