Simulation in Operations and Manufacturing Management - Essay Example

Simulation In Operations And Manufacturing Management Supply Chain Management Logistics Proposal November 30, 2006 Introduction 3 Project Definition 4 Problem Statement 5 Project Aims and Objectives 5 Preliminary Literature Review 7 Proposed Methodology 9 Quality Targets of the Simulation Models 11 GANTT Chart 11 References 13 Introduction In supply chain management, the key issues are the unforeseen risks caused by lack of management strategies, especially in relationship to technology and communication as significant factors that inhibit the supply chain (Atkinson 2004). Supply chains should include "a collaborative supply chain framework is composed of five connecting features of collaboration, namely collaborative performance system, information sharing, decision synchronisation, incentive alignment, and integrated supply chain processes" (Simatupang and Sridharan p 257 2005). Furthermore, the appropriate and integrative application of "Software as electronic commerce platform for manufacturers and wholesale distributors" with a focus on education and implementation of supply chain management software could have a significant impact on the manner that supply chains function within the companies (Karpinski p 9 1999). Business process re-engineering (BPR) is applied at the local, managerial, and corporate levels of the business. This concept has a significant impact on the various phases of the business process, where the changes that occur can be related to the flow of information and products (Desel & Erwin, 2000). BPR is used in SCM to renovate the managed and integrated processes that create a capable and viable business environment (Chan and Qi 2003). The crucial tenants of BPR is that it reduces tension between inter-organisational departments and business partners, particularly when the there is friction within the SC process (McCormack & Johnson, 2000). Business process re-engineering, specifically related to the main focus of technology and communication in supply chain management includes: (1)Further integration of activities between suppliers and customers across the entire supply chain;(2) on-going changes in supply chain needs and required flexibility from IT; (3) more mass customization of products and services leading to increasing assortments while decreasing cycle times and inventories; (4) the locus of the driver’s seat of the entire supply chain and (5) supply chains consisting of several independent enterprises (Akkermans et al p 284 2003). The benefits of using the BPR concept to promote SCM needs are that it connects information management (McCormack & Johnson, 2000); promotes cost saving activities through efficiency and communication (Horvath, 2001), and reduces financial risk in unsuccessful supply chains (Cross 2000). Project Definition This project is to examine management logistics in supply chain management as it relates to the business process with the goal to produces a model for risk management. The project is descriptive in nature. It seeks to quantify the types of risks manufacturing management has experiences and models used to develop resolutions. This will be accomplished using experimental simulation models. Risk management and opportunity research are used to understand obstacles in reaching business goals. Risk management research proposes to identify significant risks and their potential for negative impact, and the values of opportunities that have an impact on the business decision-making process. Business opportunities also involve risks, it is important-especially in the volatile supply chain to examine what risks are viewed as opportunities, and what risks must be avoided. Opportunities are situations that support the resources and goals. Risks and opportunities can be approached by a strategy in business decision-making models. These models should treat risks and address opportunities in a process cost-effective manner. Problem Statement Kathleen DesMarteau (p 6 2005) recognizes the following key points as being a component of the risks in supply chain management, which function as internal and external risks: Lost of capacity (plant is down, inventory theft) Loss of transportation (mode, infrastructure failure) Loss of supply (bankruptcy, quality failure) Loss of human resources (strike, deaths, unavailable work force) Loss of communication (telephone lines down) Loss of demand (customer bankruptcy, quality failure) Therefore, the problem statement is to: Identify supply chain logistic risks associated with manufacturing management with the goal of developing a model to overcome risks. Project Aims and Objectives The aims of this study are to develop a holistic understanding of risks, assessments, and responses in supply chain management. The problem this research seeks to identify and solve is that: supply chain logistics fail due to lack of utilizing strategic risk management principles throughout its lifecycle. Risk management strategies offer a proactive plan for small business entrepreneurs’, where uncertainty presents potential future threats or opportunities. This further seeks to modify the future of risk incidence and intensity of threats or opportunities and their possible impact on business performance (Chapman and Ward, 1997). This will be accomplished by following “Enterprise Risk Management” objectives to formulate the foundation of this research. The stated objectives are adapted from Banham (2004): Examine high-level oversight of risks on a portfolio basis, rather than discrete management by different risk overseers. Assess risk across the enterprise instead of looking at it on a per-project basis. Assess the controls in place to handle each risk and identify any gaps. Determine authority and responsibility and allocate resources appropriately. Extract supply chain logistic risk data using use business intelligence software. Examine business