Operations Management - Essay Example

?Operations Management Introduction Activities in an organization can be divided into operations and projects. Whilst operations are ongoing, repetitive and continuous activities in any organization for example finance, accounting, and production. As a consequence, all the efforts of the organization are channeled towards maintenance of operations so as to maintain quality and remain competitive in a globalised environment (Tandoc, 2010:78). Unlike in projects, in operations one has to typically stick with his or her decisions. In operation management, there is permanence in operations. A continuous process in the shop like purchasing and selling of goods is regarded as an operation. The good features that can be adopted from project management can be combined with operations management so as to have a better and efficient style of management (Olivia, 2011:59). According to Wilson (2012:178) asserts that operations can be analyzed at three levels; flow between processes, resources, and operations. Operations management involves the planning, organizing, directing, and controlling the process of bringing together people, materials, equipment, and methods so as to accomplish a wide range of operational tasks in the most cost effective way. At every point of operations management, knowledge and deliverables are typically transferred for the implementation of delivered work. Its occurrence is through the transfer of project resources to sound operations towards the end of the operation (Arnas, Jabbour, & Saltorato, 2013:89). The paper is will be going to discuss the sound operations management for organizations so as to efficiency and strategic purposes and how improvements of operations are required to maintain quality and remain competitive in a globalised environment. Operations management Efficient management of operations is of very utmost importance for both the survival and success of any firm. To ensure that the organization remains competitive in the global business environment, it must ensure a cost effective operations management process within the organization. Moreover, the management team is to be familiar with the world class operational guidelines and is to implement them to be effective. The operations management process includes: examining relevant operational activities; designing and organizing products and services; initiating and maintaining product or service selection; developing cost effective operational processes and methods; evaluating the suitable equipment used in the operations; developing cost effective operations planning and control systems; and finally developing and implementing a material and supply chain management (Meredith & Mantel, 2011:117-118). Seemingly, many tasks we do everyday appear to be easy to handle but they are really complex in nature, but the repetitiveness and their familiarity hide their complexity. As a consequence, most real world problems require complex methods at first exposure, but their sophistication is hidden as they become familiar (Slack, Brandon-Jones, & Johnson, 2011:458-470). Operation is a transformational process that adds value such that the value of the output has a financial value that is greater than the sum of inputs. The recent advancement in technology has enabled the enhanced the carrying out of various operations (Waltes, 2005:162). This is attained through an integrated value chain. It is a set of activities that create and ensure the delivery of products to the consumer. The traditional value chain comprised of the manufacturer, wholesaler, retailer, and finally the consumer unlike the new chain which comprises of manufacturer, e-retailer and the consumer (Kousholt, 2007:90). The internet based operations promotes; more efficient processes, an expanded supply chain, low cost of materials, better decision making frame work, more efficient processes, expanded supply chains, globalization, and new ways of doing business. The benefits of the internet based businesses have various impacts on operations. First, there is comparison shopping by customers. The direct contact with customers allows for no guessing about the demand, reduced inventory costs, and the build to order products and services are also made possible (Horvathova & Davidova, 2011:390-3). Another advantage is that the business is carried out online thereby lowering the transaction costs and the customer support costs reduce. It also opens up the access of customers world wide as it leads to increase in demand besides production moving overseas. The online businesses eliminate the middlemen because the logistics alter from delivering to a store to delivering to individual homes. The other benefit is that it paves way for access to suppliers world wide thus increasing outsourcing, alliances and partnerships among various firms are formed. There is better and faster making of decisions because more timely information is available with an instant access to all stakeholders in decision making. Moreover, there is IT synergy because as productivity increases the information can be shared internally or between the trading partners (Tandoc, 2010:180). According to Slack et al. (2011:214) asserts that all functions in an organization utilized processes to provide services both for internal and external customers. The typology of operations basing on the outputs has various implications. There is high and low volume in operations and processes. At low volume there is low repetition, each member of staff performs more of each task, there is less systemization, and high unit costs. In high volume its impacts are high repeatability, specialization, capital intensive and low unit costs. The implications of high and low variety in operations are also manifested. The implications on high variety ensures flexibility, complexity, the needs of the customer are matched, and high unit costs. The implications of low variety in operation are; routine, standardization, regularity, and low unit costs. The implication of high variation includes; altering capacity, anticipation, flexibility, and being in touch with demand. The implications of low variation in operations include stability, routine, predictability, and low unit costs (Vilder, 2001:289). According to Slack et al. (2011:215) asserts that the impacts of low visibility in operations and processes consist of a time lag in between order and dispatch, standardization, low contact skills, high staff utilization, and centralization. The implications of high visibility include short waiting tolerance, satisfaction being governed by the perception of the customer, customer contact skills needed, and high unit costs. Capacity management To ensure that the operations of the business run as scheduled, the operations manager is to make sure that there is capacity management. Capacity management deals with the capacity of the processes of an organization (Blokdijk & Menken, 2008:122). Since capacity constraints of any resource is the main bottleneck for any organization or company. This is attributed to the fact that improper capacity management can have an effect on a company’s financial performance and also