Question

With relevant example of your choice, explain in 2 (Two) pages the most important framework for managing operations used by production firm .

Answer 1

Managing Operation in Production

         One may generally consider that there are three distinct areas inherent in any business: marketing, finance, and operations; all other business disciplines fit somewhere under one or more of these areas. For example, finance could include investing, real estate, insurance or banking. While management is considered an academic discipline unto itself it is actually a part of all three areas: financial management, marketing management, and operations management. Operations management is the area concerned with the efficiency and effectiveness of the operation in support and development of the firm's strategic goals. Other areas of concern to operations management include the design and operations of systems to provide goods and services. To put it succinctly, operations management is the planning, scheduling, and control of the activities that transform inputs (raw materials and labor) into outputs (finished goods and services). A set of recognized and well-developed concepts, tools, and techniques belong within the framework considered operations management. While the term operations management conjures up views of manufacturing environments, many of these concepts have been applied in service settings, with some of them actually developed specifically for service organizations.

             Operations management is also an academic field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service firm and their operations. The field is a synthesis of concepts derived from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions.

            The field of operations management has been gaining increased recognition over the last two decades. One major reason for this is public awareness of the success of Japanese manufacturers and the perception that the quality of many Japanese products is superior to that of American manufacturers. As a result, many businesses have come to realize that the operations function is just as important to their firm as finance and marketing. In concert with this, firms now realize that in order to effectively compete in a global market they must have an operations strategy to support the mission of the firm and its overall corporate strategy.

         Another reason for greater awareness of operations management is the increased application of operations management concepts and techniques to service operations. Finally, operations management concepts are being applied to other functional areas such as marketing and human resources. The term marketing/operations interface is often used.

WHAT DO OPERATIONS MANAGERS DO?

At the strategic level (long term), operations managers are responsible for or associated with making decisions about product development (what shall we make?), process and layout decisions (how shall we make it?), site location (where will we make it?), and capacity (how much do we need?).

        At the tactical level (intermediate term), operations management addresses the issues relevant to efficiently scheduling material and labor within the constraints of the firm's strategy and making aggregate planning decisions. Operations managers have a hand in deciding employee levels (how many workers do we need and when do we need them?), inventory levels (when should we have materials delivered and should we use a chase strategy or a level strategy?), and capacity (how many shifts do we need? Do we need to work overtime or subcontract some work?).

          At the operational level, operations management is concerned with lower-level (daily/weekly/monthly) planning and control. Operations managers and their subordinates must make decisions regarding scheduling (what should we process and when should we process it?), sequencing (in what order should we process the orders?), loading (what order to we put on what machine?), and work assignments (to whom do we assign individual machines or processes?).

          Today's operations manager must have knowledge of advanced operations technology and technical knowledge relevant to his/her industry, as well as interpersonal skills and knowledge of other functional areas within the firm. Operations managers must also have the ability to communicate effectively, to motivate other people, manage projects, and work on multidisciplinary teams. Sunil Chopra, William Lovejoy, and Candace Yano describe the scope of operations management as encompassing these multi-disciplinary areas:

Supply Chains

        management of all aspects of providing goods to a consumer from extraction of raw materials to end-of-life disposal.

Service Operations

     Coping with inherent service characteristics such as simultaneous delivery/consumption, performance measurements, etc.

Operations Strategy

        Consistent and aligned with the firm's other functional strategies.

Framework with example

Business Process Reengineering (BPR)

         It’s a radical approach to designing core processes: take everything that you used before, discard it, and then start again from scratch. With Business Process Reengineering, you can foster innovation and improve any selected measures dramatically. If you want to do it well, focus on how you can add more value to the customer.

         Established by the Toyota Corporation, the term lean manufacturing has become a mainstream trend in the industry, and it is used interchangeably with Just-In-Time production. The concept behind is a constant improvement of processes in order to reduce waste and inventory, and maximize the output of high-quality, low-cost products and services.

A new twist on this concept is agile, or otherwise known as “the new lean.” It has its origins in software development but now is used by various industries. The reason it came to life was the growing complexity of processes, and it is characterized by product development done in small increments and super-fast decision-making. These together ensure the necessary flexibility and interactivity, proven remedies for unpredictable changes in market demand.

Six Sigma

          Improving processes using a data-driven approach is an innovation of Motorola from the mid-1980. It’s still among the trends of impact because it is a quality-improvement and cost-reducing method that focuses on customer satisfaction.

          The method is based on the Six Sigma measure, which is achieved if only 3.4 defects are found in a million of output.

This way, production efficiency can be nearly 100%. When presented with a problem, the Six Sigma approach uses a five-step method called DMAIC, an acronym of define, measure, analyze, improve and control.

Reconfigurable manufacturing system (RMS)

          Another possible method for reacting to quick changes in the market is RMS, a production system that can be used with different functionalities within a product family. With an RMS, you can make adjustments in production cost-effectively.

Employee involvement

          A recent trend that impacts the human resources management activities in operations is the increasing involvement of employees in the planning processes. Listening to the opinions of the workers often brings up fresh ideas, a different perspective on what problems should be solved and how to make the operations more effective.