Issues facing the functions of Operations Management

Issues facing the functions of Operations Management Operations management is the business function Responsible for Planning, Coordinating and controlling the resources needed to produce a companys goods and services. It involves managing human capital, machineries , technologies , information and many other resources. Operations management is the central core function of every company . even though the company is big or small, provides physical goods or services ,every company has an operating function , the role of operations management function is to transform companys raw inputs in to the finished outputs such as products or services. Inputs include human capitals, technology, Materials and Processes such as building and equipments. Outputs are goods and services which the company produces. Operations management is responsible for combining and coordinating all the available resources required to produce a proposed product or services. This include designing, the product, deciding the whole required resources , scheduling, inventor y management , quality control and job design, The Transformation Process Diagram History of Operations Management Operations management did not emerge as a formal field of study until the late of 1950s and early 1960s, It was Scholar , who recognize that all productions system face a set of problems and to stress the system approach to viewing operations process. In 1700s , the industrial revolution had a significant impact on the way gods are produced today. Prior to this movement products were made by hand by skilled people at their shops or their homes. Each product was unique . but industrial revolutions changed all that invention of machines helped to replace human power to machine power . in 1900s scientific management were introduced .it is an approach to management that focused in improving out puts restructuring jobs and selecting acceptable levels of worker out put. Scientific management brought the concepts of analysis and measurement of the technical aspects of work design. In 1980s operations management saw a huge developments Just in time concept were designed by Japanese to achieve high volume production using minimum level of inventory . this is achieved through coordination of flow of materials so that the right parts arrives at the right place at right time in the right quantity. As the customers demand in higher quality products and service , companies were forced to focus on quality in order to remain competent. Total Quality Management is a philosophy developed by quality gurus such as W Edwards Deming , that aggressively seeks to improve product quality by eliminating defects and making quality an all- encompassing organizational philosophy . with TQM every one in the company is responsible for the quality . Supply Chain Management system has been introduced in the same period to manage the flow of material and information from suppliers and buyers of raw materials al the way to the final customer. The objective is to reduce cost and improve q uality and service delivery by every one in the chain .Supply chain management became famous with the development of information technology and E commerce . electronic Commerce can occur between business known as Business to Business(B2B) , between business and customer ( B2C) and Customer to Customer(C2C) which makes up highest percentage of transaction in between business and customers . Today operational management environment is very different from what it was just few years ago. Customers demands better quality, greater speed and low cost. In order to succeed , companies have to be master s of the basics of operations management. Advanced information technology tools and software are being used to identify the resources needed to coordinate all activities involved in producing and delivering products to customer s. to gain advantage over their competitor companies are continuesly looking for ways to better respond to customers . it needs companies a deep knowledge about their customers and to meet their demands . The development of Customer Relationship Management has made it possible for the companies to understand the customers needs . Another characteristics of todays Operation management Environment is the increased use of Cross Functional Decision Making that requires coordinated interaction and decision making between the different business functions of the organizations. Employees from each function must interact and coordinate their decisions. this requires employees to understand the roles of other business functions and the goals of the business as a whole , in addition to their own expertise Service Vs Manufacturing Operations Operations can be divided in to two main categories, service operations and manufacturing operations. Manufacturing operations producing physical and tangible goods which can be stored in to the ware house before they are required, but in service operations products are intangible products that cannot be produced ahead of time. In manufacturing operations firm customers doesnt have direct contact with the operations . customers contact will be redirected through dealers , distributors and customer care centers . for example a customer is buying a computer in a super market never comes in to contact with the manufacturing company. But in service organization the customer will be typically present during the creation of the service. Car service centers, Hospitals , fast food centers are some examples of service operations. There are some manufacturing organizations provides service as part of their offering , and some service operations organizations produces physical goods that they deliver to the customer during service delivery. A barber shop may sell their own hair care products to their customers Operations management Decisions Operations management decision can be divided in to three levels . that is Strategic , Tactical and Operational Strategic Decision Making: this decision are long term decision which set directions for the entire company . they faces questions such as what will be the vision of the organizations what market the company should concentrate ,how the company should compete win the field etc. these levels of decision are made by companys topple level executives only Tactical Decision Making: short term decisions focus on particular departments are being taken in tactical