The Importance of Digitization in the Manufacturing Sector at Ninak Fireworks - Literature review Example

?Table of Contents Table of Contents System Operation Management 2 Part 2 Part 2 4 Input – process- output model 4 The Value Chain Model 5 Activity Analysis 5 Value Analysis 6 Evaluation and Planning 7 Part 3 7 Technology 7 People 8 Management 9 System Operation Management Part 1 The world overtime has shifted from its dependence on physical methods of conducting businesses and production to one that is getting more digitized by the day. When one looks at sectors that were previously labour intensive, for example checking into the airport, the present scenario is one whereby the system depends more on the good working condition of computers than on the presence of numerous staff to walk passengers through the checking-in process (Arthur 2011). This is a picture that extends to other sectors of the economy, whether it is the tourism industry, where some tourists get guidance from a digital tour guide, or one that is physically present. In the production sector, the use of computers in the process gets more prominent by the day (Katz & Koutroumpiz 2012). This section of the paper examines the importance of digitization to the manufacturing sector. The manufacturing industry forms the largest source of revenue for many economies in the world, especially first world economies (Friedrich et al. 2011). As mentioned earlier, the production industry has been privy to rapid digitization over the past few decades. This means that there is the use of intelligent machinery in place of human labour. Economists all over the world have had debates on the consequences of this. This is because, even though digitization means a more sophisticated production process, there is the fact that the introduction of intelligent equipment to the production chain implies that there are fewer jobs for human labourers (Karim et al 2013). Despite this negative consequence of digitization, the positive implications of a digitized manufacturing industry are vast. First, according to Karim et al. (2013) digitization means higher productivity for the manufacturing industry. This level of productivity in the era of physical labour dictates the need for more labour. However, the second economy, as Arthur (2011) refers to the digitized economy, means that production is not labour intensive in scenarios where it should be. This for the manufacturing industry means higher rates of production at lower costs (Sabbagh et al. 2012). In addition, machines can work for longer periods than human labour can; hence, the increased levels of production. Secondly, digitization in the manufacturing industry has revolutionized the method by which companies communicate with customers and stakeholders, and how they create brands (Karim et al. 2013). In the second economy, companies have learnt to rely more and more on social media for service production. One way in which this is made possible in the manufacturing industry is by providing avenues for customers to voice their opinions on certain products on social media, for example, on twitter. This enhances communication with the necessary clients and works towards building a brand. Another way in which the digital economy proves useful for communication is by providing consumers with the option to order custom-made products from manufacturers and, therefore, enhance customer satisfaction (Sabbagh et al. 2012). Another advantage of a digitized economy over a physical economy is the way in which digitization has revolutionized operations. It is said that in America, one in four workers engage in telecommunication while at work (Katz & Koutroumpis 2012). Across the world, members of different companies have a means through which they reach workers in other continents. The effect that this has is that it increases competition between various organizations. In addition, companies are able to outsource some of their functions to companies in far away locations. This enhances efficiency across the manufacturing industry. Digitization is important for each aspect the manufacturing industry. In production, the use of modern technology aids in ensuring higher productivity efficiently. It is, in addition, beneficial to keeping in touch with the consumers of finished goods for purposes of constructive feedback and advertisement. Lastly, digitization enhances interaction between various companies, a function that in the end leads to healthy competition and sharing. As the world continues to digitize, it is worth noting that the growth of technology is a phenomenon in which each company involved in production should invest in. Failure to digitize the production process causes a company to lag behind. Part 2 Ninak Fireworks, a fireworks producing company, faces the limitation of not practicing efficiency in their manufacturing process. In order to analyze the problems that need to be addressed to improve on efficiency in their production, this part of the paper will adopt the use of two different models applied to the Ninak Fireworks. These models are the input-process-output model and the value chain model (Hansen, Mowen & Guan 2009) Input – process- output model The input-process-output model studies the method of producing fireworks in Ninak, from the stage whereby the company receives inputs for the fireworks, to the output stage. In the input stage, it is evident that Ninak requires labour as a factor of production. The labour that goes into this stage includes 24 full-time staff members. Apart from the labour, some other materials used in the manufacture of fireworks are explosives, plastic spacers, cardboard shock absorbers, caps, among other materials. The input stage for Ninak also includes the information that those in the operations department receive from the sales teams and the warehouse and logistics teams on what the production for the day should be. This, according to the report, is one of the first issues because at times there is no consensus as to what the total output should be between the two departments. Another major drawback that the company faces is the long time that the inputs take to get to the company from the supplier. From the report, inputs can take up to 34 days before they arrive from the supplier, even though the suppliers are at times not too far away. The process stage involves a series of intricate steps given in the report. According to the information given in the study, the process is one that is carefully watched due to the high risk present in the production of fireworks. The process is conducted with a lot of caution to ensure safety of the workers. The output stage of production in Ninak is one where there are numerous challenges experienced. After the inputs are processed into fireworks, one of the issues that emerge is that of overstocking when there is overproduction. Under stocking is also evident at some point in time. This may be a product of understaffing in this sector. Another challenge the company contends with after the production of output as a direct result of poor communication among the different departments is that sometimes there is a delay in the delivery of orders, since the operations department is at times unaware of the urgent orders. The Value Chain Model The value chain model will involve three steps (Blythe & Zimmerman 2005). First, this part of the paper will describe the activities that take place at Ninak, for example the production process, as well as the steps that go into recruiting labours sources. The second step in this model will be value analysis, where the paper looks into how to add value to the process. Lastly, is the evaluation and planning stage, where the paper