Understanding the four Vs of operations management – volume, variety, variation and visibility

April 12, 2021 7:00 AM

Organisations that deliver the highest quality of service or products are the ones that attract the most customers. Prominence is, therefore, important. But ability is also important.

High variety gives more flexibility to produce goods and services to match a customer’s requirements. Variety and volume correlate—the higher the variety, the lower the volume of products or services.Government departments and CPSEs have continued to fail dismally in meeting targets for procuring from SC/ST and women-owned MSEs.

By Vidya Hattangadi

Organisations that deliver the highest quality of service or products are the ones that attract the most customers. Prominence is, therefore, important. But ability is also important; if prominence brings customers to an organisation, ability helps organisations to retain customers. Ability of the organisation tells who they are.

Eminence and ability consist of four operational processes: volume, variety, variation and visibility. Organisations survive and flourish when operations management lies in the hands of able managers to manage core activities that transform key resources into deliverable products or services. The process of creating products and services is based fundamentally on creating value in each operations management process.

Volume: It refers to how much production of a specific product is required to satisfy its overall demand in the market. This refers to the physical number of units or items produced. A high volume manufacturing service example would be a fast-food joint like Domino’s Pizza. It sells quite literally millions of pizzas and other related food items every day around the world, and one of the known characteristics of Domino’s Pizza is that the chain has a very high degree of consistency in all of its products and service delivery.

Alternatively, a low-volume example might be an artist who produces specially made commissions and pieces of artwork. These are unique, which are likely to take a very long time to produce and which cannot be easily replicated or repeated exactly, if at all. This is highly resource intensive and often a long-term process. Scarcity is often used to boost sales, but it can also be used to create massive brand lift. It plays on the customer’s fear of missing out. Please remember this fact that marketers use limited-time offers like daily deals, limitations on quantities, or one-time only promotions to create a sense of urgency and leverage scarcity.

Volume is a significant tool because it shows the confidence of buyers in a product or service. Although volume should never be used alone to determine price or selling patterns, it is a base to gain insights into the markets and determine the next strategies.

Variety: It relates to the variety of goods/services to be produced and sold to customers. This V is all about diversity. Selling a variety of products or services helps organisations increase sales and profit potential, and reduces their dependence on only one or two products, which can lead to business closure if demand for that product(s) ends or wanes out.

For example, HUL sells 44 brands spanning 14 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, and the company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit. HUL has a product to offer for each segment of the society. In a given product category, it has maintained variety.

High variety gives more flexibility to produce goods and services to match a customer’s requirements. Variety and volume correlate—the higher the variety, the lower the volume of products or services.

Variation: It refers to how much the level of demand changes over time due to external factors. However, several factors make it difficult to predict variation. For example, a natural disaster such as the Covid-19 pandemic struck the world which made the entire world go topsy-turvy in all walks of life. Most business processes do not exist as singular entities, but rather as a plurality of variants that need to be collectively managed. Most of these approaches are built on the assumption that variation points and variation drivers are given as inputs. The question of how process variation is drawn and conceptualised in the first place has received relatively little attention. It takes a lot of experience and maturity of managers to fill the gaps. When processes fail to follow a precise pattern, it causes quality issues, both in transactional and production processes.

Visibility: It refers to value chain of a company’s all processes put together. Customers need to experience the company’s products/services. Service industries have a high level of visibility compared to manufacturing industries. For example, Amazon has track-and-trace software on its website that enables their customers to have visibility of where their packages are at any given time. It is important that potential customers can locate the company they are looking for. Most people have had the experience of being lost. It is truly frustrating driving around unable to find the location a customer is searching—may be it is a company’s workshop, warehouse, retail store, head office, customer care centre, anything. Organisations must make sure that their signage is clear and visible so that visitors can easily locate. Otherwise, the experience can turn into a negative one. High-visibility signage has already helped easy-to-find repeat customers.

Unilever’s operations management is responsible for keeping the four Vs integral with high productivity throughout the global organisation. Operations managers develop procedures and processes to support the organisation in achieving higher volume, variety, variance and visibility. The operations team of Unilever directly supports marketing, sales, financial and HR performance. It essentially addresses concerns in all strategic decision areas to maintain high productivity. As a leading consumer goods firm, Unilever has evolved operations management approaches to keep all four Vs highly productive.

The author is a management thinker and blogger

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