The use of operations management techniques Essay

Operations direction is concerned with the design, planning, control and betterment of an administration ‘s resources and procedures to supply goods or services for clients. Whether it is the proviso of airdrome services, medical services, vacation bundles, or the fabrication of cars, consumers electronics and so on ; the operations director would hold been involved in the design, creative activity and bringing of those merchandises and services. ( Johnson, R. etal 2003 ) . Operations Directors are found everyplace including Bankss, supermarkets, building site, production works, authorities offices, and so on. Their function includes planing systems within an administration, guaranting quality, fabrication merchandises, and bringing of services. They besides deal with clients, providers, spouses, and latest engineering.

Operation direction is more than merely planning and managing procedures ; it is transmutation procedures which can besides be define as a series of activities along a value concatenation widening from provider to client.

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TRANSFORMATION PROCESS

Input signal:

Material, Equipments, Labour, Management, and Capital

End product:

Goods

Servicess

Feedback

Figure 1: Operationss as a Transformation Process ( version from Russell & A ; Taylor, 2005 )

For case, in a auto fabrication mill, sheet steel is formed into different forms, painted and finished, and so assembled with 1000s of constituent parts to bring forth a working car. In a infirmary, clients ( patients ) are helped to go fitter persons through particular attention, medicine, repasts, physical therapy, and surgical processs. Core activities in operations direction include forming work, set uping layouts, turn uping installations, planing occupations, mensurating public presentation, choosing procedures, commanding quality, scheduling work, pull offing stock list, and be aftering production.

Operations Management Techniques

There are several operations direction techniques used by companies. These include but non limited to ;

Thin Production

Just-in-Time

Benchmarking

Material Requirement Planning ( MRP )

Quality Management

Supply Chain Management

Inventory Management

Linear Programing

Waiting Line Analysis

Forecasting

This study will concentrate on three of the 10 Operations Management techniques listed supra. They are Supply Chain Management, Just-in-Time, and Benchmarking.

2.1 Supply Chain Management

Harmonizing to Russell and Taylor ( 2006 ) , Supply Chain Management can be described as an operations direction technique that focuses on incorporating an pull offing the flow of goods and services and information through the supply concatenation in order to do it antiphonal to client demands while take downing entire costs. It is besides an integrated group of concern procedures and activities with the same end of supplying client satisfaction. These procedures include the procurance of services, stuffs, and constituents from providers ; production of the merchandises and services ; and distribution of the merchandises to the clients.

2.2 Just-in-Time ( JIT )

This is an operation direction doctrine directed at extinguishing fabricating wastes by bring forthing merely the right sum and combination of parts at the right topographic point at the right clip. Developed by the Nipponese during the station World War II epoch, it is based on the rule of bring forthing merely what is needed and nil more than needed. The Nipponese believed that anything produced over the measure required is waste. Wastes consequences from any activity that adds cost without adding value to the merchandise, such as transferring of stock lists from one topographic point to another or even hive awaying them. ( Sirisha, D. 2003 ) .

The end of JIT is to minimise the presence ofA non-value-adding operationsA and non-moving inventoriesA in the production line. This will ensue in shorter throughput times, better on-time bringing public presentation, higher equipment use, lesser infinite demand, lower costs, and greater profits.A JIT is most applicable to operations or production flows that do non alter, i.e. , those that are merely repeated over and over once more. An illustration of this would be an car assembly line, wherein every auto undergoes the same production procedure as the one before it.

Benchmarking

This is one of the operations direction technique aimed at bettering organizational procedure by invariably placing, understanding and accommodating successful patterns and procedures by others and easing its incorporation into an administration. Simply put, benchmarking agencies comparing one ‘s organisation or a portion of it with that of the other companies. As farther explained by Camp ( 1995 ) , “ benchmarking is a uninterrupted activity ; cardinal internal procedures are adjusted, public presentation is monitored, new comparings are made with the current best performing artists and farther alterations are explored. When information about these cardinal procedures is obtained through a co-operative partnership with specific administrations ( instead than 3rd party such as independently-maintained database ) , there is an outlook of common benefit over a period of clip ” . The type of benchmarking that companies can follow are:

Strategic Benchmarking

Competitive Benchmarking

Procedure Benchmarking

Functional Benchmarking

Internal Benchmarking

External Benchmarking

International Benchmarking

Benchmarking exercising is a four-stage procedure affecting ;

Planing phase – involves placing, set uping and documenting specific survey focal point countries, cardinal events and definitions.

Data aggregation phase – involves roll uping qualitative informations and larning from the best patterns of different organisations.

