Analysis Of Sky Deutschland’s Supply Chain Operations

Basic Understanding of Principles

This is a business report for an examination of the learner’s approval for the first round of the interview. The report focusses on a case study on “Sky”, which is the leading Pay TV service providers in Austria and Germany. In this entire repot, basic management principles are being used to analyze the manufacturing and supply chain operations at Sky. It additionally recommends a set of continuous improvement (CI) actions to mitigate the challenges being faced by “Sky”.

Basic Understanding of Principles

1) Assessing the efficiency and effectiveness of Areas of Goods and Services

Considering the subscriber growth as mentioned in the case study (Sky Deutschland: Driving Customer Loyalty Through Supply Chain Execution), it can be said that “Sky” has witnessed a good business growth between 2009 to 201 (Sky 2018). However, it is not the same as confirmed by Sebastian who joined this company as the vice president (VP) of logistics department. According to Sebastian, there are issues in Sky’s supply chain operations. The supply chain at the time when Sebastian joined this company had no representatives.

In addition, Sky follows a divisional organizational structure. It is to be noted that supply chain operations is of key importance for a company that provides Pay-based TV services to customers. An efficient supply chain is needed to be accessible to customers and to avoid losing in the hands of other competitors (Handfield et al. 2015). Customers have a lot of option to choose from, which they can do by comparing different service providers on their own priorities for products and services. However, companies like Sky enjoys no such privilege and rather need to have the capability to compete and perform better than many others on a continuous basis. It is required to sustain the success and market value.

According to Resource-based View (RBV), strategic resources are potential factors to deliver the comparative advantage to a firm (Carter, Rogers and Choi 2015). From the view of RBV, Sky needs to have a robust supply chain, which is capable in forecasting marketing demands and stocking products appropriately. Notably, Sky has faced problems such as over stocking and out of stocks issue. It, therefore, can be said that Sky lacks an appropriate management of resources. In addition, an effective resource management is directly proportional to an efficient supply chain. An effective management of supply operations had once looked a far reach concept to Sky as the company had no supply chain representative till the moment Sebastian joined as the VD of logistics (Sky 2018).   

Assessing efficiency and effectiveness of Goods and Services

Sky Deutschland offered a Pay TV subscription-based services, which included a range of programs such as feature films, children’s programs, series, live sports, and documentaries. It also offered a variety of products like STB, SKUs, Sky’s Remote Control, and others.

The company found its biggest threats in the form of competitors especially from Netflix and Apple. Netflix had brought the Video-on-Demand (VoD) business in the year 2007 (Sky 2018). The service was one step ahead to what Sky had offered to its customers. It indicated that Sky had no more scope to struggle with its supply chain but rather find ways to keep offering products and services in real-time. The other threat was the innovation from Apple in the form of iPad (Sky 2018). It brought flexibility into watching movies as it ended up the limitation to be on TV to watch the desired movie.  

It all suggests that the efficiency and effectiveness of services and products offered by Sky had faced problems for its ineffective supply chain operations. Sky faced huge competition from other service providers, Netflix and Apple’s iPad. However, it failed to hold the competitive advantage. To be able to compete and take the advantage of market opportunities, Sky needs to work on its supply chain management to improve its efficiency and capabilities. This one area of operations is not just impacting on its capability to make accurate market forecasts but also offering quality service in real-time. It lacks in part of resources and services both (Stevens and Johnson 2016).

2) A critical analysis of operations using Lean Principles and Agile Manufacturing 

The section covers a critical analysis of manufacturing and supply operations of Sky. It does so with the help of lean principles and agile manufacturing.

Lean Principles

There are in total five principles of lean. These are (Varsei et al. 2014):

Value: It says that employer should know consumers’ value to a product or a service. Sky had lacked in innovation as it is evident from what Netflix and Apple had brought to the market. Sky did go in loss for succession of years until Sebastian was crowned as the VP of logistics. Netflix effectively understood the rising demands for Video-on-Demands (VoD) and so Apple with its iPad.

The Value Stream: It suggests that the whole life cycle of a product should be planned in such a way that wastes are eliminated at its different stages. It means processes that adds no value to business should be eliminated. Sky failed in this regards as well as it so far had no solution to its supply chain inefficiency.

Critique of existing approach to operations using Lean Principles and Agile Manufacturing

Flow: Flow principles of lean suggests that value stream should never stop. If it happens then waste will be an inevitable part of operations. Sky seems to have missed on flow as it enjoys an ineffective management of its supply chain. The fact has already resulted in over stocking at times, out of stocks at retail point-of-sale, and frequent availability of products that were not in demand.

Pull: Lean principle of pull suggests that nothing should be made before its demands arrive to the market. It means stocking should be done in accordance to the market demand. As stated earlier, Sky faces stocking issues in different forms. These issues are because of its ineffective supply chain and the divisional organizational structure.

Perfection: Those who practice lean they tend to achieve nothing short of perfection. They follow a continuous improvements process to address to root causes. With regard to perfection, Sky seems like had missed on perfection. It did not apply a stepwise progress towards identifying the root cause of successive loses in recent years.

