Utilization of Operation Management Tools and Techniques in Manufacturing - Essay Example

EXAMINING THE UTILIZATION OF OPERATIONS MANAGEMENT TOOLS AND TECHNIQUES IN MANUFACTURING Name of Student Name of Institution Name of Professor Date of Submission Examining the utilization of operation management tools and techniques in manufacturing Introduction In today’s business environment characterized by free flow of information, the customers are increasingly becoming well informed. The advent of the Information Age which heralded the emergence of a quest for globalization has piled a lot of financial and operational pressures on organizations. One such operational pressure is the ability of businesses to meet the ever changing and increasingly complex demands: tastes and preferences of customers. Such complexity and dynamism of customer demands require businesses to work around the clock to ensure that these demands are fully met. Meeting customer demands enable businesses to remain competitive while also enabling them to maximize profits and therefore survive. Manufacturing as a business function and operation ensures that the goods churned out through the production conveyor belt of the business meet the customer tastes and preferences. It turns raw materials into finished products tailor made according to market demand. Manufacturing is the foundation upon which other business operations are based on. It is the first line of brand and image creation. It utilizes data from market research and raw materials from the supply chain and merge them to produce goods capable of meeting the quality standards as required by both the customers and the relevant laws. It is therefore the bedrock upon which various strategies are laid; it is the ultimate tool for gaining competitive advantage in a competitive and crowded modern day market place. The globalization of most economies has opened new territories and geopolitical zones. The differences in cultural, religious, social, economic and political backgrounds call for dynamism in business operations. This is further compounded by the increased competition as a result of the mostly free market economy that comes with globalization. To stay relevant companies must therefore go beyond meeting the diverse and complex needs of their clients; they must be able to compete sustainably. Their products and services must be creative, innovative and revolutionary. But most importantly, they must be inimitable. They must not be vulnerable to the imitation which is rampant in today’s world. The only point within operational chain where creativity and innovativeness can be seamlessly added is at the manufacturing level. It allows for the business to stamp its brand image on its products and therefore gain the much needed competitive advantage in the overcrowded and highly competitive globalized marketplace. It is also at the manufacturing level that the business is able to effectively and efficiently meet their corporate social responsibility initiatives such as environment conservation. With environmental conservation increasingly becoming emerging issues in the corporate world, manufacturing provides a platform where the company can come up with environmentally friendly products (Chase, Jacobs & Aquilano, 2007). Manufacturing is part of operations management, a concept defined as “a transformation process in which inputs (resources) are by means of this process transformed into outputs (products or services)” (Horváthová & Davidová, 2011). As one of the most important and asked fields in the corporate world, operations management enable businesses to identify the dynamics of the day and map out the methods and procedures which the business can use to react appropriately to the ever changing business environment in order to maximize profits while also meeting its corporate social responsibility objectives. It enables businesses to meet their strategic goals and objectives such as profit maximization, increasing and sustaining competitiveness and profitability of the business organization and also maximization of the business’ market value. That is, it ensures the survival of the business organization. This is because it identifies and deals with both external and internal changes in the business environment (Hrủzová, 1999). It manages the supply chain logistics of the business organization with the view of contemporarily measuring, analyzing and managing cost, time and quality of the production/manufacturing process and for the business as a whole. This paper aims at researching the literature on operations management tools and techniques such as Pareto Law, Cause & Effect Analysis – Ishikawa / Fishbone Analysis, Quality Circles and Value Analysis/Value Engineering. A critical analysis of these tools and techniques will highlight their roles in operations management and most importantly, their contribution towards value addition during manufacturing as an operation function. That is, how they contribute to time, cost, quality and service. Such analysis will also highlight their differences with regards to ideological or philosophical approach towards the management, relations and involvement of the clients or customers and the management, staff and the organization at large. Operations Management Tools and Techniques The spun and focus of operations management is always a delicate matter. Some of its key approaches to tackling external and internal changes within the business environment require careful considerations in order to avoid causing controversy and sometimes litigations. It therefore requires a delicate balancing act based on thorough analysis of the situation and the solution options. This is further compounded by the dynamic nature of the business world; there is no guarantee that a situation will remain constant for an extended period of time and there is not guarantee too that it will not last. While many companies would not disclose outright that they are using operations management tools and techniques to guide their operations, they continuously adjusting and fine tuning their internal and external business processes in order to streamline their production and distribution channels for their products and services with the view of maximizing profits, quality and market value while minimizing cost and time. They continually engage in such activities as product creation and development while also laying emphasis and streamlining their production processes and distribution channels. They also manage their inventories, institute quality control measures while also managing the purchases by both the customers and the firm. Business organizations also engage in logistics especially as part of their supply chain management strategy while also carrying extensive and intensive firm’s operations, market and product researches to evaluate their performances. These external and internal activities