Operations Management Process at Green Life - Essay Example

? A Report on Green Life Inc’s preparation for business during Christmas. An Operations Management Perspective Table of contents Introduction 4 1.1 About the business 4 1.2. Operations Management 4 2. Competitive elements in OM 5 2.1 Operations effectiveness 6 2.2 Customer management 7 2.3 Product innovation 8 3. Functions in operations management 9 3.1 Capacity planning 9 3.2 Supply chain management and inventory control 9 3.3 Quality 10 3.4 Human resources management 11 4. Gains and drawbacks in operations management 11 4.1 Recommendations 12 5. Summary and conclusions 13 References and Bibliography Appendices Abbreviations HRM: Human Resources Management JIT: Just in time OM: Operations Management SCM: Supply Chain Management TQM: Total Quality Management. 1. Introduction This report elaborates the operations management process at Green Life, a firm that is into production of vegetables and raising turkeys. This report highlights the significance main critical functions of operations and aims to reinforce the fact that operations management is critical to success of any business. This is accomplished on the basis of three main competitive dimensions, operations effectiveness, customer management and product innovation. The concept integrates 8 Ms of operations management, which are the determinants of business performance. 1.1 About the business Green Life Inc. deals with growing vegetables and raising turkeys. The business peaks during Christmas. These products are sold on retail basis as well as supplied to other shops on wholesale basis. For this, an operations strategy that would integrate appropriate production based on previous sales and demand would help in optimizing the production, which would maximize profits and minimize loss from wastage through wasteful activities as well as wastage of products resulting from storage, delivery or overproduction. Setting up these operations is a highly challenging task and involves a myriad of interdependent activities and issues for the operations manager, all of which need to be addressed at the same time in order to ensure a successful business as well as maximum customer satisfaction. 1.2. Operations management: Operations management comprises of all activities that are required for production of specific goods or services. These activities include planning, designing, and the production process; integration of marketing, finance, human resources and strategy (Brown, 2000). The production/operations processes involve inputs, which include the 8 Ms such as money, material, machines, manpower, management, markets, methods and messages (Nel, 2007). The inputs are processed in someway through series of preplanned activities in order to produce desired outputs, which can be in the form of completed parts, products, chemicals, service to customers, completed paperwork etc. Operations management also involves provisions and processes for storage of inputs as well as outputs (Shim & Siegel, 1999). An illustration of this transformation process is shown in appendix 1. 2. Competitive elements in OM: Adopting competitive dimensions will reinforce the organization’s value by choosing distinct activities or initiatives that can deliver unique mix of outputs. These outputs may include value for money to the customer, customer service, quality products etc other than the main products. These can be achieved by designing the right strategy that cad deliver operational efficiency and high-quality products. Chase (2006) identifies three major components for strategy namely, operations effectiveness, customer management and product innovation. Operations effectiveness refers to the core business processes needed to run the business. Business processes include all business functions from taking customer orders, handling returns, manufacturing, marketing, delivery of finished products etc. Customer management refers to understanding and maintaining customer relationships by meeting customer demands and expectations. Product innovation refers to development of new products, markets and relationships to sustain growth (Chase, 2006, p.23-24). With operations strategy based on these three dimensions, every process or activity in operations management can be planned in a manner that is linked to the main organizational goal, which can certainly be of value to the organization. This report explains how operations management at Green Life based on these three competitive dimensions can achieve the goal of producing the forecasted products within the available timeframe and reap maximum benefits. 2.1 Operations effectiveness: Operations involved in production of goods requires various activities to be performed such as planning, organizing, staffing, directing, motivating, allocating, monitoring, and controlling (Waters, 1999). Planning in terms of money, manpower, materials, machines, and marketing planning are essential. Allocation of investment in the right places and at right time is critical in the present business. For this, materials planning based on previous trends of sales will provide sufficient information in terms of how much money would be required to procure the raw materials needed for growing the vegetables and turkeys. These raw materials would include chemicals and fertilizers, land, pesticides, etc. Soil improvement options need to be planned prior to growing the intended products for better output (Sanginga, 2009). Planning in terms of time and investment are again of prominence. Methods employed in production of goods are critical to operations. Methods