Management Of Production And Operations: How Pepsi Company Executes the Productions and Operations - Term Paper Example

 Management Of Production And Operations: How A Company Such As Pepsi Executes Their Productions And Operations Abstract: The rise of worldwide markets and more and more practical companies has concentrated management attention on rivalry between supply chains. In this paper, we examine what is production and operations management and how it is carried out successfully by some of the giant companies like Pepsi etc. We present a framework for production and operations management and spotlight backing material. Operations management is that part of the business which is concerned with the creation of the best quality of goods and services. The business will have to manage its resources, its distribution methodology of its services and products to its consumers. Production and operation management also incorporates within itself many jobs which are interdependent but at the same time they can be grouped under the main headings. Introduction: APICS The Association for Operations Management defines operations management as "the field of study that focuses on the effectively planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the organization". (APICS Dictionary, 11th edition). Operations also include the production of goods and services which is a set of value-added actions that alter inputs into many outputs. (Sean Naughton, 2002). In reality production and operations management is the alteration of production and operational inputs into outputs which meets the various requirements of consumers. The essay on Management of Production and Operations will look into the various aspects of production which includes forecasting, capacity planning, distribution, resource utilization and many other activities. Production and Operations Management also known as "POM" is the transformation of production and operational inputs into outputs which, when dispersed, cope with the requirements of customers. (Courtesy: http://tutor2u.net/business/production/pom_introduction.htm) Production management also includes capacity management which is the utilization of machine, factory, men etc. Capacity management is of three types. They are: i) Potential capacity is the task which helps the senior management to take decisions about the growth and development of the business on the whole. This is a long term decision and it does not influence the day-t0-day management of the business. ii) Immediate capacity is the production content which can be made available in a short period of time. If it is assumed that this capacity is used productively then it becomes the maximum potential capacity. iii) Effective capacity is that part of the production capacity which can be used. It is very crucial for the management to know the actual capacity which can be achieved. Capacity management has two important constraints – time and capacity. The management will have to plan their productions backwards in order to meet their demand which is time constraints. They will have to allocate the final stage of the operation of the production job to the time when delivery has to be met. Decision of temporary increase in production capacity is made at this stage. Scheduling is used by companies both backward and forward so that allocation of its plant and machinery resources, human resources, production processes and acquire materials planning can be done well in advance. This helps the company to meet its production schedule without any stop till it achieves its goals. Forward scheduling is projecting the jobs from the day resources become available to decide the day the product is due to the customer. Backward scheduling is projecting the jobs from the day the product is due or required-by date to decide the start date and/or any changes in capacity required. The advantages of production scheduling include: Process change-over cutback Inventory decrease, leveling Reduced scheduling attempt Enhanced production efficiency Labor load grading Precise delivery date quotes Real time data Production scheduling provides the production scheduler with potent graphical ports which can be utilized to visually maximize real-time work loads in various stages of production. For example Pepsi wanted to minimize the number of distribution centers to reduce costs, and this can be achieved by scheduling their activities. Managing inventories is another crucial task in production and operations management. There are many ways in which product inventory management can be achieved. The basic step is to organize the stock which a company has within the space provided. The often used products in a production function should be easily accessible. Then with regard to the space available the stock of finished or raw materials should be mapped out so that there is no confusion. It should not be assumed that all items are available in stock. A stock analysis has to be carried out every now and then so that materials are available throughout production. The production has to be carried out within a predetermined budget. Even if more space is available for stock it does not mean that the company can hold more stock but investing finance in it. So utilization of the available finance in a better way will bring out the best in the company. Motivating employees is another crucial part of production management. With regard to this ‘’actions speak louder than words’’ is a better guide, so the company has to be a keen observer in this aspect. The basic principle of employee motivation is simple. They are 1. Employees should never be demotivated. Taking away benefits or downgrading working conditions are turn offs and such kind of cruel treatment should be avoided. 