Operations Management Issues - Term Paper Example

Transportation demand for In-Transit Visibility, Just in Time inventory, and Supply Chain Management Transportation demand for In-Transit Visibility,Just in Time inventory, and Supply Chain Management Please put your name here Please put your University Name here Paper tested through copy scape. Result: No results found for the text you pasted (3,132 words). Introduction The business environment for corporate organizations is becoming increasingly challenging. Today, firms have to deal with several bottle necks such as outdate technology, underdeveloped infrastructure, inappropriate payment systems and ineffective scheduling and control systems, which have hampered their progress. Many organizations now recognize the importance of automation, optimization of scheduling and a proper inventory management system, and are incorporating total quality management and total quality control i their operations. The above scenario has increased the importance of operations management in an organization, as it is directly responsible for the final product. As a result, operations management is gaining more significance and has become a key discipline in management science. Operations management, as a whole, deals with the design of products and processes, acquisition of resources, transformation of resource inputs into outputs, and distribution of goods and services. Logistics is the process of getting products and services where they are required and when they are desired. Transportation forms the key aspect of the logistics system. Delivery of goods and services from those who want them has been taking place since the beginning of civilization. However, since the modern day customer expects products to be available at all times and with the maximum freshness in case of perishable good, companies need to ensure that their logistics process matches the highest standards. Global companies operate in an intensely competitive environment and hence they try to offer customers the best products and services with a competitive advantage. This situation has benefited the customers who now have access to world-class quality products and services. Although tools for efficient supply chain were available in the seventies, firms started increasingly adopting these tools in the nineties. Supply Chain Management gained importance during the same period. Previously, firms used supply chains to cut costs rather than build them to leverage competitive advantage. However, for companies operating on a larger scale such as Dell computers, and car manufacturers such as General Motors and Ford Motor Company, supply chain management is the central point of their business processes today. Organizations need to stress on the importance of continuous improvement in the supply chain efficiency to attain success in the market. Nokia is a good example of a company which has adopted efficient supply chain measures like rapid response manufacturing, quick-ship logistics, and a global supply web that links its suppliers and plants. Modern logistics management is based on serving the customer in an efficient manner. Modern customer-driven logistics management focuses on delivering products on time, with the least cost and without any damages. Companies like HLL, for instance, have developed a systematic logistics management process which checks the credibility of its transporters by scrutinizing the cargo at the delivery point in comparison with its condition at the time of the dispatch, the time taken by the transporter to deliver the goods, the quality of the trucks that are being used and also the past record of the transporter, and so on. Demand for Transportation As competition has intensified over the years, and companies are expanding their operations globally, transportation has become a vital function in the logistics process of an organization. In the entire logistics process of ordering, transportation, storage, and processing of goods, transportation is quantitatively the largest function. It is a process involving space and time dimensions that enhance the value of the logistics process by delivering the goods at the right time and at the right place. Transporters need to adapt to the changing market needs if they want to stay ahead of the competition. Their focus should not only be on transporting goods, but also on meeting customer needs effectively. Some transporters focus on leveraging competitive and so on. Transporters offering such non-transporting facilities apart from their regular services can become strategic partners and eventually, a source of competitive advantage to companies. Efficient transporters must have a long-term commitment and an inclination towards open communication and mutual sharing of information. They need to be co-operative with the firm and pursue total quality improvement on a continuous basis. Finally, efficient transporters should be inclined to share the risks and rewards, which come in the process of their relationship with the firm. Transportation is the process of moving people or goods from one destination to another. There are various modes of transportation available. The five basic modes of physical transportation are air, road, rail, water and pipeline. Firms consider the relative costs, convenience and suitability of each mode and then select the transportation method. For instance, firms that produce goods that are to be exported may choose a location near a seaport or a large airport. Transportation is such a kind of service which is impossible to store and hence the service is to be experienced immediately. The demand for transportation has increased drastically in the recent past. Transportation is one important aspect which firms analyze when taking decisions regarding to location evaluation. Before selecting a location or locations, a company should consider certain factors. For instance, a manufacturing company may opt to have a single central plant that produces all the products of the company. This decision can help the company achieve economies of scale by reducing the unit cost through better utilization of equipment and dispersion of fixed costs over more units. However, transportation costs incurred in obtaining inputs from highly dispersed suppliers, and distributing finished gods from the plant to a highly dispersed market, will be very high. In case of a strike or a disaster such as fire or flood, complete operations of the company will come to standstill. Transportation also has its influence over Inventory control decisions of a firm. Inventory refers to a stock of goods, commodities, or other economic resources that are held by firms at a particular time for their future production requirements and for meeting future demands. Inventory management assists organizations in minimizing their inventory cost without compromising on their ability to respond quickly to customer demand. Increased Transportation Demand due to Technological Advancements With the passage of time, operations