Free «Operations Management Project» Essay Sample

Introduction

Operations management is a vital organizational management function that is responsible for designing, operating, planning, and improving production systems. The aim of operations management is to optimize an organization’s resources and business processes so as to enhance competitiveness. There are various operations management practices including productivity, location planning, inventory management, simulation, transportation and assignment models (Kumar & Suresh 2009, p.3). Ideally, good operations management streamlines a company’s operations while enhancing its efficiency and ultimate productivity. From XYZ’s case study, there are various operations management issues that the company would like to be addressed by a consultant. The following report identifies critical issues, key approaches and concepts, and issues related to the problems and a reflection of how the company is doing with regard to the recommendations made in the report.

2.0 Key Issues

From the case study, it can be acknowledged that there is a need for operations management interventions to address key issues in XYZ’s operations. One of the key issues in the company’s processes is delays. The delays are experienced in two main areas. One of the areas is on the supply side. The case study pointed out that the company is supplied by both international and local suppliers. International suppliers account for 90% of all the company’s inventory. Local suppliers are efficient, and the turnaround time is about two days. This is relatively fast and acceptable. However, the delay issues come about when the company is dealing with international suppliers who have a turnaround time of about two months. This is a major delay that has a significant negative impact on the company’s manufacturing processes; it leads to delays in manufacture and ultimately results into delays while supplying to the final customer. The second delay is experienced on the customers’ side where XYZ Company is not able to supply products required by customers in time. In a recent survey, customers identified that they were not satisfied with XYZ’s delivery terms. This gives an insight into the existence of a poor customer service that has an ultimate negative effect on the company’s competitiveness. The delays in the process line are associated with various negative impacts on efficiency, productivity, and customer satisfaction. To the manufacturer, delays in supply have an effect of increasing the lead and turnaround time, manufacturing process delays, and, sometimes, quality issues (Tuncel & Alpan 2010, p.253).

The quality-related issue is another important question in XYZ’s operations. From the case study, it was identified that quality issues are experienced in both the supply and manufacturing elements. On the supply side, the company is not able to track quality elements of the various inputs supplied. This has an effect of leading to the supply of substandard inputs that ultimately affect the quality of manufactured products negatively. This can be associated with a poor outsourcing policy that leads to delays that leave no ample room for the company to assess supplies (Al-Amin & Jaafar 2014, p 580). On the other hand, the case study identified that although the final products supplied to customers meet the required quality standards, there exist a lot of quality-related issues in the manufacturing line. This leads to wastages and operational inefficiencies, and the company is forced to reprocess batches in a bid to regulate quality. This has an ultimate effect of enhancing the company’s operation costs because reprocessing adds to the unit cost of manufacture while increasing waste simultaneously. Such waste that has undergone processing is what may be referred to as expensive waste owing to the manufacturing activity carried out on it before being graded as waste (Womack & Jones 2010, p.65).

Inventory reduction is another key issue that XYZ Company faces in its operations. According to the case study, the company is trying as much as possible to minimize the amount of inventory. It is true that the company has formed strategies that would ensure the deliveries reach the production floor directly. The point-of-use replenishment established by the company as delivery strategy is only beneficial for local purchase; however, there are needs for reassessing this strategy to cater for international purchases (Buscher & Wels 2010, p.197). According to the case study, it is true that the operational ordering and inventory does not take into account the calculated economic order measure together with the discounts as a result of quality measures in the orders purchased. As a matter of fact, the calculated economics is much vital when it comes to inventory management; on the other hand, when discounts offered to the company by its suppliers are ignored, the inventory kept by the firm will reduce itself.

The company tries as much as possible to reduce the finished goods inventory when the final products are shipped to the relevant customers. Following this approach, some complaints are raised by the dealers based on the lost orders and the time needed for the orders to be taken in processing. The initial study as per the lost orders and processing time reveals that when an order is sent to XYZ Company, 1% of the order is lost, and the processing time is about three hours seven minutes. However, after the order has been stocked, it takes 3-5 days to be delivered to the customers, and some order even need one week to be completed. In this case, one out of 200 orders shipped is identified as wrong, but the delivery process has a correctness of 100%.