fall within the scope operations management as they are aimed at ensuring efficiency and effectiveness of all the firm’s operational processes (Rowbotham & Azhashemi, 2005. By and large, operations management primarily involved measurement and evaluation of internal business environment during its formative years and when business used the traditional approach to operations and organizational culture where the business was the center of any business transaction. However, which businesses abandoning such a formal, rigid and traditional approach to organizational culture and business operations and adopting a more informal and flexible approach to business operations, operations management is increasingly adopting measurement and analysis of more heterogeneous activities. However, every business is faced with unique challenges and have unique opportunities to exploit. Moreover, there is also a differential organizational culture across the corporate world. Therefore, measuring and analyzing operations management parameters is not uniform across all organizations. Such measurements and analyses depend therefore on the products and services offered by the business and the unique challenges and opportunities in its environment. That is, the nature of the business. This therefore leads to different tools and techniques for such evaluation. a) Pareto principle or principle Developed by Joseph M. Juran and named after Vilfredo Pareto, the Pareto principle or law advocates for the concentration and laying of emphasis on the various areas of organizational operations based on their efficiency. Also known as the law of the vital few or the principle of factor sparsity, the Pareto principle calls on businesses to measure and analyze their operational units and make improvements and adjust resource allocation based on their production efficiency. Therefore, inefficient units can then be ignored or eliminated and in most cases, improved appropriately. The 80 – 20 rule is based on the assumption that in any situation including business operations, only 20% are vital with the remaining 80% being trivial. Richard Koch (2004) writing on this principle holds that: 80 percent of growth comes from 20 percent of organizations. 80 percent of results come from 20 percent of activities. 80 percent of useful experience in an industry or profession comes from working with 20 percent or fewer practitioners and from working in 20 percent or fewer organizations. 20 percent or perhaps much less of what you do creates 80 percent or more of your value. 80 percent of profits come from fewer than 20 percent of customers. 80 percent of value is created by concentrating on 20 percent of issues within a market, by innovating accordingly. 80 percent of value comes from 20 percent of changes (Koch, 2004 pp. 53 – 54). Essentially, the Pareto law calls for streamlining operations by refocusing and redistributing resources based on the efficiency and productivity levels of entities while scraping off or making necessary improvements on underperforming units. It identifies key important areas and ensures that they maintain and sustainably continue to produce efficiently. But most importantly, a Pareto law approach ensures that a business organization improves performance by identifying key areas that needs to be improved or eliminated in order to improve overall performance of the business. It encompasses all aspects of the business and appreciates the interconnectivity of the various operations within the business environment. Therefore, in manufacturing Pareto will bring key changes especially to the supply chain of the organization. It will enable the company to configure its distribution network based on their production efficiency. Therefore, the company will be able to determine which entities along its supply chain are more productive and efficient, which needs to be eliminated because of inefficiency and which needs to be improved. The efficiency of the suppliers, distributors and the various production facilities are mapped out. Such analysis will also extend to the warehouses and the distribution centers plus the inventory management section which are all part of the manufacturing process. The business can then cut costs of manufacturing while also identifying key areas along the production chain which needs improvements. It identifies key areas in the manufacturing process that adds value to the products. By eliminating areas considered to be trivial or inefficient during manufacturing, the Pareto law can enable a business organization reduce cost of operation while also coming up with innovative and creative ways of improving them. This will save time, add quality to the manufactured goods while also improving service delivery. These benefits will be further enhanced when the trivial areas are appropriately improved. b) Cause & Effect Analysis – Ishikawa / Fishbone Analysis Created by Kaoru Ishikawa, the cause-and-effect diagrams combines brainstorming with mind mapping of a problem to determine its cause and effects with the view of coming up with solutions. This analysis is aimed at addressing the problem wholly by identifying all its possible causes, effects and solutions and then implementing the identified solution which is considered to be the most effective. The major benefit of this approach is that it helps the business to solve a problem at the first instance. Moreover, such thorough analysis can also enable the business organization identify potential problematic areas both at the present and in the future (Gregory, 1992). Such extensive problem and solution analysis within the manufacturing industry will focus on six key areas with the high potential of causing problems during manufacturing. Manufacturing relies heavily on technology. From inventory management to the actual production, technology is the bedrock of success in manufacturing. However, technological glitches, lack of adequate and perquisite technologies can lead to high cost of production, low input and output (productivity) because of reduced production efficiency, low quality of products, poor service delivery and ultimately, inability to maximize profits by the business organization. The same problems can also be caused by inadequate or inefficient production methods or processes used during manufacturing. Materials including raw materials and information may also cause problems during manufacturing. In order to reduce costs, improve quality, reduce time taken during manufacturing and improve on service delivery, the materials must be in the right form, delivered at the right place and of the right quality. However, without the right manpower who have the right skills and physical abilities, these strategic objectives cannot be met. This is because manufacturing is a labor intensive undertaking. The manufacturing industry is tasked with meeting the complex demands of the customers