Operation Management and Its Historical Evolution - Essay Example

Operational Management 11/14 Table Of Contents Introduction to Operation management and its historical evolution; 3 2.Major Functional Areas of Organization; 4 i.Finance; 4 ii.Marketing; 4 iii.Operations; 4 3.Interrelation of major functional areas; 4 4.Management and its major aspects; 5 5.Function and nature and Key aspects of operations; 5 6.Current Trends in business’s operations management; 5 Hypothetical Analysis Report Of Operations Management: 6 Introduction: 6 Summary; 6 Analysis 7 K&N CORPORATION (Proposed) Mission; 9 Must win Battles to attain proposed Mission; 10 Cost Benefit Analysis for introduction of Supply Chain Engineering; 12 Remedial suggestions; 15 1. Introduction to Operation management and its historical evolution; The success of an organization is deeply embedded in the efficacy of operations management of a company. Operations management can be defined as the process used for the utilization of resources to maximize the potential of production and operations under the regulations imposed by approved policies of company. Thus, in short it can be regarded as the combination of correlated business activities covering the service management.(News,nd) As is evident from the definition of the term operations Management, the concept was realized only after industrial revolution that occurred in late eighteenth century. By the end of nineteenth century, when manufacturing was no longer produced by single craftsmen but a team of skilled workers using the tools used for product specifications. Hence, the procedure was constrained because of limitations such as difficulties in replacements of workers and custom tools absence of gauging systems to control cost and risks etc.(Centre,nd) The historical evolution of operations management can be illustrated in the eras defined as under; Industrial revolution (1770’s) Scientific management (1911) o Mass production o Interchangeable parts o Division of labor Human relations movement (1920-60) Decision models (1915, 1960-70’s) Influence of Japanese manufacturers( books.com,nd) Therefore, in every age illustrated above, the study on operations management refined business intelligence by exploring profound systems to monitor operations management at its best. The recent advancement of the framework includes planning softwares like Oracle, SAP etc to integrate information at its best for maximum output and watertight performance. (Performance, nd) 2. Major Functional Areas of Organization; The organization’s function can be categorized into three major areas that includes finance, operations and marketing (Wiley.com, nd). The aims and objectives of the three functional areas can be defined as under; i. Finance; It deals with funds management and their best utilization in the light of company’s vision and mission statements. (publishers, nd) ii. Marketing; the functions of Marketing covers a broad range influencing the other functions of organization, these include study on market planning, exchange functions, product designing and development, product distribution, standardization and grading, financing, risk taking, packaging, labeling , branding obtaining customer support and other information etc. (today, 2010) iii. Operations; An operation is the area of business that involves the process of products and service delivery by enhancing the performance of organization to meet the standards of customer, suppliers, shareholders, employees and society. (education, nd) 3. Interrelation of major functional areas; The successful theory of operational management involves the strategical thinking of the ground functional areas towards the same target objectives and devises a corporate strategy that could interrelate and align the major functional areas in a single direction or the corporate mission. (Jiang, 2009) 4. Management and its major aspects; The functions or the main aspects of management opt to direct the functions of operations by utilizing information, developing synergies of knowledge and manage conflict of interests etc. (BIS,nd). In simple words, common vision and synergy of functions for accomplishment of that vision are the major aspects of management. (parker, nd) 5. Function and nature and Key aspects of operations; Evident is the fact from the illustrations stated above that operations of a business is the key element behind the success of an organization. The better task oriented is the operations of a company the refined will be the business activities. (Tyler Lacoma, n.d.) 6. Current Trends in business’s operations management; Thus, operations Management aims to align the information and informal values of an organization under a defined strategy to come up with the best results in terms of profit and sustainability. (Plan, nd) Consecutively, an efficient operations management aims to enhance the potential of an organization through outstanding performance in each of the business function. (Durant, nd) However, currently the trends of business operations management have visibly tilted emphasizing over contemporary advanced factors that includes focus on globalization, efficient on time production, supply chain efficacy, innovative procedures for product development, customer