Operational Issues Facing Turbo Exhaust - Case Study Example

PRODUCTION AND OPERATIONAL MANAGEMENT Production and Operational Management Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 24, 03, 2013 Introduction The following paper focuses on the production and operational management and how it affects the manufacturing company. It expounds on the topic this paper focuses on the Turbo Exhaust Company, which is one of the leading manufacturer of car exhaust. Production and operational management is science and art of transforming the production and inputs into a product that will satisfy the customer. It involves conversion of raw materials into a finished product that a customer need. The process of conversion has chain of interdependent tasks that help in adding value to a product or transform it into a new product (Mill 2008). Initially Turbo Exhaust Company used to designs and manufactures custom-made high performance automotive extractors and exhaust. The company started in 1994 to produce special exhaust and extraction for motor racing industry. Over the years, the company has grown and apart from manufacturing custom-made exhausts, it makes off-the-shelf exhausts for private motorists. A particular engine determined the specifics of exhausts during the manufacturing stages. Due to high demand of the company decided to make more exhaust and stock them. The exhaust in stock were not specific to the engine in question but were rather general. This opened an opportunity that developed into today’s company (Giannantonio & Hurley-Hanson 2011). The goal of manufacturing industries is to improve their products, low costs and increase profit, however, this does not come easily and requires experts, and more research in the field of both production and operations (Dul, Hak, Goertz & Voss 2010). In this paper it clear that Turbo Exhaust Company has make big steps since it 1994 but this is not to say there are no challenges. As the company increases it faces bigger challenges that it has to tackle if it has to expand and meet the over rising demand. Partnership with other companies has help in increasing the effectiveness of the company in achieving its objectives (Gupta, Koulamas & Kyparisis 2009). Operational Issues Facing Turbo Exhaust Current Production Processes Used By Turbo Exhausts Over the years, various processes are used to ensure the efficient of the exhaust. The aim of these processes is to ensure that the exhaust are reduces fuel consumption, reduces the emissions as well as enhance performance of the vehicles using these exhausts. The demand of the fuel in the world is increasing every day as more people acquire cars. This has resulted to more market of the Turbo Exhaust, which reduces fuel consumption. Turbo Exhaust Company has come up with supercharging exhaust to increase the air in the engine. Turbo Exhaust increases the power in the piston as the air in the engine circulation increases. When producing Exhaust the company much considers several things among them the future demand of the products, how reliable and production of product is, cost of maintenance incurred by the customer, environmental safety based on the emissions as well as the heath and personal safety of the consumer. In the current production processes of the Turbo exhaust, the company has the best available skills due to improved research, which make the company to make competitive products (Silva 2007). Motor vehicles are one of the main environmental polluter and therefore, there is need for companies that make motor vehicles part to come up with better and improve engines that will reduce the emissions. Turbo exhaust Company is trying to ensure it manufacture exhaust that are powerful and less polluter of the environment. The connection between the turbocharger and power turbine is axially and therefore it leaves the exhaust after it has gone through exhaust treatment system (Gaimon 2008). Problem identification and specification Effects of new contracts with performance shop on turbo operations Turbo Exhaust Company entered in agreement with a performance shop with the aim of improving its effectiveness. This opened up the market because the performance shop came up with better marketing and delivery strategies. As a result, the demand of the Turbo Exhausts increased, as more customers were now able to access these exhausts. In return, the company had to produce more to meet this high demand. Therefore, contracts with these performance shops open up an opportunity to both the company and the consumer (Brandon-Jones, Piercy & Slack 2012). As technology and innovation increases, it expected that a company increase the profit and lower the cost of production. However, this is not the case with Turbo Exhaust Company. Since the new contract with the performance, shop there has been an increase in the cost of production. This has largely affected the company directly. Keeping the raw materials, working materials, as well as finished products costs the company a lot (Nightingale 2011). The performance shops are now responsible in distributing the exhaust to the consumers. This has rise another problem where there is stock delays in the company. Despite high demand in the world, the distribution channels are not efficient causing huge stocks in the stores. The delivery time taken by the performance shop is higher making the retails shops full of products already order (Shewhart 1931). The sales of performance system increased with contracts shop, this was not without problem as this calls for scheduling trade-offs. Because the profit margins of custom-made systems were high, the company preferred it. Thus the