Strategic Operations Management
|I need only questions 2, 3, and 4 completed.|
Use a healthy mix of academic journals.
2. Critically analyse the role of operational performance criteria within Chevron Upstream Europe, including the implications of resource constraints, time-dependency and focus.
According to Waters (2006), operational performance is critical in the analysis and measurement of a company’s performance against the set standard indicators of efficiency, effectiveness, and sustainable production such as productivity, environmental responsibility, waste reduction, cycle time, and compliance with regulatory guidelines. The Chevron Corporation focuses on ensuring high levels of efficiency in operations and effectiveness of its systems and processes. It applies various criteria of assessing operational performance to ensure that achievement of the above mentioned. However, resource constraints, time-dependency and focus have great implications on the Company.
The company focuses on growing profitably in core areas and building new legacy positions. It purposes to meet the goal through the achievement of world-class operational performance. Operational performance criteria such as quality, flexibility, speed and cost play an important role in pushing the Company towards the achievement of its goals. The application of these evaluative statements allows Chevron to assess its performance and improve areas where there is evidence of low competence in operation. For instance, the elements of cost and flexibility enable Chevron to devise cost-effective ways of production, marketing, and distribution. Attaching the concept of flexibility allows the effective adoption and implementation of more cost-effective measures upon development. Further, as the Company focuses on improved productivity, which plays a major role in boosting its profitability and growth, the consideration of speed is inevitable. Using the criteria of speed allows Chevron to work on its speed of production boosting its productivity significantly (Waters, 2006).
The operational performance criteria play a significant role in the enhancement of operational quality of the Chevron Upstream Europe. Attention to quality as a criterion for measuring operational performance plays a major role in advancing quality improvement in all the processes of the Corporation (Waters, 2006). The criterion is applicable to all the processes and systems of the company and thus critical for the enhancement of quality. The various processes such as exploration, refining, marketing, transportation, and the production of renewables and other efficient energy alternatives demand the consideration of the criteria of quality. The quality of products and services influences the profitability and growth of an organization significantly (Ireland, et al., 2007). Upstream explores and produces natural gas and crude oil. The production of quality products and services shows the company as successful in its major operations. As such, giving attention to quality ensures constant quality improvement, which attracts and retains customers.
Quality consideration plays a significant role in pushing Chevron Corp. towards the maintenance of operational excellence in all its operations. The Company defines operational excellence as a continuous management of process safety (the promotion of personal health and safety), the protection of the environment, energy efficiency, and operational reliability. This criteria enables it to stay committed towards the attainment of superior performance and ensure zero incidents in its operations. Additionally, assessment to determine the quality of operations and the effectiveness of systems causes quality improvement in production and services delivery. This has caused a significant improvement in efficiency and excellence in the Company’s operations. According to a 2011 report by the Energy and Climate Change Committee and the House of Commons, Chevron considers its commitment to safety as fundamental in the way it conducts its business. It has integrated the criteria of quality into operational excellence and in its values, and thus prioritizes it, causing a constant improvement in operational efficiency (Chevron Corporation, 2016). The process further improves the framework of the Corporation’s safeguard, focuses on prevention and helps in building an excellent record of safe operations. As such, the operational performance criteria proves critical in the enhancement of operational efficiency, safety, and health of staff, the society, and the environment.
As operations performance criteria, quality and reliability enable Chevron to maintain high levels of operational efficiency and good customer relations. The assessment of its operations to ensure quality production and efficient processes and systems allows the continued improvement of its operational efficiency. According to a report by the Energy and Climate Change Committee and House of Commons (2011), the Company has drilled various wells around the globe without any serious well control event. Additionally, the operational performance criteria push companies to perform internal reviews to outlines any areas of weakness. Chevron performs internal reviews across its global operations of drilling and refinery processes and well control contingency plans to ensure efficiency and avoid risks (Chevron Corporation, 2015). The operational performance measurement and assessment using the criteria ensures the development of effective policies, rigorous procedures, and efficient control practices that ascertain that deep-water wells are safe and environmentally sound (Energy and Climate Change Committee; House of Commons, 2011). Additionally, it assesses its operations, systems, and processes such as distribution channels, supply chains, and delivery systems to ensure reliability. This allows it to maintain healthy relations with customers.