intelligence software programs that show risk and acceptable levels. Develop a model to monitor and evaluate the effectiveness of the organizations risk management and control systems. Preliminary Literature Review Risk management strategy as stated by Dr. H. Kerzner (1998) reveals that it requires to be established early than in the project (Restaurant/club business) and that risk be continually addressed throughout the business lifecycle, and that risk management strategy includes several related actions: risk identification, risk identification, risk quantification, risk response, risk control and lessons learned. Furthermore, in his 2006 book, Project Management, Dr. Kerzner ( p 719-720 2006) identifies the process of risk management strategy as having several characteristics. Kerzner first identifies risk planning as "the process of developing and documenting an organized, comprehensive and interactive strategy and methods for identifying and analyzing risk issues, developing risk handling plans, and monitoring how risks have changed," to the small business owner, this means that a step by step analysis of proposed risks and their possible changes is an inherent part of risk management. Secondly, Kerzner describes risk assessment as "the process of identifying and analyzing program areas and critical technical process risks to increase the likelihood of meeting cost, performance and schedule objectives," this will assist the risk management model by answering to the critical processes that create risks and the businesses responses in those areas. The risk identification process is also shown by Kerzner as "process of examining the program areas and each critical technical process to identify and document the associated risk," in risk identification, the restaurants internal and external factors are described and leveled according to their significance to the program area. For example, while a flood may be a risk, that is minimal if the business currently has a leaking roof. Risk analysis "is the process of examining each identified risk issue to estimate the likelihood of a risk and predict the impact on the project," this is the point at which the restaurant defines the proposed impact of the risk, in the flood example, the possibility of flooding would be compared to the urgency of the leaking roof in an analysis to decide which has the greater and most imminent impact on the business. Finally, in the risk management strategy, Kerzner points out that continued monitoring, called risk monitoring, is "the process that systematically tracks and evaluates the performance of risk handling actions against established metrics throughout the acquisitions process and provides inputs to updating risk handling strategies, as appropriate." To the small business owner, this is the flexibility in strategy that allows it to be applied over the lifecycle of the business, with the future goal to continually minimize risks before they develop into crises. Webber (p 48 2006) identifies risk management as "the art of making decisions in the face of uncertainty," where an "analysis can help us understand the nature of that uncertainty and dimension of the risks we are taking, but they can also provide false comfort and engender undue confidence." But even in a risk management strategy, there are pitfalls to be avoided: Focusing on numbers rather than behaviors. In the management-information game, "how much" is easy to capture, when "how" can be more illuminating. Framing the problem incorrectly. Sometimes mistakes are glaringly obvious, once they are pointed out. Overlooking perverse incentives and feedback loops. Misreading the data. Even when you have the right metrics, you may not interpret them correctly. (Webber p 47 2006). Risk management has many components, and even is risk management there are factors that should be avoided, as noted above. Overall, however, having a solid and comprehensive risk management strategy may not answer all of the concerns all of the time, but it certainly improves the businesses sustainability against negative forces. Proposed Methodology The methodology for this project is a triangulation between historical research (documents), quantitative assessments (surveys) and qualitative assessments (simulation models). The data collection plan includes both qualitative and quantitative research methods.. The scope of the data collection is to gather information in regards to the characteristics, techniques, usage and implementation supply chain logistics, business process re-engineering, and risk management strategies. This allows for specific data to be examined based on empirical and subjective evidence. The use of a triangulated method (spanning both qualitative and quantitative designs) will remove generalisations and discrepancies that can be found when using a single method. The insights to be gained are: empirical-behaviors in usage; observational-what strategies work; functional-how strategies work. Once the data has been collected by the following procedures, it will be assembled in the final research project to formulate a conclusive recommendation for supply chain management strategy in organisations. Case Study Research (Observational-What Strategies Work) To examine high-level oversight of risks on a portfolio basis, this study will use case studies in manufacturing industries. Preliminary case studies may focus on the airline and automotive manufacturing industry since both use supply chain logistics, management techniques, and technology on a continuous basis. This will assess risk across an enterprise level as opposed to a singular project. Quantitative Surveys (Empirical-Behaviors in Usage) Will be used to assess controls in place to handle risks. Preferably, this research should survey 50 or more managers. This will be based on empirical observations regarding supply chain logistics and risk management. This will determine authorities by asking