Organization Assessment Category VI - Organization Operation Management
Introduction
Operations management is a managerial involvement of designing, redesigning, and controlling the process of production and daily business operations in manufacturing goods or providing services. It covers an organization’s production or service process system, efficiency & effectiveness evaluation of its productivity, configuration and management of its operational process including its supporting service modeling. Its basic aspects are structural, functional and environmental which include manufacturing process and management, supply chain management, inventory management, human resources management, scheduling, supporting and maintenance. And its principle focuses are problem-solving and accountability to achieve the best trade-off results between cost, dependability, flexibility, quality, and speed.
MBNQA Operation category assesses an organization’s operational focuses on work, product design and delivery, innovation, and operational effectiveness in its strategic implementation, in its value chain management and in its competitive advantage management.
MBNQA’s excellency standards evaluation focuses are on two basic aspects of the operation management: 1) Work processes evaluation which includes key products & related process requirements, designing, performance, measuring, and supporting, etc. 2) Operational effectiveness evaluation which includes cost control and business continuity, etc. (NIST, 2019)
This research is intended to assess the operation managing process and effectiveness of the Ten Thousand Villages (TTV), according to MBNQA’s standard of operation (category 6) excellence and to propose possible improvements.
Work Processes Assessment
“An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims (Wikipedia, 2019).” An organizational structure can be functional, administrative, and divisional to determine how information flow inside the organization, which is important to enable an organization to be effective and efficient.
“The original philosophy of Ten Thousand Villages was inspired by Mennonite values including compassion, service, mutual aid, and peacemaking (Wikipedia, 2019).” Over the years, TTV established a long-term trading partnership with artisans and encourage them to produce marketable crafts, and purchase from them to trade in affluent North America market on artisans behave. TTV also use trading profits to provide training and employment to disadvantaged artisans and workers. TTV’s trading mostly involves artisans in Asia, Africa, Latin America, and the Middle East. (Wikipedia, 2019)
As a nonprofit organization, TTV has structured its organization based on its functional needs as:
- Governance: board of directors for policy decisions,
- Administrative: CEO and executives for strategy and objectives decision,
- Programs: to raise fund by fair trading crafts and to fulfill their mission to thrive community and to better people’s lives, such as afford education and access medical care, and
- Unique management areas: such as volunteer programs, fundraising program, etc.
Field Analysis & Conclusion:
MBNQA’s excellency standards require an organization’s work process to be designed to consider its long-term performance, measurement capability, process capability, etc. The work process needs to be effective to collaborate all stakeholders in its value chain and to identify critical points in the process, and to be efficient in setting in-process performance standards to achieve desired productivity. And, through the work process design, the organization can be positioned advantageable from preferred agile and independent suppliers’ network, with the purpose to help improve the performance of suppliers-partners and to help them contribute to improving the organization’s overall operations as well. (NIST, 2019)
As a non-profit organization, TTV has a standard functional structure that covers its volunteer program, fundraising program and tons of thriving community programs. And, as a fair-trading organization, it has an entrepreneurial partnership with its artisan-clients as its merchandise trading functional business structure and supporting market-to-market functional distribution and retail structure. But, TTV’s main people-development mission objective has emphasized its community thriving programs and labeled its merchandise fair-trading structure as a functional structure that shares the same performance measuring mechanism with its non-profit community thriving, which may have resulted in misalignment of the structure-designing purpose for TTV’s for-profit global business trading unit’s work process.
Operational Effectiveness Assessment
Operational effectiveness (OE) is the measurement of maximizing the use of an organization’s inputs, accomplishing mission objectives, achieving desired results, and performing similar activities better and efficiently. Operational effectiveness is often divided into four components: Leading and controlling functional performance, measuring and improving the process, leveraging and automating(dynamizing) process and continuously improving performance (Business Dictionary, 2019). MBNQA’s excellency standards evaluate operational effectiveness for the purpose to have a safe work environment and to deliver customer values. Its main focuses are cost control, safety & security, and reliability for an organization’s continuing business operation. (NIST, 2019)
Since 2009, Ten Thousand Villages has improved retail trading program’s operation to improve data security and to better manage pricing, payments, promotions, and returns.
As a non-profit organization, Ten Thousand Villages states on its website that its unique fair-trading model creates access to markets for artisans through its long-term “purchase where it is needed” buying-relationship. Its long-term buying program includes the following operational activities:
- Purchase program evaluation: based on the United Nations Human Development Index and the Genie Coefficient’s evaluation of the disparity between poverty and wealth in each country.