decision making level. this is the level which makes decision of how ,and why questions , such as how many products should be manufactured and which technology has to be used , and how will be the quality of the product etc. Operational Decision Making: This level of decisions mainly used for day to day issues. Such as work scheduling, replacement, maintenance etc. Decision making Levels Hierarchy OPERATIONAL Role of an operations manager Operations managers are responsible for managing activities which will be a part of the production of goods and services. Their responsibilities can be divide in to two categories , Direct and Indirect Responsibilities, Direct Contains managing both the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities are interacting with those managers in other functional areas within the company they have direct or indirect responsibilities on operations. Such areas include marketing, finance, accounting, personnel and engineering. Operations managers responsibilities are : Human resource management the people working in an organization to create a good or service or provide support to those who do. Man Power and Human Resource Management are a key resource of all organizations. Asset management A Companys buildings, Machinery, material and Inventory are directly connecting with the operations functions. Cost management most of the costs including fixed and variable cost of producing goods or services are directly related to the costs of acquiring resources, moving them or delivering them to the end user . For many organizations in the private sector, cost cut through efficient operations management gives them a critical competitive edge. Even organizations in the non-profit sector, the ability to manage costs is no less important. Decision making is an important responsibility of all operations managers. Decisions should be made in: Designing the operations function Analyzing the operations function Improving the operations function Controlling an Operating The five main kinds of decision in each of these relate to: The processes, which is used to produce products or services The quality of Products or services The quantity of Products or services The inventory , which is used to produce or supporting the production of goods or services Human resource management, including recruiting, scheduling, Performance Appraisal etc. A Case Study Maharaja Electricals PVT Ltd Maharaja Electricals Pvt Ltd is an ISO 9001 company based on Chennai, Tamil Nadu, India . Since its establishment with a single plant at Chennai before 15 years they remained the major suppliers of Mixers in South India. They collect completed spares from local manufacturers with strict quality checking and assemble them in their assembling units. They have experienced engineers and technicians in both electrical and mechanical disciplines. The company now has 20% of the South Indian mixer market. The major attraction to Maharaja Mixers is the low prices since all components are indigenously developed but still with quality assurance. Most of the middle class families always prefer Maharaja just because of their easily affordable costs. Now to cop up with the increased customer requirements from neighboring states, especially from Kerala, the company is planning to install a new plant in Palaghat, the border area between Tamil Nadu and Kerala. They are planning for an assembly lne with a conveyor belt to minimize the total time required for assembling. They prefer a U-shaped assembly line which may reduce the total installation space. Also workers at different workstations can be close so that one can help others or even handle others work when one is absent from the seat. The conveyor stops for a specific interval of time so that each work station can complete its work within that time slice. This is the time for which the basic structure of the product is available to a workstation; called Cycle Time. The main problem here is to identify the various steps involved in total assembly of a mixer. Then the cycle time for the conveyor is to be calculated. Determining the minimum number of workstations and calculating t he efficiency of the line is also a concern. The company procures the following spares from local suppliers with strict quality control in bulk. Electrical motor assembly Plastic base to fix the assembly Rubber bushes to be fixed at the bottom of the base Electrical lead to the power supply Plastic cover for the motor assembly On/off switch on plastic cover Speed regulator Plastic circular rotator Jar attachments Cardboard packing box Screws of various sizes With their ample experience in assembling the company has identified time requirements for each fixations and a linear order for assembling process. That is tabulated as follows. Process Map Theoretical Approach of the Problem, Pareto chart, Pareto Theory A Pareto chart is a bar graph. The lengths of the bars represent frequency or cost (time or money), and are arranged with longest bars on the left and the shortest to the right. In this way the chart visually depicts which situations are more significant. In the following Pareto diagram compares the available time, performance time and idle time comparison of six work stations. The diagram clearly shows at work station 1 there is no idle time for the conveyor belt. So employees with high skills and speed must be posted here. Workstation 1 is the critical point in this assembly unit since all other assembly works pre requires this assembly. Currently the assembling units are installed in an assembling unit where assembled parts are shifted from one place to another manually. It is observed with clock stop analysis that 15 minutes are required solely for shifting components to next shifting unit. Clearly here we can apply so called Pareto Principle in the situation. This principle is famed with the name of Italian economist Vilfredo Pareto who created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. The principle is also known as 20-80 rule , the Law of Vital Few and principle of factor sparsity. Later the Management thinker Joseph M Juran adopted the idea to Management Principles. Jurans assumption is that most of the results in any situation are determined by a small number of causes. For example 20% of the customers determine 80% of the sales in a trade fair. Here in our problem 30% of the total time is required for just transferring components from one table to