The Importance Of Operation Management

Published Date: 02 Nov 2017

This assignment is aimed to analyse the competitiveness of operations management with respect to a small and medium size enterprise. Because of today’s volatility and competition in business, manufacturing companies have adopted philosophies and best practices that will enable them to achieve their performance objectives of operations management, i.e. high quality, speed to deliver, just in time (JIT), dependability, flexibility and cost. Total quality management tool will be used to analyse the quality of the production process.

This study will highlight the organisation’s strategy and the importance of information system, job design and the use of information technology that will enable the company to achieve competitive advantage more effectively and efficiently.

In conclusion its worthwhile to note that operational management is very important irrespective of organisational size all companies needs to deliver their products and services in a more effective and efficient manner. It therefore imply that adoption of operations management tools will enable the manufacturing company not only enhance high productivity but also to maintain its competiveness

Table of content

Introduction………………………………………………………………………..1

Operations Management…………………………………………………….2

Importance of Operations Management………………………………3

Performance Objective…………………………………………………………4

Operations Strategy…………………………………………………………….5

Product Design…………………………………………………………………….6

Process Design…………………………………………………………………….7

Planning and Control…………………………………………………………….8

Innovation and Improvement………………………………………………..9

Supply Chain………………………………………………………………………..10

Quality management……………………………………………………………11

2.0 Information System……………………………………………………………….12

2.1 Importance of Information system for Operational Excellence…13

2.2 Uses of different information system in selected organisation…14

3.0 Job Design……………………………………………………………………………15

3.1 Importance of Job Design for Employee’s motivation………………16

3.2 Uses of Job Design to Gain Performance Objectives………………..17

4.0 Conclusion…………………………………………………………………………….18

4.1 Recommendations…………………………………………………………………19

4.2 References……………………………………………………………………………20

Introduction

Vion Food UK with head office in Livingston Scotland emerged as an acquisition of the former Grampian Country Food Group Limited in 2008. The product portfolio of Vion Food’s core activity comprises fresh beef, lamb, pork, beacon, sausages as well as cooked meat which are brought to consumers and customers via the retail, foodservice, and industrial markets across the United Kingdom. They have extensive farms and hatcheries that run throughout United Kingdom which gives them a long-term sustainable position to manage the supply chain. In addition they employ approximately 9000 people and contribute to 13% of all UK employment. The UK food exports are worth £18 billion pound annually, accounting for 7% of UK goods exported. Vion has partnership with all top players in the retail, foodservice, and food industry with lamb 13% and beef 11% of UK market share. However the company has production problems that have affected the quality of products. As an operations manager my responsibility will be to shape the current situation of the company that will enhance quality and high productivity. Some of my duties will be to place more emphasis on partnership between the farmers and the processor and to continue investing in infrastructure as well as strengthening the procurement team. More Committed to innovation and work closely with clients to bring more new high quality products into the market. Identify the cause of the current problem facing the company and propose a way forward. Various techniques will be put in place like JIT philosophy, continuous improvement and ERP tools that will enhance high level management and increase the throughput rate.

Operations management

Operations management is the activity of managing the resources or processes that produce and deliver products and services. Robert Johnston (1994) argued that operations management is concern with the task of managing the process or system for the production of goods and services from the input resources which usually include labour, plant and machinery, materials and information.Operations management is important because it provides management with the techniques to manage the transformation of resources to finished goods and services (Source: Greasley, 1990). As shown below.

INPUTS

THE

TRANSFORMATION

PROCESS

OUTPUTS

Transfoming

Resources:

Facilities

Staff

Goods

Services

Transfomed

Resources:

Materials

Information

Customers

Figure 1: The Role of Operations Management

Source: Greasley, 1990

Another perspective is that operations management is a systematic design that involves the development and implementation of effective operating system that is applicable to each and every part of organisation. Such an operation system consist of three parts

a)-Inputs or resources (natural or material resources,) which are purchased by the organisation

b)-Processes which involve the conversion or transformation of these resources into products or services

c) -Output products from the transformation process can be in the form of goods and services that add value to the organisation.

The process takes in some input resources which are then transformed into outputs of goods and services as illustrated in figure 1. According to Robert Johnston (1994) Operation management is concern with the efficiency and effectiveness of the operation in the support and development of strategic goals.

