Operations Management: an analysis of operational methods and strategies adopted by Triumph Motorcycles (PGBM03)January 14, 2022 2022-01-14 15:54
Operations Management: an analysis of operational methods and strategies adopted by Triumph Motorcycles (PGBM03)
Operations Management: an analysis of operational methods and strategies adopted by Triumph Motorcycles (PGBM03)
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Triumph Motorcycles Ltd is a motorcycle manufacturing firm that has been around for over 110 years. The firm has had successful operations over the years but not entirely. At one point, the firm closed down due to operational an operational inefficiency which Davies (2013) terms as lack of innovation – response to the market. This report analyses the operations of Triumph Motorcycles at the organisational level and suggests improvement. This is achieved by relevant reference to operations management literature. An analysis of the customers of the firm shows that factors such as cost, reliability, functionality, style, experience, brand, and application of modern technologies in bikes all influence customer decisions and characterise the contemporary motorcycle markets. it is important to note that all these factors create operations objectives and these objectives are in line with the general objectives of any organisation, that is speed, flexibility, cost, reliability, and dependency. The major objectives that came out strongly are in regard to reduction in costs and provision of quality products. The operational gaps, in this case, are also in regard to cost and quality flexibility. This report suggests that firstly, the firm needs to implement product-centric continuous improvement and in which case trade-off cost for quality. Secondly, it suggests exploratory innovation enabling a firm to treat different market segments separately and satisfactorily.
In the contemporary business world, the need for effective management is more than evident. Every organisation needs good management from the conception of ideas, having a start-up business, developing and growing the business and maintaining it when it has attained a desirable measure of success (Williams, 2015). Management essentially deals with resources and operations and knowing how to deal with them well creates a competitive edge for an organisation. In addition, with globalisation, dynamic technologies and heightened competition for resources, managers have no choice but to efficient and effective through understanding their customers and coming up with ways to satisfy the customers while still optimising profits.
In accordance to the definition of Slack, Johnston and Chambers (2010), operations management is the specific solution to operational challenges. In his words, operational management deals with how organisations produce goods and deliver services at the greatest levels of efficiency. This makes operational management indispensible to any organisation. In addition, given that this report deals with Triumph Motorcycles, a firm in the manufacturing industry, it is imperative to note that continuous improvement in operations has become a fundamental prerequisite in achieving flexible manufacturing competence (Zhang, Vonderembse and Cao, 2006).
In this year, 2015, Triumph Motorcycles Ltd will be launching four brands of its Tiger series motorbikes; a milestone in the firm especially in the use of modern technology to meet customer needs (Triumph Motorcycles, 2015a). However, the journey of this company started long before this. The company was established in the year 1902 and has produced motorcycles for over 110 years. It is important to note that it has not been a smooth journal for the management all along. In 1983, the firm had to shut down due to operational issues but later reopened in 1978 with production done in Hickley, Leicestershire and with a new strategic focus that put consumer needs and operational efficiency at its core. Currently, the firm boasts of being the largest British motorcycle manufacturer serving over 50, 000 customers in the UK and more in the USA and other parts of the world (Triumph Motorcycles, 2015b).
This report seeks to borrow from the current body of literature on operations management to assess the operational activities, at an organisational level, which include innovation, research and development, and right staffing, and their contribution to the performance of Triumph Motorcycles Ltd. The intent is to carry out a detailed evaluation of the operations by identification and analysis of the major manufacturing operations and the processes involved therein. In addition, in order to gain a deep comprehension of the processes, various frameworks, and tools, as suggested by operations management literature, are going to be used. The report will lastly offer recommendations and improvements to the processes at an organisational level.