will discuss effective policies adding value and how effective they can be to the process. Activity Analysis Ninak industries is divided into four major departments. These four departments house other smaller departments, for example, the operations department apart from being in charge of production, also overlooks issues of safety. The company sells its variety of products to individual entities and to businesses alike. The company sells to very few retailers, who only buy their products during certain seasons. In addition, as far as the information goes, they do not market its goods online. Communication is primarily by telephone and so far, messages and orders are recorded manually, by use of pen and paper. The company uses two separate discount schemes for its individual customers and for the businesses. The input, processing and output stages are as outlined in the model discussed above. The orders are then double-checked by an order completer that ensures that the boxes are marked accurately for the orders received. The administration department is in charge of human resources and billing clients. It is in this department that recruitment and training of staff occurs. In addition, they take down orders from clients using pen and paper, alongside paying off debts and other administrative duties. This, according to the report, is slowed down during seasons where there is high demand for fireworks from Ninak Fireworks. Value Analysis The activity analysis of the Ninak Fireworks Company raises numerous concerns. First is the manual system of collecting orders and other messages. This may cost the company in terms of stationery costs, time and could lead to a loss of some of the messages. The second issue raised is The fact that there is understaffing in some of the departments, whereby one of staff members has to complete two completely different tasks. This reduces efficiency in execution tremendously. A third concern is the lack of investment in online marketing. In a world that is digitizing its operations rapidly, this could potentially cost Ninak fireworks, since many of its competitors may explore this avenue as a means of advertisement. Another challenge is the seemingly narrow market for its produce. Limiting sales to a particular geographical region is problematic as it implies high demand during very few seasons. Evaluation and Planning In order to improve on the operation of Ninak Fireworks, the company should adopt a digitized method of collecting information and orders. There should be a system that updates the orders in real time and avails the information to staff across all departments. This prevents a case whereby the operations department has different instructions on what to produce. Secondly, Ninak Fireworks needs to invest in more staff to increase on efficiency in departments where some of the staff has too many responsibilities. Another important change would be to for the company to venture into online marketing to reach a wider audience. This could in fact mean a wider market for the produce, as opposed to selling to only a few entities. Part 3 Technology In the sales and marketing department, the primary method of making sales is by telephone. It is through this system that the staff members record the orders manually before transferring them to the database. In this department also, the selling and marketing of products is still done manually and not online. One of the staff members admits that this has placed them behind their competitors. Another issue with the technology is the poor coordination among the various departments in the company. Improving on the digitization in Ninak Fireworks should eventually translate favourably to all the sectors of the company. For one, creating a database where orders can be received and recorded in real time can save the company the lack of coordination among the departments. In a case whereby orders reflect online immediately, the operations department would not be torn between the sales teams and the warehouse and logistics teams. This database should be created such that it reflects, all at once, the sales made, the stock at any given time, and the deficit depending on the orders placed. Online sales and marketing would be beneficial to Ninak since this way; one is guaranteed to reach market from the world over. In addition, the internet is accessible to people of all genders and ages that may be interested in accessing their products. Other forms of marketing are quite limited in their ability to reach a wide market. Therefore striving to advertise online should improve on sales (Bennett 2006) People The staff composition at Ninak Fireworks is divided into four departments; the marketing and sales department, operations department, warehouse and logistics department, and the administration department. In the operations department, there is a unit in charge of health and safety and those in charge of the actual production. The marketing department is in charge of marketing and discounting and has staff members to perform duties to this effect. In the warehouse and logistics department, the stock control clerk is required to help the order pickers in creating a scenario where the clerk lacks time to produce stock summaries that are accurate. The administration team is in charge of all the staff, recruitment, and training. In this department, there are also staff members in charge of accounting. The people at Ninak Fireworks, seemingly, are fewer than they should be. In the warehouse and logistics department, for example, the company should consider increasing the number of employees to ease the burden of work on the existing employees such as those dealing with stock control. By employing more staff members into the understaffed sectors, the company will ensure efficiency in the execution of the various jobs and projects (Barnes 2008). Management Those in management best execute the recommendations for improvement in operations (Olson 2009). At Ninak Fireworks, the administration overlooks human resources and accounts directly. This fact places the management in a position to recruit more staff in the areas determined to be lacking in sufficient staff. In addition, the management can look into digitizing the company gradually and sustainably. This, in the end will improve on the overall performance of Nina fireworks. References Arthur, W 2011, “The Second Economy”. McKinsey Quarterly, 4, 91-99. Barnes, D 2008, Operations Management: An International Perspective, New York, Cengage Learning. Bennett, D 2006, Operations management: II. Technology and operations management, Volume 4, Pennsylvania, Sage Publishers. Blythe, J & Zimmerman, A 2005, Business- to- Business Marketing Management: A Global Perspective, New York, Cengage Learning EMEA Friedrich, R, Grone, F, Koster, A & Le Merle, M 2011, Measuring Industry Digitization: Leaders and Laggards in the Digital Economy, Dusseldorf, Booz & Company. [Accessed 10 May 2013] . Hansen, R, Mowen, M & Guan, L 2009, Cost Management: Accounting and Control, Oklahoma, Cengage Learning. Karim, S, Friedrich, R, El-Darwiche, B, Singh, M & Koster A 2013, “Digitization for Economic Growth and Job Creation: Regional and Industry Perspectives”. World Economic Forum. [Accessed 10 May 2013] . Katz, R & Koutroumpis, P 2012, “Measuring Socio-Economic Digitization: A Paradigm Shift”, Social Science Research Network. [Accessed 10 May 2013] . Olson, E 2009, Better Green Business: Handbook for Environmentally Responsible and Profitable Business Practices, Massachusetts, Pearson Prentice Hall. Sabbagh, K, Friedrich, R, El-Darwiche, B & Singh, M 2012, Maximizing the Impact of Digitization, Beirut, Booz & Company. [Accessed 10 May 2013] . Read More