Operations Management in Business
Operations Management in Business
In writing this assignment the template provided by the college has been used helping in completing the Assignment in the correct format. Information for this assignment has been collected from various sources such as academic pieces of writing from textbooks and lecture notes. Information on the company has been gathered from the organisations website, journal articles and government statistics. References will be provided at the end of the assignment under the referencing section.
LO1: Understand the structure and aims of business organisations
LO1.1 Explain the importance of operational management
Operation management can be identified as a complete set of managerial activities employed by the organization to transform resource inputs into product and service outputs. So the resource inputs are the factors of production such as materials, parts, supplies, technologies, capital, human resources and information. The transformational process is that set of activities through which operations managements produces output that is value to a customer or client in the organization’s external environment. So the concept of adding value is critical to operations management. So when operations add value to the original cost of the resource inputs, where a business can generate profit or non profit org can provide public services to the society. So no organization can be successful unless they manage their operations efficiently. An organization has to manage its operations in an effective manner so that customers will get a satisfactory output.
Why an operation manger position is important to Kingslice
1.To take capacity decisions:
That is as operation manager, has to decide how much capacity will be needed and need to identity how flexible capacity should be.
2.To take facilities decisions:
So operation manger has to decide where should facilities be located and also how many facilities will be needed and what size they should be.
3.To make workflow and technology decisions:
Operation manger should decide what workflow layout would be best for Kingslice and also what technology should be used.
4.To make materials and inventory decisions:
How often should inventory be ordered and how large should inventory levels be.
5.Have to make quality decisions:
As a bread producing company how Kingslice can achieve best quality outputs and what level it should be. So as the operation manger in Kingslice it is really important to concentrate on productivity and profitability. So as the operation manager I have to look at Quality, Efficiency and Effectiveness issues in the company. •Quality Standard:
As it is expected to produce various kinds of breads to meet customers’ needs it is very necessary to maintain standard quality in products. Eg: Wholemeal bread, White bread, Gluten-free bread. To ensure quality, the right ingredients must be bought at a reasonable price to be competitive among the rivals. So the Economic Order Quantity model will be an effective tool in this case. •Efficiency Standard:
Should reduce wastage and need to produce the right amount of breads according to sales. It is very important that all the equipments need to be up to date according to new technology bakers should be well trained. •Effectiveness Standard:
This will help Kingslice to generate more profit and will attract more investors in to the organization. So having skilful staffs and proper equipment will help to lift up the effectiveness in Kingslice. LO1.2 Explain the need to produce safely; on time; to cost; to quality and within the law Operational efficiency is the ability of an organization to deliver products or services to its customers in the most cost-effective manner possible while still ensuring the high quality of its product, service and support. To improve operational efficiency it’s important to analyze the current situation of the company, which occurs when the right combination of the people, process and technology come together to enhance the productivity and value of any business operations, while reducing the cost of routine. It is important for, Kingslice as bread producing company to, -Decrease operational cost and optimize efficiency
-Manage and develop product quality and ensure regulatory compliance -Generate a real time demand driven sales and operational planning process
Kingslice should guarantee that safety of all staffs. Staffs need to carry out a health and safety trainings which will be useful be more cautious at work and react efficiently to safety issues. Equipments should be service over period of time to prevent any danger. ➢Cost
Minimising wastage will help Kingslice a lot. So the saved money saved could be used in other departments which lack facilities. Avoiding unnecessary cost will help the company to stay competitive. ➢Time
Producing the bread on time will help Kingslice honouring its contacts to the retailers. By this act, other retailers can switch to Kingslice. ➢Quality
Customer and retailers feedback need to be taken in to consideration seriously so that we can identify which areas need to improve the most. Having regular meetings with staffs is another form of feedback where ideas can be discussed as well as issues in how to improve quality. ➢Legislation
To maintain our competiveness and reputation in the market Kingslice need to
stick on to the law. Health and safety policy should be respected by giving the staffs the necessary equipments to work. There are laws that protect the environment; at Kingslice we should try to recycle waste.
