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Critical Evaluation of Giraffe Childcares Operational Effectiveness through the Hayes and Wheelwright Model.
Programme: Executive MBA Module Title: Managing Operations Module Code: BM 793 Word Count: 2747 Module Leader: Paul Taaffe Submission Date: 9th May, 2011

Produced By: Abisola Raji Student No: 1433027

TABLE OF CONTENT
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1. Introduction.................................................................................................... 3
1.1 Background................................................................................................................... 3 1.2 Literature Review on Hayes& Wheelwright Framework...............................................4 1.3 Company Overview & Purpose Of Study..................................................................... 6

2. Critical Analysis of Giraffe Childcares Operational Effectiveness.........8

2.1 Evaluation of Giraffe Operation Strategy......................................................................8 2.2 Facility Layout & Service Concept of Layout & Processes at Giraffe Childcare.........9 2.3 Operational Quality .....................................................................................................11 2.4 Capacity & Demand Management at Giraffe...............................................................13

3. Conclusion & Recommendations...............................................................14

Appendix A- References Appendix B- Presentation of Research Findings at Giraffe childcare Appendix C- A questionnaire operationalising Hayes and Wheelwrights fourstage concept Appendix D- Testing the four-stage model of the strategic role of operations in a UK context Appendix E- Service, services and products: rethinking operations strategy

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INTRODUCTION
1.1 BACKGROUND The globalisation of businesses and the existing competitive pressures of the world economy has led to the growing strategic importance of operation function within organisations, many organisations has then realised practice of operations management cannot be forgone. This led organizations to begin to look at their operations function ensuring they are managed strategically so that significant competitive advantage may be attained for the business as a whole. Operations management is essential in any business operations since it forms the heart of the organization dealing with the design, processes, and improvement of the systems that create and deliver value for the organizations primary products and services. Like marketing, finance, & other departments, operations management is a functional field of businesses with clear management responsibilities. Effective management of the operations function in any organization is crucial as it ensures that such organization is carrying out the right activities, with sufficient resources and at the right time to achieve its objective with the potential to improve both efficiency and customer service at the same time. This provides reassurance and establishes the effective nature of such organizations to its clients, staff, community and owners. The Operations function focuses on how to combine resources and activities to produce outputs and outcomes, which can then be monitored and evaluated by comparing them with the performance indicators set by management, by making such comparisons managers can determine what aspects of its operations work well and which need to change.

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1.2 LITERAURE REVIEW ON HAYES & WHEELWRIGHT MODEL There are several frameworks that could be used to understand a companys Operations strategy and whether or not this strategy fits with the strategic goals of the company in terms of its operations effectiveness such as the Sand Cone Model, Value Chain Analysis, Just-In Time, Hayes & wheelwright four stage model etc. The 4-stage model describing the possible strategic roles that an organisations operations might play was originally proposed by Hayes & Wheelwright for manufacturing but subsequently extended for services by Chase and Hayes in 1991. (Barnes & Rowbotham 2004). The Hayes and Wheelwright four-stage model is a descriptive framework for understanding the extent to which an organisation is utilizing its operations to support overall strategic goals, as well as a prescriptive framework which helps organisations focus on future courses of action to move from one stage of the model to the peak of stage 4 (Adapted from Meredith & Shafer 2007).

Figure 1 Hayes & Wheelwright 4 Stage Model on Operations Contribution to Overall Strategy

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The model defines the progression of the operations function from the point where it is holding the company down (or at least it is not the source of any originality) till the point where the operations is the foundation of companys competitive advantage, forecasting for future changes of the market and preparing the development of the future necessary capabilities (Slack 2007) Stage 1: Internally neutral: Organizations whose operations are classified at this stage are classified to be at the lowest poorest level of operational contribution as they have little impact on the organizations competitive success. The other functions regards operations as holding them back from competing effectively (slack 2006) in essence seeing operations as a barrier to opportunity. Since operations have little strategic importance, the emphasizes at this stage is minimizing the negative impacts of operations (Meredith & Shafer 2007)

Stage 2: Externally neutral: The operations function at this stage is said to be at a level where its comparing itself to competitors or other companies in the industry. Slack suggests that the vision of the operation function here is to become up to speed with similar businesses by implementing best practice strategies already in use they seek to catch up with peers. Stage 3: Internally supportive: at this stage Hayes and Wheelwright suggests that the operations strategy is now aligned to the overall business strategy. It can internally support the objectives of the business and considers itself to be one of the best in class. It aspires to be number one in its field and the effort to be number one is likely to yield its own rewards. Stage 4: Externally supportive: An operation function at stage four is unambiguously the best at what they do. Their creativity and proactive attitude has put them ahead of the others and are easily able to out-compete their competition when following the same rules. The

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operation function at this stage is interested in changing these rules and redefining the expectations for the whole industry.

