The Problem and Its Relationship with Operations Management - Research Paper Example

 Operations management involves a lot of activities that are performed by the various departments or units within the corporation or organization. The Facilities Management Unit in particular has a remarkable effect on a corporation’s newly formed objectives or goals (King 2006) generally because the FMU or Facilities Management Unit’s responsibility lies in keeping fixed and tangible assets in good working condition and order. This includes doing regular standard maintenance to keep the company’s assets abreast with the demands and rigors of wear and tear; getting necessary permits; renovation and remodeling, supply of manpower; and material requirements and procurement. At present most companies undergo the following changes (King 2006) which affects the performance of the Facilities Management Unit: 1. Centralization of business units and operations. 2. Mergers and Acquisitions 3. Downsizing and Consolidations 4. Outsourced services and resources. 5. Dramatic shifts due to new technologies. Centralization To improve efficiency, take advantage of the economics of scale and fully utilize resources (King 2006), many organizations decide to centralize their assets and properties which may be situated in other locations. Hence, the Facilities Management Unit will now have to take into consideration all the needs of the whole organization and not the individual departments or units which are stationed in various locations (King 2006). Centralization offers a lot of benefits but also creates a challenge if an appropriate strategy has not been correctly established within the organization (King 2006). Contemplation must be justly made for the locations of production facilities, sourcing points and stocking points. If the organization’s facilities are located at various points it will be convenient for the FMU or Facilities Management Unit to have the operations for purchasing centralized so the concentration will not be on one department alone but on the whole organization. Mergers, Acquisitions, Consolidation and Downsizing Most companies will eventually have to consider keeping, disposing and purchasing assets and properties that will have a strong impact on the company’s overhead expenditure. The Facilities Management Unit is also responsible for assets that need disposing, keeping or purchasing. For that reason, if a total infrastructure and facilities management (TIFM) solution is properly integrated within the organization, it could permit the proper appraisal of assets on whether they meet or exceed the company’s present and future requirements (King 2006). Outsourcing Another way to minimize cost and increase efficiency is for a company to more towards outsourcing their Facilities Management Units or Departments. However, handing over the entire operations to a particular service provider is quite risky, so majority of outsourced firms are generally given an internal management arrangement that provides complimentary and specialty services (King 2006). This kind of partnership aids companies by keeping all communications centralized and giving the facilities and infrastructure management the responsibility of internal management (King 2006). Emerging Technologies The function of a facilities management unit is enhanced by new technologies as its data is integrated with other units or departments within the organization. This operations strategy reduces the complexity of communication and reporting by reorganizing administrative tasks, saving considerable amounts of money, time or frustration (King 2006). It is however common that in every corporation, company or organization, small and large problems arise regardless of contingency measures that are undertaken to prevent the occurrence of unforeseen events. Since one of the Facilities Management Unit’s responsibilities is to procure or purchase supplies and materials for the need of the entity, it sometimes gets entangled in issues related to delays in purchasing of needed materials or supplies (Alarcon et al 1999). Basically, such delays are associated with the delay of ordering supplies and materials, delay of delivery of ordered supplies or materials, delay of repair and replacement, etc (Alarcon et al 1999). But prior to fully discussing the aforesaid problem, the term operations management must be understood extensively to see the relation between its theories and the dilemma in the activity of purchasing. To start off, operations management pertains to the main operational activities within a business entity or corporation (mindrelief 2007). Such activities entail production/manufacturing to the distribution of goods or services to the business clientele. But since an organization has a unique personality of its own, all entities differ although they may be in the same line of business. This scenario makes a company vulnerable to a wide range of issues and problems that normally depends on the authority of distribution and the kind or class of organization it was founded and built upon (mindrelief 2007). The major goals of every operations management are primarily to reduce or lessen operational and overhead costs; and to increase operational efficiency despite the presence of cost cutting strategies (mindrelief 2007). This enables a company to provide and give products and services that are much cheaper than their competitors. Since even international companies who are able to generate billions in revenue, they still find a need to reduce their operational