Current Challenges Encountered by Ninak Fireworks and Models to Tackle Those Challenges - Term Paper Example

? OPERATIONS MANAGEMENT The paper discusses aspects of systems and operations management. Operation management implications on e-business and information systems are described, especially from the digital economy standpoint as per Arthur’s ‘Second Economy’ article. Subsequently, current challenges encountered by Ninak Fireworks and models to tackle those challenges are detailed. Additionally, a mind map exploring the challenges of Ninak Fireworks is presented in the paper. TABLE OF CONTENTS Introduction 4 Strategic Importance of the Digital Economy 4 Ninak Fireworks Current Challenges 6 Ninak Fireworks Business Process Mapping 8 References 10 Introduction What is Operations Management? If we define this question the answer that we will get goes something like this: managing the activities, decisions and responsibilities of the resources so that it can produce and deliver the quality products or services in a stipulated span of time is called as Operations Management. Mainly, Operations Management about managing resources to create goods and services (Slack et al., 2010). In today’s competitive world, every organization has the operations management team that oversees the smooth functioning of the operations in terms of production and delivery of products and services. As Hayes et al. (2005) claims, effective operations strategy should be consistent and contribute to give competitive advantage. The person who manages this particular team is called as Operations Manager and it is his/her responsibility to see the operation is going smooth. Strategic Importance of the Digital Economy A decade before the Civil War, which was in 1850, the economy of the United States was not very big. It was even smaller than that of Italy. But after 40 years of the war United States was world’s largest economy. The reason behind this enormous progress is the railroads. What they did was connect the east and the west along with the interior parts with both the sides. With this move the industrial goods of the eastern part of the country gained access for the rest of the country; they scaled the economy with stimulation of the steel and manufacturing industries (Arthur, 2011). And this had made the economy to prosper many folds making it the largest economy. These types of changes are not unusual. Since 60 years or so there has been a great transformation in the economy of the country and most of the reforms are being done by the technology that has entered the country almost unnoticing. The entry of the technology has brought new social classes with them and also creates different classes of business. In today’s fast paced world is it possible to think such silent and slow yet deep economic transformation? If we look at the genetic or nano technology we can see the same, however, the time for them has not yet come in full force (Arthur, 2011). But it is arguable that there is something deep that is going as far as the information technology is concerned, which is way beyond the computers or the social media or e-commerce. The business processes that were completely human effort are now being executed electronically without losing time. These processes are executed in an unseen strictly digital domain (Katz and Koutroumpis, 2012). Let us take a look at an example. If you think about 20 years back, when you had to go somewhere in flight you would have a paper ticket that you would produce to a human being in the airport counter. After that the person would register your ticket, check your luggage in and help you know if the flight has arrived or not. All these activities were to be done manually by human interventions (Arthur, 2011). However, today, in the time of information technology, when you go to the airport you just need to swipe your frequent flyer card or credit card in the kiosk and you will get all the necessary stuffs – boarding pass, luggage tag, receipt etc. in just few seconds, without any human intervention. Once you swipe your card, an enormous conversation is being initiated among the machines and the machine would recognize the necessary information and process your request in just few moments. All these are done electronically with the help of information technology and without any human intervention (Arthur, 2011). If we look into it superficially we can see that the shift is not that great what we are thinking, but if we see the effect of this change we can see that it is almost has the same effect like the construction of the rail roads – it connects one part with the other part and is creating a second economy quietly, which is a digital one. Operations strategy is about what operations has to do to meet present and future challenges. The strategy should be based on long term development of resources which can provide sustainable advantage (Slack & Lewis, 2011). As per Aspen root systems, the second economy where physical processes are computed