Operations Management - Term Paper Example

Operations Management Executive Summary The invention of the lighting bulb changed the way humans live by generating light in the dark and making life more colorful among other advantages. Essential, that was the basic idea behind the innovation but today lighting is more than just creating light in the dark. The demand for aesthetic items is always increasing. Lighting todays is very crucial in homes not just for the purpose of light but also for good interior designs. Lighting changes a room’s mood but this depends on the design. We are planning to transform the world of lighting by manufacturing affordable and quality lighting. The lighting products will mainly include various types of ceiling lights and table lamps for home use. We will be targeting retailers like Lowes, Home Depot, Canadian Tire, and Sears among major Canadian retailers others. Our current challenge is capital deficiency. Since we have an operating business plan for uniquely important products, we are calling for potential and serious investors to collaborate with us and loan us the required funds for our startup capital. Therefore, this paper provides an in-depth Operating Business Plan to show all the potential investors that the business that I am capable of designing a good business and operating it successfully. Essentially, since the focus will be to manufacture bulbs that save energy are uniquely advantageous, the lighting business will be highly successful. Business Description The business is a manufacturing company which will entirely deal with the production of quality and energy efficient lighting bulbs and lambs for home use. As the manufacturer, the business will not deal with customers, who are the product end users. It will distribute the manufactured products directly to the suppliers, specifically the lighting product retailers. The firm is meant to operate locally and its products with target local customers at first. Mission Our mission is to change the era of lighting through affordable and energy efficient lighting products to all local homes throughout Canada as we plan to reach our immediate neighborhood. Productivity The most important aspect of this lighting manufacturing business is productivity. Productivity is the measure of how efficient production is done (William, Mehran, & James, 2015). It is therefore articulated as the ration of the production outputs to its inputs. In this regard, the business inputs will include the raw materials used, energy resources, and labor. The outputs will be the various types of lighting products such as bulbs and light lambs. The main focus in measuring productivity will be on our total productivity in which case all inputs and outputs will be considered (U.S. Dept. of Labor Bureau of Labor Statistics, 2014). Measuring productivity will be important since it is the best way to know whether we are making progress or not. Essentially, when a manufacturing company wants to boost its competitiveness, it has to invest a significant amount of money in methods that attract production and office efficiencies. This usually calls for external consultants and cost accounting experts (Brynjolfsson, 1993). For this business, measuring productivity will not demand the help of external consultants. The main objectives of the manufacturing business are to create high demand through the manufacturing and distribution of quality lighting products to our customers, but we do not want to create extra expense doing this since the skills to achieve this goal are available. However, the high demand has to be met (Chew, 2015). This implies that our production has to meet the existing demand for our lighting products. To achieve this, we plan to come up with an effective way of monitoring our total productivity by measuring it (Brynjolfsson, 1993). To measure our business productivity, we intend to define our inputs and outputs by determining their economic value. In this regard, the business aims to look for highly qualified personnel to achieve the most efficient human resources possible. The business also will collaborate with cheap and reliable suppliers of the required row materials for the manufacturing process. In this case, the business will realize a meaningful economic value of its inputs. With affordable and high quality raw material as well as cheap and high skilled labor, the difference between the cost of inputs and the value of outputs will be high. This will constitute to high productivity and high profits in return (U.S. Dept. of Labor Bureau of Labor Statistics, 2014). Productivity will be measured by determining the monetary value of total inputs and subtracting this value from the monetary value of total outputs. It will also be determined through measuring the production performance. This will be measures using the business’ absolute or average income. Nevertheless, the best way to perfectly establish the success of the business production performance and effectiveness is determining the performance in terms of both the absolute and average quantities. These results can then be presented in a chart like in the figure below. Figure 1: Presentation of Average Productivity and marginal Productivity Source: Saari (2011) We will use both the average productivity and marginal productivity