The most successful organisations the model suggests will be those whose operations function has reach the apex of stage 4. Michael Hammer (2004) maintains that operational innovation can provide organisations with long term strategic advantage over their competitors. (Adapted from Meredith & Shafer 2007)

1.3 COMPANY OVERVIEW & PURPOSE OF STUDY Giraffe Childcare & Early Learning Centres is one of Irelands most innovative and progressive childcare providers of quality childcare & Early Years Education for Infants, Toddlers, Pre-School/Montessori and After School children. Mission: To provide the highest standard of care, delivered in purpose-designed day care centres. The company states its goals and objectives in its brochure as The provision of quality full day care service for children between 3 months Preschool age and Afterschool services between the ages of 4-12.
To Nurture each childs unique qualities and potential

To work in close collaboration with parents in raising children through provision of affordable crche services. Provide each child with a sound educational grounding and ensure they enter school happy and confident.

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7 Provide high quality and reliable service in an environment that is safe, stimulating

and providing a sensible balance between a flexible and structured routine ensuring parents needs are always met. Create a work environment that encourages professionalism, growth, and diversity. Grow a financially strong organization

The company founded in 2001 operates in over 20 centers in the Dublin area. The company is privately owned although its Early Year Education program is in partnership with the Irish government scheme under the National Developmental Project (2007 2013) to provide free pre-school for children in the year before they start primary school. The purpose of this research is to critically evaluate the effectiveness of the operations function at Giraffe centre based at Blanchardstown using the Hayes and Wheelwright model, thereby identifying what stage the operations function is currently at in the support of the companys strategic goals, drawing on conclusions which the organisation can focus on in terms of future courses of action to sustain competitive advantage. From the studies and research I conducted on the organisations processes I concluded that the operations function at the centre can be said to be at stage 4 of the model and this research will be drawing up on relevant theories and practices which led to my reasoning.

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2.1 EVALUATION OF GIRAFFES OPERATION STRATEGY Businesses that seem to be especially competitively successful, and appear to be sustaining their success into the longer term, have a clear and inventive operations strategy- (Nigel Slack) Traditionally the strategic planning has been thought of as a task of the companys top management. After they would have established the grand-plan the simpler part of the implementation would be assigned to the operational area (Hayes & Upton, 1998). However many researchers believe that the operations can have a much more important role than the mere implementation of the high-level strategy and that, in the limit, can even drive the business strategy (Hayes and Wheelwright, 1984). Slack defined an operations strategy as the pattern of the decisions and actions that shapes the long-term vision, objectives and capabilities of an operation and its contribution to the overall strategy of the business through the ongoing reconciliation of market requirements and operation resources so as to achieve a sustainable fit between the two whilst managing the risks of misalignment (Slack et al, 2009, p. 36). Such strategy should be derived from the business strategy and must be carefully integrated with the other functional areas (Schroeder, 1984 p20-21). Giraffe is committed to providing every child with the best introduction into education and learning in all its centres ensuring convenient locations for working parents with high standard of quality childcare ensuring the welfare of the children in their care and their parents peace of mind is at all times their primary concern (http://www.giraffe.ie/childcarea-parents/overview.html). The crche operates an externally supportive strategy by

positioning itself strategically to meet the demands of its target market and attain the vision of the company as a whole.
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2.2 FACILITY LAYOUT & SERVICE CONCEPT OF LAYOUT & PROCESSES AT GIRAFFE CHILDCARE Facility layout design is an important component of a business's overall operations, both in terms of maximizing the effectiveness of the production process and meeting the needs of client and employees. Effective operations management can keep cost down enhance the potential to improve revenue, promote an appropriate allocation of capital resources and most importantly develop the capabilities that provide future competitive advantage (Slack et al, 2006).

