Contents

Introduction ................................................................................................................................................... 1
WH Smith ..................................................................................................................................................... 1
1.1

Importance of Operations Management to WH Smith ..................................................................... 1

1.2

Safety, on time, cheap, quality, and law in WH Smith ..................................................................... 2

1.3

Operations Management linked with Strategic Planning concerning WH Smith ............................. 2

1.4 Systems Diagram of WH Smith .............................................................................................................. 3

Input: ......................................................................................................................................................... 3
Process: ..................................................................................................................................................... 3
Output: ...................................................................................................................................................... 3
2.1 Three Es (Economy, Efficiency, Effectiveness) in WH Smith .............................................................. 5
2.2 Strain between cost minimization and quality maximization at WH Smith ........................................... 5
2.3 Significance of Five Performance Objectives that underpin OM of WH Smith ..................................... 6
3.1 Linear Programming in WH Smith operation ......................................................................................... 6
3.2 Critical Path Analysis and Network Planning of WH Smiths Operations ............................................. 7
3.3 Need for Operational Planning and Control ........................................................................................... 7
4.1 Operational Outcomes ............................................................................................................................ 7
4.2 Network Plan and resultant Critical Path ................................................................................................ 8
...................................................................................................................................................................... 8
4.3 Quality Definition and Maintenance ....................................................................................................... 9
Conclusion: ................................................................................................................................................... 9
Reference: ................................................................................................................................................... 10

Introduction
Operations Management is the collective activities performed in designing, implementing and controlling
the production process and business processes. Operations Management is essential in business activities
because it consists of responsibilities of assuring business operations efficiency using few resources as
needed and effectiveness in meeting customers requirements. In organizations or military, operations
management involves the decision making process of line/operations manager or tactical officers of army.

WH Smith
WH Smith is one of Englands oldest companies which began in 1972 as a tiny shop. Now it comprises
unique mix of stationary, entertainment products, books and confectionary which has made it a high street
institution. As a retailer, WH Smith has lots of products, services to provide to the customers via shops
and even on internet. Recently, WH Smith has contracted with FUNKYPIGEON.com as a custom made
event card website. WH Smith appointed Kate Swann in 2003, when its operation was down line and
generating loss and she revealed sales at WH Smith had fallen but shares in the retailer had more than
doubled. The success story of WH Smith is in their motive if companies evolve and adapt, they can do
more than simply survive, but positively thrive.

1.1 Importance of Operations Management to WH Smith

WH Smiths business is concerned with daily stationary, books, and confectionary items which are
involved in a complex and crucial business operation of WH Smith. Thus importance of operations
management to WH Smith is a major decision making concern for managers of WH Smith.
Importance of Operations Management to WH Smith
Productivity is the ratio of output to input, which measures a managers or
employees efficiency in using organizations scarce resources to produce
products and services.
Secondly:
Operations management helps WH Smith to meet customers competitive
A Total Quality approach to priorities.
operations management
Firstly: Productivity
improvement

1.2 Safety, on time, cheap, quality, and law in WH Smith

The International Labour Organization (ILO) states that there is one death in the working
environment every 15 seconds and almost 270 million accidents happen every year. Issues
involved in WH Smiths operations management factors are safety, on time, quality, and law.
a. Safety: In the UK, the government Health & Safety law plays a duty of care on both
employees and employers. The company has undertaken several changes made to factory
conditions as committed by discussion and suggestions at the worker representative
committees. WH Smith is committed to a better and strong safety measurements taken in
factory and workplace for employees and employers.
b. On-Time: Operations management in WH Smith requires on-time processing, delivery and
feedback of products and services.
c. Cheap: Cost efficient strategy in operations management in WH Smith involves low cost
product with low cost raw materials, low cost labour. It has solved the 8 million pound
costing of pulping books that have been returned by customers rather than transporting them
to publisher; and establishing timers into the in-store chillers. For last year, WH Smith cut 18
million pound costs.
d. Quality: WH Smith is operating its business from 1792 with a great value in high street
business with quality products and services including stationery, entertainment, books,
confectionary and newspapers, greetings card etc for over 200 years. WH Smith maintains a
comprehensive approach to quality known as Total Quality Management (TQM). There is a
quality chain involved in operations management.
e. Law: Rules and regulations provided by the UK government are strictly followed such as
recent workers safety is to be ensured by the suppliers and the company should be
accountable to the environmental and workplace safety of the suppliers.

1.3 Operations Management linked with Strategic Planning concerning WH

Smith
WH Smith is operating business for over 200 years and now it has more than 643 units all over
the world. When new boss of WH Smith, Kate Swann joined in 2003 it was hovering for growth
return and profit. New boss took some major decisions which caused immediate dispute but after
a period of time decisions had yielded a major turnaround profit of 108 million pound.
Kate Swann made few strategic planning linking with operations management as well as adjusted
strategic planning. Strategy for the High Street stores is of typical interests which is not focused
on predicated on sales growth. The key points are:
1. Rebuild the position as UKs most popular stationer, newsagent and bookseller
2. Basics retailing and cost control
3. Move the gross margin by category mix management
4. Focusing on core categories
5. Reducing reliance on entertainment
6. Use space more effectively
7. Planning by not estimating on predicted sales growth in the short/medium term
8. Reviewing costs: stock, staff, power etc
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1.4 Systems Diagram of WH Smith

WH Smith has clear business process from customers demand to delivery of products and
services through in person or internet.
Key elements of a system can be illustrated as Input, Processes and Output.