to monitor and improve productivity. Marginal productivity entails the additional production effectiveness as more additional inputs are added (Saari, 2011). We will incorporate more inputs up to the point where the marginal productivity levels, such as point 3 where no additional outputs would be achieved as more inputs are incorporated (Bechler, 1984). Forecasting Since our main part of the business in production, we will forecast the quantity of output in relation to productivity. The business is meant to keep growing and as such, forecasting on its growth based on output and productivity is very important. In this case, predictions about the business success in the future will be done based on its past and prevailing trends. Forecasting the business performance in a future date like ten year will be important because it is the best way to establish is viability, growth, and competitiveness. Two forecasting approaches will be used. These include quantitative/qualitative approach and the average approach. In the use of qualitative/quantitative forecasting approach, we will determine the opinions of consumers towards out lighting products. We will also rely on experts to verify the consumers’ judgments for the development of a non-biased analysis (Ellis, 2008). The qualitative approach will use qualitative data to determine the quality of our products while the quantitative approach will use quantifiable data to determine how the products are selling and hence, how fast our products are gaining market popularity. The average approach will be essential in the perdition of all the business’ future values as the equivalent of the past data about its production and sales. Combining the two approaches will provide effective results (Ellis, 2008). Inaccurate results may mislead the operation of the business and delay or hinter its future success. The forecast information will be used to develop better strategies for boosting its operations (Ellis, 2008). Product and Service Design Product design is a key aspect of this business and its survival in the competitive market of lighting product. Our product are meant to create a new consumer niche and hence, to enhance the business competitiveness. In this regard, our lighting products will be mainly for home users. They will be designed to be colorful, technologically focused, and energy effective. Other lighting companies focus only on energy saving but if our products constitute a mixture of technology like remote controlled lights, authenticity, and energy effectiveness, then customers will be singing their praise. All products will be standardized such that they are applicable to any lighting system in homes and probably offices. For authenticity, we will offer customization option to provide our customer any aesthetic look they need. Capacity Planning Capacity planning will be important for the growth of the business. The business capacity decisions will depend on the prevailing market success and customer demand as well as the projected business operation. Production will depend on the market demand such that we will always focus on meeting the needs and expectations of customers as determined by the retailers. Besides, the level of production output will determine the amount of inputs required. Inputs in this case consist of both labor and raw materials. Our goal will be to achieve an optimum productivity whereby each additional input would lead to increased productivity. For instance, we will employ labor up to the point where each employee contributes to increased productivity. Nevertheless, we expect that the productivity will be increasing with time as the demand for the business products increased. Process Selection The business will rely on the most applicable manufacturing process possible. In this regard, our operation will include getting raw material from suppliers, manufacturing, and distributing to our suppliers. Our suppliers will specifically consist of the main retailers of lighting systems and electrical products in Canada. This process would be the best for our business model because it saves time that could be wasted when dealing directly with customers. We will, however, allow some direct link with some customer who would be in need of customized products because they can provide direct and accurate information regarding their demands. Our employees will work through various departments such as manufacturing, procurement, sales and marketing, as well as technical department to ensure full involvement in the process. Automation will be applied only in the manufacturing phase of the process except for the customized products. Facilities Layout Facility layout is crucial to the business. s layout important to your business? If so, what layout will you chose and why? If layout decisions are not important, why not? Defend your decisions! Work Systems The business will consist of various types of job positions and ranks. The main jobs will include the director, general manager, department manager, supervisors, accountants, engineers, sales personnel, marketing personnel, supervisors, technicians, drivers, and subordinate staff. These key jobs are designed in terms of ranks, departments, and operational processes. The director will control the overall function of the business while the general manager