Operations Management_ Final Assignmentv2.docx

OPEN UNIVERSITY OF MAURITIUS

OPERATIONS MANAGEMENT

ASSIGNMENT 1

COMMONWEALTH EXECUTIVE

MASTER OF BUSINESS ADMINISTRATION

TISHTA BACHOO

LEARNER ID: 130801213

Table of Contents3Introduction

4Literature Review

4Industrial Revolution

5Scientific Management

5The Human Relations Movement

5Operations Research (Decision Models and Computers)

6Just-in-time (JIT)

7Total Quality Management (TQM)

8Lean Production

8Recent Developments (supply chain management)

10Challenges faced by operations managers

10Globalization

11Customer satisfaction and Resource productivity

12Workforce and social trends

13Economic and Environmental

14Technology

15Ethical conduct

16Conclusion

17References

The main field which operations management is concentrated on is managing the sources directly taking share in product manufacturing or providing a service by the organisation (Horvthov, 2010). These sources are in the form of people, materials, technologies and information. They are combined together by a number of processes in order to acquire a service or a product (Horvthov, 2010). Operations management is therefore the transformation process in which inputs (resources) are by means of this process transformed into outputs (products or services) (Horvthov, 2010). The operations manager is responsible for managing the resources involved in this process. Operations management, therefore, refers to performing the traditional managerial functions (planning, organizing, directing, and controlling) on the organizations operations (Kumar & Suresh, 2009). This assignment explores changes and shifts in the field of Operations Management from the evolution era to present age. It also explores the challenges faced by operations managers in the manufacturing industry and the strategies adopted by them in order to meet these challenges. Literature ReviewThe story of operations management is all about the industrial, economic and social revolution. Perhaps more than any other business discipline, operations management has shaped the world in which we work and live (Piercy, 2012). In the earliest days of manufacturing, production of goods took place in homes and cottages where craftsman directed highly skilled workers to use simple and flexible tools to produce goods according to customer specifications (Kumar & Suresh, 2009). Under that system, one worker could make a product, such as a piece of furniture, from start to finish. However, craft production had major shortcomings. Since products were made by skilled craftsmen who custom-fitted parts, production was slow and costly (Kumar & Suresh, 2009). Another shortcoming was that production costs did not decrease as volume increased; there were no economies of scale, which could have provided a major incentive for companies to expand (Piercy, 2012). Industrial RevolutionThe arrival of modern operations management, however, occurred with the shift from craft based production to the industrial factory system (Kumar & Suresh, 2009). That is, the Industrial Revolution. It emerged in the United Kingdom in 18th century and its impacts then spread to other European countries and to the United States (Piercy, 2012). A number of innovations changed the face of production forever by replacing human power by machines (Kumar & Suresh, 2009). Coal and iron ore were used to generate power and to make machinery. These machineries were more durable than the simple wooden machines they were using (Kumar & Suresh, 2009). As days went by, production capacities expanded, demand for capital grew and labour became highly reliant on jobs (Piercy, 2012). At the beginning of the 20th century, the one element which was lacking was the management with the ability to develop and use the facilities to produce on a maximum capacity to meet massive markets today (Greasley, 2008). Hence, such a management system was developed by the American efficiency engineer and inventor Frederick Taylor, who is often referred to as the father of "scientific management"(Greasley, 2008).Scientific ManagementThe scientific management era brought prevalent changes to the management of factories. Taylor believed in a science of management based on measurement, analysis and improvement of work methods, and economic incentives (Greasley, 2008). According to him, all equipment, workers and tasks are part of a manufacturing system whose performance should be maximized (Greasley, 2008). Taylor also believed that management should be responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperation between management and workers, and separating management activities from work activities (Greasley, 2008).The Human Relations MovementUntil 1920s, operations management emphasized on organisational structure, specialisation, planning and control but not on human dimension (Piercy, 2012). Workers were expected to perform like robots. This paved the way for the human relations movement. The scientific management movement heavily emphasized the technical aspects of work design whereas the human relations movement emphasized the importance of the human element in job design (Piercy, 2012). In the following decades, there was much emphasis on motivation. It is believed that together with the physical and technical aspects of work, giving special attention to workers is essential to improve productivity (Piercy, 2012). Operations Research (Decision Models and Computers)The factory movement was accompanied by the development of several quantitative techniques. F. W. Harris developed one of the first models in 1915: a mathematical model for inventory management to solve operations problems such as production scheduling and inventory planning (Piercy, 2012). In the 1930s, statistical procedures for sampling and quality control were developed which at first were not widely used in industry (Piercy, 2012). However, the start of the Second World War generated tremendous pressures on manufacturing output, and specialists