Input:
Inputs are the raw materials which are used in the business to produce goods and services. Staff,
electricity and each component needed to begin the production process are also referred to inputs to the
system. Kate Swann wrote off input costs by reducing stuff number, erasing pension scheme and
renegotiating raw material costs with suppliers all of which resulted lower costs and higher quality.

Process:
In this stage the inputs are taken and assembled to finish goods. The production cost must need to be
reliable, quick and cost efficient. Marginal costs are to be equaled with marginal revenue from the extra
generated production maximized. Kate Swann improved production process by investing in new
technologies and cheapest delivery routes and energy saving lighting.

Output:
Output stage is the final destination of any product or service which is kept on shelves of business. High
quality products and services must be produced. And it should be competitively priced in relation to
competitor products and services. Kate Swann made a strategic decision by scrapping CDs and DVDs
department which accounted for 30% revenue of the business. This decision however was not popular but
management board was able to understand the competitiveness and low margin of CDs and DVDs.

Large businesses carry systems in operations management to build every task effective, efficient
and economic. Systems include productions, inventory control and training and development.
Sometimes systems have inclusive systems within it.

The recruitment process may be called a system. This process begins with advertisement in local
newspaper or on the shop window. Candidates are then needed to fill out an application form. All
the application forms are then scrutinized by the recruitment office and candidates are chosen
according to the required specifications. These candidates are interviewed and many are chosen.
Then candidates are taken into training and development process and are finally appointed in the
store.

Retailer

Supplier

Goods

Customer

1.Order goods

2.Goods supplied

3.Arrange goods

4.Goods arranged

5. Sell goods

6. Goods sold

Figure: System Diagram of WH Smith

2.1 Three Es (Economy, Efficiency, Effectiveness) in WH Smith

The most popular concept of operations management is the 3 Es concept. Economy, Effectiveness and
efficiency are included in this concept. In WH Smiths operations management, these three E have an
immense factor. The role of 3 Es in WH Smith is given below:
Economy: Operations management needs to be cost-effective which refers to sourcing of materials and
inputs from the cheapest suppliers while maintaining high quality standards. This could be done through
purchasing in bulk system and building an excellent relationship with suppliers. Economy measures
which were taken by Kate Swann include; cutting off final salary/pension scheme, minimizing staff
numbers and investing in energy saving transport routes.
Effectiveness: Operations management holds effectiveness while it completes tasks effortlessly. This
refers to WH Smiths more tasks completion with available resources and energy. Some initiatives which
increased effectiveness of WH Smith by Kate Swann were; offering staffs to change to progress their
career, opportunities for training & development so that they can do their work more effectively than
previous.
Efficiency: WH Smith has a long term strategic planning to reduce carbon footprint which has resulted in
greater energy efficiency. A new transportation systems is finalized, new investment has taken to support
new distribution centre which has improved transport route. Increased collaboration with suppliers and
other companies has reduced the miles that the products travel to store. This has resulted in CO2
emissions with products and lower operating costs. And also strengthening work in local communities,
offering more support to local schools and few hospitals have created partnerships by the nearby stores.

2.2 Strain between cost minimization and quality maximization at WH Smith

Cost minimization in accordance with maximizing profit is a major concern for any business. This could
be achieved by reducing raw materials. These include reducing costs of raw materials without affecting
quality. Raw materials are to be collected from the cheapest suppliers. Wasteful practices were stopped
and values were added at each stage of manufacturing. Investment in new technologies reduced the cost
of producing extra units of products. Also implementing efficient transport routes and using the latest
technologies in making stationary.

2.3 Significance of Five Performance Objectives that underpin OM of WH

Smith
Operations management reflects five performance objectives which signifies the strategy of WH Smith.
These objectives are described below according to WH Smith.
i.

ii.

iii.

iv.

v.

Quality: Operations management must assure the quality of products and services are
high and relatively low price of products and services compared to other competitors.
WH Smith improved their quality by cutting off old inventory and then manufacturing
high quality goods and services.
Budget: A large business like WH Smith needs to maintain profitable whilst striving to
deliver company objectives well within budgets. WH Smith is renowned by cutting off
costs without affecting revenue rise.
Time: WH Smith ensured the on time delivery of goods or services by ensuring every
task is completed so that customers can have them on shelves. Kate Swann made
management and staffs become more responsible and accountable which confirmed on
time tasks completion.
Flexibility: Flexibility is another performance objective referring the change of demand
and supply over time and new trends are replaced by old ones. As WH Smith is a special
genre business, it must keep pace over changing time.
Innovation: Businesses like WH Smith must invest in innovations like Kobo e-Reader,
partnership with the Post Office. Innovation attracts new customers and holds current
customers.