using digital economy has emerged (Arthur, 2011). The digital economy makes use of multiple servers, multiple semi intelligent nodes for updating, querying & checking things, which connects back to physical economy. The second economy is based on interconnected root system like the roots of aspen trees that are communicating with each other. Additionally, this second economy has a set of neural layer or nerve net to sense and it reacts with the physical economy where appropriate physical actions are triggered automatically through re-computation. For example - a load truck may pass through RFID sensor and Check- in at airport. Still there is much work which is still physical (Arthur, 2011). For example - Someone has to pick up the luggage to put it on the belt, however, the digital world of sensing, digital communication and intelligent response is emerging. With the emergence of second economy physical jobs are disappearing. It is also believed that the second economy is not producing anything. It is tracking sales, getting goods, executing banking operations & trades, controlling manufacturing, billing clients, making design calculations and guiding in medical processes (Katz et al, 2010). This second economy may prove to be engine of growth for the coming centuries but it may not provide jobs as the economy is shifting from producing to distributing prosperity. The last repository of jobs is shrinking in this system and perhaps the idea of creating jobs may change in coming decades. Ninak Fireworks Current Challenges Ninak Fireworks Ltd manufactures and sells fireworks for both the general public and business customers, including: retailers; specialist fireworks display companies and event organizers. Ninak Fireworks supplies fireworks to individuals (the general public); and businesses (usually retailers and events organizations) customers. The operations department led by Jeff Tyron is responsible for manufacturing the different types of fireworks and this has to be done very carefully. The current challenges in their operations processes and satisfying the customer are - 1 It is difficult for the department to get the right product mix. 2 The Operations Department receives conflicting messages from the sales teams and the warehouse and logistics teams, on what is required and what the current stock levels are. 3 There is no real correlation between the sales forecasts and the actual stock levels. 4 The company needs a scalable system to improve co- ordination between sales; operations and logistics. 5 Claire Forest (the Marketing and Sales) head want to target international customers. To market internationally, a better system is required. 6 At the moment, the company needs a better system as it is far behind competitors. 7 It plans to shift the processes - Sales and marketing to online platform. The Input-Process-Output Model The theoretical models has been studied and it was found that there are three levels of casual interactions - global, local and contextual (McGrath et al., 2000) between teams. The theory of Input- Process - Output model describes about input, processes and outcomes (Kozlowski et al. 1999) where interactions are contextual effected by external environment and shaped by actions in a reciprocal fashion. Team performance depends on knowledge, attitude and behavior which are both inputs and processes in developmental sequence. Classic work on team performance is based on models where inputs resulted in processes which generated outcomes (Steiner, 1972; McGrath, 1984; Hackman, 1987). Research in this field identified team performance as output and treated it as input for future team processes or emergent processes. This I-P-O framework suggests a linear progression of processes. The input-process-output model applies to Ninak Firework’s current operations processes as the company requires a single clear system that can provide information related to current stock status and incoming orders to improve things. The Value Chain Model The Value Chain Model describes the activities of organization and links its performance to its competitive position (Porter, 1985). The value chain model evaluates each activity which adds to products and services of the organization. These things should be systematically arranged into systems to produce for customers. Porter claimed the ability to perform an activity to manage linkages between various activities is the main source of competitive advantage. These activities can be distinguished into primary and secondary activities. Operations, inbound logistics, outbound logistics, marketing & sales, and service are categorized as primary activities (Laudon K. and Laudon J., 2010). The primary activities are mainly concerned with creation and delivery of products. The four main areas of support are - procurement, human resource management, technology and infrastructure. Any company’s profit margin depends on its ability to manage the linkages between the various activities of a value chain. These