The General Principles of Operation Management - Essay Example

Running Head: OPERATION MANAGEMENT Operation Management An organization’s first concern should always be to satisfy its customer’s needs and requirements for prompt and reliable services at reasonable price, as well as whole heartedly helping its own suppliers to improve the many services they offer. There are five basic performance objectives and they pertain to every kind of operation: • Quality • Speed • Dependability • Flexibility • Cost (Slack, N. et al, 2001). The above mentioned operations performance objectives, can only be understood by analyzing an organization where these objectives are followed. So in order to understand how these objectives work we shall use the example of TMC. 1) Doing things correct by means of providing error free goods along with services, which will please the customers, is known as ‘quality’ (Johnson etal 2005). According to the case study, Toyota’s vehicles without fail rank close to the top in third-party customer-satisfaction surveys. Being selected by a lot of market research and surveys as the car of the year for a number of years it shows that, Toyota has an unbeaten record worldwide. Due to the good quality Toyota’s worldwide fame and success kept going, back in 1995, Toyota was the top car in the Middle East. Moreover, TMC has manufactured extremely high quality cars that do not make much noise or do they do produce unpleasant fumes, Toyota uses more than 40 emission-control systems, it also uses dozens of technologies that have improved passenger-car safety. 2) The second performance objective is speed, this objective highlights the fact that by doing things on reasonably fast speed , the company can minimize the time between the order and the availability of the product same goes for a service this tends to give the customer a speed advantage over other companies . The TMC’s techniques are highly focused operations that lessen complexity by using easy as well as small machines, which are robust and supple. This is done by rearranging the layout along with the flow in order to improve simplicity improves speed of production. Statistics of the late 1980 show how 27 years back the output per worker was a lot more than US or European plants. 3) Third performance objective is dependability, this objective highlights the fact that the organization has perform complete its production in the time period which it has promised the customer (David 2006). In order to get a better understanding of this objective a good example to quote here would be that TMC includes ‘Just-in-time’ (JIT) production system along with workers who are multi skilled that work as a team, They use 'kanban control' which has permitted them to deliver products as they have promised. Improving efficiency as well as quality is the first and foremost concern of not only the managers and technical experts but also of each and every employee. So, it can be said that TMC is a good example of the third objective. 4) The fourth objective is ‘flexibility’ , this objective involves the responding to a vibrant environment of the organization that brings change in their products and services it also changes the manner in which they do business. Organization has got to learn to love change in order to develop flexible as well as responsive organizations to manage with a good dynamic business environment. (Peters, T. 1998) Again to demonstrate the importance of these objectives the example of TMC will be used. The TMC plant is always adopting new and innovative manufacturing resources, in order to launch new models on a fact pace. Due to this Toyota was able to attain an extremely high level of flexibility, producing fairly small batches of diverse models with slight or no loss at all of productivity or quality. TMC during the years has provided an array of options from which customers can select from. 5) One important operations objective is ‘cost’. Low price is a well known objective that tends to attract customers; this may be achieved by manufacturing goods at lower costs. Here again I shall take the example of TMC so this objective can be clearly understood. So that things can be done cheaply, TMC seek to manipulate the cost of goods as well as their services .keeping this in mind TMC has planed to move their production of vehicles that are and pick-up trucks in a lot of different countries all around the world (e.g. Argentina, South Africa). All this has helped TMC to produce high quality vehicles prices that reasonably. So if see a complete picture of these objectives it can be said that by using as well as improving quality, speed, dependability, flexibility and cost operations performance, an organization can achieve global growth and high percentage of customer satisfaction. The given example to TMC is real life proof to this, since the success of the above mentioned operation performance objectives of manufacturing as well as product developments has become so well known that it is studied and emulated world wide. An organization can become a world leader in supply chain management, with to maintain its production at the high quality, maximum speed, on time delivery, flexibility and at a very low cost. When an organization shifts its operation in diverse countries looking for inputs that have a low price this makes it easier to manufacture products at a restively low cost, it also gives the organization a chance to produce good quality (Wild 2002). Organizations that Operate continentally also gives dependability as a benefit to its customers by means of making it simpler to distribute its production in the market place. by means of these operation performance objectives TMC has been successful in managing to make its clientele happy as well as compete effectively among others companies in the global market. KPI success of