managers who is responsible for the functional components of SCM, how resources are allocated. The data analysis will focus on correlation’s and gaps using statistical inferences Qualitative Simulation Software (Functional-How Strategies Work) To extract supply chain logistic risk data using use business intelligence software, this research will use “mock” business information or business information derived from the case study (if possible). The simulation software is to be selected, but preliminary thoughts are to use open source or “free trial” software (citing time and cost relevant concerns in student research). Quality Targets of the Simulation Models Types of Simulation Models Continuous Based on mathematical equations Used for simulating continuous values for all points in time Discrete Used for simulating specific values or specific points Example: Number of people in a queue Desirable Features of Simulation Software Be capable of being used interactively as well as allowing complete runs Be user-friendly and easy to understand Allow modules to be built and then connected Allow users to write and incorporate their own routines Have building blocks that contain built-in commands GANTT Chart References AKKERMANS, HENK A., (2003) The Impact Of Erp On Supply Chain Management: Exploratory Findings From A European Delphi Study. European Journal Of Operational Research, 4/16/2003, 146 (2), P284 ATKINSON, JAMES (2004) Fm - Connecting The Missing Link. Contract Journal; 9/22/2004, 425(6494), P20-21, 2p, 12c CHAN, F., & QI, HJ. (2003). An Innovative Performance Measurement Method For Supply Chain Management. Supply Chain Management: An International Journal, 8 ( 3 )Pp 209-223 CHAPMAN, C.B. AND WARD, STEPHEN (1997). Project Risk Management- Processes, Techniques And Insights. Chichester, John Wiley & Sons CROSS, G.J. (2000) How E-Business Is Transforming Supply Chain Management, Journal Of Business Strategy, 21(2), Pp.36-43 DESEL, J. & ERVIN, T. (2000). Modeling, Simulation And Analysis Of Business Processes. Business Process Management. Berlin: Springer Verlag DESMARTEAU, KATHLEEN (2005) Forum Explores Supply Chains Future Apparel Magazine; 47 (4), P6-12, 4p, 10c FELLER, ANDREW; SHUNK, DAN; CALLARMAN, TOM (2006) Value Chains Vs. Supply Chains. Bpt Trends March 206 Retrieved Online November 28, 2006 From Http://Www.Value-Chain.Org/En/Art/?120 FELLNER, KAROLIN; KALLESEN, ROYCE; RUGGIERO, ANTONIO; YUEN, BENSON. (2006) Improving Revenue Through Fare Rationalization And A New Business Process Between Revenue Management And Sales. Journal Of Revenue & Pricing Management, Jul2006, 5 (2) P118-127, 10p, 1 Chart, 3 Graphs; HORVATH, L. (2001). Collaboration: The Key To Value Creation In Supply Chain Management. Supply Chain Management: An International Journal, 6 ( 5) Pp 205-207. KARPINSKI, RICHARD (1999) Supply-Chain Software Digs Deeper. Internet Week; Issue 779, P9, 1/8p KERZNER, HAROLD (1998). Project Management- A Systems Approach To Planning, Scheduling, And Controlling. Sixth Edition, John Wiley & Sons, Inc. KERZNER, HAROLD (2006) Project Management A Systems Approach To Planning, Scheduling, And Controlling Edition 9. John Wiley And Sons New York. MCCORMACK, K. & JOHNSON, W. (2000). Business Process Orientation: Gaining The E-Business Competitive Advantage. Delray Beach, Fl: St Lucie Press. SIMATUPANG, T.M. AND SRIDHARAN, R. (2005). An Integrative Framework For Supply Chain Collaboration. International Journal Of Logistics Management 16 (2), Pp. 257-274. WEBBER, SUSAN (2006) Managements Great Addiction. Across The Board May/Jun2006, 43 (3), P43-48, 6p The project proposal should contain a project definition including a clear statement of the problem; the project aims and objectives; an initial literature review which considers the project definition, aims, and objectives in the context of related work that has been done by others; a discussion of the methodology that you propose to use to undertake the project; and any resources required. It should also include the project plan with * An analysis of how the objectives are to be achieved including a breakdown of the project into identifiable sub-tasks. * A project plan that gives a schedule for performing the identified sub-tasks indicated this in a GANTT chart. * Risk analysis and management e.g. a discussion of the risks identified for the project and an indication of how these will be managed. This could range from poor response rate to a questionnaire or lack of data for a statistical analysis project on forecasting retail sales of an innovative product. * Quality targets and measurement of progress. It should be clear how you will demonstrate achievement of your objectives and satisfactory progress. The proposal should be 2000-3000 words. Due date 1 Dec. Please submit to the undergarduate office on te Maxwell 6th floor and mark "For the Attention" of P.Scarf Research in risk management seeks to identify problems that occur in business decisions, as well as obstacles in opportunities and advancement with the conclusion to develop a strategy for business development. Risk management often involves stages that overlap between the research, management stakeholders and the businesses needs. Business needs include: cost management, scheduling, equity and debt. Risk management research is a holistic view of the businesses opportunities and obstacle processes, procedures and responses from stakeholders in qualitative and quantitative measures. The conclusion is to make recommendations towards the basis of integrated risk and opportunity management activities. The nature of the research proposal is to use input from multiple sources to understand and identify risks and management models. Information will be gathered from documents and individual interviews, as well as surveys from small business, government centers and restaurants in the area. This will allow for evidence to support restaurant activities in the Seattle-Everett area