Operations Management - Literature review Example

Critical Analysis: Operations Management Name Institution Instructor Date Introduction Operations management can be described as involving the activities, responsibilities as well as decisions that are related to management of resources that are used in producing and delivering products and services. The operations management function in an organization is responsible for overseeing the operations management activity. It is also responsible for meeting customer requests by producing and delivering products and services. The people responsible for overseeing as well as managing the resources that consist of the operations function are known as the operations managers. The concepts as well as principles of operations management are applicable in all types of business. There are different topics that explain the responsibilities of the operations management department in an organization. Quality Control and Inspection, Managing resources and operations audits are among the various topics that explain the role of operations management in organizations. This reports aims at critically analyzing various articles in the topics of quality control and inspection, managing resources and operations audit. Personal reflections and recommendations will be provided to improve the ideas discussed in the articles. Quality Control and Inspection Quality control and inspection is an essential topic in operations management that identifies areas that firms are not doing well through inspections and what they need to do so as to improve in their final product. Quality control is applicable in all types of organizations ranging to services providing companies to manufacturing organizations. The first article under critique is the article written Boyle, Boyle, Hermanson & Houston (2013) on quality control defects in smaller firms. The authors were presenting PCAOB Inspection Reports on quality control defects that are experienced by small firms. Quality defects are shortcomings that are found in the overall quality control system of a firm. The researchers were keen in identifying quality control defects for small firms from the selected reports. Quality control defects identified with larger firms were excluded from the study. The reason for excluding these defects from larger firms is that the study was more focused on small firms and selecting defects from larger firms will be deviating from the main objective of the study. The researchers in the study identified various quality control defects that are evident in smaller firms. As identified by the researchers, these defects were related to audit performance, independent and independent procedures, monitoring and addressing the identified weaknesses, documentation among other defects. I agree with the findings of the researcher specifically on the findings of quality control defects related to audit performance. The reason is that many of the small firm’s quality control defects emerge from technical competence, due care as well as professional skepticism. Here, the quality control system of the firm is found not doing enough to ensure that technical competence is achieved. There is little or no exercise of due care and professionalism is compromised by small firms. From the discussion it is recommended that small firms take the precaution to ensure audit procedures are followed in providing evidence of the results. Audit planning and analytical procedures are utilized in auditing of financial statements. In relation the quality control defect of independence and independence procedures, the study revealed that these defects arise because small firms do not meet the PCAOB rule requirements. From the findings, I recommend that small firms should strive to have procedures for verifying the completeness as well as accuracy of representations that are made independent by managers and partners of the firms. In the article written by Blankley, Kerr & Wiggins (2014), quality control criticisms in PCAOB inspection reports were analyzed with special focus on the characteristics of Triennial Firms with and without deficiencies. The researchers were examining the quality control criticisms in PCAOB inspection reports together with the traits of the triennial CPA firm that are said to receive those criticisms. The study compared the traits of the triennial CPA firms that were cited for quality control deficiencies with the traits of other triennial CPA firms. This was to see if the traits of the separate firms are different and if there are, what the differences are. A comparison was also made between the characteristics of firms with a successful remediation of quality control deficiencies and the ones that do not remediate. A risk based approach was employed to carry out the inspection. The reason for using this approach was to ensure that only the selected audits were reviewed and the focus based on financial statement areas that possess the utmost risk of misstatement. Any deficiency that was identified in the audit or the quality control system of the firm, the deficiency was to be reported to firm for action to be take. Various criticisms of quality control inspections were identified including independence, integrity and objectivity, personnel management, and audit performance. Acceptance and continuance of clients and monitoring were also identified as quality control criticisms. From the study, it is evident that the findings