Data analysis and coverage phase – involves critical rating of patterns followed at high executing organisations, and the designation of patterns that help and discourage superior public presentation.

Adaptation phase – involves developing an initial action program to accommodate and implement the patterns followed by these high public presentation organisations.

3.0 CASE STUDY 1: Dell ‘s Supply Chain Management Practices ( Consumer Electronics )

This instance survey is based on a different type of supply concatenation direction patterns pioneered by Dell Inc, one of the prima Personal computer makers in the universe. It is known as the Direct Model, a alone theoretical account of selling Personal computers straight to the consumers, short-circuiting the resellers. With this theoretical account, Dell was able to supply its clients with bespoke merchandises, built merely after securing the order from them. This instance analyze describes this theoretical account in item and explains how it enabled Dell to pull off its supply concatenation efficaciously.

3.1 Summary – Background Note

Dell Inc. ( headquartered in Texas, USA ) is a planetary engineering corporation that develops, industries, sells, and support personal computing machines and other computer-related merchandises. Founded in 1984 by Michael Dell ( Michael ) , it grew during the 1980s and 1990s to go the largest marketer of Personal computers and waiters. Dell became a innovator in the “ configure to order ” attack to fabricating – presenting single Personal computers configured to client specification. In order to understate hold between purchase and bringing, Dell has a general policy of fabricating its merchandises near to its clients ; which allows for implementing a just-in-time ( JIT ) fabrication attack, which minimises stock list costs.

3.2 The Direct Model

Dell ‘s ‘Direct merchandising Model ‘ hints its beginnings to Michael ‘s thought of selling computing machines straight to the consumers extinguishing the demand for distributers. He believed that by selling system ( Personal computers ) straight to the consumers, the company would be able to better understand the demands of its consumers. Each system was assembled harmonizing to client ‘s penchant.

Dell besides realised that keeping a high degree of quality was necessary in order to vie with the to Personal computer makers like IBM and Compaq. To accomplish this, the company decided to increase their financess in manus by cut downing stock list. Dell decided to bring forth Personal computers as per orders it received and non to keep extra stock list or finished merchandises. Dell so subsequently decided to replace stock list with information and base on balls on the information to the providers, who were provided entree to company ‘s internal informations about the demand for specific constituents. With the decrease in constituents stock list holding a positive consequence on each hard currency flow, the company decided to convey other undertaking related production in line with the decreased stock list. The overall nest eggs Dell derived from pull offing the stock list encouraged it to seek fiting supply and demand on monthly, hebdomadal and day-to-day footing. This reduced the fluctuation in supply and demand and bit by bit it was no longer necessary for Dell to keep any component stock list.

Dell established its web site in 1994, introduced on-line pricing in 1995, and began on-line gross revenues in 1996. Within six months Dell ‘s gross on the Internet stood at US $ 1 million a twenty-four hours. By 1997, gross revenues through the Web were around US $ 1 billion, and by 1998, Dell ‘s gross revenues through the Internet accounted for more than half of its entire gross revenues. The cyberspace proved to be a supporter for Dell ‘s direct theoretical account as it was able to ease minutess. Reduce costs, and better relationships with clients. Dell ‘s direct theoretical account was straight supported by the manner the company ‘s activities were organized globally.

3.2.1 The Direct Model – Function of Dell ‘s Suppliers

As conveying constituents from the providers ‘ mills to Dell took anything between 7 and 30 yearss depending on the manner of transit, Dell required all its providers to keep a warehouse near to its mills. They could either fabricate the merchandise at the warehouse or bring forth at another topographic point and transport the finished merchandise to the warehouse. The warehouses known as Suppliers Logistics Centres ( SLC ) were located few stat mis off from Dell ‘s assembly workss. Each SLC could be shared by more than one provider. Typically, Dell required providers to keep stock list for 8 to 10 yearss in SLCs. Dell took the stock list from SLCs as required, normally refilling its stocks every two hours. Most providers replenished the stocks at SLCs thrice a hebdomad.

Dell demanded that its providers should be highly flexible to suit short-run demand fluctuations. The providers are provided with informations on real-time client demand, and every hebdomad, providers were given an order committedness from Dell for the undermentioned hebdomad. The providers needed to direct their consent to run into the company ‘s demands instantly.

3.2.2 The Direct Model – Balancing Demand and Supply

Dell maintained a database to track the buying forms of corporate clients and their budget rhythms, in order to calculate demand. It besides maintained a similar database for single clients in order to provide for their hereafter demands. The altering demand forms were communicated to the major providers three times a twenty-four hours.