Delayed production process is among the key issues that XYZ Company face in its operation. According to the case study, production is a complex and continuous process that involves a combination of different activities (Dale & Wan, 2002, p.110). Since the production process of XYZ’s products involves high standardization of ingredient, the customization is associated with delays. Most specifically, long alkyd resins have a tedious production process that consumes a lot of time. Approximately 20 hours is spent to produce a single unit of the long alkyd resin. Production process is long and tedious with every step accounting to a deliverable. Therefore, managing production process is much important to the management since it will not only increase the rate of production but also limit the time taken to manufacture a product unit.

Besides, inaccurate forecasting is a problem that the XYZ Company's management is experiencing. Based on the case study, forecasting is a rare activity of the company due to some reasons. Since alkyd is considered as a standardized product, it has a relative stability in usage requirement. Moreover, the raw materials are obtained from different sources, both local and international suppliers making the company reluctant in comprehending on what may happen in the future. These suppliers provide raw materials at a more convenient time, for example, the company relies on local suppliers for a lead time of 2 days as international suppliers may take up to 2 months to supply raw materials. Additionally, the production process is flexible to the company as customer request can be handled forthwith upon inquiry. Based on these activities, XYZ Company values average forecast that may be dangerous to its performance. There is a need to improve forecasting accuracy for stability and performance of the company (Edgeworth 1978, p.36). 

3.0 Key Approaches, Concepts That Apply to the Issues

Delay

As pointed out earlier, a delay is an aspect that is disadvantageous to both the suppliers and manufacturers (Goethals and Boylan, 2011, p.254). To the manufacturer, a delay may reduce the quality of services offered to the customers, which leads to reducing customer relation. Delays, on the other hand, reduced the efficiency of service deliverability to the customers, they also reduce sales of the products in question since the clients will not be able to obtain their orders in time. Most importantly, the delay reduces the productivity of the organization. When suppliers of raw material take longer time than expected from them to deliver goods to the manufacturer, the process of manufacturing goods will be delayed accompanying poor services and lack of trust from the customers (Heizer & Render 2001, p.310). It is notable that delays that arise between the suppliers and the manufacturers occur as a result of different aspects. Both suppliers and manufacturers may spend much time doing activity that they agreed to do. Besides, a technical activity might require more effort than you planned for, and when the organization work on an activity, it has less experience in it. All of these and some other factors may lead to a delay in the provision of services to customers.

Withal, to handle the problems of delay, it is important to establish realistic deliverables that can be achieved by the deadline (Krajewski, Ritzman & Malhotra 2007, p.177). Deadlines usually bring a clarity to the organization about the performance and effort required to achieve a specific objective. In management specifically, deadlines create a time-bound framework for the managers based on formulated goals. Besides, delays can be handled by an expectation of the unexpected. Since delays are a common expectation to every management, it is important to prepare for avoiding it. Actually, most of the delays are predictable, and there is a need for ensuring that they do not happen because they harm the organization. Deploying proactivity in management will minimize the unexpected outcomes within the organization (Kumar & Suresh 2009, p.29). The latter should be aware of those factors that may lead to delays and act on them forthwith; besides, wise scheduling of activity will minimize delays. Through following effective production and delivery processes successfully, the organization will be able to handle occurrences of delay. 

Quality Related Issues

Quality is one of the most imperative aspects that can lead to customer satisfaction. The quality deliverable is important because it makes the management more effective at meeting the needs of the stakeholders. Quality is capable of adding strengths and credibility to the organization; besides, quality is perceived as more economical in an organization in the long run (LAI 2016, p.17). Therefore, it is critical to ensure that there is quality in supply and in the manufacturing of products by the company. Developing a culture of quality between the organization and its stakeholders can positively influence an organizational performance. Employees will be more organized with improved work morale leading to a presentable outcome. Quality concepts are based on performance that relies on operational product characteristics; products should deploy measurable attributes defined in its operation to be considered as quality. Besides, products and services offered by the company should have specific features that define the level of quality, and such features must be achieved. Other concepts describing quality include reliability, aesthetic, conformation, serviceability, and conformance among others (LAI 2016, p.19).

Quality services can be enhanced by deploying different management approaches. Through focusing on the customers, the organization will be capable of providing quality services. Since customers are the main target in any business, the management tends to ensure that quality services are provided to it as a method of obtaining the competitive advantage (Page 2001, p.63). Furthermore, the obsession with quality in an organization is achieved through planning carefully, monitoring organization activities, and time-to-time reevaluation of the business. Initiating teamwork ensures better interaction and sharing of management ideas that lead to better results. Teamwork is critical in removing performance pressure from individuals hence quality services. Besides, employees’ involvement in the management process can lead to quality servicing; the management will be capable of integrating different ideas from various people that may be resourceful in providing quality services. Most importantly, through education and training of employees on various approaches to customer satisfaction, the organization is capable of delivering quality services (Pohlmann 2001, p.63).  

