Operation Management - Essay Example

Borouge – Design Improvements & Rationale While the flow diagram on page 4 lists the complete sequence of activities, there is considerable scope forimprovement that we can foresee. This can lead to better operational efficiencies.In the case, we have clear job descriptions for personnel involved in the order execution process. Yet, there should be some provisions for exceptions and establishment of supply chain metrics. In our analysis and recommendations for a better design, we look at 4 avenues of improvement.

This can be listed as 1. Exceptional Orders: Processing & tracking2. Supply Chain Efficiency & Order Metrics3. Job Re-design for Order Management Process4. Role of Boundary SpannersExceptional Orders: Processing & trackingFor each order received, we find that there is a prescribed sequence of processing activities which closes with receipt of goods by the customer and payment credit to the company Borouge. However, there could be customers who are keen on picking up ready stock from the company’s warehouse.

They could be involved in trading activities. Under such circumstances, there should a clear green channel established which reduces the lead time to a manageable limit. In these cases, the turnaround time could be limited to say, 48 hours.In such exception orders, the customer service executives and managers need to play the role of single window clearance agents. In other words, they need to be the face of the company. The customer service personnel need to be capable of handling all order related communication, product related enquiries and any other pertinent information.

There should be no involvement of sales and marketing personnel.In the case, we read about exceptions relating to the prices. Necessary approvals are obtained and the orders are processed. However, we also need to address customers who automatically become eligible for some price cuts, once they have placed a certain defined quantum of orders. This information needs to be decided in coordination with finance and sales personnel. Accordingly, for the specific customers, the applicable price discounts could be automatically applied for either bulk orders or for cumulative orders that have exceeded defined tonnage.

We reiterate that this process should be captured in SAP and should not fall within the daily purview of sales and marketing divisions. Supply Chain Efficiency & Order MetricsIn our case, we talk about shipments by sea and road. The company also needs to consider air shipment as another possible mode for express delivery. There could be a certain class of customers who are keen on availing this facility. Accordingly, the third party logistics provider should be informed to use this option in specific cases.

The customer service team should also make provisions for the right set of documentation relating to air shipment.The case mentions modes of dispatch. We find that it does not talk about measuring supply chain efficiencies. Unless the company measures performance metrics, it cannot improve them. We propose that metrics could be built into the SAP module. An example could be as listed in the table belowDateOrders ReceivedReady for ShipmentShippedShipment DateExecution %30.06.2011100208002.07.201180%04.07.201120010010005.07.201150%05.07.201130018012006.07.201140%Such a report needs to be tracked on a daily basis.

Back-dated order execution performance can also be tracked. The level of granularity can be defined in SAP. For instance, the orders could be tracked at the product level or at the business division level such as Pipe, Wire & Cable, etc.For rush orders which could originate from loyal, creditworthy customers, there should be provision of cash-on-delivery option. In a reasonably stable environment such as plastics, there may not be many such instances, but Borouge needs to factor this option in the cash payment module of SAP.

Job Re-design for Order Management ProcessWe have clear descriptions of roles and responsibilities for the order management personnel. What need to be also addressed are their interactions with other departmental or divisional authorities. This is critical mainly because information flow is as important as the flow of goods.Firstly, there should be weekly reviews of customer service teams with the sales and marketing, production teams. In these meetings, all issues relating to orders and customers need to be reviewed.

Special importance must be given to unfulfilled orders and orders in the pipeline. Clear action agendas must be noted. Personnel responsible for follow-up and execution should be named in the report.Secondly, the customer service department needs to internalize technical details of products. At every meeting, they need to imbibe the essence of product characteristics through informal dialogues with the personnel from production and product divisions. This would enable them to discuss any product related issues in a confident manner with customers.

They need not keep the customers waiting for a day or two just because they need to obtain the relevant information from other departments.Thirdly, customer service teams need to be aware of on-the-ground activities. They need to visit the warehouse or points of shipment occasionally to understand the nature of activities. They could also visit the factory and production units to gain a deeper understanding of Borouge’s products and processes.Role of Boundary SpannersIn a routine, mechanized environment, we notice that there is hardly any interaction or feedback from customers once orders are received promptly.