The management of Chevron Europe Upstream takes into consideration the concerns of resource constraints. It understands that the implementation of its strategy and the Using the criteria pushes the Corporation to ensure it has sufficient staff at all times for the performance of all the processes and operations. Additionally, according to (Chevron Corporation, 2016) and (Chevron Corporation, 2015), the Company employs efficient machinery and equipment in the exploration, refinery, production, and other that are critical for its development. For example, Chevron Europe Upstream integrates efficient technologies in its operations thus boosting its productivity, efficiency, and effectiveness significantly. As (Chevron Corporation, 2015) points out, Chevron continues to advance its capabilities in subsurface imaging and modelling supporting field development, exploration, and reservoir management. Moreover, the Chevron has expanded its use of advanced seismic acquisition and processing equipment, which improve the understanding of subsurface conditions and allow effective exploration. Further, the organization uses other efficient technologies such as nuclear magnetic resonance among others. The operational performance criteria prompt efficient resources management and influences organizational development directly and indirectly.
Most of Chevron’s operations are time-dependent. The Company views timeliness as crucial for the improvement of its efficiency and profitability. The criteria of speed, reliability, and flexibility are influenced by timeliness and affect organizational efficiency and effectiveness (Gong, 2013). The aspect of timeliness in organizational performance includes cycle time, wait time, and the completion time. While wait time influences the quality of services and customer-company relations, the consideration of cycle time and the time of completion of tasks is of the essence. The criteria are essential for ensuring the completion of tasks within set timeframes and the maintenance of effectiveness in the process (Slack & Lewis, 2011). However, time-dependence has various implications for the Company. It calls for the acquisition of costly equipment such as real-time fibre optic surveillance systems and other equipment necessary for real-time monitoring and analysis. While these equipment optimize field management and improve production, they inhibit the achievement of short-term objectives by reducing the short-term return on investment.
3. Critically evaluate the role that the operations strategy may play in helping Chevron organisation to develop and shape the nature of the supply network in which it operates.
Operations strategy plays a critical role in helping companies to develop and shape the nature of the supply networks in which they operate. The application of the operations strategy in the case of Chevron would be important in the development of the supply network in which it operates. Chevron targets various markets and focuses on ensuring customer satisfaction by providing quality products. Moreover, the Company works with small business of various types and must, therefore, develop a comprehensive supply network. The process works efficiently due to its effective operations strategy. According to Bidgoli (2014), operations strategy involves various processes applied within a company and over distribution connection, the addition of value to consumers through the improvement of delivery services and the enhancement of efficiency and quality in producing of products. Considering the scope of the operations strategy, it plays an essential role in influencing the development of the supply network. The strategy can be applied in Chevron to influence the development of the supply network in which it operates.
Integrating the Lean and Agile supply chain in Chevron
The strategies of operations in Chevron shape the supply chain to meet the demands of its operations and the different businesses it works with. The strategy demands the integration of the Agile and Lean supply chain in order to work efficiently with small businesses, small woman-owned, veteran-owned, certified minority-owned, and LGBT-owned businesses, and disadvantaged businesses among others. The integration of the Lean and Agile business supply chains makes it possible for the Company to operate and relate effectively with the businesses. According to Adamides, et al. (2008) and Qrunfleh and Tarafdar (2013), the integration of the supply chains creates a hybrid supply chain strategy. Such a strategy is critical in Chevron, which must consider the specific needs of each of the various businesses. The Lean and Agile supply chains allow the Company to focus on value addition for customers, the elimination of wastes, the ability to deal with unpredictability, and the integration of innovative and creative ideas in production and supply of products and services. The operations strategy of Chevron advances all the concerns of the Agile and Lean supply chains and addresses them efficiently. As such, it plays an essential role in shaping and developing the supply network.