coincide with the findings of Boyle, Boyle, Hermanson & Houston (2013) in relation to quality control system deficiencies of audit performance. Deficiencies related to audit performance were identified to be highest among the inspected firms. I can relate the quality control criticisms identified by the researchers in this study with those of Boyle, et al., (2013) who identified that the quality control deficiency of audit performance is highly influenced by technical competences, due care, auditor communications, professional skepticism, audit planning, financial statement disclosures and improper audit tests among others. In relation to differences in traits, I realized that there was compelling evidence of the differences among the traits for firms with quality control deficiencies and those without quality control deficiencies. There were also major differences in traits of firms that had successfully remediated their quality control deficiencies and those that did not. From the analysis, it is clear that firms with quality control deficiencies have a disadvantage when compared to those without QC deficiencies in terms of getting partners. Those with QC deficiencies find it hard to get partners than their counterparts. These results are consistent with the research done by Roybark (2012). It is recommended that firms with QC deficiencies to work towards eliminating or dealing with those deficiencies so as to attract more partners. It is also recommended that firms with QC deficiencies remediate those deficiencies to avoid QC criticisms that disadvantage the firms from getting partners. Battini, Faccio, Persona & Sgarbossa (2012) did a study about design of an integrated quality assurance strategy in production systems. The researchers in this study were targeting to design a strategy that operation managers can recommend its use in producing high quality products. The production of high quality products is said to be competitive advantage for an organization in the global markets. Therefore, operation managers must be very careful on the design that is used in producing the company products. This is to ensure that high quality products are achieved for customers. This is an initiative that I agree with in the sense that, it is the quality of products that a company produces that make the organization maintain its customers. Organizations that are keen with their design production strategies achieve high customer base due to quality products. Therefore, it is recommended that operations managers in organizations work towards managing the production design strategy for the organization’s products. Battini et la., (2012) asserts that quality assurance strategies, inspection allocation problems and acceptance sampling plans to be utilized by operations managers when designing the quality assurance strategy. I support this notion of the researchers because these components are key to achieving an effective quality assurance strategy. The reason is that high quality assurance strategies ensure that there are no defects in the production of products that may occur due to components that are not conforming. It is recommended that operation managers to define an optimal acceptance policy that guarantees reduction of defects in products that are produced in the company. It is also recommended that inspection station configurations to be implemented when designing the quality assurance strategies. I think that these inspections are essential to confirm any presence of defects on the products before they are finally released for use to the consumers. Operations Audits Operations audits are audits that focus on reviewing as well as assessing the process of a business. These types of audits are usually carried out because the process of a business usually has a possibility of having a direct or an indirect financial impact to the company. Essentially, internal audit procedures usually focus on operational audits and can extend their scope in including accounting procedures that have a possibility of impacting on financial reporting. Otley & Pierce (1996) carried out a study to examine the operation of control systems in large audit firms in Ireland. It was a postal survey study that included six big firms in the investigation. The selection of six big firms was to coincide with the expectation of the study results from large firms. The researchers in this study found out that large firms experience under-reporting of time, premature sign-off as well as other actions that reduce the quality of audit. These dysfunctional behaviors were explained in a regression model that revealed that the dysfunctional behaviors are influenced by the audit manager’s perception of the attainability of time budgets as well as leadership style. This is an indication that operations audit managers have a responsibility of emphasizing on meeting budgets so as to avoid the occurrence of these dysfunctional behaviors. The researchers revealed that organizational commitment is a significant factor in avoiding dysfunctional behaviors. However, professional commitment is not a significant factor that influences the avoidance of dysfunctional behaviors. This significance of organizational commitment is attributed to influencing the avoidance of dysfunctional behavior in the sense that the organization has the entire mandate in ensuring all the operations of the business run as required. The operational audit function in the organization is responsible