However, there is a need for constant reassurance and feedback that activities are going well. This can be managed through logistics personnel and by sales personnel. In our analysis, we briefly outline what a boundary spanner is and how he can be a bridge between the company and its customer.A boundary spanner is any employee of the company who could be routinely meeting and interacting with the customer or client firm. Boundary spanning information is critical to companies as it could provide new information relating to the market and the business environment (Kiessling, Harvey & Garrison, 2004).

To illustrate, a third party logistics provider could be delivering the goods to the customer and just receiving a proof of delivery note. This could be accompanied by some exchange of information. The information could be specific to the company or industry. In the long run, this helps establish a better personal rapport with the customers. Vital information is also exchanged that could positively impact both the companies and their customers.  Design Changes in OTC Technical Process Design Changes in OTC Technical Process The change in the design function of OTC is shown above in the flow chart diagram.

Before the third step of ‘Confirm Order’ in the original diagram, there is slight adjustment that needed to be taken care of. Not all orders are sales order. It has been explained in the supply chain and the order management portion that more focus will be given to the customization. The firm needs to take on both B2B and B2C sales. To place customization orders, Bouroge needs to take care of it since the very start of placing orders. In the order receiving part orders will be taken for sales as well as for work, but they will be put under two separate categories.

This will be integrated into the core OTC design using SAP system. The next immediate step will be the same where the details of customer’s purchase (or work) order are completed by the agents. The Standard Order Form/PO will be received by the CSO from Sales Manager. We need to reduce time for completing the customer order. Deadline would be 40 hours.Determining the de Coupling PointThis is the major change in the OTC technical design. The de-coupling point is that spot in the supply chain where the push and pull elements of supply chain overlap.

Push represents the forecast driven side and Pull represents the demand driven aspect of the supply chain. The purpose for incorporating this technique is to create an inventory buffer. The buffer acts as a lubricant in the machine of supply chain by taking care of the discrepancy between the actual demand and the sales forecast or in other words minimizing the forecast error. The justification for this technique is to cut down cost and to eradicate the wastage of time and resources. Borouge needs to use this technique if it wants to stay ahead of its game.

Great logistic and OTC companies pay special attention to de-coupling point to get that extra edge by removing errors and resource drainage. This de-coupling point will not remain stagnant and it is not just a one-time calculation. It will be a variable which will move in the supply chain. This is necessary because OTC companies want to reduce their dependence on forecasts and increase their efficiency in managing the demand driven mode of the supply chain. The de-coupling point can also be considered as an extension of Just-in-Time approach that was extensively used by the automobile industries in 1970s.

Hybrid (BTO)Build to Order (BTO) or Made to Order (MTO) needs a slight modification. As it has been discussed earlier that the forecast error will be minimized and more focus will be given to the reactionary time, the error no matter how small it is, will be there and therefore Bouroge needs to use Build to Stock (BTS). It is the forecast based on historical demand and supply transactions. BTS system will be very useful for boundary spanners as they would be able to advertise and discuss specific patterns in the trade of Bouroge.

For a firm like Bourouge that makes low value high volume plastic products, BTO system may not be as significant but it becomes crucial when it comes to cost cutting and getting that extra edge over competitors. On the other hand when Build to Order (BTO) will be working in coherence with Build to Stock (BTS), this will be much more economically beneficial. This combination is widely known in the industry as the ‘Hybrid BTO’.With this change in its design system, product specification will become very easy for Borouge.

Proactive demand management should govern the hybrid BTO model. Whatever will be left after the forecasting error will be taken care of due to this system in place by reducing costly sales discount and finished good inventory. Customer CareBorouge will need to give special attention to the customer care department. It can sometimes make or break the situation. According to Turban et al. (2002) “Customer service is a series of activities designed to enhance the level of customer satisfaction.

That is, the feeling that a product or service has met the customer expectation."Special focus needs to be given to customer satisfaction. Before, during and after the sale of service or product, Bouroge needs to look out for customer needs and demands. The customer care department will be designed keeping the best firms like DHS (logistics) as benchmark. An ‘email personality’ of the company will be established. Every means of communication with the customer or supplier, either for sale/order or for complaints, will bear our signature.

The focus will be to make them feel at home. Works CitedKiessling, Timothy, Harvey, Michael and Garrison, Garry (2004) The Importance of Boundary- Spanners in Global Supply Chains and Logistics Management in the 21st Century, Journal of Global Marketing, 17: 4, 93-115Turban, Efraim (2002). Electronic Commerce: A Managerial Perspective. Prentice Hall