organization Key Performance Indicators can also be known as KPI or in other words Key Success Indicators (KSI); these indicators help an organization to define as well as measure development that is headed towards organizational goals. Once an organization has analyzed its mission, identified each and every one of its stakeholders, as well as making its goals definite, it requires a way to measure improvement toward those goals (Heizer etal 2003). Competitive Advantage has continuously gathered information on competitor performance while conducting surveys, with the right of entry to the CPI. it can now supply a client with a standard contrast with both competitors as well as the construction products industry. Key Performance Indicators are measurements that are quantifiable and agreed to in advance, that reflect the vital success factors of an organization. They will vary depending on the organization. Key Performance Indicators Reflect the Organizational Goals An organization whose main of goal is "to be the most profit making organization in the industry in which it functions " will encompass Key Performance Indicators that measure profit as well as associated fiscal measures (John 2005). "Pre-tax Profit" along with "Shareholder Equity" will be amongst them. nevertheless, if its wants to be a profit making organization than "Percent of Profit Contributed to Community Causes" most likely will not be one of its Key Performance Indicators. Whereas educational institutes are not all concerned with profit making, so in this case the educational institutes will be Key Performance Indicators will be diverse. KPIs similar to "Graduation Rate" along with "Success In Finding Employment After Graduation", although different, precisely reflect the institutes mission and goals. Key Performance Indicators Must Be Quantifiable If a Key Performance Indicator is going to be of some significance, there has to be a method to define and measure it when accuracy. "Generate More Repeat Customers" is worthless as a KPI with no way to differentiate between new and repeat customers. "Be The Most Popular Company” will not work as a KPI for the reason that there is no way in which company’s recognition can be measured. It is also significant to define the Key Performance Indicators and stick to the same definition from every year. For a KPI of "Increase Sales", you require to deal with considerations similar situations like whether to measure by means of units sold or by dollar price of sales. Will profits be deducted from sales in the month of the sale or the month of the return? Will sales be on record for the KPI at list price or at the definite sales price? Key Performance Indicators Must be Key To Organizational Success a lot of things are measurable. But this does not play a key role in achieving the organization’s success. In chooseing Key Performance Indicators, it is important to restrict them to those factors that are vital to the organization attainment its goals. It is also essential to keep the number of Key Performance Indicators minute just to remain everyone’s centre of attention in achieving the same KPIs (Wild 2002). For example a company will have just three or four total KPIs in totality. to a certain extent there may be three or four Key Performance Indicators for the company in question and each and every one of the units inside will definitely have three, four, or five KPIs that maintain the goals of the company and can be merged into them. Supposedly a company Key Performance Indicator is "Increased Customer Satisfaction", that KPI will be alert in a different way in different departments. The Manufacturing Department possibly will encompass a KPI of "Number of Units Rejected via Quality Inspection", whereas the Sales Department has a KPI of "Minutes A Customer Is On Hold Before A Sales Rep Answers". achievement by the Sales and Manufacturing Departments in conference their personal departmental Key Performance Indicators could help the company meet KPI. The Use of Key Performance Indicators After you have excellent Key Performance Indicators defined, ones that reproduce your organization's goals, one that you could measure, then the question arises what do you do with them? You can definitely use Key Performance Indicators as a performance management tool (Derek 2003). KPIs give every person in the organization an apparent image of what is significant, of what they require to make things happen. One can use these indicators to manage performance. The manager must keep an eye on his employees so that all the people in your organization do is paying attention on meeting or more than those Key Performance Indicators. Moreover the organization may use the KPIs as a carrot. Post the KPIs ubiquitously: in places like in the lunch room, on the walls of each and every conference room, this can also be placed on the company web site for a number of of them. explain what the goal for each KPI is and illustrate the progress in the direction of that target for every one of them. People will be aggravated to arrive at those KPI targets References David Loader (2006); Advanced Operations Management, 2nd Edition Securities & Investment Institute and John Wiley & Sons Derek Waller (2003); Operations Management: A Supply Chain Approach, Thomson Learning. Heizer J. and Render B., (2003). Principles of Operations Management. (5th ed.) New Jersey: Prentice Hall Inc John Barlow (2005); Excel Models for Business and Operations Management 2nd edition, John Wiley & Sons, Johnson G. and Scholes K., (2005); Exploring Corporate Strategy (7th ed.). Hemel Hempstead: Prentice Hall Europe Peters, T. (1998); Thriving on Chaos, New York: Alfred A. Knopf Slack, N, etal, 2001, Operations Management (3rd edition), London: FT Pitman Publishing. Wild, Ray (2002); Essentials of Operations Management: Thomson Learning. Read More