include methods for soil improvement, irrigation, harvesting, ploughing, weeding etc for vegetables and hygiene methods, feeding, and other husbandry practices for raising turkeys. The materials and money required for these activities need to be planned in a manner that will minimize the inputs and optimize the outputs. For this, practices such as just-in-time inventory and/or make-to-order can be effective in case of perishable raw materials (Gopalakrishnan, 2002). Secondly, these practices can help in saving space consumption for storage of raw materials and products. These practices can help eliminate wastage arising from over production, waiting time/storage, transportation issues, excess inventories, increased process time, low labor utilisation, and in generation of scrap and rework. Further, these systems also reduce the need for direct and indirect manpower and finished goods inventories. Gopalakrishnan (2002) highlights that JIT systems foster thinking process among the labour and increases coordination between supervisors, managers and the staff members. 2.2 Customer management: Customer management in operations management relates to meeting customer demands and expectations. Operations functions related to marketing and sales have an impact on customers’ value proposition by highlighting the products and their excellence and by providing best quality at reasonable price; product differentiation through product innovation also adds value to customers as well as attract more customers (Kotler & Keller, 2009). Customer management also involves relationship management with all other stakeholders such as employees, suppliers, and shareholders. Effective relationship with employees can be fostered with effective leadership at all levels. This aspect covers 3 Ms namely manpower (HR), management and messages. Burke states that human resources are critical to success of an organization (2006; p.8). The core functions of operations that involve capacity, supply chain management, production processes, marketing and sales require manpower for their functioning. Human resources motivation and commitment affect these functions. Strong relationship with suppliers is required for producing high-quality products because the suppliers should be able to understand the organization’s goals and work in line with the organization’s objectives. Quality of outputs partly depends upon the quality of inputs or raw materials (Geetika, Ghosh & Choudhury, 2008). Westcott (2006) explains, ‘If suppliers have proven to be effective at controlling the quality of their output, the purchasing organization can reduce the amount of monitoring of the supplier and its input (p.510). Operational efficiency is the key enhancing shareholders’ value proposition (Ward, 2004). Focusing on investments in the right places that can enhance operational efficiency include high-quality raw materials, staff training, sophisticated machinery and tools etc. Moreover, focusing on the types of products in demand can be a further value-add as this will increase sales and profits. Our company also focuses on minimizing operational costs. 2.3 Product innovation: Product innovation acts as a way marker for most businesses and their sustainability. Product innovation provides product variety or the unique selling point and product choice that can increase sales and customer satisfaction. However, new product types must be judiciously selected right from the idea to their launch (Cooper & Kleinschmidt, 1987). Cooper (1999) highlighted eight actionable critical success factors for product innovation (see appendix 2). Applying Cooper’s (1999) concepts of product innovation in the present business, it would be better to draw suggestions from previous years’ experiences in introducing new products. Growing vegetables that would be in most demand during Christmas would be the best option; turkeys of high-quality and that mostly in demand like the brown-feathered and broad-breasted White turkeys would be raised so that maximum sale can be ensured (Herren, 2000). Other varieties that are less in demand during Christmas can be acquired from other suppliers in order to meet customer demands. This will avoid additional costs involved in raising the turkeys that are less in demand. Raising turkeys with different sizes and amount of meat can be another choice for product innovation. However, in general, large sized turkeys are sold in larger numbers during Christmas; hence, investing more in raising such turkeys would be a better option. 3. Functions in operations management: 3.1 Capacity planning: Capacity planning involves calculating the quantity of raw materials, manpower and/or other resources required for growing the vegetables and raising turkeys as per the forecasted volume. It also involves calculating these requirements on daily, weekly and monthly basis according to the process / operations. The amount of workload would determine the numbers of labor required and cost involved. Various processes in these operations include preparation of soil/environment; process of sowing and irrigation. For raising turkeys, planning is required in terms of the breed type, brooding process, housing capacity, equipment required, feeders and feeding quantity, hygienic and sanitation requirements. Next, planning in terms of storage of the vegetables and turkeys is critical. Planning for transportation of these products to the shops would be the last step. Thus, the capacity planning should incorporate planning at each workplace or production unit at each time; it should determine the amount of work load based on number of products to be produced, assembled, checked or processed and the amount of manpower required (Arnold, Chapman & Clive, 2008). 