from many disciplines combined efforts to achieve advancements in manufacturing. This era became known as Operations Research. After the war, efforts to develop and refine quantitative tools for decision making continued, facilitated by the introduction of the processor computer in 1951 (Piercy, 2012). This resulted in decision models for forecasting, production planning, project management, and other areas of operations management (Piercy, 2012). Later on, quantitative techniques were highly regarded. Even now, the widespread use of personal computers and user-friendly software in the workplace is very popular (Piercy, 2012). Some years later, Orlicky proposed Material Requirements Planning (MRP), mainly for assembly operations (Hsu et al., 2009). MRP relies on a computerized program both to calculate the quantity of materials needed for production and to determine when they should be ordered or made (Hsu et al., 2009). Later on, Oliver Wright and George Plossl developed Manufacturing Resource Planning (MRP II) which is linked to Orlicky's MRP but adds all the activities of a manufacturing company, including sales, purchasing and maintenance (Hsu et al., 2009). MRP II goes beyond material planning to help monitor resources in all areas of the company. Such a program can, for instance, coordinate the production schedule with HR managers forecasts for needed labor (Gattiker 2007).In the middle to late 1980s; network computing began to increase, with applications such as Electronic Data Interchange (EDI) (Exploring Business, n.d.). This has led to more co-operations with the suppliers in the form of partnering, and formation of supply chains (Gattiker 2007). In the mid-1990s, the Internet began to play a major role in business operations, and more and more companies are using Enterprise Resources Planning (ERP) software to coordinate their sales, materials management, and production planning/manufacturing, and accounting/finance activities (Gattiker 2007).Just-in-time (JIT)Just-in-time is one inventory control method. The main goal of JIT is to deliver raw materials and/or component parts in small lot sizes, frequently, and directly to the point of use, eliminating the need for incoming inspection and warehousing, and reducing material movements (Hsu et al., 2009). The manufacturer arranges for materials to arrive at production facilitiesjust in timeto enter the manufacturing process (Exploring Business, n.d.). Parts and materials dont sit unused for long periods, and the costs of holding inventory are significantly cut (Exploring Business, n.d.). JIT, however, requires considerable communication and cooperation between the manufacturer and the supplier (Hsu et al., 2009). The manufacturer has to know what it needs, and when. The supplier has to commit to supplying the right materials, of the right quality, at exactly the right time.Total Quality Management (TQM)In the 1980s, a new phase of quality control and management started which is known as the Total Quality Management (Exploring Business, n.d.). This is important to manage the entire organisation for it to excel in all dimensions of products and services that are important to the customers (Exploring Business, n.d.). TQM is a proven technique to guarantee survival in world-class competition and it can become a very efficient weapon against the rivals (Kuruppuarachchi & Perera, 2010). Quality must be a key objective not only in the operating department of the organisation but in every department (Exploring Business, n.d). It is important for the customers to recognise a high quality already from the first contact with either the organisation up to the delivery of products or services to the customers (Hsu et al., 2009). Every customer can perceive quality in a different way and that is why it is not firmly given because it continuously changes and it must be improved all the time (Kuruppuarachchi & Perera, 2010). This eventually causes growing costs of quality (prevention costs, appraisal costs, internal and external failure costs. Nowadays, quality is recognised as a crucial element to compete in the market and that the whole organisation must focus on in order to remain successful in the future (Hsu et al., 2009). Quality is really important and that is why it is necessary to control it in some way. And it is just statistical quality control that gives the organisation powerful instruments to be applied in the process of control and improvement (Hsu et al., 2009). Most often three types of control are used- process control, acceptance sampling, and traditional techniques (Piercy, 2012). To get feedback on how well they are doing and about the quality of their products and services, organisations routinely use surveys and other methods to monitor customer satisfaction (Exploring Business, n.d.). By tracking the results of feedback over time, they can see where they need to improve and how to build a stronger position in the market (Horvthov, 2010)Lean ProductionLean production systems are so named because they use lesser of certain resources than mass production systems use, such as less space, less inventory, and fewer workers to produce a comparable amount of output (Cottyn et al, 2011). Lean production systems make use of a highly skilled workforce and flexible equipment (Cottyn et al, 2011). They incorporate advantages of both mass production (high volume, low unit cost) and craft production (variety and flexibility) (Piercy, 2012). Lean production is a broad approach to just-in-time. The skilled workers in lean production systems are more involved in maintaining and improving the system than their mass production counterparts (Cottyn et al, 2011). They are taught to stop production if they detect a defect, and to work with other employees to find and correct the cause of the defect so that it wont recur. This results in an increasing level of quality over time, and eliminates the need to inspect and rework at the end of the line (Piercy, 2012). Recent