LO1.3 Explain the link between operations management and strategic planning Operations management deals with designs, management with products, processes, services and supply chains. It is considered that the acquisition, development and resources utilization that company needs to provide the goods and services to fulfil their customer’s needs. So basically it is the acquisition of resources and processes them into finished goods according to the customers’ wants and the business goal. Strategic planning is a method for a company planning the present based on the projections what will be needed in the future. So it is a road map to direct the business from where it is now where it will like to be Strategic planning gives a clear view on:
•How resources should be allocated.
•The issues need to be addressing.
•The strengths and weaknesses.
Strategic Planning Process
Link between Strategic Planning and Operation Management
In Kingslice, as the operational manger should be able operate following operations strategies, •Ability to produce bread at low cost
•Ability produce in accordance with specification and without error •Ability to do things quickly in response to customer demands and thereby offer short lead times between when customers orders a product and when they receive it. •Ability to deliver products in accordance with promises made to customers •Ability to change the volume of production
•Ability to change the mix of different products
Eg: Wholemeal bread, White bread
•Ability to innovate and introduce new products
Eg: Gluten-free bread, Multi-seed bread
Applying the SWOT analysis in Kingslice,
-Strengths: Get the best out of the staffs and equipping well trained staff and technology. -Weaknesses: Need to reduce the wastes and have to follow or standard recycling method. -Opportunities: Innovating products and change package design will help to increase the sales. -Threats: competitors and health and safety issues
LO1.4 Produce a systems diagram to illustrate a typical business
LO2: Understand the link between operations management and strategic planning LO2.1 Explain the ‘Three Es’ (economy, efficiency and effectiveness) In this 3 Es’ theory it is often referred to Value of Money. •Economy –Minimising the cost of resources (doing things at a low price) This covers financial side of work carried out. It is measured by considering the cost of resources consumed into value of output delivered. •Efficiency –Performing tasks with realistic attempt (doing things the right way) This can be measured in terms of the inputs required to generate the outputs. So if a task can be finished with less resources, the efficiency is been improved. •Effectiveness –The point to which objectives are met (doing the right things) This can be measured by setting up a target before a task begins and then evaluating whether the targets have been achieved not. •Integrating 3Es use of the resources in improving quality of the products and the customer service in Subway
So this 3Es are interrelated so as operations manger when dealing with improving quality and customer service its necessary to consider all 3. So I can suggest following, •Benchmarking against other rivals for indications as to whether we are “economic enough”, “efficient enough” and “effective enough”. •Comparing with other parts of our organization
•Measuring and interpreting trends over a period of time
•Aiming to continuous improvement
So I would suggest following measures to improve above qualities in Subway,
•Economy Performance Measures:
Maintaining a cost per unit
Comparing the actual cost input with planned input
•Efficiency Performance Measures:
Minimising the waste
Make sure staffs well trained
Equipment must be up to date
•Effective Performance Measures:
Storing the right amount of stocks
Identifying the best selling meal depending on the location
Identifying the target customer group
Responding to customer feedbacks
LO2.2Explain the tension between cost minimisation and quality maximisation.
Cost minimisation aims to achieve the most cost efficient way of delivering goods and services achieve the essential level of quality. Customer is the main root in Tesco Plc, without them they cannot survive in the completive market. While offering good customer services and the good quality products need to have an idea about the cost minimization of the product as well. So in this case I realised major out flow of the company is marketing and branding cost. Therefore I have to identify better marketing and branding technique to drop overall Tesco marketing and branding cost for our products. But marketing is very vital to survive in this competitive market (ex.Asda, Sainsbury’s, Morrisons, Waitrose) Thus have to look any alternation cost to reduce rather than cutting marketing cost. I came with an idea to reduce production cost at controlling, •Minimise the extra over time,
•Minimise unnecessary utility expenses
•Management ordering –then we can reduce transport cost and increase the sales in an efficient way. •Hence some Tesco expresses don’t have their own bake off it will be good move to build their own bake off to control waste, cost and provide high quality products. In the mean time I have given my attention to best customer services throughout our entire retail shops. By advising all retail managers to look after extra satisfactory stock at any time and maintain all warehouse activities including production ,servicing and manage of chilled foods and grocery items while minimum of wastage and maximising customer satisfaction towards highest profitability margin while in according to control the safety features. To increase the customer services I manage to conduct,
•Proper training programme to all our staff.
