INTRODUCTION OF THE COMPANY (ARGOS)

Argos was founded in 1973, owned by GUS plc and a part of Home Retail
Group. Home Retail Group was demerged from its parent company, GUS
plc, in October 2006 and since then It started selling products under two
distinctive and complementary retail brands, Argos and Homebase, which are
household names In UK . Argos has recently gone international by opening
their first ever shop in India in this year. During the year Argos reviewed its
performance against a number of industry benchmarks. Argos was also
privileged to be nominated for a number of corporate responsibility awards,
receiving top honours in several categories. Argos is a responsible retailer.
Every year they continue to make good progress on their corporate
responsibility aims and commitments. Argos has met the published social and
environmental criteria required for investable companies. Argos calculates
these indices by assessing the top 10% of companies against a proprietary
framework to judge their sustainability. Argos has been awarded a silver class,
placing us in the top four general retailers. Argos progressed to the gold band
from silver in 2007. Sustainable Investment Research International’s draft
profile for Argos has been rated by independent analysts PIRC using their SiRi
methodology. Argos has been included in the proprietary ethibel index, assessed
by French analysts Vigeo. In 2007, Argos led the retail sector in donations
generated from others as a proportion of our community investment. Argos has
received several notable corporate responsibility awards during the last 12
months. DJSI Silver award, BitC6 Gold award, Retail Week CSR award finalist
2007. Argos won in the ‘Supply Chain Innovation’ category at the 2008 European
Supply Chain Excellence Awards for its work in smoothing stock flow with Far
Eastern suppliers. Argos was a finalist in the ‘High Street Recycling Champion’
category at the 2007 Letsrecycle.com Awards. Argos also received the gold
award for institute of fundraising. The gold award is a symbol of excellence and
is awarded to employers who are successfully running their business. ‘Argos has
proved itself by successfully running the business and gaining the top slot in all
departments of excellence’.

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 TASK 1

NATURE OF THE ORGANIZATION

Argos has got a very strong workforce of some 34,000 people across the
business. Argos is part of Home Retail Group, the UK’s leading home and
general merchandise retailer. Argos is being the only one of its kind of retailer
which is very well known for variety of choice, best value and convenience.
General merchandise items and household products are sold in Argos .It has
got over 700 stores throughout the UK and Republic of Ireland. Purchases can
be made online and over the telephone. Argos sales is growing day by day
and it registered 8% growth to £4.2 billion in the last financial year.
Argos has three kinds of stores Argos regular stores, Argos call & collect stores
and Argos extra stores. Argos regular stores are smaller stores and just keep the
Argos regular range of products whereas the Argos extra are bigger stores and
keeps the full range of products. Argos call and collect stores are very
smaller stores that do not hold any stocks, but they can get both regular and
extra items for customers. Argos call & collect stores are used as pick-up
point to save customers a long journey to their nearest stocked –in store.
There over 2500 extra items in Argos extra and the products which are
extra are marked by extra symbol an are found only in Argos extra but it can
also be ordered in regular Argos stores which can be get normally in three
working days.

TYPES OF THE PRODUCT AND SERVICES

Argos offers plenty of products and services. The products their offer it’s almost
covers all the section of daily and entertainment needs of present life. Argos
sells varieties of product from garden, diy & leisure, sports and fitness,
personal care and bathroom, kitchen and laundry, furniture and furnishings,
baby and nursery, office, pc & phones, sound & vision, photography, video
games, toys& games, jewellery& watches, gifts etc. Apart from these it has got
2500 extra lines of products and it always adds some new products twice in the
year
Apart from all these products Argos also offers plenty of services. Those
services include Argos credit & insurance [Argos cards, Argos master
cards, Argos home insurance, Argos car insurance, Argos pet insurance,
Argos travel insurance and Argos homeowners loan],Argos business solutions
[Argos rewards and Argos business purchasing], Product insurance
[breakdown cover and free accidental cover] and Gift list services [set up list,
amend list and view and buy list.

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Argos is serving almost over 130 million customers every year through its stores
and also serving four million customers either online or over the phone.
Around two third of the country’s population,i.e,17 million UK households
on average have an Argos catalogue at home at any time. The target of the
company is to add around 30 stores per annum with the chain expected to
exceed 800 over time. Its internet site is the second most visited internet retail
site in the UK.

