Production and Operations Management - Case Study Example

An overview of Operation Management s Production and operations management: Managing operations is a crucial aspect of each and every kind of business. The main concern of the initial thinkers is to such as Frederick Taylor, Henry Gantt, and Frank Gilbreth was to improve productivity. They all put great emphasis on human factor as an indispensable input. The notion of production management has been transformed from the manufacturing activities and has expanded to activities as purchasing, warehousing, transportation, and other operations from the procurement of raw materials through various activities until a product in available to the buyer. The notion includes the process of delivering the services to the customers with the products. With the changing time the aspects covered are increasing, the process now also includes R&D, value creation, marketing management, sales activities, accounting and finance. The operation management model constitutes of inputs and outputs. The list of inputs include, 1. customer needs 2. Information 3. Technology management 4. Fixed assets of the business 5. Human capital 6. Variable assets related to transformation process. Information and the physical factors play an important role for managers in order to produce outputs. Most of the physical assets remain unchanged. These include buildings, land, manufacturing plants, warehouses etc. Planning, operating and controlling are the important constituents of transformation process. The improvement in the system is also an important aim of the model. Outputs consist of products and services and may even be information, such as that provided by a consulting organisation. (Koontz and Weihrich, 1994; p 633, 634) There are many other techniques, which can be undertaken by the management in order to improve the quality of management process. Some of them are described below. Time-Event Networks: Time network analysis is a logical extension of the famous Gantt chart. Often referred to as the program Evaluation and Review Technique (PERT) an in its essentials as the Critical Path Method (CPM), this technique of planning and control has wide potential use in many applications. But PERT and its various refinements, like PERT/COST, have considerable potential for use in many aspects of planning and controlling operations. (Koontz and Weihrich, 1994; p.648) Value Engineering: A product can be improved and its cost lowered through value engineering, which consists of analysing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part. The following specific steps are suggested: 1. Divide the product into parts and operations. 2. Identify the costs for each part and operation. 3. Identify each part’s relative contribution value to the final unit or product. 4. Find a new approach for those items, which appear to have high cost and low value. (Koontz and Weihrich, 1994; p.648) Work Simplification: Work methods can be improved through work simplification, which is the process of obtaining the participation of workers in simplifying their work. Training sessions are conducted to teach concepts and principles of techniques such as time and motion studies, workflow analyses, and the layout of the work situation. (Koontz and Weihrich, 1994; p.648) Quality Circles A quality control circle, or simply quality circle (QC); is a group of people from the same organisational area who meet regularly to solve problems they experience at work. (Goldstein, 1985; p.504-517) Members are trained in solving problems, in applying statistical quality control, and in working in-groups. Usually a facilitator works with each group, which normally consists of six to twelve members. The QCs may meet 4 hours a month. Although QC members may receive recognition, they usually do not receive monetary rewards. Quality circles evolved from suggestion programs. In both approaches, workers participate in solving work-related problems. Although in suggestion programs the problems are usually quite specific, those dealt with by quality control circles are often more complex and require the involvement of several team members. The team consists primarily of rank-and-file workers and sometimes also includes supervisors. So-called efficiency experts are usually excluded from the team. (Koontz and Weihrich, 1994; p.649) The Concept of TQM: TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organisation. It is the application of quantitative methods and human resources to improve all the process within an organisation and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach. (Besterfield, Michna, Besterfied & Sacre, p.1) TQM is based on a number of ideas. It means thinking about quality in terms of all functions of the enterprise and is a start is a start-to-finish process that integrates interrelated functions at all levels. It is a systems approach that considers every interaction between the various elements of the organisation. Thus, the overall effectiveness of the system is higher than the sum of the individual outputs from the subsystems. The subsystems include all the organisational functions in the life cycle of a product, such as (!) design, (2) planning, (3) production, (4) distribution, and (5) field service. The management subsystems also require integration, including (1) strategy with a customer focus, (2) the tools of quality and (3) employee involvement (the linking process that integrates the whole). A corollary is that any product, process, or service can be improved, and a successful organisation is one that consciously seeks and exploits opportunities for improvement at all levels. The load-bearing structure is customer satisfaction. The watchword is continuous improvement. (Ross, 2) Hence TQM requires six basic concepts: 1. A committed and involved management to provide long-term top-to bottom organisational support. 2. An unwavering focus on the customer, both internally and externally. 3. Effective involvement and utilisation of the entire work force. 4. Continuous improvement of the business and production process. 5. Treating suppliers as partners. 6. Establish performance measures for the processes. (Besterfield, Michna, Besterfied & Sacre, p.2) (Crosby, 1979) presented the following steps in order to undertake TQM effectively. 1. Management Commitment: Top management must become convinced of the need for quality and must clearly communicate this to the entire company be written policy, starting that each person is expected to perform according to the requirement or cause the requirement to be officially changed to what the company and the customers really need. 2. Quality improvement team: From a team composed of department heads to oversee improvements in their departments and in the company as a whole. 3. Quality measurement: Establish measurements appropriate to every activity in order to identify areas in need of improvement. 4. Cost of quality: Estimate the costs of quality in order to identify areas where improvements would be profitable. 