The Production and Operations Management - Assignment Example

Business Functions & Processes Table of Contents Introduction 3 Business Context 3 Value Addition by the Functional Area of Production Operation Management 4 Addressing Of the Factors (Voice of the Customers, Timeliness, Quality and Availability) 5 Discussion 5 Effective Understanding of Operations Management 5 Detailed Explanations 7 6 Sigma Tool 7 Total Quality Management (TQM) 10 Lean Manufacturing Technique 11 Business Process Reengineering 13 Conclusion 15 References 16 Bibliography 19 Introduction For this report, the chosen functional area is ‘production and operation management’ within the automotive industry. The two management concepts are completely separate and thus have been separately described as under. Business Context The Function of Production and Operation Management within the Automotive Industry Production management within the automotive industry can be described as a function of the automotive products. As inferred, the product life cycle generally comprises four stages i.e. development, growth, stagnation and decline. Production management in simple words can be described as all the necessary functions carried out within these four stages for providing expected value to the customers in terms of the products along with attaining maximum profitability. These functions within an automotive industry based organisation include automobile design development, formulation of effective marketing and advertisement strategies and implementing them accordingly (Ing. Punzenberger COPA-DATA GmbH, 2010). In the similar context, operations management within the automotive industry can be described as all the functions and activities associated with effective utilisation of raw materials for carrying out the manufacturing and the maintenance processes. This includes keeping record of all the fixed cost and variable costs associated with the daily production process. Operations management is also at times referred as the parent process of production management. Within this parent process, all other management processes such as inventory management, human resource management, and production management exist (Slideshare Inc., 2014). Value Addition by the Functional Area of Production Operation Management By Production Management The concept has gained importance due to the increasing competitiveness in the current marketing scenario. Adding to this, this concept has proved its effectiveness and values provision to the automotive industry. The value part can be described in relation to that of quality, quantity, time factor and profitability. As already described above, production management within the automotive industry is all about manufacturing the demanded quantity of cars with set quality standards within specified period of time to make its availability in the market certain. It also ensures that the manufacturing process gets carried out in a timely fashion and effective selling strategies get formulated through which high profitability can be attained by the companies (Ing. Punzenberger COPA-DATA GmbH, 2010). By Operations Management In contrast to production management, which focuses on profitability earning, the operations management provides value to the manufacturing companies in terms of cost cutting. As already discussed above, effective operations management helps in efficient utilisation of the resources which may be either raw material, financial or human resources. These help the organisations in the automotive sector in reducing their expense levels and attaining profitability (Slideshare Inc., 2014). Addressing Of the Factors (Voice of the Customers, Timeliness, Quality and Availability) If seen from a customer’s point of view, effective production and operation management helps in subsequent reduction of the manufacturing cost of the finished automotive units. As a result, the selling price of such products ends to remain at stable levels which the customers can afford and thus providing value to the customers (Ivert & Jonsson, 2010). As far as the timelines factor is concerned, it can be stated that effective production and operations management enables to maintain a constant pace within the production process and thus saves a whole lot of time. Similarly, with the quality and the availability factors as well, a company in the automotive sector can indulge in higher level of business performance and customer retention. These types of management process always keep in mind the production quality and timeliness factors and thus successfully meet up with the availability as well (Ivert & Jonsson 2010). Discussion Effective Understanding of Operations Management Operations management in the present day industrial scenario has become a vital factor which needs to be followed. This concept finds wide acceptability mostly in the areas of manufacturing. Owing to the fact that the manufacturing process comprises multiple diversified sub-processes so it is through operations management that a systematic occurrence of these can be carried out for avoiding material wastage (New Charter University, 2014). Besides, for sustaining