Giraffe ensures that considerable planning and expertise goes into each Centre. All its centres are buildings are purpose-built to the organisations specific requirements to provide space for playing, learning, eating, resting and sleeping. It has become fundamental to the achievement of the competitive advantage over its competition with its flexible cellular operation which makes them innovative and capable of adaptation to market demands. The flexible cellular layout at the Blanchardstown centre has helped it to provide services to different categories of children at a reasonable price in a reliable way without reducing the quality of its service. The facility at Blanchardstown is demarcated into cells whereby babies, wobblers, toddlers, preschool, Montessori and after school kids are in different sections of the facility.

Edvardsson & Olsson (1996) defined an organisations service concept as a detailed description of what is to be done for the customer and how this is to be achieved, i.e. the service concept is an outline of customer needs and a specification of how they are to be satisfied. Therefore can be said that a service concept defines the how and the what of

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service design, and helps mediate between customer needs and an organization's strategic intent.

The crche opens at 7am 6:30pm daily Monday to Friday. The crche provides varied and nutritionally balanced meals, freshly prepared by an onsite cook each day in its Health Board approved in-house kitchens, the menus change each week and are clearly posted for parents to review. Meals are provided at no extra cost and children on special diets are also catered for on prior request from parents ensuring only suitable foods are severed to such children. This arrangement saves time for the parents to concentrate on other issues of the day knowing their childrens meals are adequately catered for without compromise on its quality and timeliness. The crche has its own bus and a driver whose core job is to pick the After-school set from various day schools within the locality and bring them directly to the crche. This service is also at no extra charge to the parents and staff also provide help with completing and supervising homework for the after school groups. Parents then collect their kids from the crche personally at the close of the day while the parents of kids in competition crches have to make their own arrangement with the coach company for their childrens transport. Presently, no competition crche in the Blanchardstown area offer this service to the parents. This has added quality to their service and increased safety of the children because the children are picked up from school and brought straight to the crche whereas the independent transporters go from one crche to another exposing the children to the poor weather and road hazards. The crche also provides children with the opportunity to learn in a holistic way focusing on each childs specified areas of learning and development. They provide planned activities for children to choose from and also allows for experiences that enable children to think and act
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on their own initiative. Giraffe also provides several activity programmes to all children in an environment suitable to their needs and suitably equipped such as Games, Cookery, Arts & Crafts, Music, Dance, Computers, exercise, Summer Time Fun Programme( such as Outings, events, sports days and lots of fun activities to make the most of the summer months)

The analysis above confirms that the crches service concept is the provision of a quality and reliable service that meets the needs of parents. To drive this strategic advantage, the crche is assessed as having adopted an encounter focus which is an aspect of the unfocused service operations methodology (Johnston & Clark, 2001, p. 37-44) thereby providing a service that is an exciting experience for the service users.
2.3 OPERATIONAL QUALITY AT GIRAFFE

Quality management is the consistence conformance to customers expectation. Managing quality means ensuring that an understanding of its importance and way in which it can be improved is spread throughout the business (Slack 2006). Quality management is concerned with controlling activities with the aim of ensuring that products and services are fit for their purpose and meet the specifications. The core areas in QM are Quality Assurance & Quality Control. At Giraffe Centres there is a high ratio of staff to children especially babies allowing them to provide the personal level of attention that the children require at the various stages. The Preschool children enrolled at the centres, theres a high level of assurance given to parents that the children are embarking on a journey of self-development and learning through the Giraffe Reach Curriculum. In order to deliver its various programmes to the children, Giraffe places great emphasis on the quality of the staff who, work with the children. As a company they invest heavily in staff development and training to ensure that their service and delivery
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level exceeds curriculum guidelines. Giraffe continually monitors and improve the quality of its service and conduct annual parent and employee surveys to ensure they meet needs and expectations. Giraffe has been Recipient of Crche of the year Awards for a number of years since it was founded. A recent article by Irish times (Has the Crash changed the crche Feb. 2011 ) since the recession others companies in the industries have recorded decline however giraffe centre at Blanchardstown is full and also has a waiting list of about 15% of its capacity, thus the comparative advantage of this crche is in its quality of service, cost and reliability. For instance, Bright Horizons one of the other crche in the Blanchardstown area childcare cost is slightly higher at 192 per week whilst at Giraffe where a child pays 185 per week for better services. Additional services are also borne at no extra cost and there are incentives for parents with more than a child including flexible payment structures.

