PRODUCTION AND OPERATION MANAGEMENT

I. P/OM FRAMEWORKS

Contemporary Issues and Developments Effecting P/OM

There are multiple challenges that operations managers face on a daily basis; this blog
highlights the following five: globalization, sustainability, ethical conduct, ineffective
communication, and system design.
Globalization
Globalization101.org defines globalization as: “a process of interaction and integration
among the people, companies, and governments of different nations.” It is driven by a
reduction in trade barriers, advancements in information technology, and transportation
technology. Operation managers face competition from the company across the street,
as well as, from across the country and across the world. Tishta Bachoo, Accounting
Professor at Curtin University in Australia, explains that companies who compete with
others abroad will have to improve quality while lowering prices to remain competitive.
This falls on the operations manager as he or she is the one who “engages in the four
functions of planning, organizing, leading, and controlling to ensure that the product or
service remains competitive in the market.” Batchoo adds that the operations manager
must tap into their creative skills as innovation will be a key factor of success as will
knowledge about international business and the myriad cultures of the businesses
around the globe.

Sustainability
In her article, Business Definition of Operational Sustainability, Kay Miranda, journalist
for the Houston Chronicle, defines business operational sustainability as a “method of
evaluating whether a business can maintain existing practices without putting future
resources at risk.” When discussing the concept of sustainability, it is often referred to
as the Three Pillars of Sustainability which are social, environmental, and economic.
Operations managers must concern themselves with the outcomes of each of the pillars
including how their work affects safety, welfare, communities, the environment and
economic sustainability.
Effective operations managers must implement best practices with a concern for all
three pillars of sustainability. They also need to initiate and verify corrective action when
any outcome of one of the three pillars becomes jeopardized.

Ethical Conduct
Education site ManagementStudyGuide.com takes special note of the role ethics plays
in production. Ethics is defined as a subset of business ethics that is “meant to ensure
that the production function and/or activities are not damaging to either the consumer or
the society.” In particular organizations should consider the effects new technologies,
defective services, animal testing and business deals have on people, safety, and the
environment.
Unethical behavior has significantly contributed to the demise of successful corporations
like Enron, Tyco, and many varied firms doing business on Wall Street. Being ethical
across all business functions such as accounting, human resource management,
marketing and sales, and production are clearly within the purview of the operations
manager. Unethical behavior, regardless of its origin, becomes a stain on the company
as a whole. The recently noted ethics breach at Wells Fargo is just one poignant
example.

Effective Communication
Being consistent and effective when communicating can be difficult anyone in any
position within an organization. The challenge for the operations manager is to be able
to communicate effectively with all internal and external stakeholders. Whether they are
talking to someone on the factory floor, or in the boardroom, they must be able to
effectively communicate their message as well as process the messages being directed
to them. Mastering oral, written, and non-verbal communication is integral to making
day-to-day operations run smoothly. Effective and efficient communication is also
necessary for building employee morale and deepening trust with management.
Operations managers who take the time to be self-reflective, the initiative to be
authentic, and the effort to work on their communication skills are bound to be both
productive and successful. The development of these skills are frequently the most
requested of upper level management of their new and mid-level managers and
required to be successful in any company.

System Design
In Key Issues in Operations, a blog detailing the relationship between system design
and operational management, the main theme is that organizations must develop
systems capable of “producing quality goods and services in demanded quantities in
acceptable time frames.” Designing the system, planning the system, and managing the
system present a wide variety of challenges to even the most savvy operations
managers.
As operations managers work in multidisciplinary environments, they must be aware of
and effectively respond to the challenges presented by globalization, sustainability,
ethical conduct, effective communication, and system design. Doing this calls for
operations managers to excel in the business, technical, and interpersonal aspects of
their work as they actively support the mission and vision of their organization.
 II. PRODUCT PLANNING R PROCESS PLANNING, WHICH COMES FIRST?

LINKAGE BETWEEN PRODUCT PLANNING AND PROCESS PLANNING

Product planning serves as an input to process design. Responsibility for product

planning and development rests with marketing department and research and
development (R&D) department. The perceived needs of the customers are identified
and these needs are reflected in the product’s proposed quality, cost, function,
reliability and appearances.

Basic process planning must begin during the product design stages where selection of
materials and initial form such as casting, forging, die castings and plastic moldings take
place. The minimum possible cost of producing a part or a product is established by the
design of the part or the product. Hence, process planning must start at the product
design stage itself. The effort to design for low manufacturing cost is referred to as
production design as distinct from product design, which consists of functional design
and form design.

Given the product design, the process planning for manufacture, must be carried out to
specify in detail the processes required and their sequence. Production design first sets
the minimum possible cost that can be achieved through the specification of materials,
tolerances, basic configurations and methods of joining parts. Process planning
attempts to minimize the costs of the manufacturing process and the sequence to meet
the required design specifications.

