Operations Management: Goals of Operations Manager - Term Paper Example

Running head: Operations Management Operations Management [The of the appears here] [The of appears here] Goals of Operations Manager Managing the quality of the outputs of the conversion process Operations managers must coordinate quality and productivity measurement systems so that they offer valid comparisons from plant to plant. The measurement system should include a number of appropriate measurements, all focused on the quality of the product or service, and the input of the work force in accomplishing total output. A Pareto analysis performed in a plant in France is valuable information to a sister plant in Italy. Information, measurement approaches, and TQM training should be implemented programmatically into all plants. (Winter Nie, Scott T. Young, 1996) Inspection is not the answer to quality improvement. The focus must shift from the product to the process that makes the product by eliminating the causes of defects and reducing variance. The process of improving a product requires an educated and motivated workforce willing to originate and offer suggestions. Workers can no longer be considered an extension of a machine. This fundamental change in attitude toward workers requires top management commitment. Management support for continuous improvement cannot simply be voiced at a meeting or written in a mission statement. To achieve quality, managers at all levels must exert leadership to guide employee activities and create a corporate culture conducive to improving quality and productivity. Continuous improvement must be backed by the necessary funds, be permanently ingrained in the corporate culture, and involve the entire organization. A significant investment has to be made in training. Companies that have taken these steps are prospering on a global scale; those that haven't are lucky to be alive. This transformation of corporate culture from inspection for defects to a commitment to provide consumers with quality products and services is the result of the work of thousands of executives and operations managers who choose, willingly or not, to follow the teachings of the quality gurus. Up to 1990 TQM was both sufficient and necessary to assure success. This was best seen by Japanese ascendancy to a world economic power by incorporating the principles of TQM. But the 1990s have not been kind to Japan. TQM may be necessary to be globally competitive but may no longer be sufficient. In today's world, globally successful companies must produce high quality products as a necessary precondition for survival, but this no longer necessarily guarantees success. Success seems to be moving away from an emphasis on producing quality products to managing a corporation in a complex and fast-changing business environment. Managing complexity and rapid change is not the same as managing the quality of a product or service. A high-quality product that has become technologically obsolete or no longer satisfies consumer tastes has little value in ensuring a company's survival. (Slack, N., Chambers, S., Johnston, R, 2004) Corporations were once organized around physical assets; now they are organized around intellectual resources, core competencies, and niche markets. Corporate strategy is more concerned in preserving and enhancing a company's core competencies as a source of competitive advantage than in simply maximizing shareholder wealth. Strategic alliances and supply chain management harness core competencies of several or many companies for their mutual advantage. This interest in the mutual well-being of a group of companies is in opposition to the concept of an independent company pursuing its own interests, and in many ways, is reminiscent of the Japanese approach to business. (Burke, R, 1999) Thus, an operations manager cannot just be competent on the factory floor but should be knowledgeable on how operations on a factory floor contribute to the core competencies and competitive advantage of his or her company. Through supply chain management and strategic alliances, an operations manager may become involved with the inner workings of upstream and downstream companies rather than concentrating his or her efforts in the interests of a single company. This requires a broad background of experience. An operations manager should seek a variety of assignments, both staff and line, to become a more valuable member of an operations team. Specialization may not be in the long-term career interests of an individual. (Gene W. Dalton, Paul R. Lawrence, Jay W. Lorsch, 1970). Aligning core competencies through supply chain management and strategic alliances is the wave of the future. This may be the greatest challenge facing operations managers: how to corral the diverse activities of suppliers and users of a firm's products into an integrated whole to construct a competitive advantage. Competitive advantage built around the core competencies of a group of companies may be the solution posed by the challenge of continual change in technology, markets, and competition. The days of idyllic comfort of resting on one's oars and enjoying the fruits of past accomplishments are long gone. In the world of tomorrow, intellectual resources are going to be taxed to their fullest just to enable a company to survive the vicissitudes of the commercial world. (Roy L. Nersesian, 2000). Maximizing the efficiency of the overall process and its component sub-processes Companion to quality measurements is productivity measurements. Quality measurements tell the manager how well we are doing, and productivity measurements tell the manager the cost of doing it. This goal of productivity has become more important lately because of the increased worldwide competition. A company with a high cost of production will have difficulty competing unless it has some other distinctive competitive advantage. To compete in price with lower-cost producers, a company will need to reduce its