in the current business world, it is necessary that every business organisation brings about efficiency within its raw material consumption levels, fixed cost, variable cost, other miscellaneous essences, employee charges, manufacturing process and various other key dimensions. Moreover, bringing about efficiency within these sub-processes requires effective planning and strategy formulation. Thus, the entire operation management can be segregated into multiple planning and decision making processes few of which have been discussed as under (New Charter University, 2014). Planning In Terms of Production This is the preliminary step for the production process and is accompanied by multiple decision types such as production unit setup location, raw material listing, worker or employee count, determination of quality factor and product type among others. Without these planning, the production process cannot start (New Charter University, 2014). Control Parameters This step is generally carried out once the production process starts. This step is just about step by step monitoring of the manufacturing process. Subsequent processes within this step include monitoring of raw material utilisation rate, constant measurement of the product quality, maintenance factors and employee training among others (New Charter University, 2014). Final Assessment This is the final step of the manufacturing process. In this step, the finished product lots undergo quality check by inspecting individuals based on which the finished products are either accepted or rejected (New Charter University, 2014). Apart from these above mentioned planning processes, there are multiple other tools which are necessary for ensuring the success of the production and operation management procedure. A few of these tools mentioned hereunder: Total Quality Management (TQM) Lean Manufacturing Technique 6 Sigma model Value Stream Mapping Business Process Reengineering The detailed explanations of these tools have been provided in the later sections of this discussion. The combined implementations of these tools are used in almost every possible manufacturing organisation. These tools comprise guidelines through which efficiency within the production and operation management can be achieved. Common instance is this regard is the utilisation of these tools in the automotive manufacturing process or electronic goods manufacturing activities. Prevailing benefits of utilising these tools include optimal resource utility, wastage minimisation and profit maximisation (Six Sigma Group, 2014a). Detailed Explanations 6 Sigma Tool Apart from being a tool, 6 sigma also referred as a type of philosophy. This is a quality-control tool which had been primarily pioneered in the industrial sector by Motorola for bringing about improvisation within their product quality and fulfilling customer requirements (Six Sigma Group, 2014b). This tool mostly helps manufacturing organisations especially in the automotive sector in terms of attaining high levels of profits through detection and elimination of all the non–necessary processes and bringing about efficiency. Another additive feature of his quality-control tool is that it can be applied to every type of business process. The tool has also been helpful in terms of attaining new and retaining existing customers, providing them optimal satisfaction level and improvising business processes (Six Sigma Group, 2014b). Source: (Six Sigma Group, 2014b) The diagrammatic representation of the steps within the 6 sigma tool has been shown above. This tool has been implemented by The Ford Motor Company, a leading name in the automotive sector within its production management process along with other significant processes and it has subsequently helped this automobile manufacturing giant in saving millions of dollars (Jacobsen, 2011). During the period of 2009, the company witnessed an increase in the consumption of its basecoat paint which further led to the gradual rise in the consumption level of other Volatile Organic Compounds (VOC). This actor further risked the environmental safety factor and hiked the cost of its automobile units. As a corrective measure, the automotive giant implemented the 6 sigma model for identifying the root cause which has led to such a change (Jacobsen, 2011). As a result, the improvement figures obtained from the sig sigma analysis were drastic. In accordance with the reports, the company could have saved an approximate figure of US$1.5 million every year. Moreover, the company could have improvised the defect rate of its products by 127.000 parts per million (ppm). Besides, with the help of the results obtained from the 6 sigma analysis, the company successfully attained a medium level of customer satisfaction. Above all, the 6 sigma analyses have also helped this automobile manufacturer in reducing their annual emission of VOC to about 50.000 kg (Jacobsen, 2011). This is how 6 sigma has benefitted Ford Motors over the years. Total Quality Management (TQM) The concept of TQM generally implies the quality factor of each and every activity within an organisation. Thus, with reference to this