2. Customer analysis and operations objectives arising
2.1. Customer’s description
Triumph Motorcycles ltd serves a wide range of consumer markets internationally. With its location in the UK, the immediate market is the UK and the Europe region. For example, 9,000 of the 46, 000 motorcycles made in 2010 were sold in Britain. Although this, the market in Britain is still growing, and as the report by the Motorcycle Industry Association indicates the ratio of motorcycle ownership in the UK is still low with only 22 bikes per 1,000 people (MCIA, 2012). This may seem like a disadvantage to the local manufacturers such as Triumph but on the contrary, it is a “goldmine” in waiting. The report by MCIA points out that this rather small ratio of ownership represents the potential for growth. Furthermore, the UK has 3 million motorcycle license holders and only 1.5 million have motorcycles. Outside of the UK, the firm distributes its motorcycles, through subsidiaries, to Asia, America, and Africa. The firm owns over 380 subsidiaries in over 30 countries which is a characteristic of firms that are concerned with on-time deliveries (OTD) for their customers (Rao, Rao, and Muniswamy, 2011). The following figure 1 illustrates the export of motorcycles from the UK in general. However, this can be interpreted in showing the export of Triumph motorcycles since Triumph accounts for over 83% of the entire domestic production.
Figure 1: Motorcycle export from the UK to other markets worldwide (MCIA, 2012).
In terms of preference, consumers have turned to smaller commuter bikes as opposed to luxury motorbikes. In the report by the MCIA (2012) on the UK market, there is an emphasis that the UK buyer has started to focus on smaller bikes with practical applications and on multi-purpose sports bikes. This means a decline in both the demand and the profit arising from leisure bikes. Another research was done by Yeong et al. (2007) on the Malaysian market shows that Malaysian buyers prefer small motorcycles in the range of 70 to 115 cc (cylinder capacity). In figure 2 below, the shift towards low-capacity motorcycles over the years is evident. For example, the highest registration for motorcycles in 2012 was that of bikes with a cylinder capacity of between 101 and 125. Similarly, beyond 125 ccs, there is an obvious decline in registrations since 2009.
Figure 2: Annual registration of motorcycles in the UK (U.S. Department of Commerce, 2014)
Moreover, as seen in figure 3 below, scooters and adventure motorcycles spot and increase over the years while the rest show a decrease in new registrations.
Figure 3: Annual registration of motorbikes in the UK by style (U.S. Department of Commerce, 2014)
Besides the preference in makes and purpose of motorcycles, Yeong et al. (2007) note that there are a number of other factors that influence consumer preferences in the international market. Specifically, the traditional concept of customers’ preference for motorcycles based on their country of origin is getting phased out. Contemporary practices of manufacturers where the manufacture of parts, assembly, and sales are done in different countries has created a proliferation of hybrid products and thus consumers are more drawn towards value rather than country of origin. Yeong et al. (2007) found out that brand image still affects purchase though mildly. Secondly as noted in the MCIA (2012) report, functionality is turning out to be an important factor especially in the UK market where innovation and technological advancement is the order of the day. Additionally, Ramana and Subbaiah (2013) state factors influencing purchase decisions by consumers in low-income economies such as India as style, promotional offers, price, cylinder capacity, maneuverability, and fuel economy.
2.2. Operations objectives
In the motorcycle manufacturing and sales industry, there are many players in the global market – under which Triumph Motorcycles operates – and this means that customers have high bargaining powers in terms of cost, quality and other fundamental attributes regarding motorcycles. Figure 4 below represents an accurate description of a general consumer market, the competitive factors and operations objectives that arise therein. This can be extrapolated to the manufacture and sale of motorcycles by Triumph.
Figure 4: Different competitive factors and implications on operations objectives
Source: Adapted from lecture notes on session 3; Operations performance and strategy
Essentially, from the above analysis of the consumers of Triumph motorcycles, several factors arise as the main concerns on the consumer end and that impact on the purchase decisions and satisfaction. These are; cost of purchase, the functionality of the bike (multi-purpose and adventure), style – the use of modern technologies and the brand of the manufacturer. Other factors that emerge as important on the end of manufacturers is about distribution networks; availability in different markets and innovation. From this, borrowing from the above analysis on competitive factors and market analysis, the following emerge as the operational objectives.
Figure 5: Consumer and competitive factors and the resultant operation objective.
Source: Drawn by Author
Therefore, the operation’s objective of Triumph Motorcycles Ltd relates to the objectives of the operation suggested by Slack, Johnston, and Chambers (2010), which include cost, quality, flexibility, dependability, and speed.
