Operations Management in Business - Assignment Example

Operations Management in Business Table of Contents Task 3 LO 1 3 LO 2 3 LO 3 4 LO 2 6 LO 2.2 6 LO 2.3 7 Task 2 8 LO 3 8 LO 3.2 9 LO 3.3 10 LO 4.1 10 LO 4.2 11 Reference List 12 Task 1 LO 1.1 Operations management involves dealing with designing and management of products, its production processes involved services and the supply chain. It is described as the optimum utilization of resources by efficient procurement and processing to develop products and services that meet the consumers’ demands (MITSloan, 2014). The scope of operations management covers from strategic level to tactical level of operations. The strategic level of operation includes determining the location, structure and size of the production plants along with the service design, communication networks and supply chain technologies. It helps the organization to determine the business process of the firm. However, the tactical level includes the process of project management, selection of equipments, scheduling of processes, materials and goods traffic handling. Thus it handles the entire production operation of the plant (MITSloan, 2014). The operations of an organization allow it to accomplish its mission by employing the right technological and human recourses driven by the right managerial processes. Operation management allows an organization of produce goods as well as services. The manufacturing process yields tangible products as output whereas the service operations produce intangible output. Operations management process can be broken down in to simple steps like Planning, Organizing and Controlling. Planning involves laying down the blueprint of the course of actions. Organizing establishes the structure of the tasks involved and the hierarchy of authorities. Controlling allows the manager to ensure that the tasks are aligned with the plans. Thus the operations management allows a firm to meet its organizational goals by efficiently producing its goods and services in order to meet the demands of the customers (Kumar and Suresh, 2009). LO 1.2 This section covers the operations function of The Bramble Co., which is a furniture wholesale supplier, headquartered in Wisconsin, USA. It supplies finished goods to countries like Australia, UK, Germany, Switzerland, Hong Kong, South Africa, New Zealand, etc. The company runs its privately owned manufacturing plant in Java, Indonesia. The manufacturing plant covers a massive area of seven hectares (The Bramble Co., 2014). The company uses high end wood crafting technology along with integration of traditional craftsmanship. Bramble employs skilled workers from Europe in order to establish an efficient workforce. The company ships around seventy containers per month each having a size of forty feet. The operations function of Bramble Co. defines the operational objectives and how they are met. The company’s production process ensures that the furniture carry the trademarks of the handmade feel. The company avoids taking any short cut production techniques, which as a result yields higher product quality. Sufficient time and effort is given to each product units, to ensure that they are completely free from defects (The Bramble Co., 2014a). All the Bramble furniture goes through a hand finish stage, where skilled staffs hand paint each of the parts and pieces of the furniture. The workers pay great attention to details so that the quality of craftsmanship is maintained in each Bramble product. The product quality is ensured by passing the furniture through several quality control levels. As a result the company can ensure the products’ quality, longevity, safety and consistency. The company owns high reputation of packaging and logistics. It also ensures that all the products are properly packed before they are shipped to the customers. The company uses efficient logistics system to transport their products in a very short time, thereby improving their service (The Bramble Co., 2014a). LO 1.3 This section discusses in details the operations management of Bramble. The company’s production facility in Java is well equipped with above average working condition and modern tools and technologies. The company realizes that the human work force is the backbone of its manufacturing operations, so all the workers are well paid and provided with facilities like free clinic, medical insurances and exceptionally attractive bonus schemes. Bramble procures its raw material that is high quality wood logs from the Indonesian Department of Forestry Plantations (The Bramble Co., 2014b). These raw materials are then delivered to the tow large saw mills for cutting and reshaping it into wooden planks, which is much easier to handle. The wooden planks are then processed in kilns for fourteen days, so that the moisture content is removed from the wood, and as a result the wood gets stronger and more resilient to decay and environmental erosion. The processed wood is then moved to the Component shop, where skilled workers convert the raw materials into small furniture components. These components are sanded with latest sanding machine, which gives a smooth texture to the wood. The components