Question

The five key goals of the operations manager are to reduce costs, reduce variability and improve logistics flows, improve productivity, improve quality of customer service, and continuously improve business processes.

Describe from your work and/or personal life how you have observed someone manage an operation that achieved all or many of the goals of an operations manager. Give some examples of how some lacking areas could be improved.

Be sure to support your conclusions with facts from the readings and/or video assignments by linking theory to practice in your comments by relating your personal perspective with the information you have read or watched.

Answer 1

I am an operations manager myself at an Automotive component manufacturing company. Auto component companies are characterised by wafer thin margins owing to commoditization of most products. In such industries role of an operations manager becomes all the more important as profitability is driven by efficiency only.

1. Reduce cost : In order to reduce cost the most important thing is all HODs and their team members should be aware of the costs they are incurring and its impact on the EBITDA. In order to that, we had a session with our finance head in which he stripped down the P&L of the company and showed all the cost components in abolute as well as in % of sales form. We also had benchmark data from best performing competitors to show on which cost heads we were lagging. This helped us setting targets for cost reduction. All HODs took up aggressive cost saving targets. No cost head was left out. From manpower reduction through low cost automation to changing the bus service provider, all fields were touched. A composite cost restructuting plan was drafted with time bound execution plan and month on month savings target.This was reviewd fortnightly by the top management and yielded amazing results as our EBITDA increased from 12 % to 15%

2. Reduce Variability : Any industry is characterised by cyclicity. Some months the demand is more than the capacity and some months demand is so low that plants have to be shut down. This variability completely derails the production momentum, makes the team complacent, results in opportunity loss etc. In order to deal with this situation, we decided to follow a level production system in which we would continue production at peak capacity even if the demand is low and create FG inventory to use in months where demand is higher than the capacity. This results in uniform production targets every month and also the suppliers find it easy to cater to the raw material requirement. To further reduce variability, we designed a production pattern i.e. what product will run on what machine on what day was fixed for every month. This pattern was changed only if there was a drastic change in customer demand which usually does not happen. This pattern was shared with the suppliers as well so even they knew what to supply when and in what quanitity.

Improve Logistics Flow : We had lot of suppliers within 30KM radius from our plant. Each supplier used to supply material in their own vehicles and we had provided some transportation cost to them for that. In one of the projects we identified that if we run a milkrun system which visits all the suppliers and picks up material and brings it to the plant by evening, we could save substatial money. In addition to money, it would lead to lesser corbon emmissions. Also the stores person would not be occupied all the time for unloading so many vehicles instead he will have to superwise only one milkrun vehicle in the evening. So we implemented this milkrun plan and it was a runaway success.

Improve Quality of Customer Service : In order to improve customer service, we decided to put production planning and sales under one department. Thus we started the practice of S&OP. We were able to respond to customer urgencies in a much efficient way. Confirmation to customer against orders went instantaneously. Our customer delivery rating improved drastically as well. We also devised a mechanism by which quotes for any new product would be given by development team by 7 days. We also offered extremely less product development lead time of 4 weeks against industry standard of 12 weeks through rapid prototyping route. All this resulted in inprovement in quality of customer service.

Improve Business Processes : As an operations manageer you come across various improvements ideas as you move around the plant. Some of them may be in your function whereas some can be in related to other functions. It is very important to tap all these ideas for overall improvement of plant efficiency. In order to effectively tap the ideas, we decided to adopt a project management technique called SCRUM and made it a business process. In SCRUM, any person who sees any improvement opportunity in the plant would write it on a post it note and post it on the SCRUM board against the department to which it is applicable. When the relevant department completed that improvement project the same is removed from the board to the finished section. This improvement in business process resulted in lot of kaizens being implemented in a very short period of time.