Production and Operation Management - Hudsons Alpine Furniture - Case Study Example

Running Header: Production and Operations Management First Names: Student Number: Institution: Course Number: Course Name: Assignment Due Date: Title Essay Production and Operations Management Case: Hudson’s Alpine Furniture’ Introduction Production and operations management (POM) in the current world of competition is seen as one of the most important strategies that can be used to make sure that organizations are able to match with the rest and possibly gain in terms of performance. This is because POM is seen as a transformational of the production and operation inputs to outputs that can be used to serve customer needs. In particular, production and operation management is all about transforming the available resources into something that can be used to satisfy the customer need. POM takes into consideration five major elements of production which include: the product, the plant, the programmes, the processes and people. Product in POM is important in the sense that it involves the determination of its performance, quality, reliability and the quantity of it that is required. On the other hand, for the company to continue existing, the plant is important in supporting the operations. In general, paying particular attention to each and every production element is considered as the best practice in growing the business to the greater heights (Wallace and Whitt 2005). The primary aim of this essay is to critically analyze Hudson’s Alpine Furniture’ POM by addressing the issues related to the current processes and systems that the company uses in production, the effects of new commercial orders to the company’s operations, the decisions that the operations manager is expected to make and the effect the move to producing commercial furniture might have on the company’s financial structure. Given the company’s situation, it’s clear that the business’ production systems and processes have been based on customer needs. This is to mean that any production process must adhere to the customer specification. The company manufactures and markets furniture that is designed according to the customer requirements (Kang and Gershwin 2005). This has been seen as a very lucrative strategy that has greatly contributed to high level of quality furniture. The company furniture is basically made from locally available raw materials which the customers seem to like most. This is production system is particularly important when the company is interested in attracting more customers by providing them with what they want. The company’s production systems and processes are founded on the two passions that the firm has which are: woodworking and skiing. This has enabled the company to persistently continue to produce high quality furniture to its customers. By using local materials to manufacture the furniture for the company, the business is working towards ensuring low cost production as it continues to excel in the industry by building good reputation through its high quality products. In addition, the process that the company uses is primary aimed at adding value to the customers. In most instances, value addition is what the customers look for when they want to spend their income (Kang and Gershwin 2005). This production approach came as a result of the company wanting to make products that are related to the environment of Snowfields and high country of New South Wales Alps. This production approach has helped the business to achieve harmonization between the furniture it manufactures and the environment in which they are going to be used. The other production system that is currently used by the company is scheduling. As the company business has continued to grow, the company has decided to employ the scheduling method in its production. This is to ensure that at no single point the business should suffer from failing to manufacture and distribute its products to meet the prevailing demands. This system is used more especially during the trade-offs (Kang and Gershwin 2005). However, the custom-made furniture is given priority. This is because of the high sales they generate for the business and the profit returns. While applying this method, the company production and processing team assembles different production components and leave them lying at certain points of the production process. This is to allow for easy take-off and response to any demand whenever it arises. Scheduling is particularly important in ensuring that everything that is required in the production process is available. The scheduling process is also seen as a key to ensuring high level of quality in production. This is because it allows for easy inspection and reviewing of the materials for production that have been put in place at every stage. Inspection of different materials is used as a quality control measure whereby the production manager gets to find out what kind of input that can give the desired quality output. During scheduling, inspection can be done at different points of production to determine if the right materials are availed prior to production. However, in the traditional methods of production, inspection has been found to be very difficult in realizing quality control as it does not add value to the customer. In essence modern methods of production allow for easy inspection and quality control something that is workable with scheduling production process as illustrated by Chen (2005). For long the company has been working on custom-made furniture where the customers were specifying what they wanted to be included in the design of their furniture. In this old tradition, the customers went further to instruct the company to state what type of good should be used to manufacture their furniture. However, as the company continued