are then assembled to finished products, which are then hand painted. The skilled artists take sufficient time and care to carve the designs in the furniture. The company has good reputation of its product design and high product quality. The finished products are then moved to the Quality checking area, where all the furniture goes through a series of thorough checking for minute defects. The company maintains enough inventories so that the customers’ demands are fulfilled in very less time (The Bramble Co., 2014b). Thus the operation management of Bramble has been efficiently designed to ensure that all the products are of desired quality and are produced in sufficient quantity. Figure 1: Operations flowchart of Bramble Source: (The Bramble Co., 2014b) LO 2.1 The company makes sure that all of its products are offered high value for money for the customers. The value for money can be assessed with help of the three E’s, which are Economy, Efficiency and Effectiveness (Barnett et al, 2010). Economy: This factor is characterized by reducing the cost of production (Cannock Chase Council, 2014). Bramble has adopted efficient production methods by using latest technologies like state of the art tools and employing skilled workers and creative artists. This as a result prevents revenue leakage and keeps the operating cost of the company within a limit. Moreover, the availability of cheap labour force in Indonesia has allowed the company to employ more labours in less salary (The Bramble Co., 2014b). Efficiency: Efficiency is optimum use of resources (Cannock Chase Council, 2014). It measures the productivity of the company in terms of output against input. Bramble has achieved high efficiency by establishing a high skilled work force and advanced tools which allow the company to increase its output thereby increasing its revenue generation. Thus Bramble operates with high efficiency, which eventually adds to its profitability (The Bramble Co., 2014b). Effectiveness: Effectiveness measures whether or not a firm is able to meet its goals and objectives (Cannock Chase Council, 2014). Bramble’s goal is to produce high quality wooden furniture, with a touch of hand finish. The company has designed its manufacturing process in such a way that all the products are hand finished to ensure better texture and design, and it also ensures that all the products are free from defects. Bramble has successfully recognized and caters to the high demand of hand finished furniture and thus it has effectively met its organizational goals (The Bramble Co., 2014b). LO 2.2 A firm often needs to make a balanced tradeoff between cost and quality in such a manner that improving the quality of the product does not affect the profitability of the company (Zaklouta, 2009). In case of the furniture manufacturing industry, the cost and availability of raw materials varies across the globe. Thus companies often outsource their production plant in regions where the good quality timber is available at a low cost (Steierer, 2010). Bramble has strategically established its manufacturing plant in Indonesia, where it has access to high quantity of timber at a lower price. Moreover Bramble also has access to the low cost labour market of Indonesia (Sugiyarto, Blake and Sinclair, 2005). Thus it can efficiently leverage the comparative advantage of the host country and thereby reducing its operating costs. On the other hand product quality can only be assured when a production process involves trained staff, advanced tools and technologies and a well designed operations management system (MITSloan, 2014). Bramble makes sure that all of its workers are highly skilled and they have access to high quality tools. Moreover, to improve the product quality Bramble has maintained a good working environment and offers attractive wages to the employees in order to motivate them to work harder and focus on the product quality. Thus the company has successfully managed the tension between cost minimization and quality maximization (The Bramble Co., 2014b). LO 2.3 The performance of a company can assessed with the help of the following five parameters which are, cost, dependability, flexibility, quality and speed (NSW HSC, 2014) Cost: This parameter covers all the cost involved in the business operations of a company. The main aim is to keep the cost as low as possible without compromising on the product quality and employees’ salaries. Although keeping the costs low leads to higher profitability, but adopting strict cost cutting strategies involving reduction of incentives or bonuses, discontinuing perks and privileges, increasing working hours, etc, will eventually demotivate the employees leading to low product quality and degradation of brand image (NSW HSC, 2014). Bramble has not adopted any cost cutting methods rather it offers its employees with exceptional perks and bonuses along with above average salaries. Even though it increases the operating cost of the company, but at the same time it also helps to improve the product quality and overall efficiency of the operation process (The Bramble Co., 2014b). Dependability: Dependability measures the level of consistence of the operations process. High