oriented customized production, leadership cultivation by employee empowerment and ethical deliberation with environmental friendly initiatives. (saleetha, nd) In conclusion, technology and innovation could be stated as the key factors that supports the modern aspects of operations management through the insight of infrastructure and operational research (Gartner, nd) to attain productivity, innovation and competitive success (APICS, nd). Therefore, the operations management of recent times can be acclaimed far more challenging because of advanced technology of engineering, finance, marketing and information system strategy (business, nd). In addition, the modifications have further supplemented business sustainability by means of significant element such as capacity planning and forecasting. (L, nd) Hypothetical Analysis Report Of Operations Management: Introduction: This report was prepared at the request of Albert Michaels, President of K&N Group. The details of the fact and figures of cash flow and sales is observed to be uncertain since the last couple of years, based on the fact that our strategic manner.. This report aims at providing a rational analysis of hindrances of business growth with the objective of advancement supplemented by enhanced ability to mobilize and motivate diverse corporate cultures. Its purposes are: 1. To Investigate the Feasibility of modifying Company procedures and practices for improvement in performance. 2. To determine any costs associated with proposed changes. 3. To determine any necessary equipment upgrades. 4. To determine whether modification would enhance customer satisfaction and business growth. Summary; The purpose of this report is to evaluate effectiveness of the processes and practices undertaken in our food and beverage operation, to control stock and materials through effective reporting. This document will be presenting the introduction of new practices with the aim of bringing perfection to our Management Control. This report is based on the analysis of our company’s perception from the lens of stakeholders. The customer complaint summary is enclosed that highlights the root cause of communication gaps as the weaknesses of our operations resulting in the unsatisfactory growth pattern, although some progress had been made, several significant issues remain unresolved. This study indicates the cost, benefit analysis from the introduction of Supply Chain Engineering highlighting other consequences as well. Analysis The Customer Complaint summary of previous quarter is attached for ground analysis Category Complaint Description Number of Complaints After Sales Service Replacement/exchange of faulty items 5 Staff attitude Unprofessional/Rude Behavior 53 Behavior at Stores Lack of assistance/staff 19 Facilities required Credit cards charges should not be applicable 125 Facilities at stores Shopping bags should be provided free of cost 236 Other Products and Services Wrong Barcode 4 Poor Quality Poor Quality 158 Price Price variation between MBS, Counter and Rail Card 178 Product Unavailable Product(s) unavailable 126 As indicated, 50% of Customer Complaint’s root cause highlights loose end of Supply Chain Management As we see the existent pace of complaints is negatively striking our goodwill which is a peril for the business growth. As highlighted, more than 50% of Customer Complaints indicates the fragility of the structure of Supply Chain Management and Communication. As a Manager Supply Chain, I will propose the project of Financial Reporting Supply Chain highlighting the foresighted Perspectives and Directions. The road map to attain remarkable business growth is projected through a proposed Quality statement to be communicated down the line as the mission of our company, along with our must win battles of the project. K&N CORPORATION (Proposed) Mission; K& N CORPORATION is committed to provide quality products and services to its customers to their satisfaction. Being the Cash & Carry Store, Ensure Quality merchandize, on time delivery, and build transparent trust partnership that are aimed to identify and confirm the needs of our customers. We continuously strive to distinguish ourselves with fast, direct and cordial response. Increase employee’s motivation towards company goal and objectives. Focus on development, training and satisfaction of team to get max output from optimum input. Nurture innovative solutions to further company goals & objectives. Integrate and align the processes that best achieve the desired results. Gain competitive advantages through improved company capability. Make effective decisions based on the analysis of data and information for continual improvement. Develop mutually beneficial relationships with our suppliers to create a win win situation and to produce synergy To comply with all applicable laws and regulation of the land, and work according to the principles of ISO9001, ISO14001 and OHSAS 18001 with continuous strive to improve the efficiency of the Quality Management System. Must win Battles to attain proposed Mission; Ensure quality merchandise, on-time delivery and build transparent, trusted partnerships and map out, Prioritize and categorize the professional customer groups through research, customer visits, focus