Operations Management: The Case of British Petroleum
Category : Operations Management
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Operations Management: The Case of British Petroleum
With the stiff competition brought by globalisation and information tBPhnology, different firms and establishment are trying to consider techniques and methods which will sustain their competitive edge in the global market. Firms and establishment, particulary those large industries are critically giving emphasis on their operations management to ensure quality performance for the entire business. Primarily, the main purpose and aim of this paper is to analyse operations management as it is used in a spBPific industry, which is, British Petroleum.
Strategic Objectives of Operations Management
Accordingly, operations management aims on the transformation of raw inputs in the form of labour, material, as well as capital into useful services and goods. The value which is added by operational technique and management is very essential and significant to most firms and industries. Operational functions as well as operations are core to the provision of quality products and services. Every firms and enterprise which offers goods or services has operational functions. As far as the firms and enterprise structure are concerned, some firms will have a separate and distinct operations function. This might be known today as the manufacturing department, an operations system and others.
Operations management give emphasis on managing carefully and critcially the techniques and methods methods to produce and distribute services and goods. Normally, small organisations do not emphasise operations management, but these firms carry out the functions as well as operations which management schools normally associated and linked with the phrase "operations management." Foremost, overall functions as well as operations often consider product creation, product development, production and product distribution. Aside from this, relevant functions and operations consider the management of purchases, inventory control, quality control, storage, logistics and monitoring and evaluations. A great deal of concentration is on effectiveness of the procedures and methods. Hence, operations management often considers substantial measurement as well as assessment of internal methods. Eventually, the nature of how operations management is conducted in firms and enterprise depends on the on the nature of products or services in the firms and enterprise
In the oil industry like BP Amoco, the strategic objectives of the operations management is to become more systematic and comprehensive to achieve organisational goal of providing oil products in the global market. Operations management is one of the most essential and significant management techniques and methods in oil industry. It is in this kind of industry which an operation technique is encompasses and before-hand it’s in operations management in that oil operations management works (Hollins & Shinkins 2006). It can be noted that the oil industry is using strategic operations management approach to make sure that they adhere to quality operations.
Overview of the Industry
British Petroleum also known as BP Amoco is =one of the largest petroleum industries located primarily in London. It is regarded as one of the top four petroleum and oil petroleum firms and establishment in the global market. The industry begun in 1901w when its founder William Knox D’Arcy was allowed by Shah of Persia to investigate and the land for oil that they succeed in finding one in May 1908. Due to this discovery, the Anglo-Persian Oil Industry has been established for the exposure of such findings the industry has grown gradually due to this aprpoach during the First World War. The British Government shows strong interest to the industry that has become the source of fuel oil of Royal Navy in the war. In 1917, Britsh government has been given the opportunity to take full management of the industry as they changed its name to British Petroleum. The industry has continued to be one of the largest oil firms and establishment in the entire Europe and since they wanted to expand their market, BP have merged with an american industry known as American Oil Industry (AMOCO).
Accordingly, operational strategies used by BP management have been the critical asepcts for the success of the firm. Aside from this, the power and capabilities to consider efficient operational management approach has made the industry to be one of the most successful oil firms and establishment in the global market.
Accordingly, BP-Amoco is operating in more whichn 100 states in the 6 continental regions in the world. The main purpose and aim of this industry is to drill and find oil in different parts of the world. The foremost functions and operations of BP Amoco considers the exploration and production of crude oil and natural gas; decontamination or refining; marketing, supply and transportation and production of petrochemicals. Aside from this, the industry also considers operations for solar power. The strategic use technology as well as strategic operations management can be considered as a feature and cause for this achievement.
The industry provides products and services that are divided into three criteria; on the roads that consider fuels and stations, Liquified Petroleum Gas (LPG), fuel cards, lubricants, roadside assistance as well as route planners; homebased that consists of products like LPG, online store as well as solar and renewable energy; and for commmercial that consider air BP, Bitumen, BP Marine, BP open books, BP shipping, petrochemicals, power, natural gas, and LPG, lubricants liquified natural gas (LNG) fuels, fuel cards and solar and renewable.
Being one of the largest oil and petrochemical firms and establishment, British Petroleum (BP) has been considering global operations in over 80 nations with 233 billion revenues, and thousands of staffs and personnel. It concentrates on oil as well as gas exploration and production, petroleum products supply, and the manufacturing and marketing of different chemicals. Presently, BP owns five well-known brands in the global contexts that includes BP, am/pm, ARCO, Aral and Castrol. (BP, 2009)
Because of the rapid changes of the external market, , BP has regarded itself as a global, modern, high-techa nd decentralised and learning corporation which must learn to be adaptive and responsive (Prokesch, 1997.) The management of the company are aware that to be able to maintain the competetive edge of BP advantages, the management should rely on their technical potentials, political as well as operational knowledge since oil may be found in more challenging market environment and even will be replaced by substitutes, like solar and hydrogen. According to the management of the company, BP has been able to use operations management to adapt to change. To determine the opportunities which their rivals may not consider, BP has to generate and operational knowledge throughout the firms and enterprise, thus learn faster and exploit faster than their rivals (Prokesch, 1997; Popper, 2000).