These operations objectives originate from the fact that the trends in the motorcycle manufacturing industry require the adoption of several operational activities. Firstly, continuous improvement of quality is attributed to innovation and technology dynamism. Secondly, research and development which is essential in understanding the needs of the customer and creating variants in design to address this. Additionally, strategic pricing in a way that the customer gets value for money and purchase discounts. Lastly, with the constant scramble for the growing market opportunities in developed and developing countries, good distribution networks are needed to ensure on-time and reliable deliveries (Volume is also an issue here as the firm needs are flexible enough to address needs for an increase in demanded volume attributing from expanded market share). From the aforementioned operational activities, the apt suggestion of a process would be the mass process.
3. Description of the operational process
3.1. Process description (Mass process)
The justification of the suggestion on the mass process as the apt process for Triumph Motorcycles Ltd is, firstly, because the production of motorcycles is characterised by large volumes – such as Triumph’s over 50,000 units of bikes produced per year. There is also low variety in regard to the fundamentals of motorcycle design. This low variety is not in terms of brands but in terms of general differences in the basic components and technologies applied on the different brands. Triumph introduces new motorcycle brands in the market every year as well as constantly improving the current brands (Davies, 2013). This act can be termed as ‘product variation’ and it fits Slack, Johnston and Chambers’ (2010) description of mass processes. Additionally, the process is quite repetitive with only minor changes applied on the equipment used to handle production. The process however remains the same for all product variants. The following figure 6 illustrates the concept of processes. Triumph Motorcycles ltd falls under the mass processes.
Figure 6: Different process types and the implied volume-variety characteristics (Slack, Johnston and Chambers, 2010).
3.2. Product-process analysis
Given that different types of processes exist, a firm is at liberty to choose any process that is desirable. Additionally, as Slack, Johnston and Chambers (2010) note, the real demarcation of boundaries within the processes is a blurred concept especially in the real-life application and thus it is easy for firms to overlap different processes. Slack et al. continue to emphasize that every process has implications on the attainment of operations objectives. Fundamentally, the choice of a process dictates the capability to deliver volume and variety and the implication is that cost and flexibility are affected. The following product-process matrix is a classical description of this concept.
Figure 7: A product-process matrix; deviations from the ‘natural’ diagonal has implications on cost and flexibility (Slack, Johnston and Chambers, 2010)
As evidenced earlier in this report, the potential of growth for the demand of motorcycles is high both in the UK market – the immediate market for Triumph – and the international market. This means that the ability to produce additional units each year is important. This ability to change the volume of production is well captured by the mass process. Mass process, which according to Slack, Johnston and Chambers (2010) is applied mostly in manufacturing companies, offers a firm with more volume flexibility as opposed to variety flexibility. The implication of this is that, Triumph has the capacity to produce more motorcycles and consequently serve the increasing market demand effectively.
Moreover, the mass process allows a firm to produce different brands of a product but leaves little room for changes in the fundamental design. Triumph is well-suited by this concept because as Davies (2013) notes, there are some internal components of a motorbike that remain constant throughout production and this is never changed. Therefore, such are reused and commonised. Additionally, the outer parts, although they change a lot, in almost every new bike brand, as Slack et al.(2010) note, the mass process allows for the variation of such through the slight adjustment of the manufacturing equipment. The compromise that the mass process offers Triumph in terms of brand variation especially by varying the external design can be sufficient for marketing. In addition, the main aim of every firm is to minimize costs and as evidenced in the analysis of customers, the cost is a factor that cannot be overlooked. Davies (2013) also adds to this by pointing out that most standardised parts of a motorcycle remains the same; Triumph does not change the fixings and a few other components and this is purely on the motive of saving costs.
Another important point of note also is that research and development, – and innovations – are a critical part of the motorcycle manufacturing industry in general. MCIA (2012) notes that Triumph, a firm with a little over 2,000 staff, has constantly added members to its research and development department to the current number-240. This proportion is high and shows the weight that has been accorded researching and coming up with new products. All this is done in order to satisfy the dynamism and the needs of the customers who as Davies (2013) points out are more focused on getting the nest experience. In addition, intensive input, in terms of research, design, and manpower, goes into the analysis of competitors’ products and customer preferences in order to come up with designs and features that are satisfactory to the customer. It is therefore essential that the process Triumph undertakes offers this flexibility. Slack et al.’s (2010) description of the mass process is congruent to Triumph’s path to achieving the ideal motorcycles in the market. Although this, the product-process matrix model above (figure 7) shows a limitation in the overall flexibility that comes with the enjoyment of high volumes.