profit margins until it too can improve its productivity. Because of differentials in labor cost, raw material cost, and shipping cost, as well as trade restrictions and tariffs imposed by various countries, a company today is compelled to do all it can to improve its productivity in order to compete with efficient companies in Japan, Germany, Korea, Taiwan, and so forth. Thus, the quest for increased productivity has become a hot topic in today's business world. While in the past the areas of marketing and finance might have appeared more glamorous to business students, today it is increasingly obvious that operations management is ''where the action is.'' It is here that a manager can make a real difference in the success or failure of the organization. (Slack, N., Chambers, S., Johnston, R, 2004) A company that strives for productivity to the exclusion of all other concerns, though, will surely fail. Another important basis of competition is quality. This also has become a hot topic because of competition from firms that have drastically increased the quality of their products while simultaneously keeping production costs down. Japanese automobile companies are a good example of this emphasis on quality as a means of competing. It is remarkable that, by taking seriously the well-known theories of quality control, Japanese firms have made their products synonymous with high quality where a generation ago they were just as universally associated with shoddiness. (Wild, R, 1999) The challenge of the operations manager, then, is to use both technical and behavioral skills to manage the organization's operations, to achieve the goals of productivity, quality, and dependability. It is this challenge that makes the job of the operations manager one of variety, excitement, and importance. For this reason more and more of today's business students are eager to ''get their hands dirty'' and get into the action. (Michael R. Summers, 1998) The management of the key processes of production is at the very heart of operations management. Managers need to examine how they are doing things and strive to find better ways. A beginning point in examining any process is to ask, "Why do we do it that way" The response better not be, "Because we've always done it that way!" Process improvement should be an on-going exercise, not a program of-the-month. A basic approach to the improvement of processes is: 1. Flowchart or diagram the process. 2. Walk through the process. The process is studied by following through all the steps of execution. 3. Interview the processors. Find out what they do and why they do it. 4. Streamline the process. It helps to study similar processes at work in other organizations. Find out who does it best and either imitate them or surpass them. Joseph Harrington, a manager with IBM, described his approach to process improvement in the book, Business Process Improvement (1991). Harrington noted that an important step was to interview the people who work within the process. No one is more intimate with what they do and can have more ideas about better ways to do their work. Harrington recommended the following questions: How were you trained What do you do How do you know your output is good What feedback do you receive Who are your customers What keeps you from doing error-free work What can be done to make your job easier How is your output used What would happen if you did not do the job What would you change if you were the manager These questions help the analyst understand several things: the process itself, the culture of the workers involved in the process, and the management of the process workers. Deming's point about eliminating fear in the work place holds true for process improvements. There may be some hesitation on the part of the process workers to volunteer ways to improve their work, for they fear that they are putting themselves out of a job. If these fears can be alleviated, the workers will willingly offer their suggestions .After the existing process is understood, it is time to find ways to improve the flow of the process. Harrington calls this "streamlining the process." Streamlining the process Harrington offered ten ways to make a process work better: 1. Bureaucracy Elimination--Remove unnecessary administrative tasks, approvals and paperwork. 2. Duplication Elimination--Remove identical activities. 3. Value-Added Assessment--Evaluate every activity to determine the contribution to meeting customer requirements. Real value-added activities are the ones customers will pay you to do. 4. Simplification--Reduce complexity. 5. Cycle-Time Reduction--Determine ways to compress time to meeting or exceeding customer requirements. 6. Error Proofing--Make the process difficult to do incorrectly. 7. Simple Language--Reduce the complexity of the way we write and talk. 8. Supplier Partnerships--Supplier input must improve. 9. Standardization--Do it the best way all the time. 10. Automation--Automate boring and routine activities. Re-engineering Michael Hammer and James Champy popularized the term "re-engineering," as a broader form of process improvement (1993). The term itself is not new, as Peter Drucker described "re-engineering" more than 20 years before Hammer and Champy. The concepts that Hammer and Champy espouse are not new either. What is new is the focus on process as a path for redirecting wayward companies. They defined re-engineering as "The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed." Hammer and Champy stress that re-engineering concerns reinvention, not improvement. Although the many articles and books on quality and productivity have found an eager audience, the implementation of change must be done carefully, and when managers find themselves in crisis situations, it becomes an "all hands on deck" situation and all pretensions of bringing in new programs are discarded in favor of survival. The work force often suffers when one manager with a set of ideas is replaced by another