Importance of operation management

Operations management is important in the sense that it uses resources to appropriately create out puts that fulfil defined market requirements. According to A. Greasley (1990) operation management has made significant contribution to society by playing a role in areas such as increasing productivity, providing better quality goods and services and improving working condition. Also it’s a function by which managers can directly affect the value provided to all stakeholders, customers, employees, investors, and society. In order to produce high quality goods and services that customers demand, it requires the skills of people who can actually do the work.

Performance Objectives

The basic operations performance objectives that allow organisation to measure its operation’s performance in achieving it strategic goals are; Quality, Speed, Dependability, Flexibility and cost.

Speed

Short delivery lead time

Cost

Low price, high margin or both

Quality

Quality on specification of product and service

Dependability

Dependable delivery

Flexibility

Frequent new product and service

Performance Objectives /operation priorities

Figure 2 Operation strategy priorities own version

Daniel I. P. and Christopher M.M. (2008) argued that firms that are unable to translate their goals into an appropriate set of action might be found to underperform those who do. Flynn B.B. and Flynn J.E. (2004) also claim that competitive priorities are the planned or intended goals that guide strategic actions and resource allocation decisions. These objectives are seen as the principal source of customer satisfaction therefore should be considered by operations managers as customer services objective. This five performance objective shall be analysed with respect to the case study (Vion Food UK).

Quality entails doing things the right way with no error in the goods and services that will satisfy the customers. VionFood, will improve intimacy with client and constant innovation; it will continue to consolidate its position as a leading UK processor of high quality beef and lamb. That will be recognised and nominated for products in industry awards as the best product at the annual Meat Management Awards. Development programs shall be emerge that will focus on the personal qualities and specific development of management talents, Vionfood will work with the global food safety initiative a recognised standard as regard to operational processes in all their production sites to implement uniform standards.

Speed, one of the most important performance objective implies doing things fast to reduce the lead time. Most customers consider time as a critical factor because companies that immediately response to the demand from customers have the ability to gain a greater market share and their growth rate increased hence doubling their profitability which leads to market dominance. VionFood will be able to achieve and maintain customer expectation due to its increased supply chain integration. Since most of their farming sites are close to the processing facilities therefore there will be more direct flow of products from hatcheries, feed mills and farms, to processing plants that will enhance food security which is a core competitive benefit for customers and partners in the supply chain channel. This alignment will lead VionFood to achieve it philosophy of slaughter today in shops a day after tomorrow ensuring no delay in customer’s request.

Dependability refers to consistency of meeting the promised delivery time. VionFood will use JIT in delivery their products. VionFood has extensive facilities across the UK where high quality beef, lamb can be produced and processed. There will be more plans that will require employees to work continuously with their farmer’s suppliers to encourage sustainable farming by offering help and advice. VionFood manufacturing expert will ensure that a coordinated and consistent approach is offered to their customer. With this focused approach they will be able to supply directly to wholesalers and distributors with either branded or own label products and supply filling to food manufacturers for use in their products( e.g. for sandwiches). VionFood employees skilled will be upgraded with training schemes that will enable them to work in a pleasant, hygienic, healthy and safe condition. VionFood will works to one common HACCP standard this will enable VionFood to provide buyers at home and abroad with consistent level of food safety and quality.

Flexibility is the ability of the organisation to change its production. According to (Noori and Radford, 1995) flexibility is generally regarded as the ability to respond or conform to new situations, being usually classified as process, or infrastructure related (in Daniel A.A.2003, pp.1401-1421). Vionfood will have to achieve a considerable level of flexibility in their product line, producing Scottish steak burger from Scottish beef shall be accredited at the Royal Highland Show and the introducing lower salt bacon will provide a wide range of products and services. In addition to Lamb and beef production and processes VionFood will add more (e.g. convenience) products across its 30 sites in UK.

Cost refers to the finance required to obtain inputs and manage the transformation process which produces finished goods and services. VionFood will be operating at a low cost in all processing sectors and will be investing in infrastructure and partnership between the farmers and the processor. Although the products are got from own farms more will be done to increase farm size and create new once and also create more links that will work closely together to supply high quality product. The production process will be computerized with the aid of skilled production staff and veterinary surgeon; the meat will be cut to size and vacuum packed to customer requirements.

