The History Of The Operation Manager

Published Date: 02 Nov 2017

From: Operations manager

Subject: Using operations management to identify and overcome major problems in operation and target to improve overall productivity

As part of my responsibility as operations manager, I wish to highlight some of the major problems faced by our organisation, Ideal Cereal limited in its day to day operations and as well suggest ways in which the principles of operations management can help to overcome these difficulties.

The ownership of operations management principles by top management and the same being cascaded down to the different levels in the organisation by way of consultation with the employee representatives will lead to a dramatic improvement in the overall productivity.

The actual established processes and production techniques have not evolved since the creation of our organization. Adapting to change in the market is a very important factor that we should not ignore if our target is to sustainably increase our market share. As such, a review of the way the organisation operates is crucial at this point in time so that corrective measures can be taken where required to strengthen our position in the market.

The following analysis of the major problems and recommendations on how to improve the overall productivity should be helpful to illustrate our proposed strategy on the use of operations management.

The five performance objectives of operations management, which are quality, speed, dependability, flexibility and cost, are the pillars on which the operations strategy of an organisation is based. The operations strategy, as listed below, if properly monitored with respect to their corresponding performance objective, can help to improve efficiency of our organisation.

Product and service design;

Process design;

Planning and control;

Innovation and improvement; and

Supply chain and quality management.

Quality

The term quality in the manufacturing industry means meeting or exceeding the expectation of the standard of the product at all times. Our customers have expectations that should always be met, if not exceeded, by providing a standard of product that is never inferior to the usual cereals being sold.

To meet customer expectations, it is important to re-assess the quality of the product design. Although no alarming complaints have been received regarding the final product, it is to be noted from the recent market research, not many youngsters were aware of the presence of our cereals on the supermarket shelves. It is proposed to have a different and more aggressive marketing campaign as well as a more attractive packaging to reach for more customers. The quality of the product design in terms of attractiveness and awareness of our cereals is to be re considered. A brainstorming between the marketing, design and operations department should be scheduled to come out with a better quality product design.

Process design are the different steps involved in the manufacturing of our cereals before it reaches the final stage and is ready for distribution. The quality of the process design is satisfactory as no delays or idle time has been reported in between processes, but can still be improved by bringing in new technologies to the manufacturing process to reduce the number of processes by automation, where applicable.

At the planning and control stage, the quality costs of conformance and non-conformance should be considered. Conformance costs such as training and inspection help to avoid failures and aim for better quality products. On the other hand, non-conformance costs are the indications that because quality is not being considered, the organisation is bearing higher expenses. From an analysis of the expenses in the latest income statement, it has been noted that the non-conformance cost are at a reasonable level and there is as such no reason to be alarmed.

An innovation to our organisation could be the use of Six Sigma to reduce wastage and defects and hence improve the level of quality. The Six Sigma basically aims for incremental improvements in the organisation at all levels. The implementation of Six Sigma represents a considerable investment and it must be ensured that employees are ready to take up the challenge.

Speed

Speed refers to the time taken for the customer to receive the final product. The speed at which the cereals are produced and distributed should be such that the market demand is always being met to avoid customers substituting our products with that of our competitors’.

Introducing more modern machinery could speed up the production process, hence improving the process design. At the current demand level, the speed of manufacture is posing no trouble. However, if a more aggressive marketing campaign is to be undertaken, then the process design needs to be reconsidered in terms of speed. More performing machinery would be required to meet the new market demand.

Speed is one of the factors to consider when setting up a supply chain process. It has been identified that the current supply chain is not satisfactory enough and needs to be reworked as the products go through a too lengthy route before reaching the final distributors. To achieve a better share of the market, it is important for our organisation to work on its supply chain to minimise the time taken to supply and avoid stocking the goods with wholesalers.

An innovation to the actual supply chain can be the Just-in-time system, whereby all suppliers will be connected to our organisation. An alert system will be in place to notify us whenever the distributor’s inventory level of our cereals reaches the minimum point where we should make the delivery of more cereals.

Dependability

Dependability is a very crucial element if customer loyalty is to be consolidated. The availability of cereal boxes on the supermarket shelves each time a customer wishes to make a purchase will determine if our products are dependable.

The process design has shown a satisfactory dependability level based on the fact that no shortages, abnormal wastages and idle time have been recorded during the normal course of business. This should however not be a reason to ignore the level of dependability in the process design. Alternatives should always be available to tackle stoppages that may occur in future. In this respect, an alternative workflow needs to be worked out in collaboration with the engineering department.