performance shop is forced to spend more time on observing as the products are being made. As result of the delay delivery and huge stock in the company as well as their shop, there is no room for expansion. A company is unable to increase production because there is no place to put the extra products. This has further implications in that the company cannot meet the higher demand of products. Having excess inventory has result of slow supply results in more costs being incurred in form of expenditures for storage, taxes, insurance, and maintenance. Another negative effect of large inventory is it may lead to lost sales by the company (Bak 2010). Globalization is problem that is brought about by new contracts. Various nations have different cultures, politics, technology, and biological aspects. These factors hinder the growth of company in nations where the business environment is not friendly. For example, the partnership between turbo exhausts company and India required the company to come up with better strategies that will fit the Indian market. The demand of the vehicles in India is high and therefore the company supply had to increase. Globalization is not a simple task bearing in mind the factors that hinder the market penetration. Specialization determines the quality of a product and therefore Turbo Exhaust has set its resources on producing the exhausts. This calls for partnerships with other companies in the automobile industries. Having a partnership with performance shop increases the level of specialization as company spent more of their time and resources on manufacturing products while leaving the work of marketing and delivery on the hands of performance shop (Bhadur 2008). Day-to-day operational issues Operational Decisions made to enable company’s operations to be more effective. There operational decisions for the company to be effective. It is important for the management to understand the objectives of the company before they make any decision. This is because they will know how their decisions on a particulars issue will affect the company. In turbo exhaust company operation management determines the how to create and improve exhaust based on the available raw materials, available technology and available labor. The decisions must cut across the value chain throughout the product manufacturing. Production and operational management requires preparation of raw materials, equipments to be used as well as market identification. Proper decisions on these issues help to avoid time and resources wastage. How much exhausts the Turbo Exhaust Company make depend entirely on the market available and therefore, the operational management must ensure they understand the market (Taylor 1911). Another decision that requires to be addressed by the operational management is the issue of market price. This decision must bear in mind other factors that affects like the cost of raw materials, costs of production and the level of completion from other companies. If Turbo Exhaust Company want to remain as the leading company in that field effective advertisements or promotion must be put in place. This is the role of the operational management. New products are coming up in the market now and then and the management must ensure the consumer understand the new product (Harris 1990). Broader organizational issues caused by operational problems Effect that the move to producing off-the-shelf systems may have had on the company’s financial structure When the company began, their main aim was to produce exhaust specific to the engine. Only racing motor could be fixed with these exhausts. As the demand from private vehicles to use Turbo, exhaust increased the company started by introducing few off-the-shelf exhausts. These further increase the demand and open more opportunities for the company to increase its stock to try to meet their demand. Many consumers especially the private motorists were satisfied by the exhaust because it was price conscious and it was more efficient in terms of fuel consumption. Today the company produces both the custom-made and off-the shelf systems. This provides the flexibility because the company does not have to over rely on one (Hammer & Champy 1993). When the company shifted some resources to exhaust off-the-shelf it financial statue was enhance. The main for this is because more market of their products was opened. In addition, the private motor opted to have the vehicles’ engines more effective and efficient, hence more satisfaction. Despite the increases in the sales and production the Turbo Exhaust Company, realize that the financial situation is not as good as they thought it would be. The relative costs of production has gone up and the costs due to increase in the warehouse. Any operational management in a manufacturing company faces some challenges. To be able to solve operational problems the management must understand issues affecting the operations of the business. One of the main problems that a company like turbo Exhaust faces is consumers’ dissatisfaction. These are due to high expectations from the consumers, which sometimes are not meant. Keeping the company objectives in mind by the management is one of ensuring that consumers are satisfied (Hill 2000). Another problem is employees’ low morale. This is problem affecting many companies and it is the role of the management to ensure that the employees’ morale is high so that they can perform their duty effectively. In large company like Turbo exhaust having employees work as a team as oppose to individual will enhance their performance. Giving employees an opportunity to express their wishes also raise