The Chevron’s operations strategy focuses on the delivery of quality products, integration upstream and downstream with suppliers and customers respectively, places emphasis on efficiency, and applies flexibility, speedy operations, and promotes innovativeness and creativity. These components of the strategy influence the supply network in which it operates significantly. The Company must align the supply network with the strategy for the achievement of its set goals and objectives. The Agile supply chain is noted for its speed and flexibility in coping with new and innovative products and services as well as unpredictable demand. The strategy applied in Chevron considers these characteristics and, therefore, considerably influences the development of the supply network. Moreover, according to Adamides, et al. (2008), the Lean supply chain promotes efficiency in operation and integrates the Corporation with suppliers and customers. These tenets are key issues of concern in the development of operations strategy. Chevron prioritizes efficiency and works relentlessly towards the maintenance of healthy relationships with suppliers and customers. As such, the strategy plays a major role in shaping and developing the supply network.
The influence of the operations strategy in shaping and developing the supply network of any company is significant. According to (Bidgoli, 2014), the supply network operations strategies used by an organization in any industry contain various components that form a close link between the operations strategy and the supply network. For example, Brown, et al. (2010) asserts that the network focuses on the addition of value for customers through the processes of manufacturing and the delivery of products and services. This aligns with the strategy of operations in Chevron, which focuses on value addition through quality improvement and the assurance of efficiency in all processes. The strategy therefore shapes the supply network through the integration of the characteristics of the Lean and Agile supply chains. Further, supply management, resource management, and production processes, which are core components of the operations management of the Corporation influence the development of a supply network status with the combination of the components (Flynn, et al., 2011). As such, that the operations strategy of the Company may influence the development of the supply network in which it operates is undeniable.
Further from the aforementioned, the operations strategy of Chevron shapes and develops the supply network through a consideration of the various categories of risk in the network. According to Handfield and McCormack (2015), the supply networks comprises of six categories of risk. The Corporation considers these risks in the operations strategy and thus influences the development of the supply network in which it operates. The strategy considers the possible impacts of risks of supply chain disruption, risks associated with performance, human resources, relationships, financial status and health, and any environmental risks (Handfield & McCormack, 2015; Villa, 2011). The occurrence of any of the risks impacts on the supply network significantly. Further, such risks influence the operations of the Corporation majorly (Gadde, et al., 2010). For instance, risks associated with the financial health of the organization, environment-related risks, and human resources might deter operations and lead to significant losses. In case of spills, significant losses, or strikes, the Corporation incurs further losses and may even close-down. As such, the operations strategy considers the risk categories and shapes the development of the supply network in the process (Handfield & McCormack, 2015).
4. The operations strategy is only as good as its implementation. Discuss this statement and critically comment on five main factors that can affect the implementation of the operation’s strategy in Chevron.
The operations strategy serves major roles in the enhancement of organizational efficiency, improvement of quality of products and services, boosting organizational profitability, and promoting growth and development among other key roles. An efficient operations strategy attaches effectiveness in all operations, processes, and systems. The development of an efficient strategy, therefore, paves way for a journey towards organizational success and development. However, effective implementation determines the success of the strategy in the performance of the roles for which it was developed. Even if an operations strategy is efficient, poor implementation results to insignificant and often negative impacts. On the other hand, the effective implementation of an efficient strategy guarantees the continued development. According to Bidgoli (2014), the management and leadership of any company must understand the concept of an operations strategy implementation for success in the process. The author asserts that the strategy reveals the long-term aspirations and objectives and, therefore, implementation must focus on the realization of the goals for which it was designed. Failing to focus on its purpose limits the success of the strategy (Jin Woo, et al., 2016).
Operations strategies only become effective after implementation. Therefore, Chevron must focus on carrying out the strategic plans and translate them into positive outcomes. The process demands effective decision-making and monitoring of performance to ascertain the achievement of the set goals (Rajasekar, 2014). Additionally, the management of Chevron Europe Upstream must engage in discussions concerning the infrastructure required to support the operations strategy. Implementing the operations strategy prior to ensuring that the necessary infrastructure is in place threatens the development of inefficiency. Chevron must ensure the existence of well-functioning systems, organizational structure, human resources, and other resources, values, and culture to support the implementation of the operations strategy. The management of the Corporation must consider the policies, culture, budget, operational resources, and the internal structure of the Company’s operations function, the supply network, and the human resources (Cohen & Roussel, 2013). The consideration of the concerns mentioned allows the effective implementation of the operations strategy.