in ensuring that such dysfunctions do not occur in an organization. Professional commitment is not related in influencing these behaviors because the auditors may not be committed or may not follow the required procedures during auditing. Hence, having very little or no significance in reducing the occurrence of dysfunctional behaviors. This is an indication that operations managers in an organization have a role to play in effectively managing or supervising operational audits. It is recommended that operations managers take the duty to oversee what goes on in the auditing department and ensures that the correct auditing procedures are followed by the auditors in large firms. Audit review procedures must be followed by auditors in large firms. This will ensure that actions that affect audit quality and premature sign-off is minimized and effectiveness of formal control systems is achieved. Hu (2015) undertook a study to evaluate audit quality and measurement. Audit quality and measurement is essential to achieve effective operations in auditing. It is a task that is carried out by audit organization to ensure audit quality is achieved. the researcher in this study was aimed at discussing various suggestions by regulators, and academicians in relation to the importance of audit quality and measurement in achieving audit quality. Audit quality refers to audit reports without errors either material or immaterial. The researcher identified three elements of audit quality including input measures, out measures and context measures. I think that these measures identified by the researcher are important in achieving audit quality. What is required is that when doing audit measurement, it is recommended for auditors to apply these three groups of audit measurement to achieve audit quality. Glover (2013) was investigating on how audit technology can help federal agencies in conquering the improper payments conundrum. In his study, Glover was concerned with the increasing incidents of loses that are incurred by the federal government through improper payments that are made to organizations, contractors as well as individuals. He was aimed at coming up with a technological solution that can help the federal government in reducing these loses. Federal agencies have the capacity to adopt an audit technology that can help in speeding the improper payment recovery process. I agree with the initiative of Glover in using audit technology to reduce losses in the federal government. The reason is that improper methods of payments can expose the government to many limitations of the payment platform. The y may lead to errors of duplicate payment which are very difficult to combat. Therefore, audit firms are recommended to adopt the audit technology that will help in shortening the audit cycle. Technology has the capacity of helping auditors to recapture lost dollars that can benefit the year budgets and also offset any shortfall that may have occurred. With the use of audit technology, it is easy to analyze the root cause of errors in the federal government payment system. It is also easy to benchmark the audit operation as well as make improvement on the audit processes and controls. Managing Resources In operations management, resource management is an essential task that ensures all organizations resource are effectively allocated and used in the expected allocations. Resource management is usually a comprehensive process that involves structuring of the resource portfolio of the firm, packaging the resources of the firm for the purpose of building capabilities, as well as leveraging those capacities to create and maintain value for owners as well as customers. Sirmon, Hitt & Ireland (2007) did a study on managing firm resources in dynamic environments to create value. The researchers in this research were focused on addressing the criticisms of the resource based view in relation to oversight of dynamism, environmental contingencies as well as the role of the manager. They linked valued creation in the context of dynamic environment to managing the resources of the firm. In creating value, the researchers identified various resource management model components including resource portfolio structuring, packaging resources for building capabilities, as well as leveraging the capabilities. This would provide value to customers, create wealth for owners as well as gain a competitive advantage for the organization. Based on the researchers view, it is recommended for managers in an organization to recognize that every component of resource management as essential. However, it requires their synchronization in optimizing value creation. Therefore, as they manage every component within the process, it is important to integrate as well as balance the components. This serves to ensure that there is harmony during the process which is essential in creating value for customers. Researchers in future are called to expand this research by linking resource management as well as value creation in shaping their research. A research done by Arrau, G., Eades, E., & Wilson, J. (2012) on managing human resources in the Latin American context revealed that the practice of HRM in a country or the way in which HRM is deployed within a country like Chile has the possibility of being affected by its social particularities, history, culture as well as problems in other countries within the country’s region. This is highly attributed to similarities