expenses in order to lower the cost of manufacturing and distribution (mindrelief 2007). Stiff competition is only a fraction of the overall necessity that compels organizations to consider cutting down on their expenses (mindrelief 2007). Most operations management involves the development of effective control measures during the early stages of a project or when an entity is still new in the industry. The installation of the control measures assist in the performance appraisal of any installed systems and components (mindrelief 2007). It is quite impossible to forecast all issues and problems that a company will face daily, aside from the major dilemmas that normally crops up. Solutions will primarily depend on the knowledge and skill of the operations manager who is considered accountable for the successful completion of the project (mindrelief 2007). II. The Purchasing Process The purchasing process is a fundamental procedure which is compromised by the following elements (Handfield 2006): 1. Identify or anticipate material or service needs. 2. Evaluate potential suppliers. 3. Select suppliers. 4. Release and receive purchase requirements 5. Continuously measure and manage supplier performance. The purchasing process vary in different companies and depends whether the purchase can be repetitive, sourcing out new product or item; or entails a detailed approval process which may exceed a definite amount of money. If new items are to be purchased, more time is necessary for the assessment of prospective sources (Handfield 2003), since it brings about a long list of things that needs to be accomplished prior to the actual purchase and delivery of materials. The purchasing process normally commences with the primary identification or anticipation of needed materials or services which is needed by an individual or a company (Handfield 2003). This first stage or process will require various steps, which will depend on the volume of purchase and whether or not the company has already purchased said materials or services from the sup0plier in the past (Handfield 2003). The next step in the process is the purchase approval and supplier evaluation. When the user need has already been established and approved the supplier must also be present. In most cases, if the purchase is a repetitive one from the same supplier, a contract already has been drawn. The variable factor in this stage of the purchase chain is whether the price per item is still the same or not. Generally, if the amount is the same or lower than the state price in the contract no new approval is required for the purchase. However if the amount per item exceeds the usual amount as stated in the contract price then the purchase request needs to got through an approval process. This involves requisition, evaluation, approval of the requisition and authorization for a purchase order to be created (Handfield 2003). A new evaluation is usually required for potential suppliers of new items needed in the company and may take some time since the only qualified suppliers are to be evaluated (Handfield 2003). The third stage of the purchasing process is the bidding, negotiation and supplier selection. The selection of a supplier is one of the most essential parts of the purchasing cycle since mistakes committed during this stage of the purchase cycle will have a disastrous and lasting effect on the company’s overall objective and management (Handfield 2003). After having received all bids, a supplier will be selected and negotiations will take place. This will then go on to the acquisition of purchase approval when a final supplier has already been selected during the evaluation process (Handfield 2003). The fourth stage in the purchase cycle is the purchase approval. Once a supplier has been selected and the requisition has been approved, a purchase agreement will be drafted and made final. All details within the purchase agreement must be worded carefully including the order details as to quantity, quality, price, date of delivery, delivery method, shipping address, due date, purchase order number and specification of materials (Handfield 2003). Next comes the release and receiving of the purchase requirements that comprises the actual or physical transmittal of the purchased items (Handfield 2003). Most consider this a stage which is habitual, where the shipping and receiving process necessitates the bill of lading, materials packing slip and the reception of any discrepancy report once the items have been delivered (Handfield 2003). The last stage of the entire purchasing process is the continuous measurement and management of the supplier’s performance after the contract has been awarded because the purchasing cycle does not end with the delivery and receipt of ordered items. Neither does it end with the selection of a supplier, because it is important to be able to recognize the non-performance of suppliers and the improvement of opportunities (Handfield 2003). The continuous measurement is important for a buyer because this gives insight into the supplier’s The Purchasing Process performance as it will provide the buyer the necessary information which will support purchase decisions in the future (Handfield 2003). III. Relevant Operations Theories Management theories involve planning, coordinating, organizing and controlling; and are where the theories and concepts of operations management are based. The theories for management are generally utilized to enhance personnel and organization efficiency. In relation to this, operations management