In addition, there is another issue that arises in the application of the mass process by Triumph. As Davies (2013) says, although there is a constant pressure and advancement in the automotive industry for the standardisation of parts, this is not an option in the motorcycle industry. The manufacture of motorcycles offers very few components that can be retained in the fundamental design. Essentially, Davies (2013) says that if the customer is to believe a new bike has been introduced in the market, then the look of the bike has to change. According to Kistruck an engineer at Triumph, the firm mostly changes the wheels, the frame, the tank but the fixings still remain the same. The variations that the changes in the outer parts of a bike offer are enough to capture the attention of riders. However, Davies (2010) notes that there is more to this as more riders are focused on the engineering behind the design and the reliability of motorcycles.
Lastly, on a closer look at the market demands in terms of competition and ability to get closest to the customers, it is essential that Triumph watches the costs of its products. Moreover, as foreign manufacturers, such as the Japanese and American firms, infiltrate the UK market through subsidiaries who assemble their products, it is imperative that Triumph adopts the same strategy for external markets. The mass process restricts the above because among the strengths of a manufacturing firm is gaining competitive power over the supplier and this means an adoption of the batch process. The batch process helps in production of batches with each batch being different from the other. Therefore, a firm can supply its own parts at a low cost, as well as supply subsidiaries with parts to assemble.
4. Conclusion and Recommendation
Management is the core function of every firm and is essential in sustainability. At the centre of management activities are resources and operations. When a proper oversight on resources and operations is maintained then a business is bound to succeed. Operations management specifically handle the issue of efficiency in delivery of services and products. As seen in the case of Triumph Motorcycles Ltd, the customers need to be the central point of operations and as such the motorcycles industry is coupled with stiff competition which means that the competitiveness is also important. There are activities that are carried out in the firm that support the mass process and consequently endeavour to satisfy the customer. This shows the appropriateness of the process in the kind of industry that the firm operates in. Despite this, there are some operational gaps that need to be closed up if at the firm will stand on a better competitive platform.
4.2.1. Continuous quality improvement
Kohlbacher (2013) notes the adoption of continuous improvement activities among firms has proliferated in contemporary organisations in the recent past. In addition Kohlbacher (2013) notes organisations no longer compete on just processes but on continuous improvement of processes. In this sense therefore, it is crucial that Triumph carries out a continuous improvement of its operations. This is even more crucial because the nature of operations at Triumph encompass innovation as incremental and explorative.
184.108.40.206. Product-centric improvement
This report first recommends Product-centric continuous improvement. In this case the firm needs to establish a balance between quality and cost. As Mallick, Ritzman and Sinha (2013) point out, there is always a compromise between the two. In their study on the relationship between product-centric continuous improvements, Mallick et al (2013) evidences that a firm cannot achieve both quality and cost effectiveness in equal measures. So in the case of Triumph, the firm, in regard to quality improvements suggested by Mallick et al. (2013), needs to embrace the use of new technology to provide better bikes. This can be achieve through less design errors, addition of new features and use of better material as well as investment in more research and development. In the case of cost reduction, then Mallick et al. (2013) suggests that a firm needs to reduce the availability if new features as well as application of latest technologies. However, as seen in the analysis of the market, customers are more sensitive to experience as opposed to price and thus Triumph need to trade off cost for quality.
220.127.116.11. Improvement on explorative innovation
The above recommendation puts less weight on cost but as seen in the analysis of customers, there are international markets where price cannot be ignored. This means delivering reliability and achieving low costs at the same time. This report thus recommends a second improvement based on exploration innovation enablement. What this means is that the firm needs to segment its market well in a way that focuses will lie on the specific customer base and what works in that specific base. Exploration innovation is essential in catering for the development of new products yearly which is the tradition of Triumph as well as satisfying varied customer needs. The following figure offers an idea customer development search model and the iteration process that ensue until the right product reaches the right customer.
Figure 8: Customer search, discovery, and development iteration process (Degeryd and Graffner, 2013).
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