Developments (supply chain management)Operations management has been recognised as an important factor in a countrys economic growth (Exploring Business, n.d). We have progressed from craft based activity into industrial organisation and now into the post-industrial economy, as service sector has become more prominent (Kumar & Suresh, 2009). The ideal situation for a business organisation is to achieve a match of supply and demand (Exploring Business, n.d). Having excess of either supply or capacity is wasteful and costly; having too little means lost opportunity and possible customer dissatisfaction. In order to maintain the ideal situation, it is important develop the management of supply chain (Hsu et al., 2009). Supply chain management stresses the seamless integration of value-creating activities across organizational boundaries (Hsu et al. 2009). It enables firms in a supply chain to eliminate waste, leverage synergies and compete more effectively in an intensely competitive global market (Hsu et al. 2009). It can also play a vital role in the success of quality management initiatives (Foster et al, 2010). In todays competitive market, for firms to simultaneously offer goods and services at low cost and high quality requires the integration of the operations capabilities of multiple supply chain members (Foster et al, 2010). To gain competitive advantage, firms must develop and make use of their core resources to develop these capabilities in a manner that inhibits duplication by competitors. Challenges faced by operations managersThere are many challenges faced by operation managers in the field of operation management. Operation managers should equip themselves with all the necessary tools and knowledge across all the business function. Operation Managers need to understand the whole business flows, the products, the customers, the operation and the technology. With this in mind, they will be able deal better with various groups to improve the process and operations productivity and efficiency to the next level, understand problem-solving from technical point of view and be able to discuss intellectually with technical parties for various operation issues. Managing a service system has become a major challenge in the global competitive environment (Kumar & Suresh, 2009). Organisations are subject to more ups and downs in their day to day activities. As a manufacturer today, the basic approaches to managing operations are no longer sufficient to meet the difficult challenge of continuously achieving and improving manufacturing excellence (Kumar & Suresh, 2009). Leading companies are turning to a broader type of solution to enable manufacturing transformation - one that encompasses not just the plant floor, but also the warehouse, quality and material flow throughout the production process and product supply network (Exploring Business, n.d). Only then manufacturing excellence can be achieved and sustained. As such the work of operations managers in the manufacturing industry is becoming more and more challenging in view of the various factors that will be explained further.GlobalizationIt is commonly said that the world is gradually becoming a global village. In 1990s, reduction in trade barriers and advancement in communications and transportation technology made global manufacturing networks more effective and efficient (Horvathova, 2010). Globalization is increasingly becoming a challenge in the manufacturing industry and in turn for operations managers. It does not only imply that local firm faces competition from abroad, but also means that the former goes international (Horvathova, 2010). Competing with firms from abroad means a firm will have to remain competitive by providing quality goods and services at lower prices (Horvathova, 2010). The operations manager would definitely be concerned with this as he would have to engage in the four functions of planning, organising, leading and controlling to ensure that the product or service remains competitive in the market (Kumar & Suresh, 2009). Moreover, there would be a demand for the operations manager's creative skills as innovation is a key factor for the success of the business in this highly competitive world (Horvathova, 2010). The case whereby more companies are going international, the operations managers will need to have greater knowledge of international business and different cultures (Horvathova, 2010). Either products or services need to be adapted to suit the demand in such countries. Again, this will be a challenge for the operation managers as it would require their creative skills. To overcome the challenges due to globalization, the operation managers need to set a specialised product and target market which will keep the uniqueness of a product or service to be able to compete in the global market. Also, they must have a good understanding of their competitors. For instance, taking the case of a textile firm, if the management knows which types of garments are in demand in Australia and after taking into consideration the threat of competitors, if any, the firm can go global. Customer satisfaction and Resource productivityGiven a boost by the quality revolution of the1980s, quality is now ingrained in business. Organisations use the term total quality management (TQM) to describe their quality efforts (Exploring Business, n.d.).A quality focus emphasizes customer satisfaction and often involves teamwork (Kuruppuarachchi, D, & Perera). It is a fact that low cost and high quality are key attributes that a good or service needs to possess (Kouvelis, 2005). To satisfy customers and remain competitive in the market, a firm must be able to supply the right quantity of goods and services as high quality, at a low price and at the right time (Koss, 2005). However, there is a trade-off between cost, quality, quantity and time. It is the responsibility and a challenge for the operating manager to ensure that this trade-off is minimized (Koss, 2005). The