Due to the use of performance objective, VionFood will emerge successful in it business by leading the sector where customer intimacy is concerned

Operation Strategy

Operations strategy involves the long-term planning and structuring of work by configuring appropriate resources and processes into an operating system that best implements the organisation’s strategy. It is commonly agreed that the effectiveness of a company’s operations strategy can be measured by assessing the degree of linkage or consistency between the competitive priorities which are emphasized and the corresponding decisions regarding the structure and infrastructure of operation (Leong et al, 1990).Vionfood will be a successful company although the uncertain economic situation affected consumers buying behaviour which affected the sales market for meat in 2011. The key success to this company will be developing products with added value (innovation) and cost reduction which will give Vionfood a competitive market position. The Vionfood manufacturing will use just in time (JIT) production which shall ensure that stock levels of raw materials, components, work in progress and finished goods are kept to a minimum. This shall been made easy by the use of web based information system where farmers and suppliers get value information. With JIT production employed, stocks will be delivering to the production line only when they are needed. The company will succeed with JIT owing to the fact that majority of the farms will be owned by the company and are all over UK and near processing sites.

Product Design.

Every organisation has its approach on how to design a process. In general, the process is composed of four steps

Idea Generation ;Every organisation seek to develop new product as a growth strategy this begins with assembly of ideas from various departments, organisation’s research, customers, market research data, sales personnel , competitors etc. Vionfood concept of new product development will begins when Vionfood Retail points out an opportunity in the market. In close consultation with clients these will then be incorporated into the development of the products which might be based on season (i.e. summer and winter) or public holidays.

Feasibility Study; after the research has been done and then submitted to the market economy who evaluates the design with customers through interviews and focus groups. The technical evaluation will determine if the product be selected or not.

Preliminary Design; Involves the specification of concept i.e. what the product or service should do to satisfy customer need. This stage is defined as the process by which the package is created, the components, and service structure.

Final Design This stage involves the use of prototype to refine the preliminary design until the final design is made. The final stage will be evaluated base on three main areas; functional design to ensure that the design meets the performance characteristics which are reliability and maintainability. Form design meaning; feel and sound are applicable and production design involves the ease and cost of manufacturing.

Process Design

Analyse product information

Determining the design objective & redesigning.

Generating innovative design concept.

Evaluating the innovative design

Implementing the solution efficiently

New product

Data Base

Satisfy with design objective

Figure 3: The flowchart for process design a product.

Source (Clive G & Louis R, 1995) adapted

This is a decisive approach for converting raw materials to finished products that reflects the desired competitive priorities. At VionFood there will be combined action of the NPD Technologist and NPD managers based at Vion snowbird to develop a successful cost effective new product in line with customer requirements. They will pre-set standards necessary to support the process design in achieving its quality goals these will include Identifying and document activities, Identifying processes for improvement and evaluating process design alternatives. Process design involves understanding the characteristics of the product to determine the appropriate manufacturing techniques; it "translate product design into the technical knowledge, organisational capabilities and operating processes needed to create a product" argued by (Pisano, 1997, pp.33) in Qiang Lu and Lincoln Wood (2006). Also (Hayes et al., 2005) in Qiang Lu and Lincoln Wood (2006) argued that, essentially it is a "problem-solving process that attempts to narrow the gap between what is known about the process and its likely performance and what needs to be known in order for the process to perform as desired" so that products can be produced and tested in the process according to product and test specifications. The effective technique for documenting and evaluating a process is the flowchart. As shown below.¨

No yes

Planning and Control

Planning and control refer to the allocation of resources as part of supply network. Control is the necessary action to be taken if in the course of the operation there is a deviation of what should be happening. Planning determines what is intended to happen at some time in the future. At VionFood, a number of links will be generated that will work closely together to supply high quality meat products. They will control their breeding farms, trade and transport links to enable responsible transportation of the animals. Vionfood’s plan for the future will be through a close partnership and constant collaboration with regular, reliable suppliers to ensure continuous flow of healthy animals which will be transported directly from pig farms to the slaughter house. The system will be based on internationally recognised standards that will centre on full traceability.

Innovation.