The end of production design is manifested by the release of drawings which

summarizes the exact specifications of what is to be made. Process planning takes over
from this point and develops the broad plan of manufacture for the part or product
including the basic selection of processes necessitated in the design stage.

Relationship between Process Planning and other Operations Management Activities

Process planning also affects quality control, human resources requirement, job design
and capacity of the plant. Process design determines the details of how products /
service will be produced.

Process planning and process design describe the specific steps in the production
process and the linkages among the steps that will enable the production system to
produce products / services of the desired quality in the required quantity, at the time
customers want them and at the budgeted cost.

Intense process planning may be required for new products / services. Process re
planning may also occur as capacity needs change, business or market conditions
change and technological improvements take place in materials and machinery.
III. WHAT DOES VIRTUAL FACORY MEANS? WHAT ARE ITS IMPLICATIONS IN
LOCATION PLANNING AND LAYOUT PLANNING?
Definition: Virtual Factory
It refers to an integrated model that includes variety of software, tools, and
methodologies in order to solve any real time problem of manufacturing system. This
model sees a real factory as a combination of various sub-systems and includes them.
In manufacturing, it creates a virtual simulation exercise that helps in replicating the real
life scenario and helps in designing and implementation.
The advantage of virtual factory involves:
• It helps in creating capabilities to support the rapid development in manufacturing
sector by pooling the experts.
• It helps in providing solutions in a speedy and cost effective manner.
• It eliminates the need for pilot plants or production runs and replaces it with virtual
simulation on software.
• It helps in the decision making process.

The functions can be grouped into 3 major subsystems in a virtual factory are:
• Primary subsystems of manufacturing
• Business process subsystem
• Communication network subsystem

These subsystems are properly integrated to mimic the real life scenario.
Apart from manufacturing, companies also use virtual factory in providing service to
their customers. Companies use the power of internet and ever increasing bandwidth to
create a chain of experts/ freelancers with necessary skill sets and motivation. When
customer seeks service, he is mapped to an expert who helps in solving the problem of
customer.

Hence, this concludes the definition of Virtual Factory along with its overview.

IV. SUPPLY CHAIN MANAGEMENT

Strategic Importance of Logistical Performance

Key Issues in Supply Chain Management

Key Issues in Supply Chain Management and How to Overcome Them

Luxury car manufacturer, BMW, recently suffered production stoppage of its 3-Series
sedan in Germany, China, and South Africa, due to Bosch’s failure to supply the
necessary steering gears. Aside from its 3-Series sedan, production of BMW’s 1-, 2-,
and 4-Series were also affected. While the financial impact of the stoppage has yet to
be measured, BMW is seeking compensation from Bosch for the disruption.

The aforementioned incident highlights the importance of supply chain management.

Effective supply chain management enables enterprises to track the movement of the
raw materials needed to create products, optimize inventory levels to reduce costs, and
synchronize supply with customer demand. Furthermore, supply chain management
enables enterprises to maintain visibility over their logistics to ensure availability of
materials and delivery of products to customers. Effective supply chain management
also helps enterprises avoid production stoppages by identifying areas in which they are
reliant on a single supplier.

Supply chain management provides enterprises, especially manufacturers, with

tremendous competitive and business advantages. However, supply chain management
is fraught with challenges especially in today’s business landscape.

Three Key Issues in Supply Chain Management

Key Issue #1: Globalization

Globalization presents several critical supply chain management challenges to
enterprises and organizations:

First, to reduce costs across the supply chain, enterprises are moving manufacturing
operations to countries which offer lower labor costs, lower taxes, and/or lower costs of
transport for raw materials. For some companies, outsourcing production involves not
only a single country, but several countries for different parts of their products.

However, outsourcing not only extends the production process globally, but also the
company’s procurement network. Having suppliers in different geographic locations
complicates the supply chain. Companies will have to deal with, coordinate, and
collaborate with parties across borders regarding manufacturing, storage, and logistics.
Furthermore, they have to extend or maintain fast delivery lead times to customers who
want to receive their products on schedule despite the increased complexity in the
manufacturer’s supply chains. Finally, they also have to maintain real-time visibility into
their production cycle — from raw materials to finished goods — to ensure the efficiency
of their manufacturing processes.

Second, as companies expand sales into global markets, localization of existing

products requires a significant change in the supply chain as companies adapt their
products to different cultures and preferences. There is an inherent risk of losing
control, visibility, and proper management over inventory , especially if enterprise
applications are not integrated. This requires managing diverse structures of data
across geographies effectively.

For example: many manufacturers in Asia still handle trading partner communications
via fax and email while suppliers in North America and Europe have utilized EDI for
decades. As technology matures, suppliers in emerging markets may skip EDI
altogether and move to a more modern API driven approach to communication just as
developing countries have skipped land lines in favor cell phones.

Supply chain practitioners need to ask if their enterprise technology is prepared to

handle these diverse forms of communication that arise from Globalization, and build a
business case to stay prepared.

