Forecasting Demand, Quality Management and Location & Layout Decisions - Example

Forecasting Demand, Quality Management and Location & Layout Decisions Name Institution Forecasting Demand, Quality Management and Location & Layout Decisions Modern managers have made numerous attempts in an effort to improving service delivery of their entities. They have done so by application of the various operations management philosophies such as theory of constraints, six sigma, total quality management, supply chain management among others. The concept of operations management demands that cross-functional process be followed in making decisions. Major areas of business; from marketing to finance, organizational behavior to strategy formulation is majorly based on theory development. Operations management has come in to facilitate the concept of theory building, testing and refinement. Theory building has been noted by scholars as probably the most significant part of operations management. Subsequently, the theory of constraints has popped up as the central theory upon which this whole concept is built (Blackstone 2001). Modern economies have witnessed a rapid demand in service provision industry and investors have responded to this call. In fact, today even the strongest economies USA included derive much of their revenues from the service sector (Schroeder 2008). Despite this, it becomes interesting to acknowledge that in practice, development and modernization in services is less robust as compared to other areas like manufacturing sector. Many attributes can be associated with this state of affairs one of them being that the age of industrial revolution saw the mankind concentrate more on tangibles more than anything else. The drift in the structure of modern economies has called for other dimensions in the service sector that has earned it the attention that it now enjoys. There is more drive to make the practice in a much more disciplined and creative manner in an attempt to create specialized customer experiences that he/she can perceive as being meaningful and can retain memories not only for the service itself but also for the entity that provided the service. This is the way to transform business. There is a widespread notion, today, more than ever before, that each business transaction whether involving a tangible item or not involves one aspect of service provision or the other. This new notion has necessitated the innovation of more enthusiastic techniques of service provision, service blueprinting being one of them (Bitner et al. 2008). The desire by businesses to create real value while serving their customers has called for innovative methods of improving service delivery. Industrialists of modern times have directed research and development initiatives to these improvements. Approximately two decades ago the concept of service blueprinting has particularly evolved to address the numerous challenges that developers of service design have been facing. Unlike many other design tools this technique is more customer-oriented providing the managers a chance to evaluate the efficiency of their operations at the points of customer service (Meredith & Shafer 2010). The concept of service blueprint is a method of service improvement that is customer focused. It is a technique particularly applicable in situations where a service provider realizes that loyal customers are changing their perceptions. It checks the problem of customers wanting to dissolve their relationship with their current service provider following constant dissatisfaction (Blackstone 2001). This would be an awkward situation to be in by any player in the industry and hence the need to write this report. The supply that maximizes revenue is that which is pulled by the consumers rather than that which is pushed by the producers. Every entity produces with an intention to sell and hence distribution should be guided by demand levels. There are two negative outcomes of supply chain strategy that is not demand oriented. One is the supply of less than wanted demand levels (Fisher 1997). This is where the consumers are left asking for more but the market cannot provide. The entity is likely to lose customer loyalty as they lose confidence in the company’s ability to meet their needs satisfactorily In today’s business context marketing executives opt to manage demand rather that simply reacting to it. By employing the concept of demand planning firms are able to forecast what the market and industry will be like in some future. By so doing they are able to create more value for their customers. Today, therefore, businesses apply advanced methodologies of forecasting to enable them view future data from varying contexts. They are hence able to design their service delivery in light of objective information. This is usually statistical data generated by software programs that rationalize possible future events in the wider environment with causal factors. Today’s demand management process will apply sophisticated techniques capable of predicting environmental variables including problems, determine tolerance levels and adjust the strategic direction in light of changes. The firm maintains the stock levels that will be shipped in the immediate future thus reducing on the holding costs without compromising customer convenience. The nature of operations of an entity will dictate the system of demand management that best suits its purpose. In general there are fundamental requirements that any business will demand of its demand management system. Such include enabling demand management on a global scale given the market globalization that is now prevalent in all forms of business. It should also make forecasts based on corporate strategy and profit guided. It should also employ an approach that balances performance with scalability. Quality management involves a concern for the value that customers get out of their engagement with an organization. Total Quality management is a performance measurement tool that looks at performance form he customer perspective. It is a deviation from the traditional performance measurement tools that were purely quantitative. They relied on financial periodic data to measure the worth and performance standards of the firm. The concept of quality management is based on eight principles. These principles can guide a learner in the subject area or a company executive to trigger the company towards improved performance. The first principle is customer focus. As noted earlier the organization should be management from the customer point of view. The rationale is that organizations are fully dependent on their customers for survival and it would only be fair to meet their requirements and even exceed them. The results of this behavior include increased revenues, effective use of company resources and improved customer loyalty (Woolam 2007). The second principle is leadership. The leaders of the organization should direct the efforts and resources of the firm to a common purpose. This ensures that sub-optimization does not occur and tat all activities are aligned in a unified way. This principle is tied to the next which is people involvement. The organization should through its top management create a culture of integrated decision making (Dale & Boaden 1993). This results to a committed and motivated workforce and hence the organization is able to reap maximum benefit from its employees. The fourth principle calls for a process approach. It holds that for the desired outcome to be efficiently