Strategic Cost Management, Total Quality Management - Coursework Example

OPERATIONS MANAGEMENT (Name) (Institution) (Course) 7th August, 2008 Question 1. (a) 1(b) choosing suppliers Suppliers have a very significant role to play in ensuring the success of any business. An inappropriate supply may cost the company a lot in terms of delays, supplying low quality materials and interruption with the normal programming and scheduling of activities within the company. Much of these problems are unanticipated and thus that time taken to handle such cases may be longer than it can be imagined. In my quest for suppliers, some very vital issues have to be considered. Bryant (2008) describes a procedure named Quality Function Deployment (QFD) that is used in screening of suppliers. This procedure fits our objectives in that it recommends that. 1. The supplier as our strategic partner has to provide integrated circuits 2. The supplier will be a tool in implementing the company's quality management initiatives. 3. Suppliers of key components should have a high degree of accuracy with the capacity to adapt his production with fluctuations in demand at a competitive price. 4. The supplier should have an established assembling plant for the components to be supplied in order to track quality and cultivate responsibility. These steps if followed to the letter will ensure that the short listed suppliers of the corresponding components are achieved. It is encouraged that more weight in screening should be apportioned as determined by the usefulness of the component Question 2 a Quality management As a company posed to take the market by storm, our product quality should always and all times stand for our commitment in improving the way we do business today. It therefore becomes paramount that in our operations we have to be strict in the way we handle quality right from the suppliers to the making of the devices themselves. Bullwhip effect/beer game According to our market research, unpredictable sharp changes in demand patterns in the consumer market will spread further up the supply chain and might mean problems to some consumers. An overwhelming kind of demand should in no way catch us in surprise. According to the directors, they are wary of a situation that befell the Nintendo wii company. In this case the company was overwhelmed by the high demand for their new games that they could not satisfy the market. In fact the company had a back pile of orders around 6 months old at any given time. This can be attributed to poor communication between all the supply nodes. A small wave along the journey from the supply chain to the consumers may end up being a big problem that threatens the mere existence of the company. Such a scenario is caused by poor communication throughout the supply chain, poor ordering practices and insufficient reaction to backlogs in case of any. Strategic cost management Cost Management involves analyzing the costs of material components from suppliers in order to develop strategies to lower costs while improving supplier relationships. However, as a company policy, our cost management initiatives should in no way compromise our product quality. It therefore becomes necessary that our choice of suppliers should not be driven by costs alone but by quality also. Cohen (2005) provides us with some leading questions to help us address the issue of costing amicably. These questions are, 1. Which costs are necessary and legitimate during production and ordering form suppliers? For instance, is the current number of employees necessary? 2. Are amounts estimated for the necessary cost items reasonable? 3. Is the inclusion of a certain component or feature to our phones potentially subsidizing overlapping another? 4. Is the mode of allocation of resources optimizing them? If not, is it within our capacity to challenge and change the allocation methods? 5. Are only those expenses which should be allocated to our purchase so allocated? 6. Are there allowances for contingencies? Do these allowances seem legitimate? 7. Are profits reasonable enough, yet not excessive, to keep the supplier motivated? Total Quality Management This is a management concept that calls for competent management in all aspects of the company. Conventionally, quality had been only delegated to the product or service output. However, this concept sweeps across all aspects making quality a code to live by as a company. As we look forward in to making a first time entry in to the market this new gadget, the idea of us being pioneers cannot be allowed to derail us from making quality gadgets. Quality is principally about meeting the needs and expectations of customers. Our marketing and advertising however is the one that is going to inform consumers on what to expect from a product. Subsequently we must understand that quality goes further than just a product functioning properly. Think about your needs and expectations as a customer when you buy a product or service. These may include performance, appearance, availability, delivery, reliability, maintainability, cost effectiveness and price. Think of quality as representing all the features of a product or service that affect its ability to meet customer needs. If the product or service meets all those needs - then it passes the quality test. If it doesn't, then it is sub-standard. Quality management is concerned with controlling activities with the aim of ensuring that products and services are fit for their purpose and meets the specifications. There are two main parts to quality management namely quality assurance and quality control. Quality assurance: Quality assurance in our product starts right from the components suppliers. This is why in our search for suppliers, we have to