A Systems Approach to the Problem of Process Scheduling - Literature review Example

A systems approach to the problem of process scheduling John Smith Number: s000001 Campus: Melbourne Lecturer: Julie Brown (please use correct titles) Tutor: Dr Peter Clark Introduction Operation and production management are a process involving changing of products and operational inputs to outputs needs in meeting the wants of the customers (Weining et al. 2010). It is a field of management that specializes in the physical production of services and goods while utilizing quantitative techniques for solving manufacturing problems. Production and operational management will involve conversion of inputs to final products using resources to provide the desired utilities of the place, state or a combination to the consumer while on the hand meeting the organizational goals and objectives of effectiveness, adaptability and efficiency. Major decision areas in operation and production management include ensuring good design in service and goods production, ensuring high quality of services and products that are produced, ensuring good process and capacity designs, dealing with issues of location selection, layout designs, supply chain management, scheduling, inventory, human resource and job design. Operation and production management are very important in the organization to enhance efficiency and effectiveness in the system (Tomek & Vavrova 2009, 47). The high country furniture and joinery company The high country furniture and joinery are a company founded in 1950 by Bill Williamson in Cooma, New South Wales. The business is very successful since in the production of furniture. The company grew with the name of the founder and was referred to as Williamson’s Joinery and Furniture until Elspeth Cook took over who was Bills daughter. It was renamed to High Country Furniture and Joinery in 1990. It is a company filled with tradition. A tradition of the firm that continues to the present is the attachment of a small brass plaque to each staircase and furniture piece to indicate authenticity. Mainly the high country furniture work now involves the production of bespoke staircases for private and commercial chalets that provide a good source of revenue for the firm. However, the company is too small, and there is very little opportunity for the company’s growth. Operational aspects of the company and strategic implications The operational aspect of the company focuses on absorbing the excess capacity of the products rather than focusing on generation of revenue. Major company operations include activities in the production of cabinet making, internal joinery and staircases making. Operations in the production process have been improved through the production of high quality products and designs, which has been made possible by Elspeth efforts. Bill had lead the company joinery augmented with the manufacture of furniture pieces. The company not well stabilized, but the operations began stabilization. The company has improved the volume of furniture by incorporating ideas to improve on production and operational management. The custom furniture operations trade has increased in importance; will the joinery side of the business had begun declining. The company’s products are widely distributed in the area as well as the brand awareness and image made possible through the production of high quality products. Staircases required a high level of artisanship, and so the company has to retain the highly competent employees. Good employee relationship in the production and operation management is maintained and is essential for the company. It provides a source of motivation to the employees and increases their productivity thus efficient operations. After the initial introduction of the line in Megan’s shops demands for the production of standard line, their production steadily increased beyond the company’s expectations. This lead to more regular scheduling of standardized piece production, which affects the production of other furniture. Instead of manufacturing each piece individually, the company adopted a method of manufacturing the items in small batches ranging from five to two pieces. This caused straining of the company and as well as excess production by the company and the company was making its stocks in disorganized ways. However, when scheduling trade-offs had to be made, the custom furniture was always given priority due to its high sales and profit margins it made for the company. For this reason, scheduled batches of furniture components were often left awaiting completion. The staircases demonstrated the high level of technical skill the firm delivers. This often resulted in orders for custom-made furniture that matched the handcrafted staircases and related internal joinery. It is not unusual for the company to be approached by prospective furniture customers who are impressed by a staircase produced. This is important in attracting the required number of customers to purchase the produced by the company. Megan Jones ideas of expanding her business changed the operation of the company. However, the company started producing a hand of exclusive handmade furniture pieces since it had the capabilities and abilities. These included coffee and occasional tables, and small cabinets and buffets. This was key in improving the company’s brand reputation (Yasin & Gomes 2010, 222). As part of its operations, the company went to extent of incorporating the brass plaque as a strong branding image: Not taking good consideration of production and operation management, signing into Megan’s contract it resulted to production of excess inventory. This resulted to greater losses, as the sales could not meet the operational costs. Production process and layout of the company Production process is a functional area in business management that involves the creation of utilities in an effort of meeting