The Issues of Operation Management - Term Paper Example

Operation Management Table of Contents Item Page 1 Executive Summary 2 2 Introduction 3 3 Discussions 8 4 Conclusion 15 5 References 16 Operation Management Executive Summary/Abstract The study deals with the key issues that are related to operations management. The key issues discussed are product defects, product recalls and wastages, frequent machine breakdowns, etc. This study outlines the problems and issues in these areas of operation management and the various steps that need to be taken to overcome these problems. In this study the various steps that have to be followed in identifying the product defects are discussed with the help of diagrammatical representations. The various ways to enhance quality of the product and how to reduce frequent machine breakdowns are also discussed. This study provides a clear insight about these facets of operations management. Operation Management Introduction: The success and failure of any organisation depends upon the quality of the products and services manufactured or provided by them. The quality of the products depends upon production efficiency of the firm which consist of the use of modern tools and equipments and excellent supervision of the top level management. “Operations management is the central core function of every company.” (What is operations management? 2009). Operations management means managing the quality of the products and services produced. Usually the small businesses are less conscious about the operations management. It is related with all the processes that are performed within the organization. The primary focus of operations management is on efficiency and effectiveness of the processes within the organisation. The processes that are related with the operations management are management of purchased inventory, inventory management, quality control and inspection, store management and logistics management. “Operations Management is the function of managing the operating core of an organisation: the activities associated with creation, production, distribution and delivery of the organisations goods and services.” (Operations management 2007). Operation is the process of transforming the inputs (raw materials) into output (goods or services). The input refers to the raw materials, data or it can be the customer itself. All these resources are put into a process and are transformed into final goods and services that are ready for use by the customers. “Hill (2000) clarifies that “The operations task concerns the transformation process that involves taking inputs and transforming them into outputs together with the various support roles closely associated with this basic task.”” (Operations management 2009). Operations management is integrated with other disciplines also. The production department is considered to be the primary users of the concept of operations management. This department plays a central role in performing these operations. Nowadays the firms invest a major part of their capital in the production process. Qualities of products: “The average WinSPC customer reports that they are able to improve product quality by 20-40 percent within the first few months of installing WinSPC. By implementing real-time SPC at the shop-floor level, operators can identify, detect and correct process errors before a defective product is produced.” (Improve product quality 2008). 1) To increase the quality of the product through raising fund for buying new machines 2) To increase the quality of the product through available resources 3) To increase the quality with lesser input 4) Purchase the quality oriented raw material 5) Selecting quality supplier 6) Selecting appropriate location 7) Recruiting the skilled labour 8) Reduce cost of production 9) Usage of good machines to reduce wastages 10) Use statistical tools in order to measure the quality of the products Functions of Operations Management: “Their direct responsibilities include managing the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations.” (Understanding operations management n.d.). The operations manager in a company is responsible for the management of the operations in the production department. The operations manager must possess a specialised knowledge in the technology of products and processes must have decision making capacity, communication skill and must be self motivated. “Managers in operations management play a strategic and tactical role in satisfying customer needs and making their firms strong international competitors.” (Operations management 2008, p.1). The functions of the operations manager are mainly at three levels. First is at the strategic level and the second is at the tactical level and finally at the operations level.“The functions of “OM ranges from strategic to tactical and operational levels.” (Operations management 2009). The strategic issues related with the operations management are determination of the size and location of the production unit, deciding the structure of the networks for the service or telecommunications and designing the supply chain. The tactical issues that are related with the operations management are deciding plant layout and structure, deciding the methods of project management and selection of equipments and finally deciding on the replacements. The operational issues related with the operations management are scheduling the production process, controlling the production process, managing inventories, controlling quality and inspection, handling of materials and framing policies for maintaining equipments. The complexity involved in the process of operations management is mainly assigned to different departments. This is mainly done to reduce the complexity of the process. The integration among the departments will help the organisation in reducing the interdepartmental conflicts among the employees. The functions of an operations manager are shown in the fig –1. Fig – 1 The important functions are explained as follows; Planning - The operations manager determines the future course of actions that are related to the company layout, capacity, location, products and services. Establishing