linkages are significant for corporate success. At Ninak Fireworks, the Value Chain Model implies as the company needs a competitive system to improve co- ordination between departments - sales, operations and logistics. Claire Forest who is the Marketing and Sales head plans to gain international customers; however, to market internationally a better system is required. At the moment, the company is far behind its competitors as it lacks proper linkages between various activities of its value chain. Ninak Fireworks Business Process Mapping Business process mapping is the measure that helps to make sure all the processes in the company are aligned with its values and capabilities. Business process mapping can assist organizations to become more efficient. The four main processes in Business Process Mapping are 1 Process identification 2 Information gathering 3 Interviewing & Mapping 4 Analysis Process identification aims to understand processes. Information gathering identifies objectives and key controls (Laudon K. and Laudon J., 2010). The actual design map is created during the process of interviewing and mapping. Analysis involves utilizing tools and approaches which can be integrated to processes to make it run more efficiency and effectively (Keller & Mike, 2011). At Ninak Fireworks, complete Business Process Mapping is required where a detailed analysis of business processes can be performed to design process map to find out if improvement can be made in current process or not to make the current processes more efficient. Since the process mapping is three dimensional, it will assist Ninak Fireworks in supporting a number of business goals which include regulatory compliance, business process re-engineering, service level agreement, activity analysis and simulation. What’s more the application of software tools such as web browser will help Ninak Fireworks immensely, as the process maps will be easily available, thus streamlining stakeholder communications. This will improve the compliance to organizational standards, end to end interdepartmental communications will be augmented, and future training of Ninak Firework employees will be easier. For creating a scalable system the company requires automation and a database based system where the processes can be mapped and these interlinked processes can predict the future requirements (Laudon K. and Laudon J., 2010). Currently, the Operations Department receives conflicting messages from the sales, the warehouse and logistics teams on what is required, and what the current stock levels are. There is never any real correlation between the sales forecasts and the actual stock levels. A Database based system will provide actual and same stock level information to each department that can access this information anytime. This will make processes clear and prevent delays caused by conflicting messages. Furthermore, a database based system can be integrated to online system in future, which can be a source of competitive advantage to the company. References Arthur, W.B. (2011), ‘The Second Economy’, McKinsey Quarterly, October, available at www.mckinseyquarterly.com/The_second_economy_2853. [Accessed 3 May, 2013] Hayes, R., Pisano, G., Upton, D. and Wheelwright, S. (2005) Operations, Strategy and Technology: Pursuing the Competitive Edge, New York: John Wiley. Hackman JR. (1987). The Design of Work Teams. In Handbook of Organizational Behavior, Englewood Cliffs, NJ: Prentice-Hall Katz, R., and P. Koutroumpis. (2012). “Measuring Socio-Economic Digitization: A Paradigm Shift,” Social Science Research Network. Available at http://papers.ssrn.com/sol3/papers.cfm?abstract_ id=2070035. [Accessed 3 May, 2013] Katz, R., S. Vaterlaus, P. Zenhausern, and S. Suter. (2010). “The Impact of Broadband on Jobs and the German Economy” Intereconomics 45 (1): 26–34. Available at http://www.intereconomics.eu/ downloads/getfile.php?id=721&human=1. [Retrieved 4 May, 2013] Keller, Paulette J. & J. Mike (2011), Business Process Mapping: Improving Customer Satisfaction, New York: Wiley Kozlowski SWJ, Gully SM, Nason ER, Smith EM. (1999). Developing Adaptive Teams: A Theory of Compilation and Performance across Levels and Time. In The Changing Nature of Performance, San Francisco, CA: Jossey-Bass Laudon, K.C. and Laudon, J., (2010). Essentials of Management Information Systems. 9th or 10th ed. Upper Saddle River, NJ: Pearson Education. McGrath JE, Arrow H, Berdahl JL. (2000). The Study of Groups: Past, Present, and Future. Personal. Soc. Psychol. Rev. 4:95–105 McGrath JE. (1984). Groups: Interaction and Performance. Englewood Cliffs, NJ: Prentice-Hall Porter, M.E. (1985) Competitive Advantage, New York: Free Press Steiner ID. (1972). Group Process and Productivity, New York: Academic Slack, N., Chambers, S. and Johnston R. (2010) Operations Management (6th Edition), Harlow: Pearson Education. Slack, N; Lewis, M (2011), Operations Strategy (3rd Edition), Harlow: Pearson Education. 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