the human needs. The company utilizes employees, equipment as well as timber and other materials for the creation of products for consumers. Production involves the transformation of raw materials by use of methods and techniques into things and utilities for use by people. The production process involves a series of links in the production chain. At each point of the chain, value is added to the commodities making the product more valuable and desirable to the consumer. The company is linked with the production of furniture since it was started. The company has specialized with the production of staircases but also produce other types of furniture. As part of production, the company utilizes mass production and makes its furniture with a set design involving the use of high quality skills to produce quality products. This has created a very good brand name for the business and customers are asking for more products (Pons 2003, 531). The company utilizes the flow method of production. Where tasks are worked on in a continuous way and where the processing of materials is progressive and continues (Ouhimmou et al. 2008, 959) a production method. The production of staircases was done on a daily basis and given a greater priority over other furniture production. However, when the company incorporated Megan’s idea it was difficult to continue adapting the flow method of production of the standard pieces. It involved the division of operations where each operation was completed through the whole batch before the next operation was performed. At times, batches of furniture components were left awaiting completion. Problem identification- excessive inventory The contract between the company and Megan’s shop demand had major implications to the company. Excessive inventory is the major problem by the company. The company is too small to provide enough space for further expansion. The manager, Elspeth was well aware of the minor disruptions that the new line of work had created that were introduced by Megan Jones. Elspeth was contented to note that the business had expanded. However, she was worried by the effects that the new operations had on the company overall. The sales of the custom furniture remained strong as well as those of the standard pieces. However, the company accountant department indicated that profits were not meeting forecast expected. The costs that were associated with processing of standard furniture line were increasing more than expected. Lots of money were tied to the surplus inventory such as raw materials finished products and work processes involved. In order to accommodate these excessive inventories expensive, storage facilities and warehouses had to be rented. This increasing the costs involved. This also resulted to increased lead-time for custom and standard orders that lead to longer promised delivery times than the usual due to bulk of the work. The company’s capacity was being pushed beyond the limits with no abilities of further expansion. Its capacity can only accommodate the production of staircases only without the standard pieces production. Thus, urgent and prompt decisions had to be made by the management through evaluation of the overall impact that the standard furniture had brought to the company’s operations (Jammernegg & Reiner 2007, 187). Operations decisions required Having too much non- moving inventory is one of the biggest problems many small companies will face. The company has slow moving inventory causing negative implications to the company cash flow and profits as well as the general operations. The excess inventory in the company is consuming lots of administrative and physical resource Churchill & Mullins (2001), describe non- moving inventory to be money sitting around the company in different forms, and unless the inventory is sold, it can become a huge drain of profits to the company. Costs involved include the cost of storing the stuff as well as the decreasing value of merchandise in the store. The excess products need to be avoided in order for the company to free up cash that ought to be invested in other cash generating projects. The company problems are as results of having too much inventory in an effort to produce more and expand the brand name of the company. However, the company is tackling the current demands of the customer but not accurately forecasting for the future demands. If the staff is not tracking the inventory accurately, the company could end up running out of highly saleable merchandise of selling and producing the staircases and filling up its stock with the non-moving and excess inventory of standard pieces production. This best way of dealing with the situation is avoiding the excess inventory. Financial structure implication The financial structure is a specific mixture of long-term debt and equity that the company will use to finance it daily operations. The financial structure of the company directly affects the risks and value of the business and the manager ought to decide how the money will be borrowed and the best mixture of debt and equity to obtain. The company’s current structure is unstable, and it will affect the overall way of obtaining funds to the organization. After the initial introduction of the line in Megan’s shops demands for the production of standard line, their production steadily much beyond the company’s expectation, however, this resulted to serious financial implications. The company’s financing department indicated that the profits produced were not meeting their expected needs. The costs associated with the new line of operation introduced by Megan had increased more than it was expected. Thus, the financial position for the company was unstable. Many of the company’s funds were tied to keeping and accommodation of the surplus inventory by renting of storage facilities and warehouses thus narrowing the profits. The management ought to make sound decisions