Operational Management - Essay Example

Operational Management General motors’ is one of the leading companies in the automotive industry having supply chains in many countries. Being a company which is in the manufacturing industry it has a low daily inventory turnover ratio of 51 considering that the inventory per sale ratio is 9.1. This implies that a lot of capital is locked out in stock. Although the company manufactures high cost goods which may not have an immediate market, having a lot of the cars in the store house is a waste of resources.

The inventory metrics can be improved by ensuring on time delivery and this gives the organization a drive to get rid of excess products and gives them a competitive edge. The company should also be focused on material flow and this increases the liquidity of assets and hence reduces the chance of obsolesce. This can also be dealt with by reducing defects and this ensures that fewer cars are taken back to the factories to rectify the defects. Aligning the metrics in any company has been seen to be crucial in ensuring efficient production.

This was demonstrated well by Alfred Sloan where managing the cost of production is key. Having a lean organization where all the resources are used to the maximum is the driving force of success.Currently GM produces approximately 6.1 million unit products annually. If the company takes measure to improve the inventory turnover ratio, this can boost production making the company to increase productivity with 25%. It could thus be possible for GM to produce 7.625 million unit products with its current resources.

This would result in increased sales turnovers as their automotives do not stay in stock for a long time.