In the planning and control process, it has been noted that the actual production level is just enough to meet only a 20% increase in the market share. This level of production is alarming because our target is to raise our market share even higher through aggressive marketing campaigns. The major problem will arise when our organisation will no longer be able to meet the growing demand. The dependability of our products will be questioned at a time when we will be encouraging its consumption.

Supply chains should also be dependable. There are two aspects to the supply chain, the first one being dependability of the suppliers of raw materials and the send on being dependability of the delivery of the final products. The actual supplier of wheat, our primary raw material, is a long date business partner, and we have always received a satisfactory level of service. There is furthermore a fairly large number of suppliers of wheat, representing no high bargaining power from the suppliers. Distribution channels are however not the most efficient, because of the lack of speed, although they can be termed as dependable as the final products do reach the customer without any undue scarcity being created till date on the market.

Flexibility

Flexibility in the case of our cereal manufacture can mean meeting higher demand whenever it exceeds our normal production level, to meaning shifting our recipes to meeting the new tastes or requirements that prevail on the market.

Process design needs to be flexible to a certain extent to allow for some modifications to the manufacture of the cereals. Our existing machinery is not very flexible as it does not allow for modifications in the shape of the cereal. It would be much more attractive for kids to be supplied with cereals in different shapes like stars, alphabets or animals. However, such an innovation in our process design will definitely require investment in a modern machine.

The planning and control process need to be flexible so that it changes with the changing market conditions. Plans should anticipate the way in which the market will react in the near future. If the plans do not cater for the market trend, we may end up losing the opportunity to grow our market share while the economy is growing.

The product design should to certain extent be flexible. As a promotion exercise to encourage more sales, it is frequent for the volume sold to be increased to 20% for example. In such cases, special packaging and new volumes need to be catered for. The current product design is flexible enough to allow for such increases in volumes.

As part of the networking to be done for establishing a more efficient supply chain, it should be ensured that the new supply chain is flexible as well. Flexibility of a supply chain can be in terms of the volume of products supplied, the frequency they are supplied, any odd hours at which delivery needs to be done, any destination not in the usual course of business. Being able to meet any ad-hoc order will help determine if the new supply chain is flexible.

Cost

The cost per unit of product manufactured is an element that is very important to be controlled. The competitiveness of our finished product depends on the price at which we market them. It is important to realise that the selling price, which determines demand, is predominantly affected by the aggregate of manufacturing and marketing costs.

A good product design should be cost effective. The concept of value engineering is often used to eliminate all non-value added activity from the product design to keep away all unnecessary costs that decreases the margin yield on the sale of the final product.

The process design is also targeted to be cost effective. One of the attributes of an efficient process design is that the final product must have value for money. The value for money concept involves the proper mix of economy, efficiency and effectiveness to the manufacture of the product. A value for money product contributes a great deal to its competitiveness.

Budgets are used as planning and control tools for monitoring the costs involved in the manufacture of our products. From the income statement, no alarming excessive costs have been reported. However, there must be continuous control of the planned costs so that the variances are kept to a minimum level.

The above report as pointed out the status of the operations strategy in relation to the operations management. A summary of the major difficulties to be overcome by applying the concepts of operations management are listed as follows:

Market research has shown that the youngsters are not all aware of the existence of our products;

Existing supply chain network not appropriate;

Production level can be increased to only 20% with the current state of technology used; and

Machinery used is not flexible enough to cater for different shapes in the final product.

‘The role of the Information Systems is to provide information to management which will enable them to make decisions which ensure that the organisation is controlled.’ (Elizabeth Hardcastle 2008:7)

The definition of Information Systems (IS) has been evolving in complexity and diversity. IS consists of data which is raw facts and figures and information which is processed data and as such meaningful to humans. In other words, IS automate manual business processes and make an organisation more efficient.

‘Vertical integration is defined as the single ownership of consecutive activities along the supply chain’ (Dawei Lu, fundamentals of supply chain management:2011)

There are basically to main types of vertical integration one which is known as backward integration and one most commonly known as forward integration

Backward vertical integration relates to a situation whereby the company acquires its supply chain while forward vertical integration depicts a situation whereby the company takes over its demand chain

It is fundamental to distinguish between these two types of integration as they deal with entirely different areas. The development which can be brought about with information system in this field cannot be overlooked.

IS potentially provide more opportunities to improve the supply chain coordination.