in language, religion as well as colonial history among the countries. Like other Latin countries, the presence of increased social inequalities in Chile as well as strong paternalism within the labour unions affects the deployment of HRM within the country. However, the implementation of HRM in Chile has been favorable because it is more political stable, less corrupt and lower rates of poverty when compared to other Latin countries. I think managers have a lot to learn how the history, culture, and other problems from the neighboring countries and how they influence the deployment of HRM activities in organizations. It is recommended that organizations should work towards reducing the corruption that may hinder management of resources and especially human resources. Double talks, individualistic and authoritarian culture should be avoided to ensure effectiveness in labor relations. A research carried out by Ostojic, Bilas & Franc (2012) on managing human resource in healthcare to establish the features as well as working conditions of human resources within the healthcare setting. The researchers were examining the situation in Croatia by analyzing the potential implications of the European Union consent on these. Education and training were established as essential elements that should be provide to human resources together with developing multilevel plans to support human resource development. Managers in healthcare institutions are advised to establish measures that provide incentives as well as rewards to health workers. The human resources in the healthcare institution should include both healthcare and non-healthcare personnel. Outsourcing of healthcare personnel has a possibility of solving the problem of expenses that are increasing frequently. Additionally, it can help in rationalizing human resource needs. I agree with the findings of the researchers because education and training are valuable investment of an organization through knowledge and skills for its human resources. I believe that a skilled work force usually provides excellent performance in their work. The provision of rewards and incentives to employees is a good initiate that works towards their motivation. Incentives work towards achieving positive reinforcement for human resources in the workplace. It is recommended for managers in an organization to recognize the need for rewarding employees. It is also recommended that managers should develop multilevel plans for human resource development. To reduce more expenditure on employees, organizations are recommended to outsource workers to help in getting enough human resources and rationalize the needs for human resources. Conclusions Operations management is a function that is essential in managing the operations of organizations. The topics discussed in this report expound more on the role of operations management in organizations. The three topics that were discussed were quality control and inspection, operations audit and managing resources. Various articles were critically analyzed based on these three topics. Quality control and inspection was majorly concerned with quality control in auditing organizations. The articles enable one to understand that organizations need to work towards achieving quality control to ensure quality control deficiencies and criticisms are avoided. Designing integrated quality assurance strategies have also been identified as a tool that is essential for business to achieve high quality products. Operations audits have been identified to serve the purpose of safeguarding the proper reporting and presentation of financial statements for an organization. While effective management of human resources have been recommended for organizations that need to remain success. References Arrau, G., Eades, E., & Wilson, J. (2012). Managing human resources in the Latin American context: The case of Chile. The International Journal of Human Resource Management, 23(15): 3133–3150. Battini, D., Faccio, M., Persona, A., & Sgarbossa, F. (2012). Design of an integrated quality assurance strategy in production systems. International Journal of Production Research, 50(6): 1682–1701. Blankley, A., Kerr, D., & Wiggins, C. (2014). Quality Control Criticisms in PCAOB Inspection Reports: Analyzing the Characteristics of Triennial Firms with and without Deficiencies. The CPA Journal. 32-40. Boyle, J., Boyle, D., Hermanson, D., & Houston, R. (2013). Quality Control Defects in Smaller Firms’ PCAOB Inspection Reports: An Updated Analysis. The CPA Journal, 34-39. Glover, J. (2013). How Audit Technology Can Help Federal Agencies Conquer the Improper Payments Conundrum. Journal of Government Financial Management, 29-32. Hu, D. (2015). Audit Quality and Measurement: Towards a Comprehensive Understanding. Academy of Accounting and Financial Studies Journal, 19(1): 209-221. Ostojic, R., Bilas, V., & Franc, F. (2012). Managing Human Resources In Healthcare. Megatrend Review. 9(3): 257-272. Otley, D. & Pierce, B. (1996). The Operation of Control Systems in Large Audit Firms. Auditing: A Journal of Practice & Theory, 15(2): 65-82. Roybark, H. (2012). Public Disclosure of Quality Control Critisms: Examining PCAOB Inspection Reports to determine Differences among Audit Firms. The CPA Journal, 32-39. Sirmon, D., Hitt, M., & Ireland, R. (2007). Managing Firm Resources in Dynamic Environments To Create Value: Looking Inside The Black Box. Academy of Management Review, 32(1): 273–292. Read More