groups, customer panels and telesales etc. strategic goals are proposed to be under as our must win battles; Develop "Key Accounts" database and "Key Account Management" Business Strategy per City and align team to drive these programs with focused attention per account. Define Assortment Plans and new lay outs / planograms to facilitate target customers reaching their destination categories. Customer & trade engagement activities, Promos, Displays, Special Offers to long term / high volume partners. Explore new Channels, Markets and Service Sectors to enhance organic growth and market penetration. Reenergize stores. Design Merchandizing Programs for attraction with quality, quick replenishment and customer service. Establish independent "Customer Development" department of focus upon developing a Prioritized Customer Base for MHPL business categories and develop key account management plan to drive growth. Provide expertise, tools and training to equip the team to deliver business targets. Develop "Customer Service" focused attitude in the team to win the customer on "VOW Experience". Upgrade Supply Chain Develop & Implement Quality Assurance & HSE standards across the supply chain to create a "Corporate Image" of K&N Corporation. Maximize the use of available IT systems to automize operations and transactions for efficiency, accuracy and service standards with suppliers and customers. Demand Planning & Forecasting Process to be developed and implemented to bring "Speed to Market" and to avoid working capital blockage. Ensure quality merchandise, on-time delivery and build transparent, trusted partnerships Guaranteed availability of staff and stock. Develop Policies & Procedures. Standardization of SOPs with special focus on Supplier Engagement, Demand Planning & Forecasting, Inventory Management, Ageing & Replenishment. Develop & Implement Quality Assurance & HSE standards across the supply chain to create a "Corporate Image" of K&N Corporation. Maximize the use of available IT systems to automize operations and transactions for efficiency, accuracy and service standards with suppliers and customers. Exploit the IT system / develop process for on time payments to suppliers & receive on time deliveries to develop long term partnership. Improve Inventory turnover, OTIF (On time in Full Delivery), Ageing, Shrinkages per category and monitor progress on monthly basis. Demand Planning & Forecasting Process to be developed and implemented to bring "Speed to Market" and to avoid working capital blockage. Right people of the right jobs to drive the process of standardization and implement the integrated approach across the supply chain to bring in speed and efficiency. As a way forward, we need to hire consultants for introduction of modified Financial Supply Chain Engineering for our business. Cost Benefit Analysis for introduction of Supply Chain Engineering; We believe that business communication is not only a remedy for compliance exercise but a communication exercise for our stake holders. Financial aspects of the transaction in reference to project installation, involves the cost of implementation of Supply Chain Engineering of around $2 million per annum including equipment purchase and consultants charges. The average net earnings are estimated at $100 million with a standard deviation of $50 million. The current annual debt service is $49 million. By introducing supply chain engineering, the company expects to lose additional $2 million per annum as Cost of operation, but reduce the standard deviation to $25 million. Therefore, the company can prudently afford to make investment in Supply Chain Engineering for effective financial supply management, including interest payments in case of bank loan without having much risk of failure to pay. Hypothetical Projection of Capacity to pay cash safely from January onwards The company can afford to pay $65 million in interest safely, after hedging its results. I will like to highlight the limitation of the proposal concerning tax payments, which is a grey area to comment, because of upcoming budget. Remedial suggestions; Improving business reporting should start with broadening the stakeholder perceptive. Our leaders should present a cohesive explanation of the organization to help stake holders access its overall performance to win customer faith. Management commentary should put the numbers into context. A new integrated business reporting model for Supply chain Management should be developed to present a cohesive explanation of the business. More continuous business reporting should be encouraged. To remain relevant auditors should expand the scope of their audits and provide assurance beyond the financial statement for further improvements. 1. References 2. APICS (nd) APICS, [Online], Available: http://www.apics.org/default.htm [13 Oct 2011]. 3. BIS (nd) Selected aspects of management and organisational structures138, [Online], Available: http://www.bis.org/publ/othp04_9.pdf [13 Oct 2011]. 4. books.com, Z. (nd) Historical Evolution of Operations Management, [Online], Available: http://mba.zainbooks.com/terms/management/historical-evolution-of-operations-management.shtml [13 Oct 2011]. 5. business, r.f. 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