with a different set of ideas. Constantly changing the processes can irritate the steady work force, who probably sighs and agrees to go with the flow until the next manager comes along with a set of new directions. Process changes will work best when the word "why" floats throughout the corridors of a company. Change for the sake of change is not necessarily good. Change for the sake of advancement must be proved to those involved in the process. (Winter Nie, Scott T. Young, 1996) Managing the capacity required to execute the conversion process at minimum cost Since services are perishable, productive factors that are in place may be idle at low demand times and stretched to capacity at high demand times. The demand is fluctuating, and it might be impossible or at best a serious challenge to stretch or contract capacity. Therefore, smoothing demand and managing capacity become a constant endeavor for the managers of services. The key to managing this challenge is to understand the demand patterns and to figure out the flexibilities in your capacity. To the extent that the demand patterns can be predicted with a good understanding of customer behavior, service providers can manage demand as well as capacity. Pricing is commonly used in smoothing demand. Capacity analysis complements demand analysis and begins with identifying the processes in the blueprint that relate to each customer interaction. Very simply, the capacity in terms of servable customers for each value-creating process supporting each point of customer interaction needs to be calculated. The operations manager must identify what productive factors can be profitably adjusted to demand patterns by increasing or reducing capacity without affecting the quality of the customer experience. The alignment of the firm's assets and resources to demand fluctuations will require an analysis of the capacity of the productive factors of the firm. (Barras R, 1986). The productive factors of employees, equipment, and facilities, allocated over a period of time, determine the capacity of a firm. The amount of time that the productive factors are available divided by the average time it takes to serve a customer gives the number of customers that could be served. Since the capacity for a service depends on the various steps in the process, the weakest link in the process, or the bottleneck, determines the capacity of the whole process. Capacity for a multistep process is said to be balanced if all the steps in the process are about equal in the number of customers they can serve in the same amount of time. (Paul R. Lawrence, 1958). There are several implementation considerations in determining which capacity management practice is appropriate in a situation. For example, what is the minimum capacity at which the firm must operate The minimum capacity at which a firm must operate takes into account the volume of customers required to cover fixed costs (assuming variable costs are already covered in the pricing). The maximum capacity is, of course, the maximum number of customers that can be served. The optimum level of operation is not at the maximum capacity. Within this minimum-to-maximum range of capacity, there is an optimum capacity level at which both profits and customer satisfaction are maximized. Handling more customers than that could result in deteriorating quality. (Voss, C., Armistead. C., Johnston, B., Morris, B, 1987) Service firms must determine their optimum capacity based on frontline employee-customer ratio, such that quality is not compromised. For example, in airlines, the ratio of airport agents to passengers ranged from 15 to 1 at Continental to 68 to 1 at Southwest. Of course, the ratio should make sense based on the service design. As Southwest does not issue traditional boarding passes, they require fewer ticket agents at the airport. 4 Similarly, frontline-to-customer ratios are commonly used as benchmarks in industries such as health care, education, and the hospitality among others. At every customer interaction point in the value creation and delivery process, firms must judge the desirable ratio of frontline capacity to customers. Many operations optimization techniques seeking to minimize costs allow firms to ignore customer satisfaction unless specifically built into the algorithm. These yield management techniques ought to be designed and implemented with the primary consideration being their effect on customer value and customer relationships. (Joby John, 2003). Reference: Barras R. (1986). "Towards a Theory of Innovation in Services." Research Policy Bowman R. J. (1993). "Quality Management Comes to Global Transportation." World Trade, 6(2):38-40. Burke, R., (1999) Project Management -Planning and Control Techniques 3rd Ed. Wiley Garvin D. A. (1992). Operations Strategy. Englewood Cliffs, NJ: Prentice-Hall. Gene W. Dalton, Paul R. Lawrence, Jay W. Lorsch (1970). Organizational Structure and Design; Richard D. Irwin Hammer M. and J. Champy (1993). Reengineering the Corporation. New York: Harper Business. Harrington H. J. (1991). Business Process Improvement. McGraw-Hill. Joby John (2003). Fundamentals of Customer-Focused Management: Competing through Service Book; Praeger Michael R. Summers (1998). Analyzing Operations in Business: Issues, Tools, and Techniques Book; Quorum Books Paul R. Lawrence (1958). The Changing of Organizational Behavior Patterns: A Case Study of Decentralization; Harvard University Roy L. Nersesian (2000). Trends and Tools for Operations Management: An Updated Guide for Executives and Managers; Quorum Books Slack, N., Chambers, S., Johnston, R. (2004) Operations Management 4th Ed. FT Prentice Hall Voss, C., Armistead. C., Johnston, B., Morris, B., (1987) Operations Management in Service Industries and the Public Sector. Wiley Wild, R., (1999) Production and Operations Management 5th Ed, Cassell Winter Nie, Scott T. Young (1996). Managing Global Operations: Cultural and Technical Success Factors; Quorum Books Read More