ABC Technologies Pvt. Ltd
Discuss about the Management and Organization in a Global environment.
The present day business world is complex and the competition between rival firms has reached a global level. Business organisations have become vulnerable to a number of internal and external environmental factors that can change in real time and can cause a number of problems to the day-to-day functioning of organisations. Environmental factors, such as legal, governmental, social, economic, etc. are changing every day and are also forcing business organisations to bring about certain changes in their operations or work practices in order to sustain in the market (Grama and Todericiu, 2016). Above all, the changes in market trends also makes it imperative for companies to bring changes in their work styles so that they can remain competitive (Gill, 2002).
ABC Technologies Pvt. Ltd. is an American company that operates in the technology industry and deals in computer & other information systems. The company was started in 1978 and since then, it has grown to be one of the market leaders in the country. Recently, the company has been facing a number of problems to its market sustainability as its profits are dropping down and the competition is rising. On conducting various surveys, the management has discovered that the increasing cost of operations is one of the prime factors that is interfering with the market competencies of the company. The management has also identified that one of the areas where the company can drastically cut its operational costs is the carrying cost of inventory. The company has been ordering spare parts and raw material in bulk and has been storing it under expert supervision in its warehouses that are located throughout the country. After a number of meetings with the senior management, the company has decided to bring about a change in its inventory management system and switch to just-in-time inventory management system as it would allow the company to avoid wastage of goods and increase efficiency by ordering goods only when they are needed in the production process (Investopedia, n.d.). By implementing a just-in-time inventory management system, the management of ABC Technologies aims at reducing the operational costs and become more competitive in the market. The change that the management is planning to introduce in the company is a large system change that would be carried out slowly and steadily.
At present, the management has identified the need to bring in the desired change while the stakeholders have already been made aware about the importance of the change. The management is still in the designing phase and is designing the entire change program with the help of all the concerned people. In order to introduce the change in the organisation, the management will have to arrange for a new system that would help it in managing its inventory according to just-in-time system.
Change specifications
One of the major organisational areas that will undergo a change because of a shift to just-in-time inventory management system is the manufacturing unit. As a result, management will have to ensure that the manufacturing unit operates smoothly even if the size of inventory is reduced. The organisation will have to completely redesign its inventory management process. First of all, the organisation will have to get rid of all the inventory that it is carrying at the moment by getting it into production. Secondly, the company will have to tie up with suppliers who can offer them competitive price and can deliver the raw material within a very short span of time. Thirdly, the company will have to establish a system that would allow it to take orders from the customers and immediately process them by ordering raw material and manufacturing the end products. During the change, the job roles and responsibilities of people also might undergo a change. With a change in the inventory management system, the company will also experience collateral changes in its manufacturing units and warehouses and might also experience a fall in its human resource demand. Thus, the company will also have to conduct a workforce analysis before implementing the change and will have to redesign the structure of some units.
The risks involved in the change management program, along with their causes & prevention are discussed below:
- Delay in orders à one of the greatest risks involved with just-in-time inventory management system is that it can cause delay in delivering orders to the customers. The likely cause of delay will be shortage of inventory or failure of the supplier to deliver the raw material on time. A preventive action to avoid the risk will be to have contracts with multiple suppliers who can deliver to the expectations of the company.
- Dealing with the unexpected à business organisations can obviously experience fluctuations in customer demands. In such situations, just-in-time inventory system can make it difficult for companies to deal with the unexpected demands of the customers. To deal with such risks, the company can get in touch with multiple suppliers who are willing to provide cheaper raw material even if the quantity ordered is small (Investopedia, 2015).
- Cost of production à Just-in-time inventory management system or production system involves ordering raw material in very small quantities. At times, when JIT is implemented to reduce operational costs, it can cause an increase in the production costs as the cost of raw material increases, which was otherwise available at discounted prices when ordered in bulk (Investopedia, 2015).
The involvement of the stakeholders in bringing about such an organisational change is very crucial. The stakeholders in this business are the employees, the owners of the company and the shareholders. It is important that the company informs them about the change program and keeps them posted about every piece of information as it is a major change and is going to have a great impact on the work operations and the way in which the organisation operates, especially for the employees working in the manufacturing division.
The people who will experience the maximum impact of the change will definitely be the people working in the manufacturing units. When the organisation will make a shift to just-in-time production, its production will decrease significantly as it would manufacture goods at a much slower pace or only when a customer demands for it. As a result, the management might experience a situation where there is surplus staff in the manufacturing unit and can consequently start to lay-off employees in order to save additional cost. The employees will definitely offer a great deal of resistance to the change program as it will cross their minds that their jobs will be at a risk and the change might result in a loss of their jobs. On the other hand, an initiative to cut down the operating costs in order to sustain the market competition might be presumed in a wrong way by the stakeholders as they might think that the company is going through a difficult time and they might suffer losses in the future. As a result, they might offer a certain degree of resistance to the change management program.
