This paper talks about a medium scale organization that has been facing a lot of operations related issues. The report starts off with a brief introduction to what operations management is about. Then, it moves on to discuss the company’s background and brief history, while moving on to put light on the major issues that are now being faced by the company’s operations department. The paper then details the readers on these issues including product defects, breakdown of machinery, poor inventory management and control and poor flow of materials, people and products. Then, a proposal to the managing director has been attached keeping these issues in mind and reaching a solution to inculcate quality, efficiency, effectiveness and productivity in the operations systems, people and products. The paper concludes itself with a brief discussion on everything that was talked about in the earlier part of the report.
Operations management is a field in the study of management that involves the study of production of goods in the Production department. This type of management is about managing the processes that are involved in producing, supplying and checking quality of goods and services. Operations management is a field that is an umbrella under which systems related to the idea inception, actual production of the product, its development, refinement, quality management and then distribution of the product (Slack N. Chambers S, Johnston R, 2004).
Product quality or products defects, product recalls and wastage
Product quality is very important in gaining a reasonably decent market share. It is important that minimization of wastage takes place to capitalize on minimum costs and least amount of wastage of resources. Product wastage hence refers indirectly to the product’s quality being high and the production systems being productive so as to minimize all wastage of raw materials, time and money. Minimization of products in number is the key here since these can be recalled when a flaw in the manufacturing system is found; only those product batches are then identified and re-checked that are deemed faulty by the system or called to be low in quality, leading to wastage etc. Therefore, through this system these can be eliminated. Recalls, comes in when we talk about eliminating recalls through provision of real-time reports depicting all machines, product movement, shifts etc. (PLM, n.d.).
Breakdown maintenance, Preventive maintenance and Total Productive Maintenance
Total Product Maintenance or TPM has to do with optimization of the productivity levels of the equipment that is being used in the manufacturing systems. This is called TPM only when this optimization is done at all employee levels. Everyone, across all levels henceforth under the system of TPM works to keep all materials and equipment in good condition. This results in a lot of advantages since it minimizes losses occurring from repairs, recalling and set-ups etc. in the production department.
Breakdown maintenance refers to the act of repairing and looking after equipment after it is deemed broken, faulty etc. Preventive maintenance under this term refers to doing this constantly without the need to wait for the breakage or fault to occur. (Silicon Fareast, n.d.)
Inventory Management and Control
Inventory management has to do with managing inventory with respect to its timely delivery, reviews of stock, inventory storage, placing order etc. A manager pertaining to this field of work analyses the stock that is remaining in storage and then determines the time period it will need for the next batch of inventory to come in. This is especially true when he or she sets a minimum level of inventory right at which the next order is placed. This type of management of inventory is very important since it helps in costs not getting exceeded, excessive purchasing not getting done and wastage not likely to occur. (Management – Hub, n.d.)
Purpose of this report
The purpose of this report is to introduce a company that is medium in size having an employee workforce of two hundred employees. It introduces it to be plagued with a series of issues involving operations and production management and then produces in the form of a proposal to the MD, various solutions to curb and control these issues. This report aims at discussing some of the key elements that every operations manager needs to know and helps in gaining insight into the field of operations management strategically. It can be hence useful in both the sense- practical and student learning. (Stevenson W.J., 2005)
The company is a medium-size manufacturing company with a workforce of two hundred employees. The company has been in operation for the past five years but the manufacturing department is still facing some major problems.
Company Background Information
Yummy Biscuit Manufacturers is the leading manufacturer in the biscuits industry. The company was established in 2004. Yummy Biscuit Manufacturers has been known as a manufacturer which provides customers with biscuits having nutrition value. Also Yummy Biscuit Manufacturers enjoys the reputation of providing very hygienic biscuits of a very good quality.
The annual sales turnover of Yummy Biscuit Manufacturers exceeds $ 1.0 million and the production capacity exceeds 15,000 tons annually. The hierarchy of each department at Yummy Biscuit Manufacturers is such that at the top level of each department there is a general manager. Under the general manager, comes the senior manager for the department who reports to the gm of the department. Then there is a manager and below the manager is the assistant manager of the department. Under the assistant manager comes the shift executive of the department. The section in-charge of the department reports to the shift executive of the department. Then in a typical production department at Yummy Biscuit Manufacturers, there are supervisors who supervise the operators of the department. The operator in turn has helpers under him who report to the operator.
All this however seems like lip-service when one sees the kind of situation that the company’s production department especially is in. The company, apart from having very nice lucrative plans, has been facing losses due to the various faults in functioning of the production department. This has called for a major review and study of how operations are being managed at the company since the last five years of its inception. The major problems that are being faced by the company are:
- Product defects, product recalls and wastage.