•Evaluate the retail shops and individual staff by’’ mystery shopper’’
•Well experience new staff recruitment,
LO2.3 Evaluate the significance of the five performance objectives that underpin operations management Strategy in a business organization is essentially about how the organization seeks to survive and prosper within its environment over the long-term. The decisions and actions taken within its operations have a direct impact on the basis on which an organization is able to do this. The way in which an organization secures, deploys and utilizes its resources will determine the extent to which it can successfully pursue specific performance objectives. Slack et al. (2004) argue that there are five operations strategies: 1 Cost: The ability to produce at low cost.
2 Quality: The ability to produce in accordance with specification and without error. 3 Speed: The ability to do things quickly in response to customer demands and thereby offer short lead times between when a customer orders a product or service and when they receive it. 4 Dependability: The ability to deliver products and services in accordance with promises made to customers (e.g. in a quotation or other published information). 5 Flexibility: The ability to change operations. Flexibility can comprise up to four aspects: •The ability to change the volume of production.
•The ability to change the time taken to produce.
•The ability to change the mix of different products or services produced.
•The ability to innovate and introduce new products and services.
Operations strategy has a vertical relationship in the corporate hierarchy with business and corporate strategies, and horizontally with the other functional strategies, most notably with marketing strategy. Operations strategy might come about in a top-down or a bottom-up process with regard to business and corporate strategies. Similarly, an operations strategy might be developed in response to market requirements (i.e. market-led) or be based on the capabilities of its operations. Slack et al. (2004: p.67) argue that an operations strategy concerns the pattern of strategic decisions and actions, which set the role, objectives, and activities of operations’. Their use of the term ‘pattern’ implies a consistency in strategic decisions and actions over time. LO3 Understand how to organise a typical production process
LO3.1Explain linear programming
Linear programming is the process of taking various linear inequalities relating to some situation, and finding the “best” value obtainable under those conditions. Let X be the number of items produced in Basic and
Y be the number of items produced in Deluxe.
Let P be the profit from both Basic and Deluxe.
10X+ 15Y= P
A maximum units of capital is 100.
Maximum labour availability is 60 hours
30≥ X+2Y——————-requirement 2
The number of items of the products should be greater than or equals to zero. Then;
Y≥0 and X≥0
Graphical method is used to solve the problem
3 points are available and the 4th point should be derived from the graph Point (0,15) , (0,0) and (25,0) is available ,
X=16.7 and Y= 6.7
substituting in P= 10x+15y
P=167 + 100.5
Therefore the maximum profit = 267.5
LO3.2 Evaluate critical path analysis and network planning
Critical path analysis is a step by step technique for process planning. This is series of activities determining the earliest completion of the project and schedule network analysis techniques used to identify the schedule flexibility and the critical path of the project schedule network diagram. The critical path is the longest path (sequence of activities) in a project schedule network diagram. Because it is the longest path, it determines the duration of the project and hence the finish dates of the project given the start date. CPA requires careful planning so projects can run smoothly. Improve efficiency and cash flow, therefore materials can be ordered to arrive only as they are needed. Critical path analysis
•May be used as part of the decision making process.
•Enables a firm to plan and monitor operations.
•Time related – identifies the maximum time for an operation to be completed.
•Identify potential problems in implementing operation.
•Identifies where and when resources (including human ones) are needed. The approach is in three parts.
•Create the network – break the overall task down into discrete activities and then create a logical network showing the relationship between the activities in terms of what follows or precedes what.
•Calculate the timings – make estimates of the time required for each activity and calculate the total time required for the project and the critical path – the path of activities which must happen to estimate if the project is to be completed on time.
•Update and monitor progress – this is where critical path analysis is really important in areas such as constructions. Having formed the network and made the estimates and initial calculations, the progress of the activities can be monitored and the whole network updated as work progresses, to ensure that the project completion is not delayed.
The following tasks, estimates and precedence have been agreed in a project. TaskActivityEstimated datesprecedence
AWrite project initiation document3-
BResearch site one4A
CResearch site two2A
DDocument requirements – site one6B
EDocument requirement – site two5C
FDefine non – functional requirements2A
GDefine agreed requirements3D,E,F
HWrite invitation to tender4G
So we can prepare a project network for this project. After that we can be able to identify which activities are on the critical path of the project. Observing this path we can be able to infer the estimated elapsed duration of the project. The project network for this project-
Critical path = ABDG H
= 3 + 4 + 6 + 3 + 4
= 20 days
In order to complete to this project take 29 days normally but after applying critical path can be able to finish this 20 days and we can save 9 days from this.