another. Reducing this time substantially can save total assembling time and thus can improve efficiency of the total system. So installation of a conveyor belt in the factory is a better alternative. Solution The precedence requirements clearly mention which tasks are to be completed before starting a new one. In the above table before covering the motor assembly with an outer cover ( Task D ) the motor assembly must be fixed on a plastic base (Task A) and electrical leads must be connected to the assembly(Task C). Similarly certain other tasks are also having precedence requirements. A work station is a place or a table where the conveyor stops for a cycle time with the basic structure on it. After that conveyor moves so that the basic structure goes to the next work station where it can perform additional fittings. The first thing is to identify the task with highest cycle time. It is normally called bottle neck task. The conveyor at least has to stop this much of time for a workstation. The cycle time cannot be les than the duration of this task. In Mahararajas case connecting electrical lead to the power supply to the motor assembly is the bottle neck operation. The cycle time is therefore 6 minutes as per the table. If the cycle time is kept less than this Task C cannot be completed. Then determining the minimum number of workstations is the next problem to be solved. Theoretically the minimum number of workstations can be calculated by dividing the total time requirement with cycle time. So here as per the table the total task time is 30 minutes and the cycle time is 6 minutes. So Minimum number of workstations = 30/6 = 5 work stations. Then the next problem is to determine which tasks are to be assigned to which work stations. Here we have to use some heuristics. In this case the heuristics selected is called the Longest Operation Time (LOT) rule. According to this rule the top priority is assigned to task with longest operation time. In this case Task C is the longest task with an operations time of 6 minutes. This task has the highest priority assignment over first workstation. The table also shows that it has no precedence requirements ie no other task need to be completed to begin Task C. so task C can be assigned to the first workstation. An entry can be made to the following table. Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 The only prioritized task for workstation 1 is task C and that is assigned to first workstation. The cycle time is 6 minutes and that is equal to the time requirement of task C. so no remaining time is left for other tasks to perform in this work station. So no more tasks can be assigned to first workstation. At the next step the tasks assigned to the second workstation are to identified. From the table the next task with longest operation time requirement is task A which also requires no precedent operations. The task is to fix the motor assembly with the electrical lead(fixed at workstation 1 by task C) on a plastic base. Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 Since task A requires only 5 minutes, 1 minute is excess at the second workstation. But since we have no tasks which require 1 minutes only no other tasks can be assigned here. At the next step we have longest tasks D, F or H with en execution time of 3 minutes. But F and H have pre requirements. For task F task D must be completed. For task H, tasks B,E,F and G are to be completed. At this point of time both pre requirements are not satisfied. The pre requirements of task D are completion of task A and C which is already accomplished. So the preference goes to task D. Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B Here after assigning Task D 3 minutes are remaining. From the table all tasks with 3 minutes operation time requirement also have pre requirements of completion of other tasks. So the next preferable job is task B whose time requirement is only 2 minutes. Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 The next step is to assign task in work station 4 , here we can consider task F and Task h with longest path of 3 minutes ,.But task h have pre requirements so task F can be assigned in work station 4 Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G In work station 4 task F have used only 3 minute. to utilize the remaining time in work station 4 , task E, or t ask G can be assign in work station 4 , Task E is assigned in work station 4 Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G 6 4 E,G E 2 1 G The next step is to assign suitable task in next work Station . next suitable task which can be assigned in workstation 5 is task G . Heuristic Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G 6 4 E,G E 2 1 G 7 5 G G 2 4 H,I,J Task G will take only 2 minutes to complete the task . work station 5 can be assigned for some other tasks , next available tasks are Task H, I ,J , the longest path among these three tasks are with task H of 3 minute . So we can assign task H in work station 5. Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G 6 4 E,G E 2 1 G 7 5 G G 2 4 H,I,J 8 5 H H 3 1 I,JÂ   Here after there are two tasks left . Task I, Task J, But to do the Task J , Task I must be completed . so Task I can be assigned in to work station 6 Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G 6 4 E,G E 2 1 G 7 5 G G 2 4 H,I,J 8 5 H H 3 1 I,J Â   9 6 I,J I 2 4 J Task L have used only 2 minutes to complete the task, that is it remains 4 minutes in work station 6 , so we can assign Task J in work station 6 Heuristics Steps Workstation Prioritized Task Assigned Task Task Time Remaining Time Remaining Eligible Task 1 1 C C 6 0 0 2 2 A A 5 1 0 3 3 D D 3 3 B 4 3 B B 2 1 0 5 4 F F 3 3 E,G 6 4 E,G E 2 1 G 7 5 G G 2 4 H,I,J 8 5 H H 3 1 I JÂ   9 6 I,J I 2 4 J 10 6 J J 2 2 Â  0 Assignments of Works to the work station Work Station 1 2 3 4 5 6 Total Available Time 6 6 6 6 6 6 36 Performance Time 6 5 5 5 5 4 30 Idle Time 0 1 1 1 1 2 6 The last table shows that at least 6 workstations are required which is different from the calculated theoretical minimum. Efficiency of the assembly line is performance time/ available time X 100 Here 30/36 X 100 = 83.33 %. Ideal efficiency is 100 %. Recommendations It is recommended to use U shaped Conveyor belt and 3 work stations should be in one side and the remaining 3 workstations should be in other side so that the idle work station can help the busy work station. The conveyor belt can be drawn as below