scrutinize them strictly and verify their commitment to quality constantly. In the long run the whole process right from the component suppliers to the consumer the idea of maintaining the highest quality levels should never escape our attention. Kohln will design a unique way through which our products are produced and delivered to minimize the chances that they will be sub-standard. Our heart of quality assurance is, therefore on the product design/development stage both in our factory and that of suppliers. If all the processes in the production are closely monitored and high quality maintained then, the product will be" built in". Mentzer (2006) says that quality assurance involves working towards a mutually beneficial relationship with customers and suppliers. Like any other company Kohln will want to make sure that our suppliers to our production process have the same understanding of quality and perform. Quality control: According Mentzer (2006), Quality control is the traditional way of managing quality. He goes further and says it basically involves checking and reviewing completed tasks. For instance, this would include lots of inspection, testing and sampling of our mobile phones to verify their suitability and good functioning. Measures designed by our quality check team during production should liaise with the quality control for the necessary steps to be taken in case of defects being detected in finished products. Quality control is mainly about "detecting" defective output - rather than preventing it. Quality control can also be a very expensive process. Hence, in recent years, businesses have focused on quality management and quality assurance. Business Process management and mapping The whole manufacturing and assembling activity can simply be identified as one complex process that can be further subdivided into less complex processes. Identifying this individual processes builds a flow chart of the several number of processes working together within the larger one. Once identified and analyzed, it then becomes simpler to standardize and find areas of improvement. The essence of having the flow charts and identified processes facilitates better time and resource allocation. The idea capitalizes on defining each step and assigning it to certain staff. While analyzing the process time managers would most likely be concerned with value added activities in order to decrease the process times. Be sure to look for duplicate transactions, unnecessary steps, and anything adding little value. Question 2 b Directors have been keen top point to the management the need to reduce the number of our suppliers. Though this may pose a problem in the case of specialization, it creates some benefits for both parties in this case the suppliers and the Kohnl Computers Company. Benefits from operating with a small number of suppliers Consolidated supplier base – Transacting with fewer suppliers creates a simpler process for the purchasing and procurement department for Kohln. On the other hand suppliers providing a wider portfolio of products enjoy the same benefits in their plants. Improves communication. The smaller the number of suppliers the simpler it is for communication. This applies to invoicing and the physical transportation of raw materials from the supplying plants to Leipzig. In the long run the improved communication channels will ensure fast response time. Decrease cycle times - especially important for companies in the technology industry. Lower transaction and processing costs - automating the purchasing process will decrease the amount of non-value added activities Mentzer (2006) says that the relationship between the supplier and the company in hand is very vital in ensuring that the supplier meets the agreed quality standard in the provision of the components. He adds that the relationships are influenced by the levels of trust, commitment, mutual dependence, leadership and organizational compatibility between the two. If the relationship between Kohln Computers and our suppliers is not based on trust and understanding, cases of the suppliers may leak out information to would be competitors regarding our technology in the production of our mobile phones. The trust between the two is then facilitated by effective communication giving details on the market performance of our product so as to ensure that our suppliers align their activities accordingly. This is most essential in capacity planning and building. This allows suppliers to decrease production in case of a dismal performance to avoid creating unnecessary inventory. The philosophy that the board of directors seem to have may not be in touch with the reality and this may create a weak relationship between Kohnl and the suppliers, this is because the estimation that competition will only emerge after a period of over one year may backfire. And if it does it means that the company would be in a tricky situation as there would be increased competition in the supply market that is purely unprecedented. High levels of competition will in the long run alter the way that our company relates with suppliers and in that case there would be direct production problems for our company. Work Cited Cohen, Shoshanah. Supply chain management New York McGraw Hill 2005 Mentzer, John. Fundamentals of supply chain management:twelve drivers of competitive advantage, London, Penguin, 2004 Ritzman, Larry and Krajewski, L. Operations management: strategy and analysis, London, OUP 2000 Stevenson, William, Operations management, London Macmillan 2001 Wang William et al Supply Chain management: Issues in the new era of collaboration and competition, Massachusetts, MUP, 2007 Waters, Donald 2001 Operations management: producing goods and services Read More