is employed so indispensable inputs to complete a project within a specified budget and times is realized (mindrelief 2007). Operations management involves on time deliveries of inputs (example: raw materials) necessary for a project and careful planning. It likewise involves goal setting, having accessible alternatives, selecting a suitable execution plan and designing contingency plans (mindrelief 2007). Another crucial factor of operations management is coordination (mindrelief 2007). Coordination serves as an important link between different departments or entities that are related to a particular project. This sequence is comprised of the project managers, site engineers, suppliers, etc (mindrelief 2007). All those involved in operations management are required to share vital information with each other regularly. This aids in the improvement of innovative contingency plans in situations where there may be some changes to the original action plan. Organizing is another basic management concept that is utilized in operations management. It necessitates the procurement of all required inputs at the right time and right place, where follow-ups are done on a predetermined plan (mindrelief 2007). Organizing usually obligates project managers to conform to the quantity and quality outputs, which likewise requires the employment of contingency plans as need to counter any unforeseen problems. Although not all contingency plans will produce the desired results as earlier anticipated, putting one in place can help minimize additional costs relevant to delays in the project (mindrelief 2007). Aside from the theories of planning, coordinating, organizing and controlling, the contemporary theories of management assist in the interpretation of the changing environments in an organization (McNamara n.d.). The said contemporary or new theories are: the contingency theory, the systems theory and the chaos theory (McNamara n.d.). The contingency theory states that when managers make a decision all aspects of the present situation must be taken into consideration. And they must take corrective action on the outputs or factors which are the answer to the issue that currently besets the organization. In such situations, the problems must be handled on a case-to-case basis because issues that may seem the same may have been caused by different factors (McNamara n.d.). The systems theory on the other hand is more on a scientific managerial kind of approach that aids in understanding of the environment within organizations (McNamara n.d.). This particular management theory lies on the fact that when a segment or part of the entire system has been removed, the whole nature of the system has been changed. And since a system is generally made up of inputs, processes, outputs and outcomes, the feedback t6hat is exchanged among these four factors affects the entire organization (McNamara n.d.). Systems theory in management application aids managers to view the organization from a bigger or larger perspective. It brings about new patterns and events that can be interpreted for the enhancement of the workplace. It likewise brings into attention details – like being aware of all the parts of the organization; and how they function as a part of the whole system. This is different from how an organization is viewed in the past, where managers focus and analyze the various departments within the organization individually or one-at-a-time; without considering that the small parts affect the overall performance and efficiency of the entire organization (McNamara n.d.). Last is the chaos theory which considers events that are rarely controlled or cannot be controlled (McNamara n.d.). The reason behind this is – systems naturally become complex in nature in the long run as the organization grows and expands its boundaries beyond its original formation. Hence as the organization grows a more solid kind of structure in terms of control and contingency measures must be developed, established and utilize to maintain stability (McNamara n.d.). IV. Theory vs. Actual Practice Most organizations are built and founded on the most basic theories like proper planning, good coordination, proper organizing and having effective control measures. The contemporary or new theories (contingency, systems and chaos) are likewise integrated into the system to effectively achieve goals and provide quality service to loyal customers or clientele. While the theories could in fact be followed to the letter, most organizations defy management theories, while others do not adhere to some due to one reason or another. The plausible explanation for this is because each organization manages its operations by adapting to its own reality. And this typically varies from one company to the other (Alarcon et al 1999) depending first and foremost on geographical locations and available internal control measures.. Basing it now on the preceding paragraphs, in theoretical terms the purchasing process commences with sales planning where there is an identified need for the user or buyer. As such a list of suppliers for the required goods and services is at hand, where all the details regarding the supplier is evaluated. Next comes the analysis of need based on the purchase requirements submitted by the different departments within the organization. The appraisal of the need usually involves product specification or service attribute in order to facilitate the purchase process (Salinas 2010). This step is followed by the negotiation of terms that states the conditions of