3.1 Linear Programming in WH Smith operation

In a business, to maximize production profit linear programming is used. Linear programming problems
contain two constraints and two variables. These are modeled using Y= M(X) + C.
WH Smith may use this formula to maximize profits by organizing shop floors.
Example: WH Smith produces the below products:
1. Mathematics Books
2. Science Books
Above products are produced by following constraints:
1.
2.
3.
4.

Mathematic book requires 1 hour on Machine A and 2 hours on Machine B

Science book requires 2 hours on Machine A and 1 hour on Machine B
Both machines cannot cross 30 hours per week
Profit for science book is 2 pound and for mathematics it is 3 pound.

Linear questions can be drawn as below:

P=Mathematics book, R=Science book

P+2R<=30
2P+R<=30
Intersection point is 10 Folders and 10 Diaries where maximum profit occurs.

3.2 Critical Path Analysis and Network Planning of WH Smiths Operations

Several steps need to be taken to complete a task and there are many ways/routes to complete the task.
The critical path demonstrates all the different routes by steps which may be taken to complete the task.
Using the critical path analysis WH Smith can progress in both product manufacturing with a minimum
time frame and quality products.

3.3 Need for Operational Planning and Control

Successful business requires operational planning in every area. Emphasis on economy, effectiveness and
efficiency emerges while operational planning and control processed are developed. These also focus on
cost reduction and value addition. Operational planning and control process ensures that the business
practices are generating success in business. Examples of operational planning and control include staff
scheduling, delivery procedures and many more.
Operational planning and control helps managers to inspect according to the guidelines and schedules
which are adjusted with organizational strategies and goals. For the operational managers its like a
routine to do tasks according to the plan.
Kate Swann increased marginal profit by creating an effective operational planning and control systems
for the managers.

4.1 Operational Outcomes

Every business like WH Smith must provide goods and services as specified. Specification is high quality
related to low costs compared to its competitors. If any business fails to do so they will start to lose
customers and whole business will suffer. WH Smith must offer excellent customer service to increase
high quality goods and services.
A network plan is shown below to best describe how sequential and dependent steps are completed as
planned:
1. Finalize replenishment

Day 0

1 Day

Sequential

2. Write off goods

Day 1

3 Days

Sequential

3. New shop floor

Day 4

3 Days

Sequential

4. New tills and displays

5. Final inspection

Day 7
Day 9

2 Days
1 Day

Sequential
Sequential

6. Staff training

Day 10

1 Day

Sequential

7. Gala inauguration

Day 11

1 Day

Sequential

1 (Day 0) -> 2 (Day 1) -> 3 (Day 4) -> 4 (Day 7) -> 5 (Day 9)-> 6 (Day 10) -> 7 (Day 11)

4.2 Network Plan and resultant Critical Path

Network planning is the task of breaking down a project into its integral activities depending on time
relationship. This helps management to look up overall activities according to organizational objectives
and several courses of action to follow.
Planning stages consist of enlisting the activities and the time necessary to complete the task and draw the
associated network.

Using Critical Path Analysis WH Smith may find the shortest path in the quickest time to
complete tasks whereas building processes and procedures efficient, economic, and effective.
Activities and events: Activity may be a task that requires effort for example; waiting for the delivery of a
product. Basically, activity is represented by arrowed lines (from left to right normally)

Start point

End point
Activity

Critical Path: This is the longest necessary path which must be completed to attain project
completion time scale. An example of may clear this concept:

1
3

Figure: Critical Path (The red line is the critical path which is the longest path needs to be completed)

4.3 Quality Definition and Maintenance

Quality is a state of standard expected by customers and producers to meet the satisfaction. Quality can be
referred through products, workplace, and delivery process in operations management.
Quality is defined as below:
1.
2.
3.
4.

High demand of products

Splendid reviews from magazines
Superior relationship with customers
Positive feedback

Quality is maintained as below:

1. Responsiveness towards customer complaints
2. Resolution of consumer disputes
3. Investment in innovation

Conclusion:
WH Smith is one of the largest retailers in UK and worldwide providing a large number of production
lines. To maintain the business process according to business strategies, WH Smith follows some specific
operational strategies which help gain sustainable profit margin. Existing operational management has
produced 108 million GBP in recent year. Kate Swann has left the company but her strategies are still
maintained in operational management.

Reference:
Anon., n.d. Better retailing. [Online] Available at: http://www.betterretailing.com/steve-whsmith-post/.
Anon., n.d. Corporate Responsibility of WH Smith. [Online] Available at:
http://www.whsmithplc.co.uk/corporate_responsibility/marketplace/responsible_sourcing/.
Anon., n.d. Retail and consumer. [Online] Available at:
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10368590/WH-Smith-profitsrise-again-despite-falling-high-street-sales.html.
Anon., n.d. success through managing quality, safety,. [Online] Available at:
http://businesscasestudies.co.uk/walkers/success-through-managing-quality-safety-customer-serviceand-cost/safety.html.

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