their morale because they are sure that the company’s management listen and attend to their needs. The root causes of the problem and assigning an expert to gather information of why that problem arises. Thereafter use the information gathered to come up with long time solutions. Production and operations management in manufacturing company ensure that production inputs are well planned, come up with effective and efficient implementing strategies and control as well as coordinate the production process. Below are a few challenges that may hinder the sooth running of the system and how they can be solved (Nesterovic 2004). Many obstacles affecting the company and limit its progress .The contracts between Turbo Exhaust Company and performance shop need to be addressed immediately. For both parties to benefits and at the same time satisfy the consumers want the production, distribution and supply must be meant. This will help the company expand and at the same, it will make consumers happy. Proper strategies of achieving this must be outlined by the operational management. If this objective is achieved, the company will also incur low costs of storage and therefore more profits. Another root cause of problem in the company is lack of investors in the company. The company needs to attract and welcome more people to invest in them as shareholders. This will help in increasing the company capital and is also be able to reduce the risks. In case of risk, the company will be able to reduce the compensation. With more investors, the company is able to hire more workers and improve their equipments (Beer 1966). Specialization on the custom-made exhaust had a negative impact on the company and this is one reason why the company has not fully exploited its full potential. The introduction of off-the- shelf exhausts open up opportunities for the Turbo Exhaust Company. However, these opportunities have not been fully exploited. The ratio of off-the-shelf products to that of custom-made products is still very low. On the other hand, the demand of off-the-shelf products is very high compared to that of custom-made products. These calls for the Turbo Exhaust Company to readjust its production ratio of the two products but at the same time keep their objectives and goal. According to Adebanjo, Abbas, and Mann (2010), Lack of experts who can come up with better strategies is big problem to most manufacturing companies. Turbo Exhaust Company has a wide chain of processes that requires expert in each stage. From raw materials through the convection processes, product storage, marketing, and advertisement to product, delivery requires a group of experts who work hand in hard to ensure the success of the company. Everywhere in the world, people are demanding products that are environmental friendly. For company like Turbo Exhaust this has not been easy because motor vehicles are a major environment polluter. However, with the modern innovation and technology the company is making progress toward environmental friendly exhaust. For example, the latest product (V6) from the company has less emissions and more power than the previous product (V8). Environmental issues need to be address by all parties involved (Brizee 2007). Conclusion The above essay tries and covers a Turbo Exhaust Company. The company has over the years grown in one of the leading manufacturer of car exhaust. This has in return increased the demand from the consumer. There are several challenges and opportunities that the company faces especially due to new contracts with the performance shops. For example, the contract increases the demand of the product in the markets, but also increases the workload in the Turbo Exhaust Company. The company tries to manufacture exhaust as fast as possible to try to meet the demand. Also the contract enable the company to specialize in the field of manufacturing and leave the marketing and distributing field in the hands of these performance shops (Moses & Åhlström 2009). Daily operational decisions require that the management to familiarize itself with all issues surrounding production and operation processes. It is always important for those who are making the decision especially those that affect the staffs being part of that team. Therefore, the company should also seek options and ideas from the customers so that they know what those customers want. Decisions making is the heartbeat of the production and operational management and therefore it need to be careful considered and implemented. Having experts who can research more all processes and come up with better strategies will go a long way in improving the company (Gardner 1988). As part of operational management, the company must ensure that there is preparation of everything. That includes raw materials, equipments, enough labor, as well as the storage warehouses. This will ensure quick manufacturing of the products and thereafter enough space of storage. In addition, it will enhance the work of performance shops who will supply the products to the market. Reference List Adebanjo, D, Abbas, A & Mann , R 2010, ‘An investigation of the adoption and implementation of benchmarking’, International Journal of Operations & Production Management, vol. 30, no. 11, pp. 1140 – 1169. Bak, O 2010, ‘Manufacturing Strategy 3e: Texts and Cases (Paperback)’, The Journal of the Operational Research Society, vol. 61, no. 6, p. 1068. Beer, S 1966, Decision, and control; the meaning of operational research and management cybernetics, Wiley, London. Bhadur, R 2008, Production, and operation management, Book Enclave, Jaipur. 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