Organizational Standards - The standards within the organisation are established by setting appropriate goals and it also determines the ways to accomplish it. Staffing - The workforce required to perform the task are selected and proper training is also provided. Directing - The workforce selected are given proper direction to carry out their work. They are motivated towards achieving the goals. The incentive plans are formulated, the work orders are written, the jobs are assigned, and the results are evaluated. The acceptance of the work is evaluated and corrective actions are taken. Controlling – The inventories are managed, the quality of the process is assured and the capability of the process is also evaluated. Organizing - The structure for administration is framed, the level of centralisation is analysed and finally the make versus buy process is analyzed. The service operations management is entirely different from the product operations management. In services there is a direct involvement of the customers but in the operations related with the product there is no direct involvement of the customers. The operations manager must have clear understanding about what his company is focusing into. Discussions: In the discussion part we are going to discuss about the three problems or issues that are mentioned below and how to overcome these problems. 1. Product defects 2. Products recalls and wastages 3. Frequent machine breakdown The main objective of any organisation is maximization of profits. For making profits, it is important to gain customer satisfaction. Customer satisfaction is gained only by delivering quality goods and services. It is the responsibility of the production manager to maintain the quality of the manufactured products. 1. Product defects: “In this challenging environment, manufacturers of complex, technology-based products are taking a new look at the root causes of product defects and the techniques available to eliminate them.” (Eliminating product defects in the design phase 1997). One of the major challenges of the organisation is to reduce the product defect. “To gain a correct and accurate diagnostic, the entire processing root must be recorded and controlled in every step of the manufacturing process.” (Wong, Okfalisa & Salim 2007). There should be efficiency in each process of manufacturing. Flexible manufacturing Technologies (FMT) are more helpful to small scale industries. “FMT use by small firms will lead to product proliferation and increasing use of cooperative strategies. In addition, the organizational structure of a small firm is more compatible with FMT than is that of a large firm.” (Elango & Fried 1993). “Compensation can be claimed on the basis of negligence, absolute responsibility, and breach of guaranty. The damaged person has the right to sue the seller or manufacturer for damages suffered.” (Product liability 2007). Steps to overcome defects: There are mainly three steps involved in the process of defect prevention. They are as follows; a) “Identifying critical risks b) Estimate expected impact c) Minimize expected impact.” (Defect prevention n.d.). These three steps are represented in fig – 2, shown below; FIG – 2 By following these steps the product defects can be reduced at a higher rate. These steps are explained as follows; a) Identifying critical risks The critical risks that are affecting the system must be identified. The critical risks are the defects that occur as a result of poor operations management. The risks that influence the successful implementation of the delivery and the operation system should be identified. b) Estimate expected impact After identifying the critical risks, then assessment should be made for each risk. The financial impact of the risk should be taken into consideration during assessment. c) Minimize expected impact After identifying the risks, then various measures are taken to eliminate those risks. There are certain risks that cannot be eliminated. In such cases the probability for the risk can be reduced. 2. Products recalls and wastages: Product recall is defined as “The act of requesting the return of a commercial product to the retailer or manufacturer because of a defect or a safety or efficiency problem.” (Product recall: definition 2009). Products recall usually happens when there is a defect in the products that are produced by the manufacturer. The wastages that happen due to the defects in the products are considered as product wastages. The wastages are the result of poor management of the operations process within the organization. The product defects can be eliminated by assessing the risk that are critical to the manufacturing system. “Getting the critical risks defined allows people to know the types of defects that are most likely to occur and the ones that can have the greatest system impact.” (Defect prevention n.d.). Another definition of product recall is “The removal from sale of products that may constitute a risk to consumers because of contamination, sabotage or faults in the production process.” (Business definition for: product recall 2009). Digital manufacturing system enabled by technologies helpful to increase the efficiency of the process and minimize the cost of product recalls (Figure1). Figure - 3 X Factory architecture applied to manufacturing line (The way to higher product quality and better warranty management 2007, p.1). Mattel’s forced to change its strategies because of its excessive recalls due to outsourcings. “Mattel, the largest toymaker in the US, made several recalls of products that had been made in China. The recalls led not only to a sharp reduction in Mattels sales but also to public hearings in the US Congress, which significantly affected Mattels reputation.” (Lu, Zhigang, LinHui & Loo 2009). The main objective of any organisation is maximization of profits. Maximization of profits is possible only through customer satisfaction. Quality products should be delivered to the customers in order to increase the purchasing behaviour of the customer. Here, major challenges are to increase the quality of the products and to undertake appropriate preventive maintenance activities in order to solve the problems of frequent machine breakdown. Major problems of manufacturing department are product defects, product recalls and wastage and frequent machine break downs. These problems cause to increase the organization’s cost of production. 