- Artisan development: make small investments to create safe workplaces, to increase income and to improve productivity.
- Fair-pricing: price is negotiated to improve living conditions, and some revenue to foster workshop growth.
- Microfinance: interest-free advances are offered when placing an order, giving artisans the cash needed to do their work.
Field Analysis & Conclusion:
In his book of “Competitive Advantage: Creating and Sustaining Superior Performance”, Michael Porter introduced “the value chain is based on the process view of organizations… How value chain activities are carried out determines costs and affects profits.” A value chain analysis identifies an organization’s primary and support activities to establish the relative importance of each activity in the total cost of the product, to identify cost drivers for each activity, and to identify opportunities for reducing costs (Jurevicius, 2013).
As a non-profit organization, TTV has a mission for people development and community thriving, which is reflected in every step of its operational activities. Since artisan-clients professional development is part of TTV’s mission objective, artisan development is not just for fundraising purpose only for its purchasing program, but an important value chain in TTV’s mission achieving operational process. To increase the relative importance of artisan-clients professional development, TTV needs to, first, adjust its fair-pricing mechanism to add market-value based evaluation to improve TTV’s retail/whole business market competitive advantage and to increase profiting from retail/whole business to raise better funding for TTV’s community thriving programs. Second, TTV needs to realign artisan development for some qualified artisans to have the same importance as sponsors to TTV’s fund-raising program.
Conclusion -- Organizational Operations Management
From published online secondary data documents about Ten Thousand Villages, this report’s author analyzed Ten Thousand Villages on the field of operations management according to the standard of excellence of MBNQA award and found, as a non-profit organization,
- TTV has a great non-profit organization structure but lacks small business structure for its for-profit global trading program,
- TTV has great cost saving operational effectiveness but lacks small business financing experiences for its artisan development mission objectives,
- TTV has great people-development centered operation but lack of market value based fair pricing mechanism to improve TTV’s global trading program’s market competitiveness.
SWOT Analysis
Strength:
· Great non-profit organizational structure.
· Great people-development centered operational effectiveness.
· Great social media network to promote product sales.
Weakness:
· Lack of small business functional structure
· Lack of experiences in small business financing.
· Lack of experience to integrate current social media into commercial business operation to raise fund.
Opportunities:
· Artisan-suppliers development’s positive impacts on its fund-raising through its trading business.
· Social media network as a market media to conduct fundraising by trading non-artisan suppliers’ goods.
Proposed Actions:
- Re-align TTV’ global trading program to a small business functional structure to improve results-driven performance evaluation as a for-profit business unit of a non-profit organization.
- To establish a level II artisan development from its purchasing program and align it in its global trading program as a sponsor program to TTV’s fund-raising program.
- Re-align TTV’s fund-raising program as a supplement program to its managerial financing’s commercial loan accessible help for TTV’s artisan-clients’ professional development (workshop) program.
- Re-design fair-pricing operational process to embed market value pricing mechanism in its purchase program to promote artisan-clients’ professional development.
- Take advantage of current brick stores and website and enroll some small business suppliers to TTV’s wholesale and retail program to increase trading profit to benefit fundraising program.
- Expand current online stores to have a commercial brand that catalogs and sales market priced products, from TTV’s artisan-client and enrolled small business suppliers, for commercial merchandise customers such as event organizers and non-charity product-clients.
References:
Business Dictionary (2019) Operational Effectiveness. Retrieved from
Ovidijus Jurevicius (2013) Value Chain Analysis. Retrieved from https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html
Lisa Magloff (2019) The Typical Non-Profit Organizational Structure. Retrieved from https://smallbusiness.chron.com/typical-non-profit-organizational-structure-4896.html
NIST (2019) Baldrige Criteria for Performance Excellence Categories and Items. Baldrige Criteria Commentary. Retrieved from https://www.nist.gov/baldrige/baldrige-criteria-commentary
RIS (2009) Ten Thousand Villages Improves Operations with SAP POS Applications. Retrieved from https://risnews.com/ten-thousand-villages-improves-operations-sap-pos-applications
Ten Thousand Villages (2019) WE’RE MORE THAN A STORE Retrieved from https://www.tenthousandvillages.com/give/
Wikipedia (2019) Operation Management. Retrieved from https://en.wikipedia.org/wiki/Operations_management
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