Supply Chain Management and Operation Management - Literature review Example

Institution Affiliated The Study of Operation Management Student’s Name Professor Date Introduction Over the past three decades, business environments are changing dynamically due to economic liberation, technological transformation and changing consumers’ needs in various market segments. For companies to fit and satisfy changing consumers' needs, managers are developing new production techniques that provide a competitive advantage to the enterprise. These range of economic, technological and consumer transformational shape organizational operations either internally or externally. Both profit and nonprofit making organizations have their unique processes and operations that help the company to gain competitive advantage. In other words, organizational operations play the crucial role in escalating the team to competitiveness to high levels. Operations involve all activities used to covert organizational resources into products and services. Therefore, every company within an industry has a unique service function, and its primary purpose is the production of goods and services that satisfy customers' needs across market segments. Organizational operations require all types of resources such as financial, human, and economic and natural resources; convert resources into goods and services distribute and market them in a specified market. In other words, the operation involves activities that produce and deliver products and services to the targeted customers in the market. From this perspective, organization operations pools together all company activities together for the purpose of manufacturing goods and services as well as techniques the company uses to gain competitive advantage. Ahamed et al., (2013) adds that operation involves the conversion of organizational inputs into outputs, and techniques used to position the inputs in the larger market. Operation management includes management systems within an organization that top executes use to monitor activities employed in the production of goods and services (Ahamed et al., 2013). According to Antunes and Gonzalez (2015) operation management is an important activity for it involves managing organizational resources devoted to the production and distribution of goods and services. Each managerial function is of great importance in facilitating production and delivery procedures within the company. In modern times, multinational organizations are developing managerial functions to face the current changing business arena where customers prefer new and technological goods and services of which the company should deliver on time. Process map is one of the main tools that managers use to demonstrate the flow of the organizational activities to complete and execute the tasks within an organization. The diagram below presents process map for supply chain management in a manufacturing company. The significance of this paper is to articulate the importance of operation management by addressing various organizational problems that affect their operations specifically supply chain management and lean operations. Additionally, the paper articulates different theoretical framework explaining operation situations that multinational companies in various industries. For more understanding, the paper explores how business organizations respond to market dynamics by formulating and implementing operations; focusing on processes involved in production and services delivery in various market segments. The scope of service management Process management scope varies from one department to the other within an organization, and the scope also ranges from one product and service to the other. According to Bouchery (2013), operation management scope involves selection and management, process selection, product designs and services delivery, market location planning, facilities planning and quality improvement and administration within an organization. in other words, operation management involves managerial activities of monitoring and supervising organizational functional units. Selection and management are managerial activities that aim to choose the best functional processes and systems for effective production. Method selection is an administrative decision on mechanisms to use to covert organizational resources into the finished product and overall manufacturing process for converting the input to output. In this aspect, managers should choose the most effective and efficient technology, workforce, process flow analytical tools and company’s layout facilities. More importantly, process design involves the workflow in selected workstations of the enterprise. Operation models play a vital role for it determines the effectiveness of production flow processes across the departments. Production design is a managerial activity that deals in converting product ideologies into reality by executing actual production plans. For an organization to survive in a stiff competitive market is should come up with new goods and services as well as develop the existing products for market growth strategy. However, designing and launching new products has become one of the main challenges to manufacturing companies for the enterprise require changing its physical production techniques, which are expensive and carrying out continuous market analysis. In this aspect coming up with new marketing and product designs and manufacturing process is of great importance. In his study Bouchery (2013), found that production design is the major component of competitive advantage. Therefore, products designs and development plays a significance role in positioning the company's brand in various market segments; products design primary purpose is to meet and fulfill customers’ needs. Location of facilities for organizational operations involves managerial strategies and decision-making processes for the company's long-term commitment to the corporate resources geographical area. Managers make accurate decisions on where the organization should carry out its operations. Proper location of the company's operations ensures that customers get products and services on time, slashes production costs such as transportation of raw and finished goods and ease movement of the workforce. Improper location of the company's facilities leads to wastage of resources and investments and enormous and culminating costs of production. Therefore, managers should find proper location of the company that will result in the high-profit margin and reduced production costs. Facilities planning and material handling is the most crucial operation activity. Facility planning deals with internal plant layout or physical arrangements of production facilities. Service plan ensures that the organization meets the quality and quantity production as dictated and directed by the corporate objectives and goals. In other words, service planning