3. Frequent machine breakdown: Frequent break down of machines leads to increased rate of product defects. The machines should be maintained properly; otherwise it may cause loss for the organization. In order to maintain the machines within the organization, effective maintenance methods should be adopted. Frequent machine breakdowns can be minimised by adopting different types of maintenance. Types of Maintenance: There are four types of maintenance. They are as follows; a) “Reactive Maintenance b) Preventive Maintenance c) Predictive Maintenance d) Reliability Centred Maintenance (RCM).” (Chapter 5: types of maintenance programs, n.d., p.5.1). a) Reactive Maintenance: This is “A form of maintenance in which equipment and facilities are repaired only in response to a breakdown or a fault.” (Business definition for: reactive maintenance 2009). In this type, the maintenance is done only after the breakdown of the machines. It follows a just-in-time approach. b) Preventive Maintenance: “Preventive Maintenance is an equipment maintenance strategy based on replacing, overhauling or remanufacturing an item at a fixed interval, regardless of its condition at the time. Scheduled Restoration tasks and Scheduled Discard tasks are both examples of preventive maintenance tasks.” (What is preventive maintenance? n.d.). In order to prevent breakdown of machines, maintenance is done in advance; this type of maintenance is called preventive maintenance. Appropriate preventive measures should be taken in order to solve the product damages problems. They are: 1) Undertake preventive maintenance activities in a fixed interval: Preventive maintenance activities should be undertaken every two weeks or one month. It will be helpful to prevent the problems of the machine because machine operator gets an opportunity to check the machines and solve the minor problems of machines. 2) Clean the machines after usage It will be helpful to remove the dust from the machines and capable to maintain efficiency of the machine and productivity. 3) Use oils, bolts etc. at appropriate time. 4) Place the machines in suitable location. Machine should be put in good environment in the factory. It is better to avoid electric circuit near the machine. Good location of the machine leads to easy movement of workers and enhance their productivity. Besides, it can reduce the damages of the products. c) Predictive Maintenance: “Type of preventive maintenance performed continuously or at intervals according to the requirements to diagnose and monitor a condition or system.” (Predictive maintenance: definition 2009). This type of maintenance is done based on the prediction regarding the particular equipment. Some machines will have frequent breakdowns. In such cases, the operations manager can identify the problem that can happen for certain machines. The failures are predicted and based on that the maintenance work is done. d) Reliability Centred Maintenance (RCM): Reliability Centred Maintenance can be defined as “a process used to determine the maintenance requirements of any physical asset in its operating context.” (Chapter 5: types of maintenance programs, n.d., p.5.4). It deals with other issues that are not discussed in the previous mentioned maintenance types. Some equipment has a higher probability for failure. It depends upon the design and the operation process for a product. “RCM is a systematic approach to evaluate a facility’s equipment and resources to best mate the two and result in a high degree of facility reliability and cost-effectiveness.” (Chapter 5: types of maintenance programs, n.d., p.5.4). It is considered as the most efficient and effective maintenance programme in an organization. It reduces the cost by eliminating and lowering the frequency of the unwanted overhauls. “The purpose of maintenance is to prevent or mitigate the consequences of failure. Reliability Centred Maintenance (RCM) is a method that allows achieving this goal in an effective way.” (Articles on equipment maintenance strategies and reliability centered maintenance (RCM) 2009). From the above listed maintenance types, it is better for every company to adopt the preventive maintenance because this helps in reducing the rate of machine breakdowns. Thereby the efficiency and productivity of the machines can be maintained. Conclusion: Operations management has become a central part for maintaining the overall quality in an organization. The operations manager is responsible for the overall operation function. The best way to reduce machine breakdowns is to adopt the best type of maintenance that matches the product which is manufactured by the company. The company should be very careful before selecting a maintenance type, because the success and failure of the product depends upon the machines which are used for its production. Managers are facing the challenge of increasing the plant output and to yield maximum returns on investment. The best way to growth is to eliminate all barriers in the manufacturing process. Many of the problems related with breakdown are lack of identification of exact problems. So, production or operations manager should have the ability to identify the route cause of the problem, and must take preventive measures. Reference List Articles on equipment maintenance strategies and reliability centered maintenance (RCM): why RCM is different-a case study 2009, Plant Maintenance Resource Center. Available from: http://www.plant-maintenance.com/maintenance_articles_rcm.shtml [Accessed 27 November 2009]. Business definition for: product recall 2009, B Net: The Go-To Place for Management. Available from: http://dictionary.bnet.com/definition/product+recall.html [Accessed 27 November 2009]. Business definition for: reactive maintenance 2009, B Net: The Go-To Place for Management. Available from: http://dictionary.bnet.com/definition/reactive+maintenance.html [Accessed 27 November 2009]. 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