The ability to bring new products in the market quickly is fundamental to any successful customer-driven company as argued by Paulo A. and Cauchick M. (2007). Lee-Mortimer, (1995) stated that companies must have a process for innovating to match customer needs. Vargas and Rangel, (2007) claim that firm’s knowledge accumulation and the development of internal capabilities help small and medium size enterprises in achieving better competitive position in international and national market. As an operation manager more will be invested in consumer insight research that will be shared with clients which guide product development. Consumers are alert to meat’s origin, health, animal welfare and sustainability. This concern will call for different ways of thinking regarding current production practices. This approach will deliver a wide range of easy to cook and ready to cook product in the market and will bring a perceptible growth in deboned products in the processing sector and other new products will be introduced in the market.

Supply Chain

Supply chain management is concern with the flow of information as well as the flow of product and services. Cheryl C.P. et al (2005) claim that supply chain management (SCM) aims to integrate the various structure and processes of the supply chain, facilitating and coordinating the flow of goods and services and the flow of information necessary to provide the value that customer demand. VionFood will be using effective supply chain management and will employs continuous improvement process that will delivers added value to the chain. They will work together with reliable partners from farmyard to the end product (from feed to food). There will be a strong collaboration with the primary sector through online farming net information system and good farming star concept that will lead to a direct flow of information between the end product and the production chain effectively. With this user friendly online system, suppliers and farmers will be able to overview the supply chain on certain specification of products and receive statement of account. This system will enable the company to maintain a low volume and short lead time production process. The objective of the supply chain management will be to meet the requirement of end customers in quality and cost and to maintain its competitiveness. An illustration of the flow is shown below.

Feeds

Animals

Chemicals

Equipment

VION Food

Food Processing

Wholesalers

Retailers

Consumers

Raw materials

Storage

Product distribution

End users

Figure 4: Illustration of Vionfood supply chain management.

The figure above illustrates the raw materials required in the supply chain to enable the creation and delivery of finished product or service to the customer.

Total Quality management (TQM)

Kaynak, (2003) argued that, there is empirical evidence that effective implementation of the core quality management practices directly enhances an organisation’s ability to consistently provide products and services of satisfactory quality to its customers. For example, by timely collecting and disseminating important quality data and information throughout the organisation, managers and employees can quickly detect quality problems and take actions. Although confronted with a challenging market, Vionfood’s commitment to quality will be consistent and this will be achieve by intensive partnership with customer, product leadership and continuous dialogue with farmers and suppliers, industrial and community organisations. This focus will be important because it will provide a further upgrading of quality and innovation. Through this application VionFood will be making a contribution to strengthening its credentials and transparency in the field of food, health, and agriculture. Vionfood will adopt a leadership position in product development and sustainability and will make improvement on consumer monitor who gives the primary and retail sectors a handle to jointly work on product development. This continuous improvement activity will remains a core competitive benefit for customers and supply chain partners.

2.0 Information System in an Organisation.

Information system plays the role of providing information to the management of an organisation for the purpose of improving effectiveness and efficiency. Hicks et al (2006) argued that information and communication technologies are indispensable to the operation of the core routines of organisations. W.B. Adeoti-A. (1997) suggested that information systems are becoming of ever greater interest in progressive and dynamic organisations. Irani Z. (2006) argued that information system evaluation is vital to organisations through the need for a comprehensive framework for performance assessment.

2.1 Importance of Information System for Operational Excellence

Information system performs three vital roles in any organisation; they support business operation, managerial decision making, and strategic competitive advantage, suggested by Ali Deveci et al (2009).It can be argued that information system is a do without in an organisation to improve the efficiency of operation that will enable higher productivity and profitability and that seeks to respond in changing business condition. Sharma, M.K. & Bhagwat, R. (2006b) argued that information system is an organised combination of people, hardware, software, communication networks and data resources that collect transform and disseminates information within and among organisation. They further claim that, in the present customized and globalized business environment, where geographical distances are of no importance for customer-supplier relationships, the organisation’s competence in information system has become one of the key measures for survival.