- Frequent machine breakdowns.
- Poor inventory management and control.
- Poor flow of materials, products and people within the manufacturing plant.
Major problems being encountered by the company
Product defects, product recalls and wastage
Product quality is very important in gaining a reasonably decent market share. It is important that minimization of waste takes place to capitalize on minimum costs and least amount of wastage of resources. Product wastage however is occurring at YBM hence leading indirectly to the product’s quality being low and the production systems being very poor so as to increase all wastage of raw materials, time and money. There is no minimization of products in number since these are recalled when a flaw in the manufacturing system is found, which is the case most of the time. Due to this all products are called back to identify the faulty ones, leading to re-checking and the system hence being called low in quality, leading to wastage etc. Recalling biscuit batches is a frequent decision that the operation managers take and the most important reason for this is the absence of proper provision of real-time reports depicting all machines, product movement, shifts etc. The strange bit is that such a system in total is completely absent as the entire department in the conventional way of production.
Frequent machine breakdowns
There is no presence, whatsoever of Breakdown maintenance, Preventive maintenance and Total Productive Maintenance. Total Product Maintenance or TPM which is the optimization of the productivity levels of the equipment that is being used in the manufacturing systems. This is called TPM only when this optimization is done at all employee levels. Everyone, across all levels in the company, is negligent of such a system and the various advantages that can come with it. Therefore, all materials and equipment are found to be in poor condition most of the time. This results in a lot of disadvantages since it incurs losses occurring from repairs, recalling and set-ups etc. in the production department. Breakdown maintenance refers to the act of repairing and looking after equipment after it is deemed broken, faulty etc. Preventive maintenance under this term refers to doing this constantly without the need to wait for the breakage or fault to occur. (SiliconFareast, n.d.) Both such systems are absent altogether in the plans and functioning of the production department owing to the kind of huge losses that this medium scale organization has been facing.
Poor inventory management and control
There is also no Inventory Management and Control system in place at the company. Inventory management has to do with managing inventory with respect to its timely delivery, reviewals of stock, inventory storage, placing order etc. A manager pertaining to this field of work analyses the stock that is remaining in storage and then determines the time period it will need for the next batch of inventory to come in. This is especially true when he or she sets a minimum level of inventory right at which the next order is placed. This type of management of inventory is very important since it helps in costs not getting exceeded, excessive purchasing not getting done and wastage not likely to get occurred. (Management – Hub, n.d.) But, at YBM this is not there at all.
Poor flow of materials, product and people within the manufacturing plant
Another thing very dominant in the way the operations are being managed at Yummy, is the poor flow of materials, products and people within the manufacturing plant. There are immense productivity issues with the people who are placed in the manufacturing unit, including the supervisors and operations managers. They feel that the vision the company talks about, excludes these employees which results in them feeling neglected and not taken care of. Feelings of negativity, low productivity, high absenteeism rates, all has through the five years of operations resulted into overall profitability of systems being very low and declining. This owes to the poor flow that follows as well, with no real-time check as a system of the products, people, materials and machines. (Stevenson W.J., 2005)
Proposal to managing director
Quality improvement and Preventive maintenance and TPM
Productivity, or labor productivity is the quantity of items that are produced as output per some unit of time or number of people employed to do the work, in total. (Economics, n.d.) Research has shown there is a link between productivity and motivated employees. Specifically, the many different ways how this can be done at Yummy is as follows”
- Managers need to understand what employees want from work
- They should show respect for employees at work to them
- Managers should give comments in the form of constructive criticism and provide feedback that the employees can make use of positively (Heathfield, S., n.d.)
- Managers need to show employees that their work is liked when it is. Praise in the form of open regard, open usage of positive adjectives for the employee and his or her work, and even a pat on the back can result in a feeling of motivation inside the employee (Heathfield, S., n.d.) Kaiser is a company in Germany that keeps its employees first. (Moriseiki, 2003)
- Managers and the company can set out proper criteria for performance, which can be then used as a basis of judging and analyzing an employee’s work. (Heathfield, S., n.d.)
- Developing and retaining a good trustworthy environment and a relationship based on trust between the manager and his or her employee, can result in motivation again. This can be established if and only if effective communication is being done, and employees have a say in the matters of the business. (Heathfield, S., n.d.)
- Recognizing each employee for what he’s contribution to the work that he is responsible for and to the company or organization that he is in is another way to make him feel motivated and to retain that feeling inside him
- Delegating tasks to employees and empowering them is another step whereby employees feel good since they feel they are in charge.