comprehension, this concept will be majorly applicable to the production management within automobile industry since the concept of quality in this industry is mostly related to the products (cars, engines and interiors among others) (White & et. al., 2009; Slideshare Inc., 2014). Furthermore, this quality management tool also takes the customers’ and the stakeholders’ point of view into consideration. Moreover, TQM takes the following factors into consideration for the analysis part. The factors have been listed hereunder: Product design quality Quality of raw materials Quality of the associated processes Quality of performance of the employees Quality of the supportive products Consequently, based on these factors, it can be stated that TQM also proves its effectiveness within the operations management (Slideshare Inc., 2014). This quality management tool has been implemented by Toyota within its production management. The implementation of his tools has helped Toyota in terms of maintaining the standards of its commitments regarding products and service. In general sense, Toyota has been practising the concepts of quality assurance and quality control for providing high quality products and more than expected levels of satisfaction to its customers. These two concepts (quality assurance and quality control) form the two main components of the total quality management (Slideshare Inc., 2014). The company follows a specific style of implementing the TQM concept within its production and operations management. In case of production management, the brand appears to be highly strict regarding the quality of the raw materials, semi-finished and finished products. However, in case of operations management, the brand appears to be flexible and tended towards fulfilling customer demands. Thus, the applicability of TQM has benefitted this brand in terms to maintaining high production standards and attaining multiple rewards based on quality (Slideshare Inc., 2014). Lean Manufacturing Technique The lean model has its applicability majorly in the manufacturing industry. The model was primarily developed by the Japanese automobile manufacturing companies. This model mostly takes into consideration of the customers’ perspective. Lean management tool finds its effectiveness in terms of maintaining continuous profitability and production consistency by eliminating all the resource wattage factors. The model considers the fact that the ideas of each and every activity to be carried about within an organisation should be clear. The lean accounts the following aspects as manufacturing wastages (National Productivity Council, 2014). These aspects have been mentioned hereunder: Overproduction of goods The period of waiting before starting the activity Ineffective transportation Excessive inventory Slow motion of activity Defective raw materials and production On the contrary, the lean manufacturing tool abides by the following principles (National Productivity Council, 2014). Identification of the factors which will create value for the customers Maintaining a constant flow within the operation and functionality Manufacturing in limited amount and requirement specified in order to minimise inventory stocking and resource wastage The lean manufacturing model has been implemented by Toyota within its production and operations management processes. This model has subsequently helped this Japanese automotive giant in identifying the areas of resource wastage and thereby maintaining sustainability and continuous development. Through the effective implementation of the lean model, the brand has also brought about significant amount of efficiency within its machinery, human resource and organisational functionality. Below mentioned are a few of the initiatives undertaken by Toyota through the implementation of this model (Process Improvement Japan, 2010). The brand re-engineered a power regulation device which has benefited the brand in terms of saving US$20 per unit of power consumption. Besides, it has relocated the machineries and tools close to the settlement areas of the workers so that they can easily access them. The company has also colour coded the raw material socks so that the workers do not get confused while using them (Process Improvement Japan, 2010). Specific guidelines regarding maintaining of effective coordination and working technique between the workers have also been setup by his brand. The company has also brought about significant reduction within its paper utilisation rate. Moreover, for the production purpose, the brand has switched from the use of aluminium to the use of stainless steel which is half the cost of aluminium. Above all, the company has made the final product inspection process as completely automated. This has helped the brand in effective utilisation of its available resources as well as time management which in turn has helped in profit maximisation (Process Improvement Japan, 2010). Business Process Reengineering Business Process reengineering is a completely new concept which mostly focuses on the implication of information technology within the existing business processes with