LO3.3 Explain the need for operational planning and control
Operational planning and control decisions involve arrangement and control of labour, materials, and capital input to produce the required quantity and quality of production most efficiently. Operational planning and control are based on forecasts of future demand for the output of the system. But even with the best possible forecasting and the most finely tuned operations system, demand cannot always be met with existing system capability in a given time period.
•Unexpected market trends
•new product developments
Can throw the forecasts off and problems in the operations system can reduce capacity. At these times, shorter term managerial decisions must be made to allocate system capacity to meet demand. Long term planning involves factors such as fixed capacity planning and product planning. These decisions will affect the organization in the long run. Medium and short term planning involves variable capacity planning, product forecasting, operations scheduling and inventory management. Operation manger organises the operations functioned be allocating responsibilities and creating structures. To ensure business will run smoothly in the long run following planning and controls have to take in to action ➢Routing:
_ decides the quality and material type
_organizing production control forms
_investigating which part of the product need to produced or bought
Preventing unnecessary delays and completing operations successfully and efficiently. _Master scheduling
How the process and operations are done through the route sheets. _Centralised Despatching
➢Follow up and expediting
LO4 Be able to apply relevant techniques to the production of an operational plan for a typical business
LO4.1 Produce a set of clearly defined operational outcomes
Companies achieve operational outcomes by reducing or avoiding costs. We can use SMART tool to define the outcomes
•Specific: Clear and definite terms describing abilities, knowledge, values, attitudes and performance. •Measurable: It is feasible to get the data and data are accurate and reliable so it can be assed in more than one way. •Aggressive but Attainable: Has potential to move the organization forward. •Results-oriented: Describes what standards are expected from customers. •Time-bound: Describes where organization would like to be within a specific time period •As the Operations Manager at Curry’s,
•When a customer orders for any particular product online it will be delivered next day, so as the operational manger if we can improve that same day service. It will enhance the quality of customer service provided by Curry’s. •Reviewing all the shifts and rescheduling the staff rota. So we can put more staff in the busy periods so it will help to provide excellent customer service because customers won’t be waiting in the long queues to get served. •Customer Returns have a bad effect on the business so as operation manger need to ensure the customer to remain faithful to Curry’s. Discount vouchers, Percentage discounts can be issued to the customer. This will satisfy customers. •Some customers experience problems in going through the catalogues. By having trained staffs, it is promising for them to offer help to the customers who wish to use their assist in deciding which particular product the customers are looking for. •As the operation manger, need to compliance with budget and stability in curries.
LO4.2 Produce a network plan and indicate the resultant critical path
ASearch for suppliers and prepare storage10-
BObtain quotation and get the approval 20A
DInform The accountant 10C
EReceive Goods20D G H
GChecking goods and acceptance5F, C
LO4.3 Explain how quality could be defined and maintained
Quality means different things to different organizations depending on the context. In curry’s quality is more likely to mean service excellence and customer care which is measured in terms of meeting customer expectations and customer satisfaction.
http://www.iia.org.uk/en/Knowledge_Centre/Resource_Library/quality.cfm •how to ensure the overall quality standard in curry’s
-Providing vision and direction to achieve results.
-Making decisions using accurate data and facts.
-Delivering value through the development of individuals
-Managing process through an integrated approach
-Focusing on customers and anticipating future needs
Quality management tools, standards and models
-ISO 9000 series
-Total quality management
-Investors in people
•To achieve quality standards in curry’s need to,
-Provide quick response to customer feedbacks and problems
-Have fully trained staffs
-Revise supply chain of the products if products, defects higher than the returns expected per day.
-Have up to date software’s and hardware’s to provide after sales services if required
Conclusion and recommendation
Operations management is a broad area of business management that involves labor relations, statistics, manufacturing control, and policy creation, among other things Being a good operation manager demands lots of hard work and dedication as he/she has to demonstrate how he/she manage scarce resources, time, cost, quality and so on. Planning and control has to be carefully monitored and in case the latter go out of hand it is impossible to keep the business on the right track
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