the negotiation in terms of unit price, quality, delivery, etc. After the negotiation process, the phase for the bidding and budget request comes in. This is where the materials or services requested or needed is considered meticulously in accordance to what is exactly needed and the current relationship of the organization with the current suppliers (Salinas 2010). Last in the purchasing cycle now comes for the request of orders from the supplier. This phase will deal with how the purchases are going to be made (type of communication), time when the order was made and the expected date of delivery along with tracking the order once it has been shipped out by the supplier (Salinas 2010). The above paragraphs comprise of how the purchasing must be done based on theoretical terms, where everything from start to finish goes on smoothly without any problem. But in reality, the purchasing processes of organizations are often disrupted by unforeseen events that add to the organization’s over head costs. The disruptions in the purchase cycle will usually affect the services provided to customers, along with the quality and reliability the organization desires to preserve (Dawson 2007). In reality problems can already exist during the first stage or phase of purchasing process due to miscommunication that delays the submission of necessary internal request forms for needed materials in each department. As the purchasing cycle progresses, issues regarding the pertinent details of suppliers can likewise arise when the required documents needed for bidding are lacking, which unfortunately causes delay in the proper selection of a qualified supplier. Although a supplier may already have been selected, dilemmas in the delivery happens at times especially if the request forms have been delayed protractedly within the organization or if the request sent to the supplier is not clear on the specification of materials or services needed. Another delay my again occur if the delivered goods do not conform to the quality needs of the organization, having the need to send back the delivered materials and have them replaced. If the organization still uses the traditional way of communication like telephones, faxes or regular post mail, it will have a difficulty of sending in an order request to suppliers as this normally is time consuming, not to mention the need to do follow-ups, etc (Alarcon et al 1999). V. Consideration of Changes for Quality Improvement and Customer Focus Many times over, an organization’s problem in the successful implementation of the purchasing process is the supplier. However, the supplier’s operation is not under the control of buyer (organization). Considering and understanding this detail alone will necessitate the organization to rectify its internal purchasing procedures. First of all, organizations can cut down on delays by having a very clear picture of the company’s current and future needs (Dawson 2007). Such needs or requirement must conform to the proper selection of a supplier who is qualified to meet such requirements. The organization’s needs must be definite and well specified to enable both the organization and the supplier to come up with what is expected from them. This means the development and utilization of strong internal procedures in terms of purchasing (Dawson 2007). Being able to make the right choice in the selection of a supplier is significant so as to establish proper controls. Suppliers must be re-assessed regularly to make sure that they are currently able to supply and meet the needs of the organization. The selection, evaluation and re-evaluation records of suppliers must be updated and maintained properly (Dawson 2007). Proper internal communication is essential to the success of the organizations purchasing procedures. All information must be clear and specific, including adequate description of the product or service required. This includes the technical description of the items, packaging and delivery (Dawson 2007). A mandatory internal procedure must include meticulous review of all outgoing information to the supplier to cut down on sending erroneous information that may cause the delay of material delivery (Dawson 2007). VI. Recommendations To make an organization’s procurement or purchasing process smooth and efficient, it is first important for an organization to create a conducive workplace for its employees and give them their proper dues in terms of salary and benefits in order to motivate them and to improve their customer service (Chaudron 2008). By making employees feel that they are well cared for by the organizations which employ them, the worker will be encouraged to do their best not only in their respective jobs but also in the correct and timely accomplishment of materials requisition forms. This will help in cutting down on the delay of submitting the internal purchase forms, which if delayed will certainly affect their daily dealings with the organization’s customers (Chaudron 2008). Employing the problem solving/problem prevention cycle is another way to maintain quality in the purchasing process. This involves: 1) the gathering of information and appraisal before any pertinent action is taken (Chaudron 2008); 2) having regular brainstorming in order to generate possible solutions prior to the evaluation of newly formed ideas; and 3) evaluation of success (Chaudron 2008). Based on the foregoing recommendation, the organization’s FMU or Facilities Management Unit must primarily gather necessary and relevant information about the purchasing