is an excellent facilities arrangement across all departments including operating machines and equipment, storage facilities and supporting services (Antunes and Gonzalez, 2015). Material handling deals with techniques used to move raw materials and finished products from one point to another within the organizational. According to Barrett (2014), material handling is an art and science of moving, packing and storing goods and services. Proper handling of the materials within the company reduces wastage, increases output, saves the space and promotes proper handling of machinery and production equipment. Finally, quality control and management involves managerial malpractices that ensure that the company produces and retains a desirable level of quality products. Additionally, quality monitoring and oversight provides that the enterprise delivers acceptable goods and services in the market. From this perspective, having an efficient quality control system within an organization is of great advantage to the company for it escalates profitability margin to high levels due to reduced costs of production. According to Barrett (2014) customers in global markets no longer focus on price tags of the commodities but the quality and level of product satisfaction. Supply Chain Management and Operation Management Johnston (2015) defines supply chain as organizational activities associated with movements and flow of raw materials and finished goods from one production stage to the other. Supply chain management constitutes procurement of raw materials, management of organizational facilities and physical movement of production elements management. There are two dimensions of supply chain management: upstream and downstream supply chain management. Downstream supply chain management relates to customers while upstream relates organizations to the suppliers. Downstream supply chain movements deal with movement of finished products from the company’s facilities to the final consumer. Upstream supply chain management involves managerial activities of procurement of raw materials form the suppliers. There are five components of supply chain management: plan, sources, make, deliver and returns. Plan component deals with strategizing how to allocate resources that go towards meeting market demands for the company’s products. Managers should develop efficient plans with a capacity to monitor the supply chain operations. Sources involve procedures that the managers choose the suppliers from that larger market to deliver raw materials needed to create goods and services. It is important for managers to develop pricing strategy, delivery modes and payments processes to create an efficient inventory process. Make involves manufacturing steps, schedules and activities that managers designs for proper execution of production, packaging and delivery processes within the company. Deliver component part of supply chain management involves coordinating delivering modes to ensure that the consumers get the products on time and there is continuous supply of the products. Finally, return is the last component of supply chain management that deals with networks of returning excess and defective products back to the company. Operation Strategy The strategy is a long-term scope of the organization plan that aims to allocate resources accordance to the business changing environments to meet customers’ needs and shareholders expectations (Sodhi and Tang, 2014). Organizational strategy exists in three levels: corporate, business and functional strategy. Business plan deals with overall corporate operations and the top executives use the business strategy to formulate long-term regulatory guidelines. The business plan deals with managerial activities concerning the type of the products and service the company should provide in a various market as defined at the corporate level. Additionally, the plan of activities involves activities that represent the company's competitive advantage. Functional strategies are managerial activities such as finance management, human resource management, and production management that support the organization's competitive advantage. The chart below demonstrates various elements of operations strategy. (Adopted from Sodhi and Tang, 2014) An operation plan is a valuable administrative tool that deals with shaping the organizational vision, objective and realizes capabilities of the corporate internal and external services. Today, the market structure is changing rapidly, and competition is becoming stiffer than before in all industries, and hence, global companies are developing new operation methods to face the current business dynamics (Sodhi and Tang, 2014). In simpler words, the main reason for having an efficient and appropriate operation strategy is to retain the performance of the company and its productivity in spite of facing unpredictable changing business environments. According to Slack and Lewis (2011) operations strategy are managerial decisions that involve figuring out the organization's long-term capabilities and business techniques that reconcile business activities with its environments. In his research, Johnston (2015) found that multinational companies that were performing well in the past four decades, today they are laying off workers, closing some most of the branches and downsizing the structures due to rising business obstacles and unrealistic operation strategy. In his study, Badri et al., (2012) suggest that, for a company to survive in the current fast-paced global markets, it must adopt new operation strategy specifically technology and customers’ changing lifestyles. For instance, Sony is an international Company founded in the mid-1940s based in Tokyo (Sony Annual Report, 2014). Sony deals with electronics, gaming and entertainment products across the planet. The company's brand has a global reputation due to its quality products. In recent years, the company has been facing stiff competition from two giant multinational corporations, Samsung and LG products, which are more innovative than Sony (Sony Annual Report, 2014). Due to the stiff competition, Sony has been laying off the number of workers and governing structures in various market segments including Africa. The company's primary strategy was to make and sell quality products in the market without considering innovation. .for the first five decades, Sony was doing very well until recent years when the new entrants with innovative products have over. Under the new managing director, Kazuo Hirai, the company is developing innovative strategy such as total embracement of creative and the technology development to face the current business dynamics (Badri et al., 2012). Today, Sony brand has been penetrating in various market segments very fast due to its new operation strategy, integrated innovative and quality production strategy. According to Badri et al., (2012) most of the multinational companies fails to