OPERATIONAL STRENGTH AND WEAKNESS

As it can be seen that Argos offers plenty of goods and services in more than 700
stores all over the country and through other different mediums ,it is only
possible because of the way its operates .Its operational strength lies in its
strong workforce and a very strong operating team [distribution ,supply chain
,process improvement team ,distribution HR ,etc].But as ‘operating conditions
are now getting more challenging’ [D.Crawford, aug 2008, The financial express]
and the much unexpected frequent change in present market and where a
business is serving more than 130 million customer, it is very hard to run a
business with plenty of goods and services .It is always hard to run a business
with more than one product ,if a business have more than one product ,there
will always be technical glitches and operational complications which makes the
life of the operational team very hard. As it is said every single lining has a
cloud, and every strength has a dark side. Strengths can become weakness and
turn on you when you least expect it.

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 TASK 2
INPUT-OUTPUT MODEL & CURRENT OPERATION STRATEGY
The link between Argos and its customers can be examined through
transformation process [input-output model]. The input-transformation-output
model provides a useful way to visualise the planning and scoping process
against the implementation process and the link between the organisation
and its customer.

The input-output model basically has three stages i.e, input, transformation
and output. Input is the stage where resources are supplied. At this stage there
should be consistency in supply of resources and the resources should be of good
quality. Resources are of two kinds [1] transforming resources i.e., labour,
equipment, machinery, facilities, etc. And [2] transformed resources i.e.,
material, information and customer. These transforming or transformed
resources are then put into transformation stage from where the final product
comes out at the output stage. But Most of the products that are sold in Argos
are not manufactured by them, but are mainly imported from different
manufacturers from different countries. The distribution senior managers are
responsible for the purchase of products. They have to make sure that the
quality of products has got the standard to be sold in Argos, apart from this
they have to make sure that they have ordered the right quantity and according
to their budget and from the right place.

Argos has different distribution centres all over the country. The main
distribution centre is the central distribution centre. All the imported products
from the manufacturers first come to central distribution centre. The central
distributions team take over the process to distribute it to different centres. In
the central distribution centre the distribution team transformed and
categorised the products in different sections and sent it to different
distribution centres like Barton , Basildon , Bridgewater, Castleford , Corby,
Heywood, magna park, Kettering and Moss End. From there the different
managers and regional managers sent the products required to different shops
all over the country. There are different managers like support manager, supply
chain manager, regional manager, etc.

From there it’s been send to different shops all over. There are three managers
in Argos shops store manager, stock room manager and shop floor manager.
When the products comes in the shops the stockroom manager takes over
the process and distribute it to team leaders. The team leaders then
supervise the team to put all the products on the shelf. Each and every
deliveries got a detailed list of the products their location and where they
coming from .Then after putting the deliveries away, its been released on the

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system so that all the products are ready to sale. From there it reaches to
customers. The operation inside the shop runs in a systematic way. Customers
can find that the products they wanted are available or not on the machines
provided in the shop. It says the price, units available, and if not available
whether it can be ordered. Then customer can pay at the kiosk in the shop or
queue up to pay at the tills. As soon as the customer pay the money they get
the receipt saying order number and the section and at the same time there
is a ticket comes out in the stockroom saying the catalogue number of
the item, its location, units available, order number, time of ordered in
the limited time set for serving customers [present serving time is 4.17 seconds
from the time customer pay the money] Then the designated person responsible
for picking pick the item and pass it to the collection team and then the
collection team gives it to the customer.

PERFORMANCE OBJECTIVES
There are five performance objectives in operation i.e., performance objective.
They are quality, speed, reliability or dependability, flexibility and cost. These
five performance objective are very much relevant to Argos, which is discussed
below.

Quality
Quality is placed first in our list of performance objectives as well as in the list
of Argos because many authorities believe it to be the most important. There
are two important points on quality as a performance objective.

Customers are a very important part of business and so in Argos. The quality
control manager is responsible for the quality of the products and make sure
that the customers who ‘consume’ the operations products and services will
have less (or nothing) to complain about. And if there is any complain on any
items it is sent back to the lab for quality checking, and if any defect found in
that particular item it is RTM [Return To Manufacturer] So if the customers
have nothing to complain about they will (presumably) be happy with their
products and services and are more likely to consume them again. This brings in
more revenue for the company.

The senior distribution manager’s team make sure that the conformance quality
is high in all the operations processes and activities and very few mistakes will
be being made. If there is any mistake they respond it quickly and come out
with a solution. This generally means that cost is saved, dependability increases
and speed of response increases.

Speed
Speed is a shorthand way of saying ‘Speed of response’. It means the time
between the customer ordering an item and, them getting it. There are internal
and external affects.