2.4 CAPACITY & DEMAND MANAGEMENT AT GIRAFFE

Capacity Management is the activity of coping with the mismatches between demand and the ability to supply demand where such mismatches have been caused by fluctuation in demand, supply or both Slack 2006). Capacity is an important element of a firms competitive strategy
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and plays a major role in its competitive dimensions i.e. quality, delivery, dependability, speed and costs (Adapted from Meredith & Shafer 2007). The Giraffe centre at Blanchardstown has a capacity of 85 in total for both full time and part time children. As Mentioned earlier currently due to the high level of service offered there has been a fluctuation in demand for the service in that there currently have a waiting list of about 15% of their capacity. The Key issue here is the high level of the unpredictability of demand since the recession started as working parents are the core of its business and some have had to change service package from full time to per-time as their personal work circumstances permit. Although parents are advised to notify of any changes as soon as possible and new clients are advised to enrol as soon as possible to guarantee spaces. A recent procedure put in place at Giraffe to address this issue is that parents pay for the weeks their children are not at the centre as they are advised to keep their place they have to pay for it otherwise that space is sold to someone else.

3. CONCLUSION & RECOMMENDATION In conclusion, it can be seen from all discussed so far that the operations function at Giraffe is at stage four of 4 of the Hayes & Wheelwright Model. Although One could argue that that there is a mismatch in its Supply and demand for Childcare services and hence this position

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isnt justifiable however it must be noted that other aspects of its operations is at the apex of Stage 4 providing a world class service and redefining the industries expectation which no one of its other competitors in the area have been able to achieve. Meredith & Shafer suggest that although some areas maybe at different stages of the model, the operation function must be classified as been at the stage where majority of its operations function is characterised. Giraffe operation function can be therefore being concluded to be at stage 4 of the model as most of the function is innovative, creative and proactive and clearly ahead of its competitors. Based on above and in order to maximise the benefits of the comparative advantaged already gained, Im recommending that Giraffe begin a long term relocation or a full utilization of current facility plan for the following reasons in order to continue to gain the service users confidence on the Centres quality of service, permanently address issue of mismatch between Capacity demand and Supply and continue to be innovative by incorporating flexible services such as such as travel care, conference care and stormy-day care which hasnt been ventured into yet to provide for services for working parents and shift works.

APPENDIX A
REFERENCES

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Barnes, D., & Rowbotham, F., (2004) Testing the four-stage model of the strategic role of operations in a UK context [Article] International Journal of Operations & Productions Management Volume: 24 Issue: 7 2004 Edvardsson, B. & Olsson, J. (1996) Key concepts for new service development Service Industries Journal, Vol. 16, No. 2 pp. 140 64 Giraffe (2010) Overview [Internet] Available @ http://www.giraffe.ie/childcare-a-

parents/overview.html Accessed 25/03/11 Hayes, R. H. and Wheelwright, S. C. (1984). Restoring Our Competitive Edge. John Wiley. Irish Times (2011) Has the Crash changed the crche Article [internet] Available @ http://www.irishtimes.com/newspaper/weekend/2011/0226/1224290904669.html 29/03/11 Johnston R. & Clark G., Service Operations Management, 2001, Pearson Education Ltd, Essex. Meredith. J.R., & Shafer, S.M., (2007) Operations Management for MBAS 3rd Edition John Wiley & sons, USA. Schroeder, R. (1984). Operations strategy: missing link in corporate planning? Management Review,August. Slack N, Chambers S, Johnston R & Betts A, (2009) Operations & Process Management, 2nd Edition Pearson Education Ltd: Essex Slack, N., Chambers, S. and Johnston, R. (2007). Operations Management, 5th Edition FT Prentice Hall, Fifth Edition Slack N, Chambers S, Johnston R & Betts A, 2006, Operations & Process Management, 1st Ed., Pearson Education Ltd., Essex http://alendademachim.blogspot.com/2009/09/can-operations-be-strategic.html Accessed

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