Key Issue #2: Fast-changing Markets

According to EduCBA, consumer behavior is affected by cultural, social, personal, and
psychological factors that are quickly being changed by technology and globalization.
Social media is creating new pressures for consumers to conform while putting pressure
on enterprises to utilize these sources of information to respond to changing
preferences in order to stay interesting and relevant.

Like globalization, the fast-changing consumer market also brings with it supply chain
management challenges:

First, products have shorter life cycles due to rapidly changing market demands.
Enterprises are under pressure to keep up with the latest trends and innovate by
introducing new products, while keeping their total manufacturing costs low because
they understand that trends will not last for a long time. This also demands a flexible
supply chain that can be utilized for manufacturing other products and for future
projects.

Second, aside from new products, companies also need to constantly update product
features. Enhancing product features requires enterprises to redesign their supply chain
to accommodate product changes.

Finally, innovation presents a challenge in forecasting demand for new products. The
constant innovation necessitated by fast-changing markets also means enterprises will
constantly have to anticipate demand for new products. Enterprises need to create and
maintain an agile supply chain that can respond well to spikes and dips in demand and
production needs.

Companies should be asking if they have all the data needed to make planning
decisions to address challenges created by fast-changing markets. For example, if
stated lead times from suppliers are longer than actual times, this will lead to higher
inventory levels than are actually required and affect costly decisions around network
planning and optimization. Omnichannel retail has reated silos of sales data that have
to be blended and harmonized to detect demand signals earlier in the planning process
as well.

Key Issue #3: Quality and Compliance

Aside from influencing consumer behavior, social media highlights the importance of
having high-quality products. According to research conducted by eMarketer, reading
reviews, comments, and feedback is the top social media activity that influences online
shopping behavior. Furthermore, social media has not only raised consumers’
expectations of product quality, but has also amplified the damages caused by product
recalls. Thus, enterprises are under increasing pressure to create high-quality products
and to create them consistently. They can do so by addressing quality at every level of
the supply chain, such as raw materials procurement, manufacturing, packaging,
logistics, and product handling.

Product quality often goes hand-in-hand with compliance. Enterprises need to ensure
that they meet local and international regulatory standards in manufacturing, packaging,
handling, and shipping of their products. Aside from passing quality control and safety
tests, enterprises are also required to prepare compliance documents such as permits,
licenses, and certification which can overwhelm them and their supply chain
management systems.

Emerging capabilities like IoT, Smart Packaging, and Blockchain are changing how
compliance is enforced and measured. However, these innovations will produce
streams of data that can’t be handled with the enterprise technology of the past 20
years. Managers should carefully consider where these investments make sense and
asking IT if the business is utilizing platforms based on micro-services and big data to
support these heavy data lifting requirements.

Overcoming Supply Chain Challenges with Data Management and Integration

At the core of all these supply chain challenges, from globalization to compliance, is the
need for better data management and integration.

Faced by global operations, market expansions, and stricter quality and regulatory
standards, enterprises are getting overwhelmed by massive amounts of information
coming from different suppliers and customers in varying geographic locations that they
need to properly manage. This includes data from every stage of the supply chain such
as pricing of direct and indirect materials, labor agreements, rental contracts, tax
documents, freight bills, and compliance certificates, among many others.

Data management and integration is key to solving these challenges by connecting the
manufacturer’s supply chain management systems with those of their suppliers and
partners. Data management and integration give manufacturers much-needed visibility
and control over all of their supply chain processes such as procurement,
manufacturing, storage, and logistics.
Raw information coming from suppliers, partners, and even customers are also often
composed of both structured and unstructured data which makes it even more difficult
for enterprises to consume, analyze, and generate insights from these disjointed pieces
of information. Proper data management and integration transform these raw
information into compatible formats required by different supply chain management
systems to ensure their seamless flow.

Data management and integration address supply chain management challenges at the
most basic level of the value chain and in every activity. Furthermore, providing visibility
not only to manufacturers, but also to suppliers and partners can potentially improve
trust and long-term relationships.

A Powerful Data Management and Integration Tool for Manufacturers

Liaison Technologies’ data solutions for the manufacturing industry enable
manufacturers to overcome their supply chain challenges. They help enterprises
globally manage and seamlessly integrate mission-critical data to improve efficiencies in
forecasting, inventory management, material procurement, stock replenishment, order
fulfillment, supply chain, and other key manufacturing processes.

Delivered using the ALLOY™ Platform, Liaison’s integration and data management
solutions support the storage, integration, and syndication activities that enable
manufacturers to grow a repository of quality data from their production process and
supply chain. It also consolidates, cleanses, and enriches data coming from any number
of disparate sources helping manufacturers keep up with globalization, respond to
changing market needs, and meet quality and compliance requirements. Contact our
data experts to learn more about how Liaison can help you overcome your supply chain
management challenges.

V. TOTAL QUALITY MANAGEMENT

Key Principles of TQM

Quality Management Standards

Critical Success Factors in TQM Implementation