If it was found that the lead clip for a merchandise was increasing, the procurance of the merchandise was accelerated or extra providers were brought and the clients were encouraged to purchase utility merchandise. If any constituent was found to be roll uping, clients were provided inducement to purchase those merchandises. On the other manus, if demand exceeded supply at any given point in clip, Dell had more than one provider to speed up supply. If the constituent was generic, Dell checked with alternate providers. Once the provider options were exhausted, Dell used its selling squad to switch demand.

3.3 Benefits of Direct Model

Dell gained enormous benefit from their Direct Model attack to Supply Chain Management. As Dell did non keep big stock list of finished merchandises, it did non hold to sell technologically disused merchandises at a price reduction. Dell was able to convey in new merchandises harmonizing to the demands of the clients into the market faster than its rivals. In add-on to this, Dell was able to integrate new engineerings rapidly into its merchandises and take them to clients about two months in front of its rivals. Through the Direct Model, Dell ‘s production system functioned on negative working capital as providers were paid 36 yearss after Dell received payments from its clients. This is in contrast with other computing machine makers who normally paid the providers 30 yearss before the Personal computer was skipped to the market

3.4 What Dell could make to acquire more positive consequences

In order for Dell to recover its figure one place in the Personal computer market, it has to do important concern alterations to manner its been making concern for two decennaries. First, Dell could supply a installation where consumers have the chance to see the merchandise before purchasing it. Dell can accomplish this by partnering with PC retail shops. This will besides assist to turn to some of the client service issues and better its support system. Another thing Dell could make is to make merchandises with a longer shelf-life, like digital telecastings and pressman cartridges, in add-on to a few desktops and notebooks and sell them through the Dell retail shops. Finally, Dell could come in the commercial retail section and compete with likes of HP and Acer, although this is an country in which Dell is non experient plenty.

4.0 CASE STUY 2: Toyota ‘s Just-in-Time Revolution ( Automotive )

This instance survey is based on the Just-in-Time fabrication system pioneered by Toyota. It is one of the most important production attacks of the station universe war II epoch. The instance discusses in item the construct of Toyota ‘s JIT system and the ‘Kanban ‘ construct ; which was one of the rules on which Toyota ‘s JIT was based. I will compare the Kanban construct with the western fabrication doctrine. I will besides do nonsubjective unfavorable judgment and suggestion, where appropriate, to demo what else Toyota could make to acquire more positive consequences.

4.1 Summary – Background Note

Toyota ‘s history goes back to 1897, when Sakichi Toyoda ( Sakichi ) diversified into machinery concern from his household traditional concern of woodworking. He founded Toyoda Automatic Loom Works in 1926 for fabricating automatic looms. Sakichi established an car section within TALW. Toyota Motor Corporation was established in 1937 after Sakichi ‘s boy Kiichiro Toyoda ( Kiichiro ) convinced him to come in the car concern.

Kiichiro visited the Ford Motor company in Detroit to analyze the US automotive industry. He saw that an mean US worker ‘s production was nine times that of a Nipponese worker. He realized that the productiveness of the Nipponese car industry had to be increased if it were to vie globally. Back in Japan, he customized the Ford production system to accommodate Nipponese market. He besides devised a system wherein each procedure in the assembly line of production would bring forth merely the figure of parts needed at the following measure on the production line, which made logistics direction easier as stuff was procured harmonizing to ingestion. This system was referred to as Just-in-time ( JIT ) with the Toyota Group.

4.2 Just-in-Time Production System in Toyota

Taiichi Ohno ( Ohno ) , who is now referred to as ‘the male parent of JIT ‘ enforced JIT in Toyota ‘s fabrication workss in the early 1970s. The system was aimed at avoiding waste, cut downing stock lists and increasing production efficiency in order to keep Toyota ‘s competitory border. Initially, it was used as a method for cut downing stock lists in Toyota ‘s shipyards, but subsequently it evolved into a direction doctrine including a set of techniques.

Kanban was an of import constituent of Toyota ‘s JIT construct. It is a simple parts-movement system that depended on cards and containers to take parts from one workstation to another on production line. Ohno developed the in 1956 from the supermarkets in the US, which had devised an effectual system for refilling of shop shelves based on the measures picked by clients. The kernel of the Kanban construct was that a provider delivered constituents to the production line merely when required, therefore extinguishing storage in the production country. Supplier delivered coveted constituents when they received a card and an empty container, bespeaking that more parts were needed for the production. In instance of line break, each provider produced merely adequate constituents to make full the container and so stopped.

At Toyota, two types of Kanban cards were used. To travel parts from one topographic point to another, known as the Conveyance Kanban card and to authorise the production of parts, known as the Production Kanban card. Three types of information were exchanged utilizing Kanban ;

Pick up information guided the earlier phases sing parts to be produced for the succeeding phases.