Agile Manufacturing

Agile unlike lean is not based on eliminating the waste but rather is customer oriented. Principles of agile are (Busse et al. 2016):

Consumer Enhancement: It suggests to deploy practices that would enhance consumer experience. It means quality and competitive pricing is an essential element of agile manufacturing. The annual report 2010 of Sky Deutschland indicates the negative value of net income (Sky 2018). It means that churn rate has also grown. It suggests that sky has failed significantly in enhancing the consumer experience.  

Competitive Improvement: This agile principle suggests that all business domains need to be productive in order to create opportunities for the organization. On viewing Sky from the perspective of this agile principle, it can be said that there are issues in some of the business domains of the company. It is actually as discussed earlier that Sky faced issue with its supply chain operations. It lacks a robust governance of the operation. As a result of which the company has failed miserably in fulfilling the rising demands of consumers. The gap is well picked up by some of the biggest names in the entertainment industry such as Netflix. Netflix went a step ahead and offered Video-on-Demand (VoD) service to users.

Organization: It says production should be made flexible with market demands. It should also be ready for a change in quick time. On contrary to this, Sky has struggled to be flexible with market demands. As a result, it continuously faced issues like over stocking of less valuable products, out of stocks of highest selling items, and so on. Despite knowing that there is not even any representative in its supply chain operations, it was found as struggling to find ways out of the challenge.

Continuous improvement plan for Sky Deutschland

Leveraging the Impact: People according to this principle of agile is essential to operations. It says that monitoring the human capital on a constant basis is a necessity to leverage from opportunities. It also encourages to locate skilled professionals to the appropriate place when it is required the most. Sky despite recruiting Sebastian as the VP of logistics struggled to improve the efficiency of supply chain operations. The supply chain operation is not that organized as it should be considering the growing industry of paid entertainment services.

Continuous Improvement (CI) in Action

1) A Continuous Improvement Plan for Sky Deutschland to remedy the issues

A continuous improvement is a must do thing for Sky to mitigate its supply chain issues. The lean principles also suggest to follow the similar strategy in order to deal with a persisting issue. Sky had persistently faced issues like inability to make the appropriate market forecast, and to establish an organized supply chain operation. These issues can be sorted out by adhering to the below mentioned stepwise guidance (Brandenburg et al. 2014):

• Improvements are based on small and persistent changes
• Brainstorming sessions are valuable
• Incremental improvements are much safer to employ
• Employees to be encouraged to take the ownership and be involved in the improvement
• Improvement is reflective

Improvements are based on small and persistent changes: The model of continuous improvement suggests that it is best to move smaller steps and take calculative approach as compared to taking risks by deploying larger changes. The stepwise progress in this way would reduce the fear of loss and enhance the adaptability level of the change. Moreover, the new VP of logistics in Sky would be able to integrate smaller things to make it an organized change process.

Brainstorming sessions are valuable: Employees’ ideas are valuable as they are the closest to any problem. Hence, they can help with some valuable ideas, which might not have come to the managers’ minds. It is, therefore, important that Sebastian identifies its team to lead the change and give them fair amount of chance to bring in their ideas. This would not just generate a wide range of ideas but would also motivate employees. They will feel privileged to be the part of this change process.

Incremental improvements are much safer to employ: Incremental improvements is what needs to be adopted by Sky. Incremental improvements help to avoid unnecessary expenses being incurred on processes that are not valuable to a change process. In addition, employees do not just contribute with their valuable ideas. In fact, many of their ideas can be eliminated to avoid the extra expenses. Sebastian will hold a key role in the change process for identifying and differentiating the valuable and invaluable suggestions.   

Specific steps and reasoning

Employees to be encouraged to take the ownership and be involved in the improvement: The continuous improvement model encourages to provide ownership to employees as this will produce a wide range of ideas and employees will also feel motivated in the process. In a change process, managers face the challenge to keep the team members motivated towards their contribution. Additionally, they are needed to construct a separate strategy to keep the motivation level high. However, by giving the ownership of decision-making, Sky will be privileged to have employees who are intrinsically motivated towards the change. Moreover, Sebastian’s role and responsibility in the change process will also become a lot easier.

Improvement is reflective: Reflection of works as suggested by CI model is a key to a successful accomplishment of the change process. Sky needs to be very careful in this part of the work to avoid involving any invaluable decision-making by employees. The management in Sky in particular the VP of the logistics operation must focus on constant feedback as to understand the challenges faced by employees. Such feedback sessions will help managers provide timely solution to temporary challenges. Hence, in this way they will be able to avoid waste to become a part of this change process.   

(Touboulic and Walker 2015)

3) Arguments in favor of the plan to get the support and required resources

From the case, it is evident that the organization is facing significant amount of issues in the supply and logistics management department. The above mentioned plan has the potential to meet the issues faced by the organization and the justification behind the plan is mentioned below:

From the case, it is visible that the organization is in need of an effective change in order to make sure that they be able to solve the issues in the supply chain and logistics management. Due to significant size of the organization, the volume of the change will also be huge. But in order to manage this sort of change, the organization must follow the path of implementing small sections of change. The successful completion of the small changes and the recognition of the good work of the employees are significant in making sure that the large change is implemented with repetitive success in the segmented small changes (Christopher 2016).