5. Quality awareness: Raise quality awareness among employees. They non-conformance. 6. Corrective action: Take corrective action as a result of steps 3 and 4. 7. Zero defects planning: From a committee to plan a program appropriate to the company and its culture. 8. Supervisor training: All levels of management must be trained in how to implement their part of the quality improvement program. 9. Zero defects day: Schedule a day to signal to employees that the company has a new standard. 10. Goal setting: Individuals must establish improvement goals for themselves and their groups. 11. Error causes removal: Employees should be encouraged to inform management of any problems that prevent them from performing error free work. 12. Recognition: Give public, non-financial appreciation to those who meet their quality goals or perform outstandingly. 13. Quality councils: Composed of quality professionals and team chairpersons, quality councils should meet regularly to share experiences, problems, and ideas. 14. Does it all over again: Repeat steps 1 to 13 in order to emphasise the never-ending process of quality improvement. (Ross, p. 6-7) Management must participate in the quality program. A quality council must be established to develop a clear vision, set long-term goals, and direct the program. Quality goals are included in the business plan. An annual quality improvement program is established and involves input from the entire work force. Managers participate on quality improvement teams and also act as coaches to other teams. TQM is a continual activity that must be entrenched in the culture- it is not just a one-shot program. TQM must be communicated to all people. The key to an effective TQM program is its focus on the customer. An excellent place to start is by satisfying internal customers. We must listen to the voice of the customer and emphasise design quality and defect prevention. Do it right the first time and every time, for customer satisfaction is the most important consideration. TQM is an organisation-wide challenge that is everyone’s responsibility. All personnel must be trained in TQM, statistical process control (SPC), and other appropriate quality improvement skills so they can effectively participate on project teams. Including internal customers and, for that matter, internal suppliers on project teams are an excellent approach. They understand the process better than anyone else does. Changing behaviour is the goal. People must come to work not only to do their jobs, but also to think about how to improve their jobs. People must be empowered at the lowest possible level to perform processes in an optimum manner. There must be a continued effort to improve all business and production processes. Quality improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin technical techniques such as SPC, benchmarking, quality function deployment, and designed experiments are excellent for problem solving. On the average 40% of pounds is purchased product or service; therefore, the supplier quality must-be outstanding. A partnering relationship rather than an adversarial one must be developed. Both parties have as much to gain or lose based on the success or failure of the product or service. The focus should be on quality and life-cycle costs rather than price. Suppliers should be few in numbers so that true partnering can occur. Performance measures such as uptime, percent non-conforming, absenteeism, and customer satisfaction should be determined for each functional area. These measures should be posted for everyone to see. Quantitative data are necessary to measure the continuous quality improvement activity. (Besterfield, Michna, Besterfied & Sacre, p.3) The purpose of TQM is to provide a quality product and/or service to customers, which will, in turn, increase productivity and lower cost. With a higher quality product and lower price, competitive position in the marketplace will be enhanced. This series of events will allow the organisation to achieve the objectives of profit and growth with greater case. In addition, the work force will have job security, which will create a satisfying place to work. As previously stated. TQM requires a cultural change. The change is substantial and will not be accomplished in a short period of time. Small organisations will be able to make the transformation much faster than large organisations. (Besterfield, Michna, Besterfied & Sacre, p.3) Hence summarising the key points discussed above, productivity is a major concern of managers. It implies measurement, an essential step in the control process. The productivity measurement of skill workers is generally easier than that of knowledge workers such as managers. Yet managerial productivity is very important, especially for organisations operating in a competitive environment. Production management refers to those activities necessary to manufacture products; it may also include purchasing, warehousing, transportation, and other operations. Operations management has a similar meaning, referring to activities necessary to produce and deliver a service as well as a physical product. The operations management systems model show inputs, the transformation process, outputs, and the feedback system. A variety of tools and techniques make operations more productive. Seven steps are often involved in planning and designing a product and its production. Companies can choose from six different kinds of production layouts. In order to operate the system, the managerial functions of organising, staffing, and leading must be carried out effectively. Controlling requires an information system often supported by computers. (Koontz and Weihrich, 1994; p.653) Among the various tools for planning and controlling operations is operations research, which is the application of scientific methods to the study of alternatives in a problem situation to obtain a quantitative basis for arriving at the best solution. The operation research procedure consists of six steps. Examples of tools are linear programming, inventory planning and control, the just-in time inventory system, and distribution logistics. Other tools and techniques are time-event inventory system, engineering, work simplification, quality circles, total quality management, and a variety of computer-aided approaches. (Koontz and Weihrich, 1994; p.653) References Besterfield, D. H., Michna, C. B., Besterfied, G., H., & Sacre, B. S., (no date available). Total Quality Management, Third Edition, pp. 1-3. Crosby, P., (1979). Quality is Free, New York: McGraw-Hill, 1979. Goldstein, S. G., (1985). “Organisational Dualism and Quality Circles,” Academy of Management Review (July 1985), pp.504-517. Koontz, H., and Weihrich, H., (1994). Management: A Global Perspective, Tenth Edition, McGraw-Hill, International Editions, pp.633-653 Ross, J. E., (no date available). Total Quality Management: Text, Cases and Readings, Second Edition, Florida Atlantic University, Boca Raton, Florida, pp. 1-3 Read More