impeding its business prospects. A good example is when a company introduces an innovative product and mounts an aggressive marketing campaign to promote it, must make sure that it has enough manufacturing capacity to meet the expected surge in demand. This is so to avoid shortfall in sales (Grummit, 2009:103-5). Operations strategy is the sum total pattern of the decisions that shape the long term capabilities of ay type of operation and their contribution to the overall strategy, through reconciliation of market requirements with operations resources. The process operations strategy include; operations strategy formulation, implementation, monitoring, and control (Waltes, 2005:166). The operations strategy is aimed at reconciling the market requirement and the operations resources. It also identifies the performance parameters to meet the market requirement (Horvathova & Davidova, 2011:95). The operations strategy has a matrix that incorporates the performance objectives such as speed, dependability, and flexibility, when integrated with the decision area leads to market competitiveness (Tan, 2009:138). This further leads to attainment of operations capacity. The levels of operations capacity include the strategic capacity which focuses on the probable market in future, current capacity and capabilities, and identification of capacity forecast. Medium term capacity has its time scale in months and weeks, focuses on resources both through outsourcing and in-house resources. In addition it is site specific and it is this strategy that establishes the physical capacity constraints (Slack, 2009:235). Short term capacity strategy has its time scale in weeks, hours and minutes. It focuses on the individual staff loading of operational staff, and the current demand and capacity (Bettley, Mayle, & Tantoush, 2005:39). The market requirements for the capacity strategy to be effective include: forecast in demand because the capacity of operations is demand dependant, requires complex decision making, and it also directly influences the size of the operations; the uncertainly of future demand, this is a circumstance that can not be avoided as it may hinder investment to meet demand, has an influence on the economics of operations by increasing the sales in the short term; change in demand, the time scale of demand may inhibit the investment to meet the demand; the availability of capital is another market strategy but it may constraint operations ability to meet demand (James, 2011:159). Making of an incorrect decision to invest is vulnerable to any business strategy as it may lead to the collapse business. The operations resources consist of cost of the structure of the capacity investment. It is the most basic, yet it is the most crucial. It concerned with relationship with the capability operations, actual capacity and profitability. It is the inherent ability of the company to combine resources into capabilities which is the source of its tangible market value (Bettley et al., 2005:66). It is an ability of an operation not only to add value, but also to develop the value that it adds specific to the company that allows it to continue to operate in a competitive market both now and the future. Unlike the manufacturing strategy view of operational management, taking the view of transformational process, the scope of operations strategy is considerably wider. What defines the capability of a company in business is its ability to utilize the resources it has at its disposal, and through consistent development of these specific resources making them able to meet its goals and objectives (Vilder, 2001:52). Moreover, according to Tan and Matthews (2009:82) found out that the ability to offer the customer a company specific service or product is an effective manifestation of the ability to combine tangible and intangible resources in the most effective and efficient way The factors that affect the timing capacity from change include; the lead time capacity for change, ability to cope with change, forecast on the level of demand, the activities of the competitor, uncertainty of future demand, required level of service, and economies of scale. Inventory management The accumulation of inventory helps in the attainment of quick response, flexibility, maintenance of stock of exceptional quality, large volume gives the cost benefit, planning protects from critical stock out, thus enabling level of dependability of supplies (Slack, 2009:148-9). However, some of the constraints accrued in inventory management comprise of shortage of cash, shortage of warehouse space, the nature of the goods strategically refrain from the large volume investment, often required a pragmatic approach for optimizing quality speed, quality, dependability, and flexibility (Ezibgo, 2012:355-360). Inventories are utilized in operations management as they reduce the imbalance between supply and demand. The inventories are categorized as process related or support related. As a result they are classified into five types mainly; buffer inventory whose major purpose is to compensate for the unexpected change in demand and supply. The cycle inventory is there because there is need to produce products in batches. Decoupling inventory is there because operations are divided into smaller areas of batch so as to maximize local utilization and efficiency. The anticipated inventory is based on the market forecast where products are manufactured throughout the year and stored as inventory. Pipeline inventory exist where the products can not be transported instantaneously between the point of manufacture and the point of demand. This is typical of the retail industry (Slack, et. al, 2011:99). The utilization of inventories in operations management can have its constraints. There is blockage of money in the form of working capital, thereby reducing the borrowing and investing capabilities of the organization. The storage and maintenance costs make additional expenses to the organization. They have the possibility of becoming damaged or obsolete. They occupy valuable space in the organization. Finally, they involve administration and insurance costs (Muller, 2011:104-106). Location, layout and flow Operational management must ensure a regard to the size of the operations. Addressing the layout planning problem commences with understanding the key factors that have an influence on the layout design. This is attributed to the fact that decisions are based on the data that has been collected to support the balance between economy and the diseconomy of scale (Mahadevan, 2010). The larger facilities offer spread of fixed costs over large product volume, fixed capital investment for the large product volume, and also the staff requirement is proportionally less. On the contrary, there is complex internal organization and the costs of distribution are higher. The location of operations can be done on single location to minimize interaction with other facilities (Rastogi, 2010:65). It may be as a result of the consideration to the quantitative and qualitative aspects such as cost of land and the existence of similar facilities in the proximity respectively. Conversely, multiple