level of dependability means that a firm can easily rely on the production capacity and can easily meet the customers’ demands (NSW HSC, 2014). Bramble enjoys a high dependability owing to its highly efficient production firm in Java. The good product quality allows it to have a good brand image and preference among the customers and at the same time the efficient integrated use of technology and hand crafting has set a reliable standard for the company (The Bramble Co., 2014b). Flexibility: Flexibility measures the firm’s adaptability to market environment (NSW HSC, 2014). Bramble does not depend completely on dedicated machineries as its production process also involves hand crafting. Thus it allows its operations to be flexible depending on the market demand. Moreover, due to extremely low perishability of furniture products, the company does not have to worry about over production (The Bramble Co., 2014b). Thus, the company’s operations are flexible enough to meet the changing market demand. Quality: Bramble takes extreme care to produce high quality hand crafted products which has a high perceived value due to their accurate finishing and almost negligible manufacturing defects. The company employs a series of rigorous quality checks so that the customers receive only the best furniture units (The Bramble Co., 2014b). Speed: Speed involves reducing the lead time as much as possible. Maintaining a good quality is not enough if a company cannot deliver the products to its customers in time (NSW HSC, 2014). Bramble ensures that it has sufficient units in stock so that they can ship their products as soon as they receive an order (The Bramble Co., 2014b). Task 2 LO 3.1 Linear Programming and Critical path Linear programming determines the best possible outcome of a process by using certain mathematical models. It considers several linear inequalities and finds out the best probable situation under the given conditions. Linear programming is a part of Mathematical optimization which covers the finding of optimum output options. It is used in organizations to design allocation of resources to get maximum output (Vanderbei, R.J., 2001). Designing a critical path is one of the ways to find out the optimum workflow. The critical path allows the managers to identify the workflow which requires the shortest time. Thus based on the critical path analysis they can improve their current operation process and reduce the time taken in the entire process. The network diagram helps to identify different relationships between the activities in the workflow. By getting the clear picture of the network diagram the managers can easily point out any particular activity which might be slowing down the entire operation and eventually they can eliminate them to achieve a more efficient operations process (Vanderbei, R.J., 2001). LO 3.2 In order to evaluate the effectiveness of the operations process, a network diagram and critical path analysis has been done. The entire evaluation process has been broken down into five stages, a) evaluation of the production process b) evaluation of logistics, c) understanding procurement, d) research and development, e) improving production process. The critical path diagram shows the following: The task A is independent and it takes 2 days. Task B is dependent on task A and it takes 3 days. Task C takes 2 days and is dependent on task A and task B. Task D is dependent on task A, B and C and it takes 2 days. Task E is dependent on task D and it takes 5 days. Based on the critical path (please refer to attachment) it can be ascertained that the shortest workflow is A>C>D>E and the total time taken to complete the task is 18 days. Figure: Critical path Source: (Author’s Creation) LO 3.3 The operational plan is often misunderstood with the strategic plan. Before describing the operational plan, the difference between the strategic plan and operational plan needs to be discussed. The strategic plan is focused on setting an objective or goal and develops a set of strategies to pursue that goal. It provides a holistic guideline to the entire firm for achieving its primary goals, whereas the operational plan is focused on the short term or day to day activities. It provides a detailed blueprint of the work flow to direct the employees to run the daily tasks of the organization. The operational planning seeks to answer the following questions: a) what are the activities that need to be performed b) who are the individuals responsible for the activities c) what is the time frame within which the activities need to completed d) and how much financial resource is required to finish the activities (Greasley, 2009). In case of a furniture supplier, devising an operational plan is of primary importance. The company needs to break down the required activities to achieve the long term strategic plan. The day to day activities include procurement of logs, processing, sawing, making components, assembling, etc. In order to improve the efficiency of the operational process, the firm must clearly define each activity of the workflow so that there are no ambiguities or overlapping of responsibilities. After the activities are indentified, they