management has undergone a considerable change. Now-a-days most organizations are adopting new technologies in their manufacturing processes to improve productivity, reduce labor cost, provide safe work environment for their workers, improve material handling and manage inventory better. In studies conducted to find the relationship between financial performance and the investment in technology, it was found that organizations which invested more on technology performed better than the organization will less investment in technology and R&D. A number of significant developments have taken place in various fields in the recent past, which include the digital computers, improvements in data-storage technology, sophistication of software, advances in sensor and optical technology, artificial intelligence and many more. All these developments have contributed in the progress of operation technology. With respect to the development in the transportation facilities, the latest technologies have brought about revolutionary changes in materials management. Technologies such as Robots and Automated Storage and Retrieval Systems (AS/RS) make execution of materials management functions convenient, easy and economical. Robots are re-programmable and multi-functional manipulators designed to move materials, parts, tools, and other specialized devices through variable programmed motions to perform a variety of tasks. They are versatile, computer-controlled machines programmed to perform various tasks independently without human support. Several robots are stationary and mounted on the floor, with an arm that can reach different locations. The two basic types of robot applications are ‘processing’ and ‘pick-and-place’. Out of these two the later falls in the criteria of transportation and this kind of technological advancement is obviously the reason for the increased demand of transportation. In a pick-and-place application, the robot moves the product. The application of robots includes transfer of materials, and material loading and unloading. Material transfer applications involve movement of materials from one location to another. These movements range from simple operations of lifting and placing (Coyle, 2006) items from one location to another to complex operations wherein the movement and placement is based on calculation. Robots equipped with tools like gripper are employed to load and unload materials at a workstation. The AS/RS systems are computer-controlled and mechanically-operated materials handling systems. The functioning of these systems is similar to functioning of physically operated robots, but these systems can also perform complex operations of loading and unloading the inventory with their dozens of automated pallet movers. Automated Guided Vehicles (AGVs) are the systems that can be used to store and retrieve inventory items from stock. These AGVs replace traditional material handling equipment like manually operated trucks, hydraulic, hand pallet trucks, and straddle trucks. Today, several firms use AGVs to carry out their in-house transportation works. The semi-automatic AGVs are a combination of computer and human control and can move independently on their guided paths to a specific workstation and then signal using built-in horns or light to the operator to perform the required operation. Once the operator completes the operation, the AGV moves to the next workstation to carry out the next series of tasks. The guided paths on which these AGVs move consist of strips of magnetic tape on the floor and the sensor attached to the AGV directs the vehicle to follow the path. Flexible manufacturing system is one more advancement with respect to transportation. Early automation systems consisted of a transfer line, which was a fixed-path conveyor with single-purpose equipment installed on either side of it. The conveyor moved the parts to each workstation where the machines performed a pre-determined task. This automation was economical only for those organizations, which were involved in the production of large volumes of a single product or similar products. To overcome these inefficiencies, Flexible Manufacturing Systems (FMS) were introduced in production lines. FMS is more flexible automation in which several machine tools are linked to the material-handling system. A central computer controls all aspects of the system. This system is effective in producing different items that have similar processing requirements. In a flexible manufacturing system, the automated material handling equipment moves the requisite materials to the appropriate work-center. Machines at these centers are pre-programmed to select, position and performs specific operations with many tool options. Once the machine processes a particular batch, the central computer signals the details of the next jobs and each machine repositions and retools accordingly. In the meantime, the processed parts are automatically transferred to the next machining center in its route. All the above mentioned advancements and sophistication in the field of transportation are not available widely and are slowly gaining recognition. This has led to the high level of demand for transportation in today’s organization all over the globe. The demand for transportation has also increased with respect to three other aspects of Operations Management field which are namely In-Transit Visibility, Just-in Time Inventory and Supply Chain Management. Transportation demand for In-Transit Visibility In-Transit Visibility is a mechanism or a process which makes use of Radio Frequency (RF) or Automatic Identification (AI). This system is designed with an aim to provide the customer of logistics with maximum visibility and also information regarding real-time status with respect to the movement or transportation of all kinds of supply material (United States Army Combined Arms Support Command, 2007). The In-Transit Visibility system is designed in such a way that it identifies, locates and also simultaneously tracks the transportation movement of all kinds of supply material from the originating destination to the user or consumer. “ITV is the fusion of logistics information and distribution technologies for rapid crisis response, deployment and sustainment. It provides decision makers at all levels of command and throughout the logistics pipeline with accurate, near real-time data to collaboratively plan, prioritize and redirect logistics operations. ITV provides the capability to track and shift units, equipment, and supplies that are enroute. The use of ITV allows the delivery of tailored logistics packages directly to the war fighter (United States Army Combined Arms Support Command, 2007).” Supply Chain Management and Transportation Supply Chain Management has become one of the key areas that organizations are focusing on to reduce costs and improve the efficiency of the production process. The supply chain can be described as the network, covering the various stages in the provision of products or services to