operations manager needs to make sure that either the product or service is to the standard required by the customer. Thus, it is important for the operations manager to maintain their engagement in Total Quality Management and the extent to which he is able to meet the standard required by the customer will definitely be a challenge for him (Kuruppuarachchi & Perera, 2010). It is crucial for manufacturers to emphasize on improving productivity (Gattiker, 2007) and hence satisfying customers. Empowering employees by giving them timely information boosts productivity, and this is exactly what an integrated information system - an enterprise resource planning (ERP) system does (Gattiker, 2007). For instance, the textile industry is so vast and comprises of many departments, teams, offices, cities, countries. This makes it very difficult to track the performance, productivity and usage of employees capability and availability companywide (Wall & Sirichoti, 2013). This lack of employee visibility may negatively affect smooth work load distribution, optimization of employee usage and accurate employee productivity and effectiveness (Wall & Sirichoti, 2013). So it is critical to build up a companywide central system, which records and displays details about the capability and availability of individual employees. Hence, the IT software for enterprise resource planning (ERP) is specifically designed for this purpose (Wall & Sirichoti, 2013).Workforce and social trendsChanging society values, cultures and interests have a great impact on the work of operation managers (Exploring Business, n.d.). Since some of the managers have to deal directly with operating employees, they have to take into account social trends. The managers also have to bear in mind the demographic changes while planning, organising and controlling (Exploring Business, n.d.). Nowadays, the large swath of the workforce (boomers) is retiring and a new wave (millennial /gen Y) is entering the workforce (Ferris, 2012). Hiring qualified workers to replace the old ones who have been working for 30 years or more is a challenge for many organisations. This change of guard is seen mostly across the manufacturing industry (Ferris, 2012). Moreover, finding the right employees, and managing these people becomes a constant battle for operations managers as the younger generation have turned their back on the manufacturing job (Ferris, 2012). Most of the time, in the textile industry, workers don't stick with one employer for decades like they used to, and the operation manager may sponsor a star employee's machine-tool course only to see that worker get lured away by a firm across town (Ferris, 2012). In order to meet these challenges, firstly, the operating managers should take a proactive approach to attract and retain quality new hires, who are very well qualified and those having certain levels of experience in the manufacturing field (Ferris, 2012). Secondly, they have to implement effective on-the-job mechanisms to transfer knowledge and retain the older experts for as long as possible (Ferris, 2012). The manager must also prevent culture clashes and sex inequalities in order to maintain a friendly working environment. Economic and EnvironmentalThe dramatic change in the economic landscape also affects the work of operations managers (Klassen, 2013). Economic variable such as inflation, unemployment, interest rates, exchange rates, economic growth, or recession have an impact on the price of raw materials and the price of finished products (Munasinghe, 2013). For instance, in the case of inflation, the operations manager is torn apart between two extremes: one, the high price of raw materials and second, he will have to produce at a low cost (Munasinghe, 2013). Natural calamities such as cyclones and droughts and other unforeseen events also affect the price of certain raw materials and again, the skills of the operations manager as a resource allocator and negotiator will be put into value (Klassen, 2013). Operations managers play a critical role in determining the environmental impact of manufacturing operations through choice of raw materials used, energy consumed, pollutants emitted and wastes generated (Klassen, 2013). Business organisations are coming under increasing pressure to reduce their carbon footprint and to generally operate sustainable processes (Klassen, 2013). Sustainability refers to service and production processes that use resources in ways that do not harm ecological systems that support both current and future human existence (Munasinghe et al., 2013). Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making (Munasinghe et al., 2013). Operation management is central to dealing with these issues. Sometimes referred to as green initiatives, the possibilities include reducing packaging, materials, water and energy use, and the environmental impact of the supply chain, including buying locally (Klassen, 2013). Other possibilities include reconditioning used equipment (e.g., printers and copiers) for resale, and recycling (Klassen, 2013).One good example is the Sri Lankan tea manufacturing industry. Finlays tea estates have adopted a more systematic triple bottom line reporting method which covers the full spectrum of economic, environmental and social impacts (Munasinghe et al., 2013). Finlays factories are now entirely powered by renewable sources of timber and they are in the process of developing a system of establishing their carbon balance sheet or footprint, with the aim of reducing emissions of global green house gases. They have launched a project of cultivating tea with a view to enriching the organic matter content of the soil through mulching, and to minimizing the use of furnace oils for tea drying. This not only led to savings in foreign exchange owing to fewer imports, but it provided employment for surplus labour. They have also started hydroelectric power generation on the plantation, which helps the country to meet its energy