Inventory Management

Business inventories, when managed effectively, will deliver expected business objectives (Sharma & Bhat 2012, p.40). Different approaches are used to reduce inventory in the business to free up more cash for investment into it. Reducing supplier lead-time is an approach that the organization uses to reduce inventory in the business. Faster lead time ensures the reduction of short-term carrying cost and the risk of holding obsolete items. On the other hand, eliminating obsolete inventory as an approach of reducing inventory provides a long-term profit while having a negative impact on short-term profits (Sharma & Bhat 2012, p.44). Inventory can also be reduced through optimizing order size and purchasing frequency. This would be vital in supporting operational goals of the business. The benefits that an organization will enjoy in terms of reducing the inventory include reinvestment of working capital in other issues as the management keeps cash flow within the organization. Reducing inventory will also decrease capital loss in the supply chain as usable storage space is increased (Stone-Romero, Stone & Grewal 1997, p.87). 

Inaccurate Forecasting

Forecasting sales are used in the production process to estimate the demand for goods and services (Stone-Romero, Stone & Grewal 1997, p.44). Forecasting is vital in business because it is used to predict and act accordingly to the losses that may occur as a result of unsold inventory; such losses may threaten the performance of the business. Therefore, there is a need for an accurate forecast of the most important aspects of the business while trying to reduce business risks.

Several approaches are underlying forecasting strategy as a business management process. Through estimation, the level of demand and supply can be obtained to know what amount of products to be produced, what to supply and to whom (Suwanruji & Enns, 2007, p.59). On the other hand, estimation helps in predicting the competitor’s approach to acquiring a competitive advantage. Besides, historical data forms a forecasting approach in the organization. Forecasting uses information from stored data to predict in the most efficient way managing business for effective deliverables. In cases when there are no reliable data, some models are used to provide ways of forecasting based on behaviors of specific products.

4.0 Reflection on Recommendations

For efficient management, XYZ Company should deploy some particular aspects to ensure that customers are served in a more convincing manner. In the case of delays, XYZ Company should set realistic goals that are worth achievable within the time limit (Harper, 2001). The company should ensure that the best approach to the delivery of their products is chosen to minimize the time that goods may take on transit. On the other hand, the company should prepare for the unexpected from the international suppliers that may cause delays. The fact that the international suppliers may take up to two months to deliver raw material should give the company a clue of delay happenings and use the local suppliers to stock more raw material in an attempt of preventing the delays. To minimize delays arising from international suppliers, XYZ Company should make use of the available local raw materials from the local suppliers.

Quality is the main core of the business. A business that values quality will have a positive competitive advantage (The Power of Sustainable Thinking – How to Create a Positive Future for the Climate, the Planet, Your Organization and Your Life, 2009). XYZ Company can enhance its product quality in several ways. The management should ensure that there is effective communication between the employees and the customers. Good customer relationship will establish a support system in case of any problem experienced by the customers. Therefore, good customer relation through adequate communication will help XYZ to solve problems of quality. Besides, XYZ Company should deploy training programs in the business as a quality servicing methodology. Through informing stakeholders of what can be done to enhance quality, the company will stick to quality production. Employees should be trained in essential services that will enhance quality production in the management. Informing employees about the importance of customers will enhance productivity.

When it comes to inventory management, XYZ should reduce its lead time. Reducing the time intervals between the initiation and the production process will allow for faster production within the same time limit (Tuncel & Alpan 2010, p.250). Besides, reducing lead time will ensure that all calculated economic order measures as well as quality discounts that might be offered are included in the inventory. This usually happens when too much time is allowed for processes that may be forgotten at long last.

XYZ Company should deploy accurate forecasting in the business to facilitate its operation and improve the level of output. Through accurate prediction, the management within the company will be able to predict the actual trends. When deployed, this will improve deliverables. Besides, the company should set forecasting demand based on the trends to work towards it. Through the use of stored data as well as models, the company will be able to forecast effectively for positive feedbacks. Therefore, forecasting not only improves the level of output, but it also enhances good customer relation within the organization (Whitt 1999, p. 880).