the prime intention of giving it a completely new look. It is all about rethinking multiple strategies regarding how to change the organisational structure by altering the existing guidelines and framing out new (Wells, 2000). In case of the production and operations management of an automotive company, business process reengineering may refer to conversion of the manual manufacturing system into an automated system which will save time, efforts and resources to a major extent. Automobile manufacturing processes often comprise multiple critical stages where the implementation of manual process might prove to be ineffective. Here, the concept of business process reengineering comes into the picturization (Wells, 2000). This automation concept which has been a part of the business process reengineering has further been applied by multiple Japanese organisations within its production and operations management with the prime intention of bringing about efficiency within its work process. Moreover, through the effective implementation of this concept, the brand has successfully attained significant amount of competitive advantage and thus has become one of the leading automobile manufacturing brands in the global market. Apart from just Toyota, the business process reengineering concept has been successfully implemented by Ford Motors as well. With the help of this tool, Ford Motors has attained success in the areas of productivity improvisation, minimised processing time and cost, quality improvisation and high level of customer satisfaction. However, the success factor of this tool lies in the fact that the organisation should bring about fundamental change within its system. Adding to that, one major disadvantage of implementing this tool is regarding its complexity (Mashari & Zairi, 1999). Conclusion Taking into consideration all the above discussed concepts, a conclusion can be drawn that the production and operations management is the amid the most crucial work processes, which comprises all the functions within an automotive industry based company. Moreover, with the increase in the competitiveness trend within the market, more and more automobile manufacturing companies have been tending towards the use of a combination of management tools for bringing about efficiency within their work processes. Through the implementation of these tools, these above discussed automotive giants also tend towards bringing down their expense levels and thus attain better profitability over the duration of their operations. References Ing. Punzenberger COPA-DATA GmbH, 2010. Production and Performance Management in the Automotive Industry. Information as a Production Factor, pp. 1-7. Ivert, L. K. & Jonsson, P., 2010. The Potential Benefits of Advanced Planning and Scheduling Systems in Sales and Operations Planning. Industrial Management & Data Systems, Vol. 110, No. 5, pp. 659-681. Jacobsen, J., 2011. Ford Team Uses Six Sigma to Reduce Costs While Improving Environmental Impact. Making the Case for Quality, pp. 1-4. Mashari, M. A. & Zairi, M., 1999. BPR Implementation Process: An Analysis of Key Success and Failure Factors. Business Process Management, pp. 87-111. New Charter University, 2014. Operations Management in Manufacturing and Service Industries. Managing Operations, Information and Technology. [Online] Available at: https://new.edu/resources/1722 [Accessed May 15, 2014]. National Productivity Council, 2014. Lean Management System Works On the Following 5 Principles: Lean Management for Productivity Enhancement, pp. 1-3. Process Improvement Japan, 2010. Japan’s Method of Manufacturing Process Improvement. Lean Manufacturing Principles. [Online] Available at: http://www.process-improvement-japan.com/lean-manufacturing-principles.html [Accessed May 15, 2014]. Slideshare Inc., 2014. Operations Management. OM vs. Production Management. [Online] Available at: http://www.slideshare.net/akash_in/operations-management-5028176 [Accessed May 15, 2014]. Slideshare Inc., 2014. Total-Quality-Management Toyota. Presentation Transcript. [Online] Available at: http://www.slideshare.net/dhruvsheth/28328395-totalqualitymanagement [Accessed May 15, 2014]. Six Sigma Group, 2014a. Benefits of Six Sigma. What is Six Sigma? [Online] Available at: http://www.sixsigmagroup.co.uk/Methodologies-Tools/Benefits-of-Six-Sigma.aspx [Accessed May 15, 2014]. Six Sigma Group, 2014b. What is Six Sigma? Home. [Online] Available at: http://www.sixsigmagroup.co.uk/Methodologies-Tools/What-is-Six-Sigma.aspx [Accessed May 15, 2014]. Wells, M. G., 2000. Business Process Re-Engineering Implementations Using Internet Technology. Business Process Management Journal. [Online] Available at: http://www.cwu.edu/~atkinsom/BPR_implementations.htm [Accessed May 15, 2014]. White, G.R.T. & et. al., 2009. The Implementation of a Quality Management System in the Not-For-Profit Sector. The TQM Magazine, Vol. 21, No. 3, pp. 273-283. Bibliography Jones, R. M., No Date. Operations Management Technology. University of Glamorgan, pp. 1-25. Jones, R. M., No Date. Operations Management Processes JIT, MRP and Constraint Theory. University of Glamorgan, pp. 1-20. Read More