Operations Strategy, Making Capacity Decisions - Coursework Example

Name: Course: Tutor: Date: Operations Strategy Business and organizations manufacturing products for profit depend on some processes to make their products produced appropriately and delivered within the set time frame. All these processes act as the operation for the business or company. In 2005, Krajewski, Ritzman & Larry defined operations strategy defined as the plan on how an organization intends to allocate resources so as support its infrastructure and production to achieve a set of objectives. While comparing to a machine, one can establish that for a machine to work properly all its components has to operate appropriately and together with other parts to achieve the goal (Krajewski, Ritzman and Larry 34). Operations strategy defines how various components including departments of the organization will alongside each other to realize success (Ward, McCreery, Ritzman and Sharma 1038). Organization set different operations strategies with regards to management style and the demands of the business. It should be noted that not all organizations will have a department called operations but they must assume the activities of operations since each organization are involved in producing goods or providing services. The operations manager plays a role of managing resources that are used in these procedures. Employing market-oriented plan to operations, a business makes decisions concerning the markets and about the consumers who are existing in those markets which it aims to target (Holweg and Pil 83). The market position of a business is one where its performance facilitates it to attract consumers to buy its products and/or services in a more effective way compared to other market players. Competitive facets are the way products or services attract orders based on quality, price and speed of delivery. Operations strategy is a practical approach. Fundamentally, operations strategies are associated with the process of change of inputs into outputs (Krajewski, Ritzman and Larry 47). Therefore such strategies offer the basis for the decisions that work at operations level of an organization. Some of the pinpointing areas in operations strategy are the product design (tangible or intangible), selection of the vendor, selection of proper process for conversion of inputs into outputs, scheduling of production, etc. Even though strategy, as such, is more of taking lasting decisions, operations strategy are more relevant and tactical for daily and even short term decisions. Some of the long-standing decisions that are on the basis of the operations strategy are facility and location planning, technology selection, decision buying or making, selection of form of products or services which the organization intends to produce, management-based decisions, etc. (Holweg and Pil 79) . There are several alternative processes for formulating operations strategy for a certain business. These will in general need assessment of the market prerequisites (marketing) and resource abilities of the operations (operations). In 2005 Hill offered an iterative platform that connects the business goals which will present direction of the organization; that describes how the business will compete it its target market and the operations strategy which offers ability to compete. The framework comprises of five steps. These steps are defining corporate goals, determining marketing strategies to fulfill the strategies, assessing how products or services attracts orders compared to those of competitors, establishing, the most suitable methods to deliver products and provision of infrastructure needs to support the operations (Hill 37). Wal-Mart is considered one of the most successful, effective and leading retailers in the history of the U.S (Ward, McCreery, Ritzman and Sharma 1041). Its operations strategy is to utilize low levels of inventory and prices to make faster sales founded on low prices and providing value. Maintaining low levels of inventory enables the organization to maintain prices low for their consumers, including replacing products with new products once inventory is over. This also raises demand. Competitive Priorities Ward, McCreery, Ritzman and Sharma (1998) describe competitive priorities as strategic choice or the means where business decides to compete in the market. Competitive priorities have four dimensions namely low cost, flexibility, quality and delivery (1035). Competitive priorities are important because quality products and low cost attract are some of the factors that attracts consumers to a business. These customers can then become loyal to the business and increase its performance. Flexibility and timely delivery of goods is very important as far as customer satisfaction is concerned (Ward, McCreery, Ritzman and Sharma 1036). When the company is flexible and understands the customer needs and delivers it on time, they gain a good reputation which they can use as a competitive advantage. Finding out proper competitive priorities is a critical part of formulating a production strategy. Porth, Kathuria & Joshi claim that decisions concerning production strategy are generally made at high management level in organizations (17). The