Question $1\mathrm{.}2$

RE$-$THINKING OPERATIONS IN THE NEXT NORMAL

Operations functions$$including procurement, supply chain, and manufacturing$$are at the forefront of managing the

challenges and finding new ways of working in light of global trends and disruptions. The COVID$-19$ pandemic has

accelerated the pace of change, creating an inflection point. Companies have relied on their operations functions not only

to maintain day$-$today operations, which has itself been challenging, but also to position the business to survive and grow

in the post$-$pandemic world. For example, regionalization has been accelerated by the pandemic, as countries closed

their borders and protected their supply chains. Globalization was already under strain before the pandemic: the

intraregional share of global goods trade increased by $2\mathrm{.}7$ percentage points between $2013$ and $2018,$ according to an

analysis by the McKinsey Global Institute $($MGI$).$ Regionalization is most apparent in global innovation value chains,

given their need to closely integrate many suppliers for just$-$in$-$time sequencing. This trend could become apparent in

other value chains as well, as automation reduces the importance of labor costs and increases the importance of speed

to market in company decisions about where to produce goods.

The pandemic is the latest, and most severe, disruption to affect value chains in recent times. The financial impact of

these disruptions is significant. An MGI analysis found that over the course of a decade, the average company can

expect disruption to cause losses equal to almost $45$ percent of one year$$s profits. This is equal to seven percentage

points of decline, on average. As many companies have learned over the past year, many operations functions are not

sufficiently prepared to handle the shocks. These functions were built for an earlier era, when change was more gradual,

disruptions were less frequent, and customer expectations were lower. Today, companies need greater transparency into

demand, supply chains, and production capabilities, so that they can respond proactively or in real time to rapidly

changing conditions. Considering that operations disruptions$$whether arising from geopolitics, technology, climate

change, or disease$$are becoming increasingly frequent, incremental improvements will not be sufficient to prevent

significant revenue losses. Operations leaders must fully rethink their organizations and capabilities to deliver not only

short$-$term financial improvement, but also longer$-$term value creation through efficiency, resilience, agility, and

digitization.

$1\mathrm{.}2$ Today, companies need greater transparency into demand, supply chains, quality management, and production capabilities, so that they can respond proactively or in real time to rapidly changing conditions. In the context of the manufacturing sector, critically discuss why operations managers should prioritise investing in quality management strategies and concepts. Your response should make use of relevant frameworks and examples. $(20$ Marks$)$