to grow and got much recognition in the market, the commercial buyers started developing interest towards the company. This is an act of market growth where the business is expected to serve the new demands. These new demands had presented quite a big challenge for the business as it was forced to respond by redesigning its operations in order to meet these demands (Bensoussan and Cakanyildirim 2005). Two common features with commercial orders is that they very sensitive to the price of the furniture and second, they ordered for similar furniture items. First and foremost, this new commercial orders implied that the company was supposed to work on expanding on its capacity to effectively serve them. This was a constraint to the company resources. Even though the orders presented growth opportunities for the business, the custom-made furniture continued to dominate in the company’s total sales and revenue generation. The problem that is presented with this new demand is that the company was to be constrained in increasing their production while using the only one manufacturing facility that was available for production (Bensoussan and Cakanyildirim 2005). This is the facility that was expected to be used in producing both custom-made and commercial furniture. In addition, the equipment that is currently used for production is more general and thus raising concerns in its capability to work on both commercial and custom-made furniture. This equipment has long been used in ensuring flexibility in producing different designs as per the customer requirements (Batt 2002). This is to mean that the business’ equipment is likely to be overwhelmed in realizing effective and efficient production. Effectiveness and efficiency in production refer to the capability of the company to produce a product better serves the customer demand at a more reasonable cost. Capacity is very critical in this case. This is because it ensures that proper machinery and spacious plant are available for production. Capacity can be categorized into four major groups namely: the potential capacity which is the ability to influence the senior management team to make certain decisions about business growth, the immediate capacity which refers to the ability of the business to produce a certain a mount of products in the short-term to meet the prevailing demands, and the effective capacity which explains that not every capacity can actually be used in the production. In general, the company is limited in capability to meeting these new demands in very many ways. First, the company may not be having the required manpower to work on the standardized commercial order. This will mean that the company will not be effective in meeting the customer demands within the required time. The company’s operating plant is relatively small to work on all the customer orders. Third, the machinery equipment is placed at different points based on the functions they perform. This is to imply that the company’s scheduling production system will not be compatible for both custom-made and commercial furniture as demonstrated by Franx and Koole (2006). Even though the company has been doing relatively well in terms of performance, the emerging business opportunities as a result of the market expansion, have continued to pose very serious challenges to the business and more especially the decision makers. Traditionally, the business was specialized in custom-made furniture but after penetrating into the market, new commercial customers have started placing new orders with the business. This is to imply that the management team is expected to make day-to-day business operations to make sure that the company remains effective in its production (Franx and Koole, 2006)). Remaining effective in production is the ultimate objective of any production and operations and management team. First and foremost, the operations manager is expected to deal with ever rising cost of operations more especially from the commercialized furniture. The cost rising from this furniture is associated with the cost of managing the inventory while waiting for delivery or sale. This is to mean that everyday the operations management team need determine the amount of furniture that should be manufactured so as to reduce operational costs (Ozer 2003). Operations cost can be looked at from different perspectives which include the materials that are purchased for production. The price of these raw materials is very critical in determining the overall cost of production. The other cost element that ought to with dealt with in daily operations, is the loading and scheduling processes that are used by the operations team. This is because it clearly specifies the various activities that have to be performed, when and how. This is particularly important in ensuring that time as an important resource is well managed. The other operation issue that has to be looked into on a daily basis is the process of dispatching and follow-up. Such documents as Job Cards, Routine sheets and inspection cards as well as Move cards are always used by the operations teams to facilitate the movement of production process (Ozer 2003). Follow-up on the other hand, is used in the production process to ensure that the production process activities are performed as applied. Expediting is important in ensuring compliance with issues such as time and quality. Expediting is also used in operations, to collect information about the production process which could be used in redesigning the process in order to realize effectiveness in the company operations. Inspection in many organizations is a routine work. Inspection is carried out the activities that are carried out on the activities that are being performed by the operations. Inspection may not necessary be used as a quality control tool since there