competitive priorities play a significant role in process choice, technology adoption, manufacturing planning, control systems, capacity management, staff skill development and the quality assurance (Porth, Kathuria and Joshi 14). Once competitive priorities are identified, it can guide relevant resource allocation to fulfill operations’ goals. Describe the differences among make-to-order, assemble-to-order, and make-to-stock According Holweg & Pil make-to-order is a business manufacturing strategy that generally enables customers to buy products which are customized according to their requirements (74). In short, it is a strategy where producers manufacture a product only after the consumer places an order. This form extra waits time for the customer to get the product, but enables for flexible customization rather than buying from the shelves of the retailers. This strategy is regarded good for highly customized products such as bicycles, automobiles, computer servers, and for products in which holding stocks are so costly, like the aircraft (Parry and Graves 76). In the context of automotive, make-to-order is a demand-based manufacture strategy in which a product is built and scheduled in reaction to a validated order received for it from the final consumer. A make-to-order approach does not imply that every supplier in a supplier chain must be manufacturing only when a consumer order has been approved (Holweg and Pil 74). Evidently, it would not result to economic sense for the producer of low value high and volume parts to use make-to-order. The major advantages of the make-to-order strategy in situations of high product range is the capability to supply the consumer with the correct product specification needed, the decline in sales discounts and finished product stock, including a decrease in stock obsolescence threat (Holweg and Pil 78). The main disadvantage of Make-to-order is that the producers are vulnerable to market demand instabilities leading to a declined capacity use in production. Hence, to make sure an effective utilization of production resources, a make-to-order approach ought to be followed with proactive demand arrangement. According to Parry and Graves, getting the correct and proper balance of Make-to-order and BTS to uphold stock levels correct to both the market condition and operational constancy is critical to manufacturer (37). Assemble-to-order is a business manufacturing strategy in which products ordered by the consumers are produced promptly and customized to a particular extent (Parry and Graves 24). This strategy requires that basic portions of a product should be already manufactured however are not yet assembled. When an order is confirmed, the parts are quickly assembled and delivered to the consumer. The assemble-to-order approach is a hybrid strategy between a make-to-stock approach – in which products are wholly produced ahead - and the make-to-order approach – in which products are produced once an order has been confirmed. The ATO approach tries to combine the advantages of both approaches - getting products into consumers' hands rapidly while enabling for a product to be customized (Holweg and Pil 82). Consumer’s orders could need the assembly of different types of products (components). For instance, a computer producer like HP gets different orders that comprises of various sizes of hard drives, keyboards monitors and monitors among others (Parry and Graves 38). These kinds of orders are assembled from existing parts. In production systems in which component manufacturing lines are considerably bigger than assembly times and relative commonality of parts exists in these orders, the assembly-to-order approach will emerge (Holweg and Pil 83). It should be noted that this strategy enables producers to realize higher levels of product variety and fast delivery of product or service whilst maintaining low stock. These systems work well for the flexible and selective customers who will not purchase a certain product unless the product has the particular key features which suit them. A flexible consumer is a one who is willing to negotiate his or her key items. On the other hand, the make-to-stock is a traditional production approach used by organizations to match manufacturing with consumer demand (Holweg and Pil 81). This method forecasts the demand so as to establish amounts of stock that should be produced. Whilst this strategy gets rid of finished-products inventories and decreases a company’s exposure to economic risk, it normally spells long consumer lead times and larger order accumulations. Making Capacity Decisions The statement decision-making capacity implies to a prospective participant’s capability to make a significant decision concerning whether or not to take part (Carpenter et al 533). It is in general believed to consist of the following four steps. These include understanding, appreciation, reasoning and expression of choice. Carpenter et al posits that in this context understanding means the capability to understand the disclosed information regarding the purpose and nature of the processes involved, including the benefits and risk of taking part versus not taking part in a given activity (536). Possibly the most fundamental component of capacity