through product design, creation and development. Such complexity requires round the clock and competent supervision. Supervision is therefore is a potential cause of problem during manufacturing especially when it is inadequate. Finally, the environment is also a potential source of problem during manufacturing. Extreme weather conditions such as drought, flooding, typhoons not only lead to damage of properties; they also led to loss of lives – labor. c) Quality Circles This operations management tool is based on employing the services of the organization’s employees, on a voluntary basis, to identify problems within their job description. Through discussions, they can then come up with solutions to the problems. When used, this technique ensures that there is a sense of continuity within the organization as they together on various problems. Such use of group intelligence also encourages harmony and teamwork. It is also relatively cheaper and therefore reduces operational cost while adding quality, service delivery. Using quality circles usually takes a shorter time as the employees understand their work environment better and therefore can readily identify the problems within their jobs and offer suggestions (Montana & Charnov, 2008). In manufacturing, members of the quality circles can be drawn from various areas including inventory management, production and human resource management teams. d) Total Quality Management (TQM) This technique primarily aims at producing quality products and services at the first at attempt instead of implementing quality monitoring procedures such as supervision to guarantee quality products and service delivery (Kanji, 1990). However, it goes a step further to ensure that such activities are continuous. The business organization therefore endeavors to improve quality on a daily basis by improving all aspects of the manufacturing process and general organizational activities. To guarantee quality at all times during manufacturing and throughout the organization, TQM calls for identification and solving of problems and therefore incorporates other operations management tools. TQM employs a technique known as organizational learning; an informal approach to management where information and knowledge is created and shared all across the management levels of the organization and also with the external environment (Marquardt, 2011). Such an approach is also an important human resource management tool as it creates a sense of belonging and loyalty amongst the employees (Ivancevich, 2006). Therefore, the company will be able to retain its skilled labor while be able to attract new talents within its folds to help drive the company forward through creative, innovative and revolutionary manufacturing ideas. These ideas reduce cost, improves quality and service delivery while ensuring that production and order processing periods are reduced. Summary Operations management in manufacturing target several key areas including product and service especially at a macro level where products and services are created, developed, produced and distributed for consumption. It allows for effective inventory management which reduces costs through efficiency and effectiveness. This also saves time as it reduces the chances of overstocking or understocking. That is, it calls for the ‘Just in time’ (JIT) approach to manufacturing. It also helps in logistics and facilities management to ensure that the raw materials and produced goods are transported in timely manner while ensuring that the facilities such warehouses and stores are ready to accommodate the incoming stock as per the dictates of demand. Moreover, operations management ensures that the sales and marketing and the production departments are seamlessly interlinked with the finance and human resource departments. Generally, operations management re-engineers, redevelops and fine tunes all organizational processes and realigns them with the organizational objectives and goals at present and in the future (Chase, Jacobs & Aquilano, 2007; Galloway, Rowbotham & Azhashemi, 2005). Conclusion Because of globalization and civilization, the modern day business environment has become increasingly competitive. The customer demands have become very complex and dynamic. However, businesses must survive in spite of the increased operational pressures. Today’s environment therefore requires a collaborative and flexible approach to business management and operations. Operations management offers businesses a platform where they can implement key strategies that are reflective of the modern challenges and business opportunities. It revolutionizes operations and realigns them towards the need of the customers, employees, investors and the business in general. It encourages collaboration and teamwork within the organization through creation and free flow of information and knowledge. Operations management tools and techniques offer various options which businesses can exploit to identify their problems and find effective solutions. It covers all operations of the business including all its products and service cycles with the aim of reducing cost of operations while ensuring that the company produces high quality products and delivers the best services in the market within the required time. Operations management is an embodiment of efficiency and effectiveness in an otherwise chaotic business environment. References Chase, R. B., Jacobs, F.R. & Aquilano, N.J. (2007). Operations Management for Competitive Advantage (11th ed.). New York: McGraw-Hill. Galloway, L. F., Rowbotham, F. & Azhashemi, M. (2005). Operations Management in Context. Oxford: Elsevier Butterworth-Heinemann. Gregory, F. H. (1992). “Cause, Effect, Efficiency & Soft Systems Models. Journal of the Operational Research Society, 44 (4): 333 – 344. http://en.wikisource.org/wiki/Cause,_Effect,_Efficiency_%26_Soft_Systems_Models Horváthová, P. & Davidová, M. (2011). “Operations Management as Practice of Organizations' Strategic Management in Relation to the Environment.” 2011 International Conference on Financial Management and Economics IPEDR vol.11 Ivancevich, J.M. (2006). Human Resource Management. New York: Irwin/McGraw-Hill. Koch, R. (2004). Living Life the 80/20 Way. Boston, MA: Nicholas Brealey Publishing. http://zepho.com/rails/books/LivingThe80-20WayWorkLessWorryLessSucceedMoreEnjoyMore.pdf Marquardt, M. J. (2011). Building the learning organization: Achieving strategic advantage through a commitment to learning (3rd ed.). Boston, MA: Nicholas Brealey. Montana, P. J. & Charnov, B. H. (2008). Management (4th ed.). Barron's Educational Series. Slack, N., Chambers, S., Harland, C., Harrison, A. & Johnston, R. (2004). Operations Management. Upper Saddle River, NJ: Pearson Education. Kanji, G. K. (1990). “Total quality management: the second industrial revolution.” Total Quality Management 1(1). Gopal k. Read More