Risk assessment
In order to minimise the resistance, the senior level management will have to identify certain change levers or change agents from within the organisation, who will help the management in facilitating the change by acting as middle men between the management and the stakeholders. It is not necessary that the facilitators of change or change agents are those people who are at higher positions or managerial levels. It has been discovered that union leaders, leaders of different units, etc. can prove to be better facilitators of change as the people look upon them as their role models, can connect to them and will definitely listen to what they have to say. If the management can get such people on board, they can easily help the management in achieving its strategic goals.
Implementing a change program in a business organisation is one of the toughest tasks according to the present day business world. There are certain factors that make it difficult for the management of business organisations to successfully implement the change, such as resistance to change, fear of the unknown, lack of proper communication, etc. In order to implement the change program i.e. making a shift to just-in-time inventory management, the management can follow the below given three stage implementation plan that was suggested by Kurt Lewin.
1st stage or unfreezing – In this stage the management can generate a sense of urgency in the organisation by informing the stakeholders about the areas where it losing competencies and how a change can help the organisation in making an improvement as compared to its present status. This process will basically involve instilling some unrest in the organisation or as the name suggests, it involves unfreezing the previous work attitude or operations (Change Management Consultant, n.d.).
2nd stage or change – once the management is able to bring it to the notice of the stakeholders that a change is actually required in their work attitudes or work operations in order to bring about some overall improvements in the organisation, the next stage is aimed at actually introducing the planned changes. In this stage, the stakeholders will begin to solve those uncertainties that had developed in the first stage and will also get to know about the changes. During this stage, the actual change will take place and people will be able to identify new ways that will help them in carrying out their work operations smoothly.
Stakeholders Involvement
3rd stage or refreeze – in the final stage, or the refreeze stage, the management can celebrate the achievement of its short term and goals related with the change management program. In this stage, once the change has been accepted, the management can try to reinforce the changes in behaviour or operations achieved by rewarding the people who have helped in achieving success or have accepted the changes and have performed well (Mindtools.com, n.d.).
The manufacturing unit of the company and the employees dealing with the inventory management will definitely have to undergo some training and development program so that they can cope up with the changes in systems. Even if the management feels that there are no specific skill sets required for the implementation of JITI, the employees still must undergo a training session where they can learn about JIT and how it functions. n case the management decides to update the software or hardware of the company in order to make it more oriented towards Just-in-time management system, the employees will have to undergo special training modules that would help them in placing orders and managing inventory using the new systems (Freifeld, n.d.).
Resistance to change is one of the key factors that results into failure of change programs. The key areas of resistance in this change program are discussed below:
Resistance from employees à as discussed above, there might be resistance offered by the employees if the company starts to cut down its operational costs because they will have a fear of the unknown. In order to deal with the resistance to change that the employees might offer, the management should ensure that the employees are involved in the change program and their feedback is always taken into account. The management should have efficient communication channels so that they can share all important information and data, related to the change program, with the employees and other stakeholders so that they can feel more confident about what is going to happen and have nothing hidden to be feared from (Nguyen, 2013). Further, involvement of the employees in the change program and proper communication will also ensure that there are less rumours going around in the workplace, which can also cause unrest amongst the employees and ultimately lead to an increase in the resistance to change (Prosci.com, n.d.).
References
5 Tips for Managing Resistance to Change | Prosci. Prosci.com. Retrieved 21 March 2017, from https://www.prosci.com/change-management/thought-leadership-library/managing-resistance-to-change
Freifeld, L. Learning Just in Time. Training Magazine. Retrieved 21 March 2017, from https://trainingmag.com/content/learning-just-time
Gill, R. (2002). Change management–or change leadership?. Journal Of Change Management, 3(4), 307-318. https://dx.doi.org/10.1080/714023845
Grama, B., & Todericiu, R. (2016). Change, Resistance to Change and Organizational Cynicism. Studies In Business And Economics, 11(3). https://dx.doi.org/10.1515/sbe-2016-0034
Investopedia,. (2015). What are the main problems with a JIT (just in time) production strategy?. Investopedia. Retrieved 20 March 2017, from https://www.investopedia.com/ask/answers/040215/what-are-main-problems-jit-just-time-production-strategy.asp
Just In Time – JIT. Investopedia. Retrieved 20 March 2017, from https://www.investopedia.com/terms/j/jit.asp
Kurt Lewin 3 Phase Change Management Model and Change Theory. Change Management Consultant. Retrieved 20 March 2017, from https://www.change-management-consultant.com/kurt-lewin.html
Lewin’s Change Management Model: Understanding the Three Stages of Change. Mindtools.com. Retrieved 20 March 2017, from https://www.mindtools.com/pages/article/newPPM_94.htm
Nguyen, S. (2013). 6 Steps to Manage Resistance to Change. Workplace Psychology. Retrieved 21 March 2017, from https://workplacepsychology.net/2010/05/13/6-steps-to-manage-resistance-to-change/
What Is Change Management? | Prosci. Prosci.com. Retrieved 20 March 2017, from https://www.prosci.com/change-management/what-is-change-management
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