needs at low cost and saves foreign exchange through the low consumption of oil (Munasinghe et al., 2013).TechnologyTechnological advances have led to a vast array of new products and processes (Exploring Business, n.d.). Undoubtedly the computer has hadand will continue tohavethe greatest impact on business organizations. It hasrevolutionized theway companies operate (Exploring Business, n.d.). Currently the following technologies are under focus to support operations in the manufacturing sector: Robotics, Computer controlled manufacturing, Biotechnology and global positioning systems (Exploring Business, n.d.). Technological advances in new materials, new methods, and new equipment havealso made their mark onoperations (Bohari & Zainuddin, 2013). Technological changes in products and processes can have major implications for production systems, affecting competitiveness and quality, but unless technology is carefully integrated into an existing system, it can do more harm than good by raising costs, reducing flexibility, and even reducing productivity (Bohari & Zainuddin, 2013). In order to overcome this challenge, operations managers will have to adapt his skills in view of the recent developments that have been taking place in production. It is also important to underline that with the advances in technology, products are becoming outdated over time (Exploring Business, n.d.). Therefore, the operations manager has to constantly keep pace with new technology to ensure that the firm does not lag behind with regards to the product being unique (Exploring Business, n.d.). Furthermore, it is expected that the operations manager will have to face and cope with an integration of business needs, people needs and technology (Bohari & Zainuddin, 2013). Manufacturing industry such as automotive industry makes use of automation to reduce the need for human's interaction in the workplace. The use of technology in this particular industry helps to improve efficiency and effectiveness. New technologies also provide opportunities to create more flexible work environments. For example, in the automotive industry-- available technologies include the self-propelled, computer-guided carriers that help to keep the floor clear of equipment because all equipment is mobile. This technology also makes it possible to change the layout of equipment to fit particular work organisations.Ethical conductThe need for ethical conduct in business is becoming increasingly obvious, given numerous examples of questionable actions in recent history. In making decisions, managers must consider how their decisions will affect shareholders, management, employees, customers, the community at large, and the environment (Horvthov, 2010). Finding solutions that will be in the best interests of all of these stakeholders is not always easy, but it is a goal that all managers should strive to achieve. Furthermore, even managers with the best intentions will sometimes make mistakes. If mistakes do occur, managers should act responsibly to correct those mistakes as quickly as possible, and to address any negative consequences. Operations managers, like all managers, have the responsibility to make ethical decisions. Ethical issues arise in many aspects of operations management, including: safety (product & employee), quality and environment (Horvthov, 2010).In the manufacturing industry, business ethics codes are commonly used to keep business activities legal and maintain the companys public image (Horvthov, 2010). Manufacturing industry normally adopt a "No Harm" policy. Refraining from harming others is an ethical consideration that also helps hold society together (Horvthov, 2010). For example, the toy industry refused to employ child labor and ensure human rights are respected. Fairness is another important factor that is taken into consideration in this particular industry. For example, in most manufacturing organizations, the same criterion is being used to determine employee treatment, such as promotion and firing. Manufacturing firm make use of contracts, handbooks and code of conduct to set out the standard, rules and regulation to follow (Horvthov, 2010).

ConclusionWe can conclude that many evolutionary terms and shifts have led the need for Operations Management. It can be said that the operations function in business organisations is responsible for producing goods and providing services. After the Industrial Revolution, countries evolved to an industrial economy. But for a time, manufacturing was more of an art than a science and element of management was missing. This changed when Taylor introduced the method of scientific management. The Operations Manager in the manufacturing industry faces many challenges and these are in the form of: globalisation, customer satisfaction and resource productivity, workforce and social trends, economic and environmental issues and technology, as discussed above. Operations managers in the manufacturing industry are being able to meet new challenges. However, it requires much effort. Firms within this industry are operating in a dynamic environment and changes are inevitable. Firms are able to adapt to changes by adopting new technology and combing machine and human power to improve efficiency. To be successful, the firms are adopting code of ethics and professional standard to improve employee morale and production level. Quality enforcement like TQM and Lean management are used to continuously improve process, people and product. More emphasis is being put in recruiting the best people. Operation management is putting more emphasis on green initiatives for the industry to remain sustainable. All the strategies discussed above, if well developed and maintained, will overcome the challenges which the operation managers face in the manufacturing industry. This is how the industry will also reach a high competitiveness and it will be able to maintain it.References1. 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