by laying a foundation for risk assessments and business decisions. The framework of this research specifies the main objectives in risk management, as well as the behaviors and usage in small businesses. Risk management strategies that have been used by restaurateurs are examined to identify the successes and failures for benchmarking purposes. The objectives and outcomes will be used to define key elements in risk identification, assessment and strategy. Furthermore, the researchs nature is to identify risk assessment by the process of analysis and evaluation with the purpose of recognizing priorities in business risk management. Systematic evaluation and analysis of risks associated in the restaurant business will use qualitative and quantitative information to understand the magnitude of risks. Risk assessment determines what consequences may come from a business decision, or lack of a decision making, and rate the significance of risks against the opportunity and business needs to develop priorities in the business decision making process. Risk assessment prioritized by the consequence and frequency to determine what efforts are needed at what intervals. This assessment is for proactive resource planning by propagating a measured list of priorities and consequences in risks management. For the purposes of this research, information will be disseminated through theoretical, historical and empirical evidence gathering. The process is to deliver the most significant information to risk managers in the restaurant field. The research process is comprehensive to include a wide range of start up risks, uncertainties and challenges. These are assessed so that businesses can prepare and overcome risks for an opportunistic outcome. A structured process includes the literature review and data collection in qualitative and quantitative format. This will allow for a systematic examination of risks in the restaurant business. There are many ways to identify and assess risks, but interviews with key business stakeholders, document and literature research as well as relative surveys are preferred to deliver a blanket of risk management assessments and processes. The goal is to encompass a wide and diverse range of inputs, opinions, and information. Integrating risk management strategy in small business is necessary for its success. All project management knowledge areas as describe by Project Management Institute’s PMBOK will be utilized on this research study. The study focuses specific aspect of Project Risk Management in Seattle-Everett area restaurants. Risk management principles, methodologies, tools and techniques illustrated by City University’s MSPM program will benefit the author and small business entrepreneurs. Risk management is approached in a comprehensive manner with the ultimate goal to enhance project processes and activities. Risk management plans involve business development and continued functionality through the restaurants life cycle, and should be integrated with the business goals. For example, cost analysis includes risk on equity, debt and ownership in the purchase and implementation of an item. This is a responsibility of management and appropriate stakeholders, such as investors. The goal is to understand what practical strategies and participations can be designated in a functional manner. The process applies to the extension of the restaurants management strategy in a consistent and goal oriented application that enhances desirable outcomes and performances by risk and opportunity management. The focus in business management is to answer to uncertainty about achieving goals and risks defined in terms as a “threat to success” (Chapman and Ward 1997). These threats are determined by their nature and the manner in which they impact opportunities and business goals. Assessment monitoring of risk management in a continuous and comprehensive manner ensures that strategic plans can be developed and actions can be implemented to answer to these threats. With that, it is also important to evaluate the implementation of risk management. The cycle and phases in implementation should be facilitated for continuous improvement to avoid crises that may arise. Proactive and reactive planning are not alternatives, they are complementary aspects of planning as a whole, with proactive contingency planning supporting reactive contingency planning. Similarly, crisis management is not an alternative to risk management; it is a consequence of its failure. Only if risk management fails completely, or is simply not addressed, will crisis management become the dominant management mode. The rationale behind this research proposal is based on the economic impact small businesses and restaurants have on the national and state economy. Although there are many closures in small businesses, they still employ a large amount of citizens and produce a substantial amount of Gross Product. The future of restaurants should be protected. Secondly, because risk management—or lack thereof, affects all forms of business activities, the importance of planning and flexibility in answering to these risks is especially important in start up restaurants. The rationale is to answer the environmental circumstances of (1) being a small business with only a 44% success rate, and (2) being a restaurant where, in the state of Washington, 10-20 close per quarter, and (3) being a consumer and competitor based business. Lastly, there is an associated risk any time a business deals with money, which in a restaurants case is all the time. Further consideration is given in the banking and lending sector. To most bankers and lenders, a restaurant must prove its reputation before it gains any financial liability, and yet, a start up business often has no substantial financial portfolio. This creates a need for risk management to focus on developing the restaurants financial status in the eyes of bank lenders. Read More