Further, the implementation of the operations strategy determines the success of a company in the pursuance of its short-term and long-term goals/objectives. The efficient implementation of the strategy requires an outline of the systems, the description of the organizational structure, and the involvement of all members of staff. The description of the organizational structure allows the division of the Corporation into distinct parts that work with well-defined roles and responsibilities towards the achievement of the set goals (Singh, et al., 2015). Moreover, the management outlines the systems to include various unit systems such for communications, production, manufacturing, exploration, order processing, information, and customer relations among others. In the implementation of the operations strategy, the various systems differ in accordance with the specific company and the industry in which the particular organization operates (Liu & Liang, 2015). That the operations strategy demands the consideration of various issues shows it as entirely dependent on the effectiveness of its implementation regardless of how efficient it may seem in the course of its development.
Main factors that can affect the implementation of the operation’s strategy in Chevron
According to (Flynn, et al., 2011), managerial behaviour plays a critical role in influencing the implementation of operations strategy. The management and leadership of any organization must be on the forefront in the promotion of organizational objectives and the execution of operations strategy. The management influences resource allocation, the disbursement of the resources, and plays a critical role in motivating employees to give their best towards strategy implementation. Additionally, an effective structure that demarcates roles and responsibilities effectively allows the proper implementation of the strategy. Chevron has achieved significant success in the implementation of its operations strategy due to the influence of the management.
The effective implementation of operations strategy demands sufficient resource allocation. As a leading global company in the industry, Chevron has the resources required for the effective implementation of its operations strategy. It allocates resources for the various organizational processes in accordance with its operations strategy. For instance, according to the 2016 report by Chevron Corporation, it offers all the required resources including equipment, technologies, and necessary financial input for the effective implementation of its strategy.
Reward and Incentives
The reward structure of an organization influences the implementation of operations strategy significantly. The Chevron Corporation has an efficient reward system that acknowledges the contribution of employees towards the achievement of institutional objectives through the effective implementation of operations strategy. According to (Bidgoli, 2014), linking the reward structure of an organization to the accomplishment of results causes considerable organizational success. Offering incentives/rewards to employees who perform exceptionally motivates Chevron’s employees to work constantly towards the achievement of individual, team, and organizational goals. In doing so, the organization experiences an effective implementation of its operations strategy.
The Control System
In the course of implementation, the consideration of the control system is critical. The control system plays a considerably essential role in monitoring the operational performance and effectiveness in order to identify areas that require adjustment for enhanced performance (Slack & Lewis, 2011). The system involves various activities that are of significance to the improvement of performance. For example, reviewing objectives, goals, and the constraints, monitoring changes and conditions, and measuring the performance of the operations are important parts of the control system. Additionally, the comparison of the actual performance with the operations strategy plans and the adjustment of the strategy for the improvement of performance are of equal importance in the implementation of operations strategy (Waters, 2006; Energy and Climate Change Committee; House of Commons, 2011).
policies serve an important role in the promotion of a successful operations
strategy implementation. Such policies ensure the existence of efficient
systems, operations functions, sufficient resources, and effective management
and leadership which place the company on an elevated ground for the effective
implementation of the operations strategy (Slack & Lewis, 2011). Chevron operates
under well-formulated and efficient policies. Additionally, it has an efficient
operating model, a value system, sales channel, customer service, and an
effective asset footprint (Chevron Corporation, 2016). These ensure the
effective implementation of the operations strategy by creating an efficient
platform for operations. Moreover, the Corporation has clear, accurate, and
flexible objectives, distribution channels, value systems, and depicts effectiveness
in planning, ordering, marketing, and delivery processes. Moreover, its efficient
utilization of resources would allow the sufficient allocation of resources for
the implementation of the strategy (Cohen & Roussel, 2013).
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