  The case is significant in specifying that the organization was unable to have innovative and effective ideas for reducing the negative impact of the issues that they were facing. The plan is able to hit the absolute spot by introducing a brainstorming activity where Sebastian would be able to request innovative and strategic ideas for the organization from the employees (Fernie and Sparks 2014). As the employees are the one facing the issues day in day out, Sebastian’s approach to the employees for the solutions will be significant.

Arguments for senior management support

The incremental improvement is much needed for the organization as the management must make sure that they be able to identify the appropriate issues and their solutions for the organization (Rushton, Croucher and Baker 2014). Even if the employees are contributing with effective strategies, Sebastian must make sure that the management filters the ideas for the correct solution.

The change for the organization is in need to be managed appropriately and in order to do so the involvement of the member of the organization is much needed for the organization. In order to make sure that the involvement of the members of the organization is guaranteed, the organization must introduce ownership policies for the decision making (Jacobs, Chase and Lummus 2014).

The management is in need to make sure that they provides the chance to the employees for effective decision making as that will make sure that they are involved in the process of continuous development. As the responsibility for the decision making will make sure that the employees are involved in the organization in a significant manner, the employees will be able to self-motivate themselves and that will make the task of Sebastian lot easier (Dyckhoff, Lackes and Reese 2013).

Apart from this, the interactive sessions will be significantly helpful for the management to make a collection of he challenges faced by the employees of the organization.

4) Detail the metrics to be used to monitor the progress of: 

(a) Increasing customer satisfaction 

The evaluation of the progress is significant for the organization as that will be able to identify any possible scope of introduction of new policies as modifications. The evaluation of the customer satisfaction will be significantly helpful for the organization in assessing whether the plan is successful in reducing the problems faced by the organization. In order to calculate the increment in the customer satisfaction, the organization is in need to follow both sets of approaches including online and offline.

The evaluation of the customer reviews will be significantly helpful for the organization in order to assess the success of the plan in online medium and in case of the offline medium, the organization is recommended to conduct a survey on their existing and potential customers in order to evaluate the level of customer satisfaction that the organization is able to achieve (Mangan, Lalwani and Lalwani 2016). The survey is to be conducted after at least a year from the initiation of the implementation of the plan.

Metrics for monitoring progress with examples

(b) Decreasing operating costs

The organization is in need to conduct a financial analysis which will include the operating costs of the organization over the years. The inclusion of the operating costs of previous years will enable the organization to evaluate whether the plan is successful in reducing the operational cost or not (Hugos 2018). Hence the collection of the statistics in the form financial report is the essential need for the organization to evaluate the probable decrement in the operating cost.

Conclusion:

On a concluding note, it is visible that the organization is having a sudden dip in the generation of the revenue due to the above mentioned issues in the supply chain and logistics management. But the specified plan with the solutions for individual problems will be able to avoid any increment in the detrimental impacts of the issues faced by the organization. The success of the plan is to be measured for the evaluation of the need of any further introduction of other change activities and the parameters along with the medium is in need to follow the specified factors.

References 

Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for sustainable supply chain management: Developments and directions. European journal of operational research, 233(2), pp.299-312.

Busse, C., Schleper, M.C., Niu, M. and Wagner, S.M., 2016. Supplier development for sustainability: contextual barriers in global supply chains. International Journal of Physical Distribution & Logistics Management, 46(5), pp.442-468.

Carter, C.R., Rogers, D.S. and Choi, T.Y., 2015. Toward the theory of the supply chain. Journal of Supply Chain Management, 51(2), pp.89-97.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Dyckhoff, H., Lackes, R. and Reese, J. eds., 2013. Supply chain management and reverse logistics. Springer Science & Business Media.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Handfield, R.B., Cousins, P.D., Lawson, B. and Petersen, K.J., 2015. How can supply management really improve performance? A knowledge?based model of alignment capabilities. Journal of Supply Chain Management, 51(3), pp.3-17.

Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.

Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Sky. 2018. file:///C:/Users/User/Downloads/2862713_1048898832_CaseStudySkyDeutschlandStudent.pdf. Retrieved from https://file:///C:/Users/User/Downloads/2862713_1048898832_CaseStudySkyDeutschlandStudent.pdf

Stevens, G.C. and Johnson, M., 2016. Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), pp.19-42.

Touboulic, A. and Walker, H., 2015. Theories in sustainable supply chain management: a structured literature review. International Journal of Physical Distribution & Logistics Management, 45(1/2), pp.16-42.

Varsei, M., Soosay, C., Fahimnia, B. and Sarkis, J., 2014. Framing sustainability performance of supply chains with multidimensional indicators. Supply Chain Management: An International Journal, 19(3), pp.242-257.