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Externally speed is important because it helps to respond quickly to customers.
Argos has set a serving time of 4 mins and 17 secs from the time customer
orders a products or a services .And, this is usually viewed positively by
customers who will be more likely to return with more business.

The internal affects of speed have much to do with cost reduction. Usually,
faster throughput of information (or customers) will mean reduced costs. Argos
has more than 700 stores all over the country and it is trying to open another
100 stores by next year and thus reaching to the customers thereby increasing
its utilisation and reducing its cost by saving fuel [reducing delivery through
transport]. The distribution improvement team make sure that the speed of
internal throughput within an operation is not slow. When materials, or
information, or customers ‘hangs around’ in a system for long periods (slow
throughput speed) there is more chance of them getting lost or damaged with a
knock-on effect on dependability.

Dependability
Dependability means ‘being on time’. The operation team in Argos make sure
that the customers are getting the quality product or services in the fixed
serving time [4 mins and 17 secs] which they are promised. Again, it has
external and internal affects.

Externally (no matter how it is defined) dependability is generally regarded by

customers as a good thing. Certainly being late with delivery of goods and
services can be a considerable irritation to customers. In Argos the supply chain
manager is responsible for the smooth and proper supply of products and
managing the whole supply network and makes sure that the products reaches
to the customer on time. So, again, the external affects of this performance
objective are to increase the chances of customers returning with more
business.

Flexibility
Flexibility in operation means ‘being able to change the operation in some way’.
The operating system in Argos very much flexible. There are external and
internal affects. Externally, Argos has different types of flexibility and allows
its operation to fit its products and services to its customers in some way. It has
got a wide variety of products and services for its customers to choose from
which is mix flexibility. In every six months Argos develops new products and a
service in ideas which customers may find attractive which product service
flexibility is. Argos has got a process improvement team and different projects
managers which allow the operation to adjust its output levels and its delivery
procedures in order to cope with unexpected changes in how many products and
services customers want, or when they want them, or where they want them
which are Volume and delivery flexibility.

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Once again, there are several internal affects associated with this performance
objective. Argos is very much flexible which speeds up response, saves time (and
therefore money), and helps maintain dependability.

Cost
The project manager, distribution strategic manager, continuous improvement
manager, etc in Argos are always planning in improving costs the cost structure
of different organisations can vary greatly. The different categories of cost vary
in the other four objectives which are discussed above. Second, and most
importantly, the other four performance objectives all contribute, internally,
to reducing cost. This has been one of the major revelations within Argos
operations management over the years. "If managed properly, high quality, high
speed, high dependability and high flexibility can not only bring their own
external rewards, they can also save the operation cost’’.

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 TASK 3
ROLE OF DESIGN & TECHNOLOGY OF OPERATING SYSTEM

Design refers to the process of originating and developing a plan for a product,
structure, system, or component. It is used for either the final (solution) plan
(e.g. proposal, drawing, model, description) or the result of implementing that
plan (e.g. object produced, result of the process). There are four types of
designs namely product design, process design, layout design and network
design.

Product design is the idea generation, concept development, testing and

implementation of a product which can be physical, object or a service.
Whereas process design is a design of processes for desired physical or chemical
transformation of a materials into a product. Process design can be the design
of new facilities or it can be the modification or expansion of existing facilities.
The design starts at a conceptual level and ultimately ends in the form of
fabrication and construction plans. The interrelationship between the
product/service design and process design has implications for the cost of
production or operation. The product and process design can overlap and in the
cases of services this can be to a greater extent because of the service
characteristics of intangibility, inseparability, and simultaneity. Network design
is basically a set up of network in designing the product. The layout design is
physical location and the arrangement of transforming resources. There are four
basic types of layout design i.e., fixed position layout, process layout, cell
layout and product layout. It should reflect the volume and variety. Technology
is considered very important in product/process design. Technology gives the
idea to the designer about the present concept of product in the market.
Technologies are a broad concept of transforming the material and design it in a
manner of present market need. Product/process technology is used to convert
the resources into final product which is core product. It helps to develop more
advance products in such a way with improved quality. It also helps to maintain
the consistency of supply.

Argos is a process layout, where transformed resources are put together for
sale. Process design is very important in this type of business. If the process
design fails the whole business is going to fail as well. For this Argos has got a
separate team for that which is process improvement team.

The above team is responsible for planning process that involves decisions about
the physical arrangement of economic activity centers needed by a facility’s
various processes. They make plans that translate the broader decisions about
the competitive priorities, process strategy, quality, and capacity of its
processes into actual physical arrangements.