is always a department in charge of quality control. The intention of carrying out the inspection by the operations manager is to determine if all activities are being committed as ought to. Finally, evaluation is very important for the operations team. This is because it enables the operations department to determine whether it’s on the right track towards realizing its objectives. Evaluation is important setting up standards that should be achieved in future. This is especially important in ensuring that the operations team is up to its task and is able to serve the customer needs in a more appropriate way (Pinker and Shumsky 2000). The decision to move to producing commercial furniture is a very difficult choice to make for this company. This perhaps of the company’s tradition of manufacturing and selling the furniture depending the on the customer specification. However, after some establishment, the company has seen enormous growth in the market share which has even seen many customers making commercial orders from the company. The challenge for the company is to move from the norm and diversify its products in order to meet the emerging market demands. In order to move from its traditional move and start producing standardized furniture from the company are likely to have so many implications to the business (Aksin 2006). This is because the company will have to deal with the new demand on top of what its doing currently. In choosing to manufacture and market commercial furniture, the company may be forced to adhere to a number of factors. First, the company is operating in one single plant where it does all its operations and that is at Queanbeyan. In this case therefore, the company will be forced to work an extra mile and incur more cost to expand the available plant or even start a new one in order to be able to accommodate the new demand. From the company perspective, this is a cost that must be incurred by the company in order to ensure effectiveness in operations. This is to imply that cost of operations is going to be a very big challenge for the company since it will be forced to invest back much of the profits that are realized from the current business. In addition, deciding to manufacture commercial furniture, will imply that the company redesign its internal organizational structure in order to allow for a more accommodating and favorable structure whereby the business will be able to deal appropriately with both customized and commercial furniture. In addition, the company will have to align itself in terms of capability in order to deal effectively deal with the standardized commercial orders. In order to achieve for instance, there is a possibility that the company will have to consider fresh training for the employees and in order to have them develop some skills that will make them fit in dealing with the new challenges (Ozer 2003). This is because the roles will have to be reassigned and this will mean that certain skills will be required in order to execute these roles as required. Still this will add to the company’s operating costs. A part from the negative challenges the move will have on the company, it is assumed that the move will have some positive effects from the move. First, the business will have the opportunity to diversify their product base. This is particularly important in ensuring that the company will not have not have to depend on just one product for its survival. The move will allow the company to reduce the risk of market failure in a situation where one market segment fails. In addition, the move will be very critical to making good use of potential resources that may exist in the company. This is more likely to happen if the company employees are allowed to serve in different capacities. Finally, the move is likely to have a positive impact to the business in terms of sales and revenue generated. However, this will depend on how well the move will be governed in order to ensure that the traditional market for the customized furniture is not affected according to Easton and Goodale (2005). Conclusion Production and operations management (POM) is very critical in any organization. This paper has critically reviewed this concept with regard to Hudson’s Alpine Furniture’ Company. This essay has particularly paid attention to four main issues under POM which include the current production systems and processes used by the company, the effect of new commercial orders to the company, the day-to-day decisions that operations managers are expected to make and the likely impact to the business if it moves producing furniture for commercial orders. However, based on the situation under which the business is passing especially with the emerging new markets, it looks like that opportunities not only presents good prospects for the business but also some constraints in terms of resources required to exploit them. In general terms, POM is a very important strategy in ensuring that efficiency and effectiveness is achieved in the company’s activities and that objectives are realized as earlier planned. References Aksin, O 2006, Effective strategies for internal outsourcing and off shoring of business services: An empirical investigation, Journal of Operations Management, vol. 3, no. 41, pp. 324- 367. Batt, R 2002, Managing customer services: Human resource practices, quit rates and sales growth, Academy of Management Journal, vol. 45, no. 3, pp. 587–599. Bensoussan, A and Cakanyildirim, S 2005, Optimal ordering policies for inventory problems with dynamic information delays. Working Paper, University of Texas at Dallas, Texas. Chen, F 2005, Quantifying the value of lead time information in a single-location inventory system, Manufacturing and Service Operations Management, vol. 7, pp. 144 –151. 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