locations require integration operations at various sites. According to Rastogi (2010:68) argues that their performance may be dependant on the other operations sites. This integration is attained by transportation modeling. Efficiency in operations management requires good layout of operations. However poor layout may be disadvantageous to the organization as there will be bottlenecks due to backlogs, a safe working practice becomes an issue, the quality performance is also impaired, difficulty in supervision, decrease in self motivation, and an increase in operations costs (Arora, 2004:112). The product layout is to be in a straight line and it is appropriate where there are large quantities of material, where products are manufactured in assembly lines. It has a high level of out put. The process layout tends to have the similar processes grouped together thus making them less likely to get affected by breakdown. Functional grouping provides flexibility, thus avoiding monotonous work. It also makes sure of efficient coordination between the groups. The various types of layout include fixed- position, functional, cell, line and mixed layouts (Alrashidi & Baakeel, 2012:95). Process design The conceiving of looks, arrangements, and working of something before its creation is paramount in operations management activity. It must deliver a solution that ensures that the objective is fulfilled according to its volume and variety (Heizer & Render, 2005:18-20). The objectives of process design with regard to effective operations management ensures that there is quick response, low costs of running the organization, and competitive. The operations strategy directly translates to process design (Slack, Chambers, & Johnston, 2010). The process types for products include project, jobbing, batch, mass, and continuous processes. On the converse, the processes for services consist of professional services, mass services, and service shops. Process mapping is to be embraced in operations management because it gives an outline of how the activities in the process are related. It shows information such as the flow of materials through the process. Design of products and services Since operations consist of a repetitive process, design is a very crucial component form to the products and services. The objectives of good design are; they makes sure that the customer is satisfied, it communicates its purpose to the market, satisfies the actual or the anticipated need, enhances the competitiveness of the organization, and finally it helps in branding image and loyalty (Slack, et al., 2011:359-361). The stages of design include generation of the concept, screening, preliminary design, evaluation and improvement, and finally prototyping. Design of products and services considers three major aspects; concept, package, and process. Concept is an articulation of the outline specification on the nature and the use of the product or service. The notion of product or service is important for the articulation, development and testing of the concept (Colvin, 2000:68). The packaging of products and services is an important activity in management of operations. This is because most of the operations produce a combination of products and services. Ultimately, it is the core of the product. The alteration of the core transforms the concept that is behind the product or service. According to Wisner and Stanley (2008:55) asserted that with regard to operation process, the concept and the package of the product or service require a process for the creation and delivery to the customer. The activity of designing in itself is a process as it conforms to the input-transformational-output model. Supply management network According to Kousholt (2007:69) anayzed and found out that operations are part of the larger and interconnected supply network. The operations managers are tasked with ensuring that the design of the supply network is effective. The supply network helps in comprehending the competitiveness in the market, identification of significant links in the market, focusing on the long term issues, and finally helps in the focusing of costs According to Hanke, Johns and Wichern (2009:145) argue that the supply network design can be used to make vertical integration or out sourcing decision. The vertical integration improves the market intelligence; it increases the control of operations in a competitive market, provision of low cost opportunities, and finally increases the control of operations in a competitive environment. The outsourcing decisions helps to free resources, reduction of costs, superior design, access to capacity, easier control of costs, and increased focus on the core. The relationships in the supply chain network include business or consumer relationship, traditional market supply relationship, and the partnership supply relationships (Norman, 2002:137). Conclusion Operations management is planning and execution of operations particularly routine work in the service and manufacturing worlds: demand forecasting, inventory control, production planning, quality management, and supply chain collaboration. Summarily, operation is a function of an organization that performs the ongoing execution of the activities that produces the same product or provides a repetitive service. The examples of operations in an organization comprise of manufacturing operations, production operations, and accounting operations (Vilder, 2001:64). Operations management is one of those areas in management that is concerned with overseeing, designing and controlling the production process and also redesigning the business operations in the production of services and goods. It has the responsibility of ensuring that the business’ operations are efficient in terms of meeting customer needs. It is concerned with the management of the processes that converts inputs such as energy, labor, and forms of materials into outputs in the form of goods and/or services. Therefore, operations management is crucial as it is concerned with creation of products and services upon which we are all dependant. Effective operations management gives an organization the potential to improve both efficiency and customer service simultaneously. Operations are permanent endeavors that lead to production of repetitive outputs, with the resources basically being assigned the similar set of tasks according to the standards that have been institutionalized in the life cycle of a product. Proper management of operatonions is effective when issues like suppy management network is properly mantained. The organizations proper management of capacity management ensures that operation is a transformational process adds value such that the value of the output has a financial value that is greater than the sum of inputs. Moreover, better management of operations is through effective design of products and services. Process design helps to conceive looks of the product thus attracting customers and also communicates to the market. To sum up, the recent advancement in technology has the enhanced the efficiency of carrying out of various operations. 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