Party of the business technique of BP is its efficient entry to the global marketthat makes them have full operatiosn overseas. Aside from this, the industry is able to seek improvement in its business operation and tries to provide innovative and highly useful products for the target market. Aforementioned, the industry divided its market into three categories that helps them in knowing what the needs of their client.
Aforementioned, British Petroleum is one of the biggest firms and establishment in the field of oil as well as allied products whose market value is considered be in hudred billions. Nonetheless, because of the financial crisis faced and other unpredictable phenomena involving the enivornment, it leads the company to face challenges in their operations. As mentioned, BP offers their products and services under three categories in line with their standardisation approach. The organisational performance of the company based on its operation management approach seems to
Aforementioned, the major operations of British Petroleum is the exploration as well as the production of the crude oil and natural gas and other aspects. Accordingly, the operations management sytem of the company is the cornerstone of their strategy in attaining reliable, sae as well as responsible operations at every site of BP. Through this operations management system, BP has been able to deliver a step-change in the efficiency of how the people they are able to handle and organise the people, the process and the plant and how they adhere to the protection of environment. The company’s organisational performance lies on the belief of the company on integrating their operations management system for their operations to consolidate the requirements of BP in terms of the process safety, organisational performacne to environment, policy and regulations compliance in operations and safety among personal, marine as well as driving aspects.
Organisational performance of the company has been bounded by the establishment of their Operations management system which enables sites a systematic and methodic strategy to enhance operating performance constantly. The company aims on working to combile group requirements within their own approaches to satisfy their legal responsibilities, adhere to the needs of the local stakeholders, decrease risk and enhance reliability and effectiveness. In doing so, different plants and sites within British Petroleum utilise management approach to set priorities as well as manage risks. As part of this approach, British Petroleum has been able to generate the elements of operating which features eight dimensions on how processes, people, pland as well as performance operate and considered within the industry. Such factors include leadership, organisation, risk, procedures, assets, optimisation, privilege to operate and output/results.
Elements of operating diagram
Source: British Petroleum (2010). Online available at http://www.bp.com/sectiongenericarticle.do?categoryId=9027859&contentId=7050846. Retrieve January 28, 2010.
Aside from this,, the operations management system also considers the perofrmance enhancement cycle which degines 6 local business approaches which includes covering intent, planning and controls; risk assessment and prioritisation; implementation and operation; management review and improvement and measurement, evaluation and corrective action This sustains and drives change to and enhancement of local business processes to deliver the factors of operating.
After this has been done, the company delivers their produces through their global distributors (Exhibit 2)/ . The company has been able to distribute their producxts under their brand names through the use of retaila nd terminal sevices in various sites (Exhibit 4).
Aside from this, as part of their operations management system, the company also considers logistics aprpoach. Accordingly, it is a process in which the company ensures that they are able to handle efficient flow and storage of their products and servicesand other aspects such as product manufacturing to delivery and consumption to be able to meet clients' requirements (Hyland, 2002). As part of their logistic aprpoach, the company has been able to generate specific pricing approach which adheres to the quality of their products.
Global Distributors for British Petroleum
Distribution Models used by BP
Recommended Operational Strategies
In companies like British Petroleum, it is essential and significant that the industry must consider some operational strategies to be able to sustain their competitive leadership. In this regard, though the company has been able top consider their own operations management system, there are still other systems in which the companyc an use to improve their operations in the global market and one of these is throguh the use of e-commerce. This technological instruments considers making as well as keeping relationships and initiating new technologies in the products and also in terms of the distribution and delivery system of British Petroleun. The most essential and significant contributor to success in the oil and petrochemical industry like BP is building strong relationships with the value chain including local stakeholders, shareholders and the entire management. Firms and establishment can benefit in nvarious ways if they are able to sustain loyal clients (Gwinner et al., 1998). Nonetheless, for the relationship to be profitable and long term, the stakeholder must also benefit. There are several techniques and methods which can be taken in planning efficient operational product as well as service delivery strategies, but business organisations suggest a comprehensive approach which deals with cost, organisational structure, market preferences, as well as internal capabilities (McLeod, Miller, & Oh, 2001). Internal capabilities consider elements of the management method such as the firms and enterprise configuration and environment and managerial characteristics (Mers and Sauber, 1995)
Efficient and sustainable methods require combined tasks from product/service design to post-sale stakeholder. As part of the operational management approach of the company, the quality should be considered since it has been taken historically as a method-concentration at the front end, with initiatives like quality function deployment that turns the interfacing of stakeholders and product design into a manageable system (Goodale, Hornsby, & Kuratko, 2001). For instance, the consideration of the Just-in-time (JIT) operating systems, albeit much less sophisticated than usual material requirements planning (MRP) systems, are constant with rigorously raising quality levels by waste management. .Aside from this, JIT systems may be appropriate for firms like BP by giving emphasis method improvement on increasing flexibility. One promising approach or operational system is JIT II (Pragman, 1996 in which the suppliers provide representatives of the supplying firm (called in-plants) inside the buying firm to be able to facilitate efficient and proficient management of the relationship (which is, interfacing product design and handling and organising of inbound logistics).