is the understanding (Tan, Anne and Tony, 347). Obviously, for one to be able of refusing or consenting to a particular issue, a subject has to have some fundaments understanding of the truths engrossed in the decision. Appreciation refers to the capability to appreciate the importance of disclosed information and the possible benefits and risks for a person’s own situation (Carpenter et al 536). Additionally to understanding in the factual sense alluded, most researchers on capacity concur that an issue must also hold appreciation of the significance and nature of the decision which they are experiencing (Tan, Anne and Tony 346). Reasoning means the ability to involve in a reasoning process concerning the benefits and risks of participating against alternatives. Tan, Anne &Tony claim that with no the mental capability to take part in reasoning and influence information in a rational manner, it is impractical for the understanding and appreciation to an issue in the decision (349). Reasoning is normally said to incorporate the capacity to weigh benefits and risks and assess presumed consequences. The last step involves the capability to articulate a choice regarding whether or not to involve yourself in doing something (Carpenter et al 538). It is feasible to imagine a situation where reasoning, appreciation and understanding are all in one piece, although where a topic has no means to communicate or express their proposed decision. It is not possible to express a choice. Concerns regarding an extended forecast in capacity planning In 2005, Krajewski, Ritzman and Larry defined Capacity planning as the method of establishing the capacity of production required by a business so as to fulfill changing needs for its products. Capacity planning is a long lasting decision which creates a company's general level of the resources. It widens over time horizon to get resources. Capacity decisions influence the lead time of production, consumer responsiveness, company capability to compete and the operating cost (Vellinga 402). Insufficient capacity planning may result to the loss of client and business itself. Excess capacity may exhaust the firm's resources and avert investments into much more profitable business. The issue of when the capacity ought to be enhanced and by how much is a very critical decision. However, capacity planning is associated with some challenges that may affect the company’s activities and also its relationship with customers. Uncertainty is one aspect that affects planners in their activities. With this regard, planers face concerns such as quality problems, delays and material handling (Krajewski, Ritzman and Larry 17). Quality problems arise when the demand is high and the company is rushing to meet these demands. With quality problems, the consumer will not get value satisfaction and will then purchase goods from the company competitors (Krajewski, Ritzman and Larry 19). On the other hand, when the capacity planner fails to plan appropriately for the capacity, the demands will be high and company may run out stock causing delays in further productions. An inconsistency between the demands of the consumers and the capacity of the organization can lead to inefficiency, either in unfulfilled consumers demands or under-exploited resources (Vellinga et al 399). The objective of capacity planning is to reduce this inconsistency. The organization capacity demand differs on the basis of changes in the production yield, like rising or reducing the production size of available product, or producing fresh products. Tan & Anne & Tony posit that an ideal use of the available capacity can be realized by means of enhancements in the overall equipment effectiveness (OEE) (346). The capacity can be improved through integrating new methods, materials and equipment, raising the number of employees or the machines, raising the number of job shifts, or obtaining extra production facilities. Works Cited Carpenter et al. “Decisional capacity for informed consent in schizophrenia research”. Arch Gen Psychiatry 6 (2000): 533-538. Print Hill, T. Operations Management, 2nd edn. Palgrave Macmillan Basingstoke, 2005. Print Holweg, M. and Pil, F. ‘Successful Build-to-Order Strategies start with the Customer’, MIT Sloan Management Review, Fall issue, 43 (2001): 74-83. Print Krajewski, L.J., Ritzman and Larry, P. Operations Management: Processes and Value Chains. Upper Saddle River, New Jersey: Prentice Hall, 2005. print Parry, G. and Graves, A . Build to order: the road to the 5-day car. Springer, 2008. Print Ward, P.T., McCreery, J.K., Ritzman, L. P. and Sharma, D. “Competitive priorities in operations management,” Decision Sciences, 29 (1998):1035-1046. Print Porth, S. J., Kathuria, R. and Joshi. M. P. “Performance impact of the fit between manufacturing priorities of general managers and manufacturing managers,” Journal of Business and Economic Studies, 4(1998):13-35. Print Tan, J., & Anne, S. and Tony, H. “Decision-Making as a Broader Concept,” Philosophy, Psychiatry, & Psychology, 16 (2009): 345–349. Print Vellinga, A., Smit, J.H., Van Leeuwen, E., van Tilburg, W. and Jonker, C. 2004. “Instruments to Assess Decision-Making Capacity: An Overview,” International Geriatrics, 16(2004): 397–419.Print Read More