- Equal opportunity for all employees needs to be set explicitly. Also, a culture of mentoring one’s followers or subordinates is a good way to motivating them since by guiding them they feel like someone cares for them. (Heathfield, S., n.d.)
Implementation of an effective and efficient inventory management system
There are various faults in the way YBM is handling its inventory. It should employ a proper system like the perpetual inventory system to employ efficiency in the way inventory at YBM us controlled and managed. Yet another alternative is methods, could be the ABC Classification, whereby inventory is divided into groups, and then according to the cost (annual) of each group it is ranked with respect to usage obviously. There are many techniques to controlling inventory, these are:
- Economic purchase order quantity (How much to order)
- Reorder level (when to order)
- Minimum inventory or safety stock.
When each of these is incorporated in a production department to have an efficient system, then can it be said that efficiency and productivity is being achieved. This proposal highlights the implementation of these tools henceforth. The model in EOQ, talks about determining the optimum quantity to be purchased each time. It deals with placing orders only when henceforth a minimum level is reached.
Just in Time (JIT) and Housekeeping
Just in time hence is the system in place that can lead to efficient inventory management. A lead time is determined, which is the time interval between ordering and getting delivery of the materials that were ordered. Also a minimum inventory level or ‘safety stock’, is determined, to know the time or ‘when’ to order. This will curb the problem of wastage of materials at Yummy. As the reorder point moves upward due to demand, safety stock can be increased. Statistical methods can also be employed to determine one’s safety stock and estimation methods can also be used based on two or three months of past data (through trial and error, that is). (Stevenson W.J., 2005)
Also, housekeeping can be employed to sort, straighten, sweep and shine, standardize and sustain methods to keep the quality of the workplace organized. (Russel R.S. & Taylor III B.W., 2009
Selection of layout and improvement of process flow
Improving flow during production is very important and for this real-time systems need to be adapted and implemented in the factory. Lean production can be adopted by Yummy by reducing wastes and improving customer satisfaction value. The combination of Lean production and Six Sigma is very fruitful, since it helps in cutting waste, reducing variations in systems and processes and during production. By improving the flow of work through a real-time system for monitoring systems, lean production can prove to be a lucrative proposition. There are two basic techniques for improving flow and leveling production – Kanban and Heijunka box.
As flow is improved through these techniques and through employing real-time monitoring of people, products, materials, and processes, quality problems will be solved. Pull processing is another technique that helps in improving process flow. This means that products are actually pulled at the consumer end, or planning and production of biscuits at Yummy can be done as per demand, instead of the way it has been done (through making a specified number of batches irrespective of what exactly is needed by the consumer and in what quantities). (Business Knowledge Source, n.d.)
For Yummy to succeed and work to flourish the input of each and every resource is essential. The effective use of this input, in particular when talking about human resources, adds a lot of value to the overall processes at work. This can be achieved when and if workers and employees are motivated since their productivity then is said to increase and be at high levels. Toyota is the name of a company that has established its name well in the market for high productivity through various techniques. (Emerald Insight, 1996) The problems of Product defects, product recalls and wastage; Frequent machine breakdowns; Poor inventory management and control; and Poor flow of materials, products and people within the manufacturing plant, hence can be controlled and curbed with the aid of techniques like Kaizen, Kanban, six sigma, real-time monitoring systems, perpetual inventory system, housekeeping, lean production, keeping employees motivation levels high and Just in Time. (Slack N. Chambers S, Johnston R., 2004)
- Business Knowledge Source (n.d.) How to improve process flow through leveling. [Internet] Web.
- Economics (n.d.) Glossary- Labor productivity. [Internet] Web.
- Emerald Insight (1996) How can a company achieve improved levels of quality performance: technology versus employees? [Internet]
- Heathfield, S. (n.d.) Top ten ideas about what employees want from work. About.com. [Internet] Web.
- Management – Hub (n.d.) Inventory Management Introduction [Internet]
- Moriseiki (2003) Auto Stories. [Internet]
- PLM (n.d.) Digital manufacturing process management. [Internet]
- Russel R.S. & Taylor III B.W. 2009, Operations Management: Creating Value Along The Supply Chain, John Wiley & Sons. Inc
- Silicon Fareast (n.d.) TPM. [Internet]
- Slack N. Chambers S, Johnston R 2004, Operations Management, FT-Prentice Hall.
- Stevenson W.J. 2005, Operations Management (8th Edition), McGraw-Hill/Irwin
- Urichuck, B. (n.d.) Employee Motivation. [Internet]