accomplish operation plan because they lack market knowledge on how to position their brand in the market segments. For a company to overcome challenges in the market managers should come up with innovative strategies to deliver tangible and intangible products to the customers; business has to follow practical and realistic steps to produce goods and services demanded in the market. Most importantly, the business structure is the most powerful tool that determines the effeteness’ of the operation strategy. For instance, Toyota Motor Inc. that is a manufacturing company based in Japan, have different operations plan and time-to-time they change them as the way of accenting innovativeness. The company operations strategy aims to match its vehicles with customers’ demands and expectations to gain and retain competitive advantage. In their studies, Badri et al., (2012) operation strategy deal with business patterns and strategic decisions, which set the organizational objectives and production process. Slack and Lewis (2011) adds that services plan content involves critical decisions that managers formulate to address the company's situation in comparison to the business arena dynamics (environments). According to Sodhi and Tang (2014) managers have the capacity to propel the organizational the way they want using operation management and operation strategy. Today, change in business arena is more rapid and extensive than ever before and numerous businesses are emerging within industries. Operation management is one of the tools that every manager should embrace for it determines the competitiveness of the company. Operations strategy perspectives There are four aspects of strategic operation: top-down view, bottom-up perspective, market requirement perspective and resource-based perspective. According to Baines (2013), top-down view strategy involves generation of content ideas by corporate workers (business plan) founded on business environments such as technology, government policies and social-cultural development and economic status. In other words, managers scan the company's business environments to identify the changing conditions and threats, redefine organizational strategies, and set and allocate organizational resources. Bottom-up perspective aims to promote innovativeness in a company (Slack and Lewis, 2011). Innovation allows the company to develop new products that satisfy customers' needs. Market requirement perspective seeks to translate the market demands to organizational operations. In other words, the market dynamics determines the type of the transactions the company will formulate. The resource-based strategy involves business processes that aim to exploit the available resources to produce goods and services, and in turn, maximize profit margin. The chart below summarizes the elationship between the four strategic perspectives. Lean Operations Lean operations are production activities that allow an organization to manufacture quality and quantity products at minimal costs. There are three main elements of lean operation: waste elimination, teamwork (involving everyone) and continuous production improvement (Sodhi and Tang, 2014). Waste is any production activity that does not add value to the final product or consumers. There are some events that every manufacturing company should adapt to eliminate waste. Firstly, the company should manufacture exactly goods and services that customers want. Producing quality products is one way of reducing waste for the company will have neither surplus demand nor excess supply. Secondly, the company should produce an exact quantity of goods to avoid excess production, especially businesses that produce perishable products. Thirdly, the company should manufacture goods and services when the customers demand them. In this aspect, the company can control the rate of production; to deliver products and services on time to the market. For an organization to eliminate waste altogether, managers should involve all employees during strategic planning. Enhancing operations efficiency for waste elimination process map The primary purpose of the lean operation is to enhance and the creation of an organizational culture where top executives give employees an opportunity to generate ideas. From this perspective, involving employees in during decision-making process allows the workforce to understand the company's waste elimination methodologies and benefits of eliminating waste during the production process. Most of the multinational corporations train the employees' ways of reducing waste in various departments (Sodhi and Tang, 2014). Continuous improvement (CI) involves creation and development of new production techniques. In modern times, customers' needs are changing, and the lifestyle is becoming unpredictable. Hence, the company should come up with flexible strategies, which allows the company to gain change momentum. Conclusion Operation management is the combination of art and science that goes into improving the way the multinational company strategize short-term goals of making product and service and deliver them to customers. As stated above, both profit and nonprofit making organizations have their unique processes that help the company to gain competitive advantage. References Ahamed, Z., Kamoshida, A. and Inohara, T., 2013. Organizational Factors to the Effectiveness of Implementing Servitization Strategy. Journal of Service Science and Management, 6(2), p.177. Antunes, R. and Gonzalez, V., 2015. A production model for construction: a theoretical framework. Buildings, 5(1), pp.209-228. Badri, M.A., Davis, D. and Davis, D., 2012. Operations strategy, environmental uncertainty and performance: a path analytic model of industries in developing countries. Omega, 28(2), pp.155-173. Baines, T., Lightfoot, H., Peppard, J., Johnson, M., Tiwari, A., Shehab, E. and Swink, M., 2013. Towards an operations strategy for product-centric servitization. International Journal of Operations & Production Management, 29(5), pp.494-519. Barrett, D., 2014. An Empirical Investigation of the Influence of Preparation and Implementation Capabilities on Lean Management Competence (Doctoral dissertation, The University of Western Ontario). Bouchery, Y., 2013. Supply chain optimization with sustainability criteria: A focus on inventory models (Doctoral dissertation, Ecole Centrale Paris). Johnston, R., 2015. Service operations management: return to roots. International Journal of Operations & Production Management, 19(2), pp.104-124. Slack, N. and Lewis, M., 2011. Operations Strategy. Harlow: Pearson Education. Sodhi, M.S. and Tang, C.S., 2014. Guiding the next generation of doctoral students in operations management. International Journal of Production Economics, 150, pp.28-36. Sony Annual Report, 2014. A Message from Howard Stringer, CEO. Retrieved from https://www.sony-latin.com/corporate/SOLA/acerca/infocorporativ ( Acceessed on 16 January, 2017). Read More