Firm flexibility can take various forms (Goodale, Hornsby, & Kuratko, 2001). For instance, the flexibility of the products ty addresses the firm's power and capabilities to handle difficult, non-standard orders; to meet specific stakeholder specifications; and to produce products featured by various features like in the case of BP under their three product categories. Method flexibility (product mix flexibility) adheres to the firm's power and capabilities to produce small quantities of products cost efficiently so which alterations in product mix is said to be easy to accommodate. Tangential to these two types of flexibility, volume flexibility adheres to the firm's power and capabilities to rapidly adjust capacity to be able to accelerate or decelerate production in response to changes in stakeholder demand.
In the study conducted by Chaganti, Chaganti, and Mahajan (1989) identified product scope as the relative breadth of the firm's product line. Hence, product flexibility clearly maps well to the scope of the product offered, and method flexibility has some overlap with product scope. It can be said that, stakeholder is at the core of quality approaches and is linked to many quality instruments and mediums (Rucci, Kirn, & Quinn, 1998; Anderson & Narus, 1998). This category spans a large domain, startuing with developing knowledge aregarding the stakeholder, to examining the performance of firms and establishment through complaint resolution. Part of having good operational management system is the understanding the stakeholder and the marketplace iwhich involves listening to stakeholders and studying stakeholder satisfaction data (Beckett-Camarata, Camarata, & Barker, 1998). Organisations and firms which are efficient in this will have methods set up to communicate with, and receive communication from, stakeholders. The systems which serve as stakeholder interfaces are keys to a successful operational products and service delivery technique
The operational tool which British Petroleum may consider is tecghnology: Changes in technology have extreme implications on how a firm manages its operational product and service delivery sytem. Particulary, e-commerce is extending value within the operational management method. Businesses use this to integrate their internal functions with the applications of shippers, suppliers, and the stakeholders, per se (Scarborough & Spatarella, 1998). Aside from this, such operational management system allows shipment status messages to be received instantaneously and provides vendor-managed as well as continuous replenishment logistics and inventory programmess (Decovny, 1998). This new technology can also help the company to decrease inventory risks and maximises the sale of products with short life cycles by the reduction of the time it takes to reach the broadest plausible market (Scarborough & Spatarella, 1998). In addition, this aprpoach can also proide competitive advantages by having a more accessible order-entry method, decreased paper handling, and less re-keying of information (DBPovny, 1998).
Although there are obvious benefits for firms and establishment using operational management system in their operational products and service delivery, barriers to this approach still exists. Hence, the management should be able to ensure that barriers are handled properly.
Operational management system can be viewed as a complex aprpoach. To be able to successfully initate it the management must be able to ensure that they have the resources and are ready to face the challenges ahead. Moreover, the management of BO should be able to determine various aspects which may affect the use of their operational management system Analysis shows that BP has been able to utilise approach that enables their company to ensure that all their operations are handled well.
In addition, itc an be said that the economic status can also enable BP to consider the use of all their resources to easily provide its products and services to different segments of the market. The use of operational management approach can also be able to streamline the business portfolio of the company. With the use of their operational management system, BP has been ale to emphasised the strategic use of technology, operational management system and a strong and competitive organisational performance as the main reason why it has become successful in its venture of providing quality products for oil and petrochemical industries.
In the analysis, the only recommendation is, BP must continue to strategically and effiiciently decide on different investments in terms of their operational management aprpoach that would enhance its business performance both in the local and global market. All in all, companies can ensure quality provision by considering efficient operational management system.
British Petroleum (2010). Available [www.bp.com]. Accessed on January 28, 2010.
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5. McLeod, H., Miller, N. & Oh, K.Y. (2001). Managing Family Businesses in Small Communities. Journal of Small Business Management, Vol. 39.
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Popper, M. (2000), ‘Organizational learning: mechanisms, culture, and feasibility.’ Management Learning, 31(2), 181-197.
Prokesch, S. (1997), ‘Unleashing the power of learning: an interview with British Petroleum's John Browne,’ Harvard Business Review, 75(5), 147-168.
Pragman, C.H. (1996). JIT II: A Purchasing Concept for Reducing Lead Times in Time-Based Competition. Business Horizons, 39(4): 54-58.
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