2.2 Uses of Different Information System in Selected Organisation.

VionFood will use Enterprise Resource Planning system (ERP) as a decision support mechanism that gathers data from various sources to one area. This data will be made available to Vionfood’s employees through farmingnet, a web based information system for farmers. This will increased customer intimacy in the sense that it will clearly reports the slaughter details back to the farmer which will enable farmer to determine if adjustment is necessary. Information officers and farmers will use the information system data to improve their result and also to report details of the animal they want to deliver in a clearly structured manner while supplying information on the feed and about any veterinary medicine used. There will be a continuous flow of information and data exchange that will help animal farmers to optimise their business operation and gradually raises the overall production and product quality as well as economic balance. There will be effective flow of information from one department level to another and maintaining network to different branches for efficiency and cutting cost. Enhancing operational procedures such that branches with lose making will be closed and regular training of staff shall be enforced. These activities (primary and secondary) will create an added value to the chain that will give the company a competitive advantage.

3.0 Job Design.

Work design is a combination of different types of tools and technique purposely to keep employee satisfied while maintaining high level productivity and reducing cost. Job enlargement, job enrichment, job rotation, and job simplification are various techniques used in a job design. The allocation of these tools and technique to a specific work task for employee is another way of defining job design. Pooja G. and Renu R. (2005) argued that experiences have shown that well designed jobs have a positive impact on both employee satisfaction and the quality of performance. Pooja G. and Renu R. further propose in their study that a well define job would enhance motivation, satisfaction, and performance of employee

3.1 Importance of job design for employee’s motivation

Edward E. Lawler and Richard Hackman (1971) argued that a job will be motivating and essentially satisfying only if it is high in all core dimensions of autonomy, task identity, feedback, variety and skill. Recently Morrison et al (2005) claimed that job design provides both employee control and greater skill development. In that perspective, Vionfood, will have different skill jobs created that will require different activities for employees starting from the manager of the business to the purchasing unit and down to the slaughter unit. In every unit there will be specific task assigned and completed by employees. Like in the animal slaughter unit every employee will be attached to its specified task till completion. The process will be such that it will have different stages and every stage will have different activity that require its own skill .The effectiveness and performance will be observed through the company’s system information flow which will make it clear if the target are met (e.g. weight and size ).

3.2 Uses of job design to gain the performance objective

Operational excellence will be the key to Vionfood business and production process which will deliver efficiency, cost control, safety and quality. VionFood will place emerging technology at the forefront of its business, employee and customers will use web based information system to communicate along the supply chain. More emphasis on the use Information system application

n like meat scan, Farmingnet, tracking and tracing , online invoicing system that will provide information to customers, consumer market, employees, and enterprises that will add value to the chain by reducing cost. A health and safety management system will be adopted to ensure the safety on the work floor and thus will reduce the number of accidents. The company will take further steps to build on customer intimacy, partnership with customers, and product leadership that will bring more development of activities providing equity to employees and higher level performance. Trainee programs for employees for the development of skills will be put in place. The involvement of employees in board meetings and other high level activities of the organisation will be implemented this will give a better understanding on the production processes. There will be an on-going modification of personnel structure to further improve efficiency and reduce cost and reinforce the company’s competitive position. Employees will therefore be encouraged to explore in different scopes and work transparently with integrity. This will improve their efficiency at work thus promoting the company’s philosophy.

4.0 Conclusion.

In this study, analysis was made of the company’s production and operational practices and Identification of key processes that will enable the company perform better have been highlighted i.e. product design, process design, planning and control, innovation, supply chain management, and total quality management. The company’s objective of meeting up with performance and operation priorities is discussed. Identified problems of the company are highlighted and the measures mentioned will solve the problem. Work motivation and how the company will use job design to achieve it performance objective is also highlighted. It should be noted that the technology and concepts used by large firm can also be used by small and medium size company such application like JIT, TQM that are used to improve performance and quality standards

This research conclude with the view that technological and management tools used in operations management and strategy will enable the firm not only improve production, maintain competitiveness, perform well, but also reduces cost.

4.1 Recommendation

This case study has demonstrated the importance of operations management to VionFood Company and proper implementation will avoid issues like the recent horse meat scandal, and maintain quality at all levels of production. They should ensure transparency to all stakeholders that will allow them to view clearly the types of ingredients used in their products. In order to cut the meat to the required size as requested by customer they should have the right tools. Processing equipment should be monitored and other food brand that require additional hand labour. Raw materials sourced from other countries should be properly examine and tested for proof. A solid mechanism should be put in place to check the suppliers of fresh meat and to sourced life animals not those that have been already slaughtered.