3.2 Supply chain management and inventory control: Supply chain is the network of activities that include procurement of raw materials as well as provision of products and/or services to the end customer. Thus, supply chain management integrates procurement, operations and logistics to provide value added products or services to the end customers (as shown in appendix 3). SCM has to be managed effectively so that organizations can meet customer expectations in time and with minimal costs while delivering high-quality products. The supply chain usually involves multiple suppliers and distributors; hence, it becomes the responsibility of the operations manager to effectively coordinate with these suppliers (Arnold, Chapman & Clive, 2008). The main aim is to achieve low cost and high quality and responsiveness. Considering the volatility of our products, we opt for just-in-time delivery of raw materials and finished products in order to avoid wastage of any form. SCM is dealt at strategic, tactical and operational levels (Monczka et al., 2010). At strategic level, we are contracted with specific suppliers that supply raw materials of specific standards. These contracts are reviewed with respect to the products, customer satisfaction, as well as pricing on a regular basis. Raw material supplies are procured on periodic basis based on the capacity planning. Transportation of raw materials and finished products to the retailers is managed through the suppliers on a just-in-time basis; however, few raw materials that can be stored are procured on a yearly basis in order to minimize transportation costs; the quantity of these raw materials being low, their storage is also not an issue. At operational level, resources such as seeds, eggs, poults (baby turkeys) etc are procured just before production. Inventory such as supplies of raw materials, equipment, technology, etc acquired from suppliers are managed strategically according their usage. In our business, inventory is minimum and limited to equipment and technology required for production; this helps in avoiding locking of money involved in storage and handling; this also avoid tax and insurance premiums; it also avoids potential wastage caused by damage of excess stock (Boyer & Verma, 2009). 3.3 Quality: By adopting Total Quality Management principles, we ensure an organization-wide effort to improve quality of products and services (Cooney & Sohal, 2005). All staff members are trained on quality control procedures, and quality control assessor checks for the quality of all finished products. Besides these, our quality standards, as agreed with external suppliers and vendors, ensures we use high-quality raw materials so that we get high-quality outputs. Moreover, the JIT delivery of raw materials and finished products helps in avoiding potential wastage from spoilage and damage. Usage of high-end technology and hygienic conditions for storage of finished products (vegetables and fully grown turkeys) also ensures maintenance of quality. Investment in these aspects cannot be compromised in order to retain customer satisfaction and revenue generation. 3.4 HRM: Human resources or manpower is the most critical aspect of any management function and the driving force is leadership. Effective people management can be achieved through leadership and effective supervision that adopts practices for motivating, appreciating, encouraging and monitoring their work. Job design and work measurement are critical in gaining commitment from employees. In our firm, the all tasks are assigned according to employees’ skills and competencies. Employees are well trained before they commence operations, which enhance their confidence and commitment (please see appendix 4). All employees are oriented towards TQM principles so that every employee is committed to achieving quality and minimizing any form of wastage. Employees are empowered to take decisions related to their tasks, which can result in innovation. Innovation in terms of products, quality control, identifying and minimizing or eliminating wastage, improving profits or minimizing losses are constantly encouraged and appreciated with due recognition; this strengthens employee commitment, which impacts operations in terms of pace as well as quality. 4. Gains and drawbacks in operations management: Operations management that is based on strategies that are aligned to organizational goals is always successful. At Green Life Inc, the essence of operations management is derived from operations effectiveness, customer management and product innovation. These strategies provide sustainable competitive advantage to the organization, which continuously adds value to the business in making profits. Approaches and practices such as strong customer/supplier relationships, TQM, employee training, and product innovation lay strong foundations to effective operations management. Customer and supplier relationships based on objective and measurable performances help the business sustain. The concepts of TQM foster application of quality in every aspect of business, which further adds value to customers, business, and shareholders. Employee empowerment and involvement fosters commitment and motivation, which directly impacts performance in terms of productivity and cost saving, and thus the output. Nevertheless, drawbacks cannot be avoided. For instance, effective supply chain management requires trained supervision of quality of supplies; this does not guarantee absence of manipulation of supplies. The effects of bad supplies may become evident at later stages. Secondly, effective leadership and organizational strategy that is based on strong vision and mission is the key to effective employee management. Thirdly, employing TQM concepts is time consuming. Employee empowerment meant for greater improvements could get delayed due to too much involvement, discussion, too many ideas etc. Striving to achieve profits in short term using new approaches as proposed by employees may not be as effective as expected. 