Transfer information indicated when the parts had to be produced for the succeeding phases.

Production information was transmitted from the earlier phases to the ulterior phases to inform the workers about the merchandise mix and other operational affairs.

To do the Kanban system effectual and harvest maximal benefits from it, Ohno framed six regulations:

Do non dens faulty merchandises to the subsequent procedure

The subsequent procedure comes to retreat merely what is needed

Produce merely the exact measure withdrawn by the subsequent procedure

Degree the production

Kanban is a agency to ticket tuning

Stabilize and apologize the procedure

Another of import constituent of JIT was called Heijunka ( production smoothing ) . JIT ‘s rule of constructing merely the needed figure of points helped maintain the production costs low. Heijunka helped in the achievement of this rule by making a consistent production volume. Heijunka averaged highest and lowest fluctuations of the orders. The fluctuations were so removed from the production agenda. This ensured that the right measure of parts was produced with minimal work force. Heijunka took attention non merely of the entire volume of points but besides the type of points produced and the other options.

Benefits to Toyota

The JIT system implemented by Toyota offered several advantages over other fabrication procedures. Because of the early acceptance of JIT, Toyota benefited more from the system than other car companies. The chief benefit of the JIT system to Toyota is its ability to assist drive down costs and waste by bettering the flow of production. Another large advantage of JIT system to Toyota is that it improves the reactivity to alterations in demand. The Kanban construct implemented is like a smart traffic visible radiation with ability to feel when the traffic, or in this instance the demand, is constructing up. In add-on to these, Toyota was able to:

Reduce stock retentions by decrease in storage infinite which saves storage and insurance costs.

Have less on the job capital tied up in stock as stock is merely obtained when it is needed.

Reduce clip spent on look intoing and re-working the merchandise of others as the accent is on acquiring the work right first clip

4.4 What Toyota could make to acquire more positive consequences

Toyota has non been able to retroflex the JIT production system in an efficient manner in any of its operations outside Japan. Toyota should seek to absorb the Nipponese civilization ( which is a chief drive force of their JIT ) in their other operations outside Japan inorder to acquire more consequence. Besides, Toyota should utilize more than two providers for most parts as holding less than two providers makes Toyota susceptible to flux break.

5.0 CASE STUY 3: Xerox – The Benchmarking Story ( Consumer Electronics )

This instance survey is based on the benchmarking enterprises taken by Xerox, one of the universe ‘s taking duplicator companies. This is a portion of their ‘Leadership through Quality ‘ plan implemented by the company during the early 1980s. I will discourse in item the benchmarking construct and its execution in assorted procedures at Xerox. I will research the positive impact of benchmarking patterns on Xerox besides make nonsubjective unfavorable judgment and suggestion, where appropriate, to demo what else Xerox could make to acquire more positive consequences

5.1 Summary – Background Note

The history of Xerox dated back to 1938, when Chester Carlson, a patent lawyer and parttime discoverer, made the first xerographic image in the US. He struggled for over five old ages to sell the innovation, until 1944 when Battelle Memorial Instutite approached him to polish his new procedure. Xerox was registered as a hallmark in 1948 when The Haliod Company obtained all rights to Carlson ‘s innovation from Battelle. Xerox Corporation was formed and listed on the New York stock Exchange in 1961.

The company grew throughout the sixtiess by geting many companies, and subsequently diversified into the information engineering concern through to the early 1970s. in the 1970s, Xerox focused on presenting new and more efficient theoretical accounts to retain its portion of the reprographic market and header with competition from the US and Nipponese companies. The company ‘s gross increased from $ 698 million in 1966 to $ 4.4 million in 1976, and net incomes besides increased quintuple from $ 83 million in 1966 to $ 407 million in 1977. The rapid growing at Xerox led to the debut of a assortment of controls and processs and the figure of direction beds was increased during the 1970s. This, nevertheless, slowed down decision-making and resulted in major holds in merchandise development.

By early 1980s, has found itself progressively vulnerable to intense competition from both the US and Nipponese rivals. Harmonizing to analysts, Xerox ignored new entrants who were consolidating their places in the lower-end market and in niche sections. The direction besides failed to give the company strategic way. The company ‘s operating cost was high and its merchandises were of inferior quality in comparing to its rivals. Xerox besides suffered from its extremely centralized decision-making procedures. As a consequence of this, return on assets fell to less than 8 % and market portion in duplicators came down aggressively from 86 % in 1974 to merely 17 % in 1984.xerox ‘s net incomes decreased from $ 1.15billion in 1980 to $ 290 million in 1984.