needs or requirement of a department or unit before taking any action that needs to be undertaken in the usual protocol of procurement (Chaudron 2008).This will prevent the unnecessary processing of order forms that need to be forwarded for purchasing (Chaudron 2008). Although a local internet connection may be in place it is still essential for all personnel as well as managers to understand that proper coordination with everyone involved in the purchase chain is still a must to prevent the occurrence of delay without just reasons. Brainstorming is another recommendation to instill proper and efficient controls within the organization. This will allow managers and staff to see how the purchasing cycle works and the problems that they usually encounter along the way. All involve personnel; especially those working in the Facilities Management Unit ( since they are the ones handling the purchasing requirements) must be encouraged to voice out their concerns in order to form new ideas that will counteract any adverse issues which may eventually arise from the purchase cycle (Chaudron 2008). It is likewise recommended that measurements (statistics or mathematical computations) to back decision is essential to deliver consistent quality of goods and services to current and potential customers, as it helps in the detection of problem trend and correcting them before they occur (Chaudron 2008). Measurements to back decisions also provides an opportunity for manager or organizations to find out why a particular problems in the purchasing process line happened; and prevent it from happening again or becoming repetitive (Chaudron 2008). At present most companies or organizations are encouraged to make use of the internet to make their purchases since this saves time in actual transmittal and reception of communication. It also conveniently generates the required paperwork and transferring of purchase documents to suppliers electronically which saves on additional expense for mail and delivery or relevant documents (Handfield 2003). The installation of a satisfactory internet connection which can help facilitate paper work and share data internally among the various departments of the organization must be considered by the top management of any organization. This will help greatly in reducing the pile of paper work that tends to get accumulated overtime since the files can be saved in hard drives, CDs or other forms of removable discs. In addition, it will also assist concerned personnel in the provision and exchange of important and required information or data without having to personally go inside every office that requires said data. Organizations in cooperation with their respective Facilities Management Units must learn to properly cooperate and coordinate with suppliers and customers (Chaudron 2008). Suppliers are often treated with indifference, but it is strongly suggested that organizations build a partnership-like relationship with its suppliers (Chaudron 2008). This is because it is better to have a number of suppliers several of whom are willing to provide the organization’s needs and requirements at the cheapest price possible (Chaudron 2008) without foregoing quality. Building good relationships with everyone involved in the purchase process or cycle is a strong deterrent to delays in the delivery of goods and services because employees who are treated fairly often return the favor by accomplishing whatever task is required of them. And suppliers who are treated with respect will do everything from their end to make timely quality deliveries to safeguard their good reputation with the existing clients (Chaudron 2008). Lastly, the entire purchasing cycle must be considered as a whole for if a certain part of the cycle has been disrupted, the entire purchasing system will definitely be affected. References Alarcon, Luis F., Rivas, Rodrigo, Serpell Alfredo. (1999). Evaluation and Improvement of the Procurement Process in Construction Projects. Retrieved April 07, 2010 from ce.berkeley.edu/~tommelein/.../PDF/Alarcon&Rivas&Serpell.pdf Chaudron, David. (2008). Elements of Quality. Retrieved April 07, 2010, from http://www.organizedchange.com/tqmelem.htm Dawson, Scott. (2007). Purchasing: Developing a Supply Chain that Satisfies your Customers. Retrieved April 08, 2010 from, http://www.9000world.com/articles/iso-9001-purchasing.php Ganeshan, Ram, Harrison, Terry P. (1995). An Introduction to Supply Chain Management. Retrieved April 06, 2010 from, http://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html Handfield, Rob. (2003). E-Procurement and the Purchasing Process. Retrieved April 08, 2010 from, http://scm.ncsu.edu/public/hot/hot031022.html King, Bill. (2006). Why Do You Need to Strategize your FM Role? Understanding the Strategic Role of Facilities Management. Retrieved April 07, 2010 from, http://www.simek.com.my/strategic_role_of_fm.html McNamara, Carter. (n.d.). Brief Overview of Contemporary Theories in Management. Retrieved April 07, 2010, from http://www.managementhelp.org/mgmnt/cntmpory.htm Mindrelief.net. (2007). What is Operations Management? Retrieved April 06, 2010, from 2007 http://www.mindrelief.net/operations_management.html Salinas, Miguel Angel. (2010). The Purchasing Process. Retrieved April 08, 2010, from http://www.ineur.com.mx/index.php?option=com_content&view=article&id=170%3Ael-proceso-de-compras&catid=51%3Aboletin-marzo&lang=en SPMO Central Storeroom. (n.d.). Flowchart – Procurement of Supplies. Retrieved April 07, 2010 from, www.upd.edu.ph/~spmo/procflow4.pdf Read More