4.1 Recommendations: To address the limitations, we recommend proposition of an organizational vision and mission that incorporates the three competitive dimensions of operations in addition to other objectives. This will help the leadership as well as employees to understand the significance of their work in achieving the business goals. Employee empowerment and ideation should be exercised in a planned fashion in order to minimize conflicts and time taken to implement the ideas. For this, supervisors need to involve themselves in finalizing the decisions. Secondly, we recommend employment of quality-control executives that can work closely with all suppliers at supplier locations. 5. Summary and conclusions In summation, this report illustrates that operations management is a comprehensive phenomenon including distinct and complex activities that need to be performed in order to achieve a firm’s goals. At Green Life Inc, operations management utilizes the 8Ms, money, manpower, materials, methods, management, machines, messages, and markets optimally to achieve business goals. This is done based on specific strategies linked to human resources management, quality, supply chain management, and production processes in terms of planning, organizing, controlling, leading and measuring. Operations management encompassing these functions and based on unique strategies as employed at Green Life Inc. will help in achieving the objective of this firm, which is to achieve maximum profits and sales of products (vegetables and turkeys) with minimum usage of resources. References and Bibliography Arnold. J.R.T, Chapman, S.N and Clive, L.M. 2008. Introduction to materials management. 6th ed. U.S.A: Pearson Education Inc. (pp: 125-152). Boyer, K.K and Verma, R. 2009. Operations and Supply Chain Management for the 21st Century. Ohio: Cengage Learning. Brown, S. 2000. Strategic operations management. Great Britain: Elsevier. Burke, R.J. The human resource revolution. 2006. In Burke, R.J and Cooper, C.L.’s The human resources revolution: Why putting people first matters. The Netherlands: Elsevier. (Ch.1; pp: 3-12). Chase. (2006). Operations Management for Competitive Advantage. 11th ed. New York: Tata McGraw-Hill. Cooney, R and Sohal, A. 2005. The Human Side of Total Quality Management. In Holman, D J, Wall, T.D, Clegg, C.W, Howard, A and Sparrow, P’s The essentials of the new workplace: A guide to the human impact of modern working practices. West Sussex, UK: John Wiley & Sons. (Ch.3, pp:33-50). Cooper, R. G., & Kleinschmidt, E. J. 1987. Success Factors in Product Innovation. Industrial Marketing Management, 16(3), 215-223. Available from http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=12428317&loginpage=Login.asp&site=ehost-live (Accessed May 19, 2011). Cooper, R.G. (1999) “From Experience: The Invisible Success Factors in Product Innovation”, Journal of Product and Innovation Management, 16 (2), pp: 115-133. Available from, http://www.stage-gate.net/downloads/working_papers/wp_19.pdf (Accessed May 19 2011). Geetika, Ghosh, P and Choudhury, P.R. 2008. Production Theory. In Managerial Economics. New Delhi: Tata McGraw-Hill Education. (Ch.7; pp: 183-214). Gopalakrishnan, P. 2002. Handbook of Materials Management. New Delhi: PHI Learning Pvt. Ltd. Herren, R.V. 2000. The Poultry Industry. In The science of animal agriculture. 2nd ed. New York: Thomson Learning Inc. (Ch.6; pp: 64-82). Kotler, P and Keller, K.L. 2009. Marketing – Management. 13th ed. New Delhi: Pearson Education Inc. Monczka, R.M, Handfield, R.B, Guinipero, L.C, Patterson, J.L and Walters, D. 2010. Purchasing Strategy. In Purchasing and Supply Chain Management. Hampshire, UK: Cengage Learning EMEA. (Ch.3, pp:52-76). Nel, W. 2007. Management for Engineers, Technologists and Scientists. 2nd ed. Cape Town, SA: Juta and Company Ltd. Porter, M. 2000. The Value Chain and Competitive Advantage. In Barnes, D’s Understanding business: processes. London: Routledge. pp: 50-65 Sanginga, N and Woomer, P.L. (Eds.) 2009. Integrated Soil Fertility Management in Africa: Principles, Practices and Developmental Process. Nairobi, SA: TSBF-CIAT. Supply Chain Management Software Solutions, n.d. The StuffReview. Available from, http://www.thestuffreview.com/thearticel-Supply-Chain-Management-Software-Solutions.html (Accessed 18 May 2011). Shim, J.K and Siegel, J.G. 1999. The scope of operations and production management. In Operations Management. New York: Barron's Educational Series. (pp:1-25). Ward, K. 2004. Marketing finance: Turning marketing strategies into shareholder value. Massachusetts: Butterworth-Heinemann. Waters. D. 1999. Operations Management. Kogan Page Limited: London. Westcott, R.T. 2006. Supply Chain Management. In The Certified Manager of Quality/Organizational Excellence Handbook. 3rd ed. New Delhi: Pearson Education India. (Ch.18; pp:510-530). APPENDICES Appendix 1 SOURCE: Nel, 2007. p.138. Appendix 2. Source: Cooper 1999; p. 117. Appendix 3. Source: Supply Chain Management Software Solutions, n.d. Appendix 4. Source: Chase, 2006; p.194. Read More