When David T. Kearns ( Kearns ) took over in 1982, he discovered that Nipponese companies were able to undersell Xerox ‘s monetary values effortlessly because their mean costs of duplicators was 50-60 % cheaper than that of Xerox. Kearns rapidly began stressing decrease of fabrication costs and gave new push to quality control by establishing a plan that was popularly referred to as ‘Leadership through Quality ‘ . As portion of this quality plan ( to happen ways to cut down their fabrication costs ) , Xerox implemented the benchmarking plan. These enterprises played a major function in drawing Xerox out of problem in the old ages to come. The company even went on to go one of the best illustrations of the successful execution of benchmarking.

5.2 Benchmarking against Nipponese Rivals

Xerox discovered that it took twice every bit long as its Nipponese rivals to convey a merchandise to market, five times the figure of applied scientists, four times the figure of design alterations, and three times the design costs. The company besides found that the Nipponeses could bring forth, ship, and sell units for about the same sum that it cost Xerox merely to fabricate them. In add-on, Xerox ‘s merchandises had over 30,000 faulty parts per million – approximately 30 times more than its rivals. Benchmarking besides revealed that Xerox would necessitate an 18 % one-year productiveness growing rate for five back-to-back old ages to catch up with the Japanese. After an initial period of denial, Xerox directors accepted the world.

Following this, Xerox defined benchmarking as ‘the procedure of mensurating its merchandises, services, and patterns against its toughest rivals, placing the spreads and set uping ends. Goal is ever to accomplish high quality in quality, merchandise dependability and cost. ‘ Gradually, Xerox developed its ain benchmarking theoretical account. This theoretical account involved 10s stairss categorized under five phases – planning, analysis, integrating, action and adulthood.

Figure 2: Xerox Benchmarking Model ( harmonizing to Karsnia 1991, Camp 1989 )

Xerox collected informations on cardinal procedures of best pattern companies. These critical procedures were so analyzed to place and specify betterment chances. For the intent of geting informations from the related benchmarking companies, Xerox subscribed to the direction and proficient databases, referred to magazines and trade diaries, and besides consulted professional associations and confer withing houses. Having worked out the theoretical account it wanted to utilize, Xerox began by implementing competitory benchmarking. However, the company found this type of benchmarking to be unequal as the really best patterns, in some procedures or operations were non being practiced by duplicator companies. The company so adopted functional benchmarking, which involved a survey of the best patterns followed by a assortment of companies irrespective of the industry they belonged to. Xerox initiated functional benchmarking with the survey of the repositing and stock list direction system of L.L. Bean ( Bean ) , a mail-order provider of featuring goods and out-of-door clothing.A

Similarly, Xerox zeroed in on assorted other best pattern companies to benchmark its other procedures. These included American Express ( for charge and aggregation ) , Cummins Engines and Ford ( for mill floor layout ) , Florida Power and Light ( for quality betterment ) , Honda ( for provider development ) , Toyota ( for quality direction ) , Hewlett-Packard ( for research and merchandise development ) , Saturn ( a division of General Motors ) and Fuji Xerox ( for fabricating operations ) and DuPont ( for fabricating safety ) .

Consequences of Benchmarking

Some of the benefits Xerox derived as a consequence of their benchmarking are ;

Customer satisfaction for its copier/duplicator and publishing systems increased by 38 % and 39 % severally.

Customer satisfaction with its gross revenues procedures improved by 40 % , service procedures by 18 % and administrative procedures by 21 % .

Customer ailments reduced by more than 60 % .

Fiscal public presentation of the company besides improved well through the mid and late eightiess.

Some of the other benefits Xerox derived were:

Number of effects reduced by 78 per 100 machines.

Inspection of incoming constituents reduced to below 5 % .

Inventory costs reduced by two-thirds.

Noteworthy lessening in labor costs.

Became the leader in the high-volume copier-duplicator market section

Country units improved from 152 % to 328 % .

5.4 What Xerox could make to acquire more positive consequences

Xerox could acquire more positive consequences by continuously benchmarking against other companies outside the United States, particularly in India and China. As we are in a more competitory concern environment where clients penchant are altering and they want more value for their money, Xerox should seek to diversify more into the engineering market in order to retain its fight in the market.

6.0 Decision

Hence we can see that operations direction is an of import facet of any concern administration. It is really of import as it is concerned with making merchandises and services ; the nucleus of an organisation ‘s being. It is besides disputing because the techniques implemented by organisations need to work globally and responsibly within the society and the environment ; as we can see in all the three instance surveies used in this study.