customers ((ICMR), 2003). It includes not only manufacturers and suppliers, but also transporters, distributors, retailers, etc. Supply Chain Management integrates procurement, operations and logistics to provide value added products or services to customers. Supply Chain Management (SCM) can provide both tangible and intangible benefits to an organization. Tangible benefits include revenue growth, optimized inventory management, etc. Intangible benefits include improvement in quality, improvement in customer satisfaction, and enhanced customer and supplier techniques (Schonberger, 1997). Supply Chain Management can provide both tangible and intangible benefits to an organization. Tangible benefits include revenue growth, improved facility utilization, optimized inventory management, etc. Intangible benefits include improvement in quality, improvement in customer satisfaction, and enhanced customer and supplier techniques. Supply Chain Management has become one of the key areas that organizations are focusing on to reduce costs and improve the efficiency of the production process. The key drivers of supply chain performance are inventory, transportation, and facilities. They help determine not only the responsiveness and effectiveness, but also the strategic fit of the supply chain. Inventory – Inventory includes raw materials, work-in-progress, and finished goods in the supply chain. Inventory exists in organizations due to a mismatch between demand and supply. Inventory is also maintained to increase the responsiveness of organizations to sudden increases in customer demand. Transportation – Organizations use transportation to move components and products between the different stages of the supply chain. Transportation decisions are made on the mode of transportation and route to use in the transfer of products from one point to another. Facilities – Facilities are the locations in the supply chain where the raw materials and finished goods are stored, and where work-in-progress materials are assembled or fabricated, and from which finished goods are distributed. Facility’s capacity and location has significant affect on the performance of the supply chain. In order to service the needs of customers and fulfill their expectations and to meet the organizations’ growth and profitability objectives, managers focus on improving the effectiveness of the supply chain. If an organization follows the principles of supply chain management, it can attain a balance between customers’ expectations and its growth and profitability objective. Customizing the Logistic network is one of the most important principles of Supply Chain Management. Companies usually design their logistics system either to meet the average service requirements of all customers or to satisfy the toughest requirements of a single customer. JIT and Transportation Just-In-Time (JIT) manufacturing system is a planning system for manufacturing processes that minimizes the availability of material inventories at the manufacturing site to only what, when and how much is strictly necessary. The JIT system is an integrated set of activities designed to achieve high-volume production using minimal inventories; raw materials, work-in-process, finished goods and other consumable goods. According to the JIT system, all components and other inventory items arrive as and when required i.e. just before the start of an operations. Items are picked up by the worker and fed directly into the production process. In order to operate a highly successful JT logistics channel, the pre-requisite is a reliable system of transportation (Stank, 1997). The criticality of transportation in the JIT system increases when long lines of logistics are channeled. This fact is very true when it comes to international logistics. Reducing cycle-time is one more advantage. The cycle time refers to the time from which the requisition is placed with the vendor to the time the product reaches to the final customer. Toyota is the best example when it comes to the effective transportation along with JIT. Tran system, a sole logistics service provider for Toyota Motors in India is excelling in its job year after year. Right from procuring raw materials for Toyota’s manufacturing to delivering the completed vehicles to the dealers across the country, the company is performing heavy-duty tasks with minute precision. For instance, the Tran system vehicle picks up weathered beading every day by 8.30 am from its plant in Sahibabad in Uttar Pradesh to deliver them to Toyota Kirloskar Motor’s manufacturing plant at Bidadi which is situated 50 km from Bangalore. Tran system should have a high level of logistics service efficiency, since it delivers vehicle components to Toyota from 83 suppliers spread across 20 different states using 261 trucks traveling more than a lakh of kilometers every day. Tran system also ensures that these components reach Toyota’s manufacturing plant in Bangalore just-in-time for the operations. A delayed shipment runs the risk of delayed production for Toyota, which Tran system cannot afford under any circumstances. Tran system carries its business operations with 261 heavy and 16 light trucks with a staff of 45 employees. The company is a joint venture between Transport Corporation of India and Mitsui & Co. Toyota informs its requirements to all its suppliers and by 25th of every month on the basis of its schedules. Tran system delivers components to the plant and delivers vehicles along with spare parts to 32 dealers across the country without any delay. Once these vehicles are delivered to the dealers, the empty trucks are loaded with vehicles of other companies, so that they do not return in a vacant condition. These innovative ideas, coupled with logistics efficiency matching the standards of Toyota, have made Tran system a truly successful logistics service provider ((ICMR), Marketing Management, 2004). Bibliography (ICMR), I. C. (2004). Marketing Management. Hyderabad: ICMR. (ICMR), I. C. (2003). Operations Management. Hyderabad: ICFAI Center for Management Research (ICMR). Chopra, S. (1992). SCM - Strategy, Planning and Controls for Manufacturing & Services. McGraw Hill. Cook, C. (2007). Operations and Value Chain Management. Prentice Hall Inc. Coyle, B. a. (2006). Transportation. Thomson learning. Craig, T. (2005). Outsourcing Offshore Supply Chain Management What It Is And What It Isnt. WebProNews. Ernst, R. (1998). Global Operations & Logistics. USA: John Wiley & Sons. Monks, J. G. (1996). Operations Management. New York: McGraw Hill Inc. Schonberger, R. J. (1997). Operations Management - Customer Focused Principles. Irwin publications. Stank, T. P. (1997). Just-in-time management and transportation service performance in a cross-border setting. Transportation Journal , 1-7. United States Army Combined Arms Support Command. (2007, May 04). In-Transit Visibility (ITV). Retrieved November 24, 2008, from United States Army Combined Arms Support Command: http://www.cascom.army.mil/Automation/ITV/index_newtemp2.htm Read More