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Design activity can improve the quality of operating system. In Argos design
activity play a very important role. It helps to develop and deliver the
continuous improvement rollout programme across the distribution network
including resources and required enablers to facilitate the implementation of
continuous improvement on a site specific basis, in line with another initiative
across the business. It supports site base planning and review sessions. It
establishes and operate a reporting mechanism that provides written and
statistical data on the effectiveness of continuous improvement. Design activity
leads to improve events and develop other aspects as well. It provides
excellence team across the wider business. It delivers a proper guidance in
operation management team across the distribution division. It makes the
divisional training team to deliver enhanced in house awareness, understanding
and capability of operations team. Design activity supports the division and
business with process improvement to support the requirement for business
growth. It reviews and challenges the internal processes with a view to
improving Argos service to the customers. Design activity gives the knowledge,
ideas and expertise in processes and systems. It evolves and manages
communication in distribution support managers helps in developing and
delivering good quality communication and manages distribution’s
communication strategy.

CURRENT OPERATING ISSUES AND ITS SOLUTION

Argos is running its business very successfully and has got a good operational
team. But now as the world is running fast and it’s getting very hard to forecast
the future of any business, the business and its operating system need to
employ good technology to create a unique market position and successfully
compete against the other competitors. Argos presently is not very well
equipped with such facilities that can change the way the company replenishes
the stock which can be one of the biggest problems in its operating system in
the near future. As Argos is such a big company dealing with plenty of products,
it is very much essential to maintain and replenish stock properly. If the stock is
not maintained systematically the organization will loose its control over
business. At present Argos does not have any such technique to revolutionaries
its systems and infrastructure in order to meet the needs of a changing trading
environment. This can be the biggest problem in operation.

To overcome this operational issue and problem, Argos needs to adopt some new
operational technique. RACO [Replenishment and Core Operation] can be
adopted as a new operational tool. It can be one of biggest system
implementation has ever been taken. ‘’The judges said few other retailers have
so successfully employed technology to create a unique market position and
successfully compete against super market offering increased general
merchandise. They said RACO was a great example of a retailer pre-empting the
need to revolutionize its system and infrastructure in order to meet the needs
of a changing trading environment and ensure continued success in the non-food

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retail sector’’ [Argos post April 2008]. RACO will help and improve daily stock
management, due-day deliveries and moving to a single merchandising system
for stock data. RACO allows faster and more frequent generation of orders and
stock replenishment. RACO will increase the level of engagement in the project
across the business. It will keep the track records of buy-in suppliers and other
external partners updated. So RACO is the new operational technique which
needs to be adopted in order to overcome the present operational issues and
problems.

ROLE OF PLANNING AND CONTROL

Planning and organizing are two management functions that have been popular
research areas in recent years. Control, the third well-known management
function, has received surprisingly little attention. This is perhaps because the
task side of control is noticed and the behavioural or human side is largely
overlooked. But as previously noted, managers should carefully consider the
behavioural aspects of the process when designing a control system if employees
are to be motivated to accomplish assigned tasks.

Effective planning and control is very much important in getting the maximum
output and profit from the business. Effective planning and control includes
proper capacity planning, proper forecasting output, proper resource planning,
proper inventory management etc. It should be dealt according to the nature of
demand and supply of products in the market.

Capacity Planning
Capacity planning is the process of determining the production capacity needed
by an organization to meet changing demands for its products. In the context of
capacity planning, "capacity" is the maximum amount of work that an
organization is capable of completing in a given period of time.

A discrepancy between the capacity of an organization and the demands of its

customers results in inefficiency, either in under-utilized resources or
unfulfilled customers. The goal of capacity planning is to minimize this
discrepancy. Demand for an organization's capacity varies based on changes in
production output, such as increasing or decreasing the production quantity of
an existing product, or producing new products. Better utilization of existing
capacity can be accomplished through improvements in overall equipment
effectiveness. Capacity can be increased through introducing new techniques,
equipment and materials, increasing the number of workers or machines,
increasing the number of shifts, or acquiring additional production facilities.

The planning manager and the distribution manager are responsible for Capacity
planning in Argos. They determine the production capacity needed by an
organization to meet changing demands for its products. Though Argos mainly

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depends on products manufactured by different companies from different
countries role of capacity planners is very important in finding the present need
of the business. They take the feedbacks from stores and distribution chain and
order the products according to the need of the business. In Argos the capacity
planners also decides as to the capacity of products and varieties needs to be
send in different stores.