need to be distributed among the employees. The allocation of tasks should be done keeping in mind the individual skill set capacity, so that there the right person gets the right job. The proper work allocation will further increase the output of the operational process. The activities must be bound in a time frame so that the daily activities can be finished within the desired time. Establishing a time frame will allow the company to meet the urgent demands of the customer, which in turn will improve the brand image of the firm. In order to perform these activities, the company needs resources. Resources include both capital and labour. The key objective of resource optimization is to yield maximum output with minimum resource possible, this can be done by designing a proper operational plan which helps the organization to monitor every activities and track the individual capital requirement (Vanderbei, 2001). LO 4.1 This section includes a layout for producing a wooden cabinet and the operational processes involved. The first step is to break down the objective into smaller activities. Then depending on the employee skills, the activities are allocated to them. Each activity is bound by a particular time frame and it must be completed within the given time. The operation starts with procurement of raw materials from the forest. Procuring wood in some regions may be challenging due to the growing scarcity of tress. The timbers are then sent to the saw mill for cutting them down into planks. These planks are then sent for processing in the kiln, where they are kept for around 14 days to remove the moisture. Processing is necessary to make the wood harder and more resilient. After processing, the planks are sent to the component shop, where individual parts of the cabinet are made, like doors, legs, etc. The finished parts are then sent to the designing section, where skilled wood artists carve designs in the parts. The designing is done, the finished parts are then sent to the sanding shop for making the surface texture smooth. From the sanding shop, the parts are sent to assembly shop, where the workers assemble all the parts together to make the cabinet whole. The cabinet is sent to the paint shop, where skilled artists paint the cabinet based on the desired design or pattern. Then after the paint is dried, the cabinet is sent for quality checks, where the workers check for any defects. After passing the quality checks the cabinet is sent for packaging, where workers make sure the packaging is sufficient enough to protect the cabinet from in transit hazards. LO 4.2 Control and Quality management is necessary for maintaining the sustainability of the product or service quality. It is also essential from the point of view of sales, as quality control not only involves improving the existing output of the organization but also to avoid investing in poorly performing resources or assets. Quality control focuses in eliminating weak points in the sales management. Following the 80/20 rule, the managers often reduce the investments in the poorly performing resources or simply remove them (Zaklouta, 2009). Thus it allows the company to only retain the high performers, which as a result increases the overall output and efficiency of the firm. In the area of project management the quality control plays the role of a vital determinant for the success of the project. Project managers make sure that all the activities are performed based on the desired standard. This can be achieved by constant monitoring of the activities which in turn will easily point out any deviations from the plan or quality standard. Thus quality control plays a major role in the growth and sustainability of an organization. Reference List Barnett, C., Barr, J., Christie, A., Duff, B. and Hext, S., 2010. Measuring the Impact and Value for Money of Governance & Conflict Programs. ITAD. December, p. 6. Cannock Chase Council, 2014. Value for Money. [online] Available at: [Accessed 24 December 2014] Greasley, A., 2009. Operations management in business. 6th ed. Mason: South-Western Cengage Learning. Kumar, S.A. and Suresh, N., 2009. Operations Management. New Delhi: New Age International. MITSloan, 2014. What is Operations Management. [online] Available at: [Accessed 24 December 2014] NSW HSC, 2014. Operations Strategies. [online] Available at: [Accessed 24 December 2014] Steierer, F. 2010. Current Wood Resources Availability and Demands. [online] Available at: [Accessed 24 December 2014] Sugiyarto, G., Blake, A. and Sinclair, T., 2005. Trade Liberalization with Labor Market Distortions: The Case Of Indonesia. Nottingham University Business School. 5-12. The Bramble Co., 2014. At the Bramble Company. [online] Available at: [Accessed 24 December 2014] The Bramble Co., 2014a. About Us. [online] Available at: [Accessed 24 December 2014] The Bramble Co., 2014b. The Process. [online] Available at: [Accessed 24 December 2014] Vanderbei, R.J., 2001. Linear Programming: Foundations and Extensions. 2nd ed. New Jersey: Princeton Zaklouta, H., 2009. Cost of quality tradeoffs in manufacturing process and inspection strategy selection. Massachusetts Institute of Technology. September Read More