to restore the financial state of the company. Recommendations and Measures the company adopts Mark down model- this involves slowing the excess stocks and concentration with production of the main merchandize. Production of the standard pieces the company is producing adopted from Megan’s idea do not meet the revenue for covering for the cost of space that the consumer they results to lose for the company. It will be helpful if the company slows down the production of the items and knock down the prices to ensure a flow of the commodities (Pons 2003, 523). Adopting the bundle or cross merchandize model- this involves the company bundling the production of standard pieces with the main merchandise at discounted prices. This is a tactic to pick up impulse sales from the customers. They will values the discount that they are getting by making their purchase and will increase their purchase on the main commodity. The surplus inventory can also be donated for charity by the organization. Giving bulk purchase discounts- the company can motivate the customers to buy one or more product or service through offering two for one or buy one and get one free. It may also include offering discounts of the excess inventory products after purchasing a bulk of commodities. However, it is crucial for the business to consider the benefits as the customers could get used and only wait to go on sale and ignore the main merchandise. Too many deep discounts could alter the company’s brand image especially the rich tradition accompanied by the store (Lee & Wu 2006, 262). Development of an inventory profile- it is essential for the company to develop an inventory profile. This will be beneficial in ensuring and controlling surplus inventory in the company. It is crucial for the business to determine the amount of investment that it has tied in terms spares, absolute materials and excess inventory. The inventory profile provides a guide and summarizes all the information of the company production process thus providing for a quick and effective assessment of the overall storeroom inventory (Ashayeri et al. 2006, 732). Setting realistic turnover and investment goals- the company needs to set realistic turnover and investments goals. The ratio of usage of money to the total investment is a good measure to determine the effectiveness of the inventory management. The company needs to focus its investments in production of staircases as it main operations and forgo the production of standard lines. It is important for the company to set an optimum investment target on the required inventory level to avoid incurring losses. The company sets goals for turnover that provide a competitive benchmark for comparing the inventory management practices to the company standards and capabilities (Ballou 2000, 74). Sale of the surplus inventory to a surplus store operation/inventory liquidator- an inventory liquidator will buy the excess merchandise that the company is producing, but often with a discount. Many operations specialize in buying nonmoving inventory. Usually, this auctioning houses converte the junk into lots of cash. It is essential for the business to determine the value of the surplus and how much to expect before entering into any negotiations (Ouhimmou et al. 2008, 963). Conclusion Operation and production management are a process involving changing of production and operational products into outputs needs of the customers. Major Decision areas in operation and production management include ensuring good design in service and goods production, ensuring high quality of services and products that are produced, ensuring good process, and capacity designs in the production process. The high country furniture and joinery company have utilized operation and production management through artisanship, by making sure that it produces high quality products for the customers and incorporating design, as well. However, the company is small, and it is facing problems in operations when seeking opportunities to grow. Excessive inventory in the company is the major problem resulting to losses in the company. The management has to come up with decisions of dealing with the surplus inventory as it is causing negative implications to the company cash flow and profits, as well as the general operations. This involves development of an inventory profile, Setting realistic turnover and investment goals and development of effective operational plan (Ouhimmou et al. 2008, 956). It is important for the manager to develop effective action plans for the company. If the company lacks a good operational plan, then everything is up for a chance. Lots of money are tied to the surplus inventory such as raw materials finished products and work processes involved. In order to accommodate these excessive inventories expensive, storage facilities and warehouses had to be rented increasing the costs involved. Thus, the manager has to concentrate with the production of only the main merchandise, to avoid the losses incurred since the company is small and has no room for future expansion. Measures adopted to deal with surplus inventory include Selling of the surplus inventory to a surplus store operation, giving bulk purchase discounts for customers and adaptation of the bundle or cross merchandize model. These will help restore the company normal production and operational state. References Ballou , Ronald H. , 2000. Evaluating inventory management performance using a turnover curve. International Journal of Physical Distribution & Logistics Management, 30, pp.72–85. Ashayeri, J. et al., 2006. Cyclic production-inventory planning and control in the pre-Deco industry: A case study. International Journal of Production Economics, 103, pp.715–725. Churchill, N.C. & Mullins, J.W., 2001. How fast can your company afford to grow? Harvard business review, 79, pp.135–134, 166. 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