Forecasting Output
Forecasting output is very important thing in any business. It should be done
according to the nature of supply and demand of product in business. If
forecasting is not done correctly business suffers a huge loss. Though it is an
extremely difficult thing, there are some mathematical models are available to
do forecasting. They are moving average method, time series method, expert
opinion and judgmental method. Before forecasting, operations manager should
clearly define the output units that can be used to forecast the future events.
Ideally, demand should be forecast in output terms rather than input units.
External factors often make it difficult to attain any level of accuracy,
particularly when the demand depends on seasonality. There are several causes
of seasonality and regular fluctuation in demand. It can be geographical and
climatic condition as in the case of travel and tourism products, or even other
causes such as political, behavioral, cultural and social or even financial. For
example, during the morning and evening hours, demand for public transit may
be high and during the business hours, demand for telephone and other
communication services can be high.

Strategic planning manager is responsible for forecasting output in unknown

situation in Argos. Sometimes businesses don’t do well and there are loads of
stock already in warehouse is available. In this situation strategic planning
manager plays an important role in forecasting the situation and getting the
proper output for the business as well as getting the stocks out. In present
trading situation it is very hard to forecast business and so output, but a proper
and close estimation is done by the strategic planning manager to get the
output for the business.

Resource Planning
Resource planning is the planning of how business resources are acquired and
moved from one state to another. Planning resources is very important in any
type of business. Without proper planning production cannot be done in a
smooth manner.

The central operation manager is responsible for proper utilization of resource

and planning in Argos. It includes financial resources, production resources,
information technology, etc. Human skills are managed by the HR manager. The
central operation manager reviews the cost, benefit and resources. Currently he
is engaged in Irish delivery strategy where he allocating resources in proper
way. As they plan for resources they also manage the risks and issues and

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ensuring appropriate action is taken. At present the central operation manager
is engaged with the staff in central operation trying to utilize the resources in a
proper way.

INVENTORY MANAGEMENT AND SUPPLY CHAIN

Inventory is a list for goods and materials, or those goods and materials
themselves, held available in stock by a business. Inventory are held in order to
manage and hide from the customer the fact that manufacture/supply delay is
longer than delivery delay, and also to ease the effect of imperfections in the
manufacturing process that lower production efficiencies if production capacity
stands idle for lack of materials. Managing inventory in the supply chain is
critical to ensure high customer service levels. However, it is also a very costly
asset to maintain. Supply chain management manages the inventory and supply
network

Managing inventory in the supply chain is critical to ensure high customer

service levels. However, it is very costly asset to maintain. Having the right
amount of inventory to meet customer’s requirement is critical. Supply chain
manager in Argos not only manages the supply network keeps track of goods
held available in stock by the business. Inventory are held in order to manage
and hide from the customer the fact that manufacture/supply delay is longer
than delivery delay, and also to ease the effect of imperfections in the
manufacturing process that lower production efficiencies if production capacity
stands idle for lack of materials. Supply chain manager in Argos provides a
comprehensive and professional secretarial advice to operation managers. They
also help the distribution director in maintaining the proper distribution chain.
So the work of supply chain manager is versatile in Argos.

ISSUES OF QUALITY MANAGEMENT AND IMPROVEMNT

Argos has got a comprehensive operational team but still they are lacking in
quality management to some extent. Quality maintenance is a method for
ensuring that all the activities necessary to design, develop and implement a
product or service are effective and efficient with respect to the system and its
performance. Quality management is focused not only on product quality, but
also the means to achieve it. Quality management therefore uses quality
assurance and control of processes as well as products to achieve more
consistent quality. Quality Management is all activities of the overall
management function that determine the quality policy, objectives and
responsibilities and implement them by means such as quality control and
quality improvements within a quality system. The issues related to quality
management in Argos are inconsistency in maintaining the quality of the
product.

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As Argos is dealing with plenty of products, so the products is distributed to the
stores without proper quality checking which decrease the level of quality
management.

To improve this situation Process improvement manager and the continuous

improvement manager has been given the task to make a proper strategy to
control and maintain the quality. Now Argos has set up a lab for quality
checking. It is very hard to check all the products as it is dealing with plenty of
products so if any complaint is made for any products they a quality is checked
and if its found ok they are send back to the stores and if they are not found ok
they are RTM [Return To Manufacturer]. The quality management team is also
engaged taking other initiatives and planning to improve the quality system.
They establish and operate a reporting mechanism that provides written and
statistical data on the effectiveness of the programme.

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 REFERENCES

o Mr. N Saleem’s Hand Notes 2009

o Pearson Education, Operational Management. 4th edition
o www.argos.co.uk
o www.google.com

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