realized then all related activities must be managed as a process. This results to lower operational costs, predictable results, high chances for improvement and evaluation of risky areas. The fifth principle is closely related to the former and is based on system approach to management. According to this principle, effectiveness and efficiency are optimized when interrelated processes are understood and managed as a system. The system should put emphasis on the key processes while structuring the entire system in such a way that the objectives of the entity are objectively realized (Dale & Boaden 1993). The sixth principle calls for continual improvement of the overall performance of the firm. This entails doing an activity better each time. This calls for constant training for the employees, establishing goals to track and measure continual improvement and most importantly, recognizing and acknowledging improvements (Waldman & Atwater 1998). The seventh principle calls for factual approach to decision making. This means that decisions should be based on reasoned data and information. The validity of decision should also be based on past experience with a similar situation. Decision making should incorporate both intuition and experience (Waldman & Atwater 1998). Finally is the principle of mutually beneficial supplier relationship. According to this principle, real value is created when the entity and its supplier operate in a symbiotic relationship. They should hence agree on joint response to changing environmental forces such as customer needs. It is by this that they will optimize on costs and resources (Dale & Boaden 1993). Organizations exist and operate for varying reasons as defined by their mission and objectives. However, all have a goal of having an efficient layout and location as determined by the nature of their engagement. At minimum, the choice and design of the two attributes must ensure firm growth, efficient distribution, and enhanced customer contact points (Cox 1999). Location decisions are set on grounds of customer distribution. The essence of this approach is that it is imprudent for an organization to incur high transportation costs both when ferrying supplies to the factory and transporting the finished goods to the final consumer (Khan & Creazza 2009). In the light of this, organizations with highly centralized customer base would best choose the plant location as closest as possible to the customers. Scholars have taunted the process of layout development as both art and science. It is an art because it has the elements of creativity and synthesis and science due to its reliance on analysis. Both qualitative and quantitative attributes come into play in the layout design selection process. Due to absence of a standard algorithm for handling the firm layout problem, cumulative and tentative decisions are applied when arriving at the final decision. Design layout process takes a number of distinct but integrated steps – formulating the layout design problem; analyzing the design problem; searching for alternative layout designs; evaluating the alternative; selecting the best and finally specifying the layout design so selected. The rule of thumb in layout and location selection is that the ideal choice would be that which maximizes customer satisfaction while minimizing on costs. There are four types of layout commonly adopted by organizations. These are fixed product layout, production line layout, group layout and process layout. It is upon the discretion of the company management to select the best layout for the business and then style it up to meet the specifics of the operations. Fixed product layout is applied on situations where the product is too large or has exaggerated cumbersome handling procedures. Due to these factors it becomes prudent to bring the processes to the product rather than the product to pass it through the processes. This is common in many construction undertakings and ship manufacturing industry (Montreuil 2008). The bottom line to an effective application of this approach is ensuring that the right processes are brought to the product at the right time. The production line layout is a case where processes are situated in line with the sequence of product processing. This approach is applied in situations of high volume production. The machines along the production line are not shared by different products. Since each process is closely located with the other, the production line layout minimizes the distances between processing operations hence minimizing operational costs (Harps 2000). A group layout is applied where the production volumes cannot support a pure production line layout. The option becomes t employ this approach where products are grouped into logical families. Then a production layout is now used for each category. The method is defined by high level of intradepartmental flow (Montreuil 2008). Finally is the process layout. It virtually involves a collection of processing departments. All the machines that perform certain processes are categorized together in the process layout. The method is best suited for situations where the products are largely dissimilar and production is on low volumes. It is characterized by high level of interdepartmental flow. An example of application area for this layout is the job shops due to the varying types of low volume items they deal with (Montreuil 2008). In today’s business environment competition is almost the major challenge to business. Any prudent manager will be better positioned to enhance service provision by applying the most satisfying service to clients. Today, customer retention is the tone of business. This fit will not be realized until the proper customer experiences are created at the service point through quality service. It is imperative that the system adopted for customer service be directed towards creating good customer memories in an effort to solicit future relationship with the same client. Unique competitive advantage can be created by designing strategic customer interaction points. References Bitner, Mary Jo, Ostrom, Amy, Morgan, & Felicia, 2008, ‘Service Blueprinting: A Practical Technique for Service Innovation’, California Management Review, forthcoming, Spring. Blackstone, JH 2001, ‘Theory of Constraints – a status Report’, International journal of Production report, Vol. 39, no. 6, pp. 1053-1080. Cox, A 1999, ‘Power, Value and SCM,’ Supply Chain Management: An International Journal, Vol. 4 no.4, pp. 167-175. Dale ,B & Boaden 1993, Management of Quality Fisher, ML 1997, ‘What is the Right Supply Chain for Your Product?,’ Harvard Business Review, Vol. 75, 2, pp. 105-16. Harps, LH 2000, ‘The Haves and the Have Nots: Supply Chain Practices for the New Millenium,’ Inbound Logistics Journal. Pp.75-114. Khan, O & Creazza, A 2009, ‘Managing the product design-supply chain interface: Towards a roadmap to the design centric business,’ International Journal of Physical Distribution & Logistics Management, Vol. 39, No. 4, pp. 301-19. Meredith, JR & Shafer, SM 2010, Operations Management for MBAs, 4th edn, John Wiley & Sons, New York. Montreuil, B 2008, Introduction to Logistics Engineering, CRC Press Schroeder, RG 2008, Operations Management: Contemporary Concepts and Cases, McGraw- Hill Irwin, New York. Waldman, D & Atwater, L 1998, The power of 360-degree feedback: How to leverage performance evaluations for top productivity, Houston, TX: Gulf Publishing Woolam, J 2007 Using Performance measurement to improve management: Read More