2. Rewards should be contingent with behavior. Standard salary is not as motivating as pay for performance. But it the employees value safety and feel that performance linked pay is too much pressure then this tactic can backfire. 3. Value should be given to people’s contributions. 4. Employees should be included in making important decisions. 5. Employees should be given new and occupying gainsays to keep them induced and learning. Motivating individual employees Each team member must be regularly; at least once a quarter should be motivated. Questions like ‘’what do you most/least enjoy doing?’’ What would you like to do more/less of in future?’’ etc., should be asked to motivate them. Some of the most important motivational factors are: · Acknowledgement · Novel challenges · Chances to meet new people · An opportunity to learn and grow with new skills · Autonomy. · Clear destinations. · Feeling concerned · Status · Encouraging appeals, sensitively expressed vision The path to success in inspiring employees is to keep away from the ‘’one size fits all’’ attitude. Not all employees are motivated by the same things. It’s imperative to avoid a blame approach. A supply chain is a meshwork of installations and distribution choices that does the functions of getting materials, alteration of these materials into midway and finished products, and the allocation of these complete products to customers. Supply chain management is characteristically considered to lie between fully perpendicularly incorporated firms, where the complete material flow is possessed by a single firm, and each channel member functions independently. Consequently coordination between the different employees in the chain is important in its efficient management. Cooper and Ellram [1993] have compared supply chain management to a well-adjusted and well-ordered relay team. Such a team is more challenging when each player knows how to be positive for the hand-off. The kinships are the firmest between players who instantly pass the baton, but the full team calls for to make an aligned effort to win the race. There are two broad categories of supply chain management factors. They are strategic and operational. Strategic decisions are made classically over a more farsighted time horizon. These are intimately connected to the corporate strategy and guide supply chain policies from a plan perspective. Whereas operational decisions are short term, and centers on actions which take place on a day-to-day basis. There are 4 main decision areas of supply chain management: 1) Location, 2) Production, 3) Inventory, 4) Transportation (distribution) Decision with regard to location: The geographic location of production facilities, sourcing points and stocking points are the natural initial steps in creating the location of the factory of the company. The location of installations calls for a dedication of resourcefulness to a long-term plan. As soon as the size, number, and location of these are decided, the possible tracks through which the product flows to the final customer become visible automatically. These determinations are of great importance to a firm as they constitute the basic strategy for getting at consumer markets. This will also have a substantial impact on income, price, and degree of service. These determinations has to be influenced by an optimization schedule which will take into consideration production costs, duties and duty drawback, tariffs, taxes, distribution costs, local content and production limitations, etc. Quantitative approach of a Business is about numbers, so that a decision about a product which is used by millions of people can be arrived at. At the same time a qualitative approach is also to be followed Quantitative approach is particularly useful in product development as a way of supporting qualitative research. Relying on the standard techniques — normally surveys and focus groups is a basic method where the research for quality and quantity is not available. In short qualitative approach is normally better for exploring, understanding, and uncovering, while quantitative approach is better for confirming and clarifying. Conclusion: Thus production and operations management is a very crucial function of the top level managers in an industry. They have to follow the function to the end so that they can be successful in their venture. Various methods and approaches of production and operations management with reference to forecasting, motivation, scheduling, location etc. have been discussed in the essay. Supply chain management is another important aspect in the success of a company and this has been proved by major giants like Pepsi, cocoa cola etc. If the supply chain is not properly managed nor is it planned well ahead then it is sure to end in chaos in the business. Location of the factories and plant is also another crucial factor. References: 1. Sean Naughton, (2002). Operations Management in a week, Chartered Management Institute, ISBN 0-340-84966-5. 2. Chase, Aquilano, et al., (2001) Operations Management for Competitive Advantage, 3. Blackburn, J. D., Kropp, D. H., & Millen, R. A. (1987). Alternative approaches to schedule instability: a comparative analysis. International Journal of Production Research, 25, 1739-1749. 4. Dixon, P. S., & Silver, R. A. (1981). A heuristic solution procedure for the multi-item single level, limited capacity, lot sizing problem. Journal of Operations Management, 2, 23-29. 5. Eftekharzadeh, R. (1993). A comprehensive review of production lot-sizing, International Journal of Physical Distribution and Logistic Management, 23, 30-44. Read More