will oversee its operations and discuss major issues with the director, who is the business owner. The department managers will oversee their respective departments and report directly to the general manager. The supervisors will see that all specialists and staff execute their duties as required. All other staff members will execute their duties as directed by their managers and supervisors. The job performance of each employee will be measured by the value of his job, activeness, and productivity as an individual with respect to the value of his or her duties. The business will ensure continued improvement in its employees by offering occasional training programs to improve the value of its human resource. Location Planning and Analysis This businesses is specifically a manufacturing company which will only deal with its suppliers and a few special customers. Manufacturing requires quite a large piece of land and thus outskirts of the city will be the best location. The reason for this location is that cost of land is relatively low and there is always some room for expansion. The future strategy towards location of the business is to expand but further from the city center. The business also plans to open a new manufacturing plant possibly in the rural areas once its products capture the market effectively. Quality Assurance Our business quality assurance program will include measures ensuring that our products are efficient, good looking, affordable, and long-lasting. The inspection process will monitor quality of raw materials from suppliers, the production process, the finished products to detect any faults and check the aesthetic value of each product as a key aspect, and monitor how long the products last with the customers. Any faulty products reaching end users will be replaced with quality faultless products at no additional cost. To monitor the quality of our sold product, we will use online surveys were customers can express their opinions regarding quality and other aspects. Quality Control Continuous improvement of our manufacturing process will be crucial for the business success. A continuous improvement process will thus be implemented. It will involve incorporation of new technologies and ideas from our customers. These new technologies and ideas will be incorporated in the design of every product and affected during manufacturing. We will then note the reactions of customer to ensure that the continuous improvement program evolve effectively. Total Quality Management The TQM of the business will entail employees’ involvement in various decision-making processes. Employees always want to be part of their company in order to get motivated. The business TQM will also entail offering training programs to employees as a way of improving the firm’s human resources. Employee motivation will also be a valuable aspect of the TQM program. Supply Chain management The business is mainly a manufacturing company which intends to deal directly with its suppliers and distributors directly. Its supply chain is, therefore, simple. Completion will only arise when dealing with direct customer who may need customized products. Therefore, as far as the supply chain will be crucial in the business, it will not be complex. However, structuring purchasing and logistics functions will be necessary due to the volume of expected sales. The business will start as a single plant and thus its structure will be centralized even after increasing the number of manufacturing plant divisions. The function will be centrally controlled from a head office in the parent plant. Inventory Demand They will carry an dependent inventory demand. The number of product it will manufacture at any given time will depend on the level of demand. The choice of this inventory demand will made to optimize its productivity. The amount of raw material to order from suppliers will be determined by the average sales in the past. This way, it will achieve optimum productivity level where purchasing excess inputs would be avoided. As the demand increases, the inventory demand will increase. References Bechler, J. (1984). The Productivity Management Process. American Productivity Center. Bozarth, C. (2011, January 28). INDEPENDENT VS DEPENDENT DEMAND INVENTORY SYSTEMS - An EXAMPLE: Inventory Management Models : A Tutorial. Retrieved December 6, 2015, from https://scm.ncsu.edu/scm-articles/article/independent-vs-dependent-demand-inventory-systems-an-example-inventory-mana Brynjolfsson, E. (1993). The productivity paradox of information technology. Communications of the ACM, 36 (12), 66–77. Chew, W. B. (2015). No-Nonsense Guide to Measuring Productivity. Retrieved December 6, 2015, from Harvard Business School Publishing: https://hbr.org/1988/01/no-nonsense-guide-to-measuring-productivity Ellis, K. (2008). Production Planning and Inventory Control Virginia Tech. McGraw Hill. Saari, S. (2011). Production and Productivity as Sources of Well-being. MIDO OY. U.S. Dept. of Labor Bureau of Labor Statistics. (2014). Multifactor Productivity-Frequently Asked Questions: Bureau of Labor Statistics. . Retrieved December 6, 2015, from http://www.bls.gov/mfp/mprfaq.htm#1 William, J. S., Mehran, H., & James, C. (2015). Operations management: Fifth Canadian edition. Whitby, Ontario : McGraw-Hill Ryerson. Read More