Operations management is a management practice that involves overseeing, designing, and redesigning operations, which businesses undertake in the process of production of goods and services. Linderman Industries and strictly Furniture have good operation management practices that oversee the production of their products. The companies strive to build an operation that is lean and financially stable. The philosophy of continuous improvement is evident in the activities of the companies. The companies are on the right path in improving their stability and competitiveness through proper planning, inventory management, and improvement in the quality and productivity of its products.
Operation management in Linderman Industries and Strickly Furniture
Linderman Industries strives to achieve success in their operation. The company is in the process of developing operations management practices that will ensure its long-term financial stability. Operations management and strategic planning is used by both organizations to guarantee their future success. Linderman Industries is in the process of adoption of the project organization to enable a subsidiary company to start its operations. The company can improve its productivity through production planning, production system design and management of the production systems. Strickly Furniture on the other hand, requires efficient planning of its operations to enhance productivity and reduce the wastage in time and resources in the production of Furniture. All the above practices by the companies attempt to improve the level of quality of the services, which the companies offer.
Organizational planning involves making plans for all the activities which the organization undertakes to produce and sell their products. Planning may be either for long-term stability or to ensure profitability in the short term. Planning may also involve a few departments in the organization or it may involve the whole organization. However, despite the presence of different scope in time of the plans the plans ultimately ensure that the business achieves it vision.
Strategic planning enables a business determine its position in the future. The strategic planning should be taken by all companies regardless of their size and area of specialization. The strategic plan enables the business to be more focused on adding value to the customers. In addition it enable the company make maximum use of its available resources and time. Thus, the organization takes full advantage of it strengths and opportunities while minimizing its weaknesses and threats. Strategic planning also reduces the crisis within the business as the employees work towards the achievement of a common goal (May, 2010). Strategic planning enhances the communication between the organization and the different stakeholders of the company who include customers, employees, suppliers, and investors.
The long-term nature of the strategic planning enables a company to achieve financial stability in the long run. Thus, strategic planning enables the company to undertake the necessary investments, which would ensure the profitability of the company in future. This may be despite the fact that the investments may be a huge burden to the company in the long term. Linderman Industries' has a strategic plan of incorporating Mexican managers in the running of the subsidiary company in Mexico City. This would ensure the profitability and stability of the company in the long run. Strategic planning of Strickly Furniture has enabled it to improve the level of productivity of the company. Lean manufacturing enables the company to spend less time in manufacturing its products and have less wastage of materials.
The success of the operations management of business depends on the ability of the business to predict the future changes in the variables that affect production of the principle goods or services of the company. Forecasting enables the business to predict the changes in the variables, which affect production. The variables include time, money, demand and labor. Forecasts emphasize on the time and magnitude of future events that may affect the company (Mahadevan, 2007). Forecasting facilitates the organization in making decisions, which ultimately help in the dealing with several other factors that will affect the operations management of the business organization.
Demand forecasting enables the organization to predict the demand for its products in future. Forecasting will show the magnitude of demand for the products at a specific time in the future. The organization can therefore undertake the necessary plans to ensure that it is able to cope with the demand of the products. The plans may include diversification of the product line, investment in a new production plant or mergers and acquisitions. In addition forecasting will enable the organization to predict how the productivity of its employees is affected by different variables. All this is done through the comparison of different historical data of the company. Forecasting therefore helps the organization in making decisions with regard to marketing, human resource, accounting, and finance.
Forecasting also enables an organization to manage its materials and resources effectively since he can predict the future impending events. The company can therefore make decisions as to whether to lay off some of the staff minimize the laying off. This would help the company have production at its optimum level.
Strickly Furniture is able to undertake good forecasting of how the demand of its products is affected by different seasons. The organization is therefore able to undertake continuous production of goods with the excess products during the low seasons going to inventory which enables it to offset the shortages in production, which occur during the high season. Forecasting enables Linderman Industries start subsidiary a company in Mexico, which will help in improving the sales of its products. The company also intends to localize the management of the company and it has therefore appointed Carl Conway to help in the integration of Mexican managers in the running of the company. However, implementation of the forecast plans seems to be faced with difficulties. Carl Conway's plans of using pilot products made with metric measurements, which would be effectively embraced by the Mexican market is met with resistance from Jim Burke, Vice President for manufacturing. The above disagreements threaten the effective acceptance of the products by the Mexican market.
The system design of an organization is dependent on the size of the organization, the products it makes, technological advancements, and the customer needs. Strickly Furniture uses continuous flow system. In the system, conversion of the products begins with the input of raw material. The production of the products is sequential. During the process, the required resources are organized in stages to ensure they are used effectively and economically (Mahadevan, 2007). Strickly Furniture has a very efficient systems design, which is able to incorporate technological advancements into the production design. The company uses discreet manufacturing where the various products are made before in the initial stages of production before being assembled in the final stages of production. This system is facilitated by the fact that the company makes few varieties of products and the raw materials, which are used in the manufacture of the products, are similar. Most of the products are made using boards. The computerization of the sawing process enables the company reduce the wastage of raw materials while increasing the efficiency of the production process. In addition the system design ensures that each worker is responsible for his or her own quality thereby increasing the employee responsibility and satisfaction in the work. The system design ensures that production is completed in as few steps as possible and it produces high quality products that meet the customer expectations.
Use of technology in the manufacturing process is generally beneficial to the company. However, the technology may lead to deskilling of the workers if they do not take the appropriate steps in training the employees who use the technological aids which make the work easier (Lewis & Slack, 2002). However, the company ensures that the use of technology to make it products does not reduce the skills, which the employees have. Some of the activities that are vital in the designing of the products such as carving are done manually by highly skilled employees.
All operating systems use resources in the production of goods or services. The resources are generally available in fixed quantities. The availability of the resources necessitates strategic planning to ensure that the organization is able to meet the future demand and expectations of the customers. Therefore, organizations need to keep looking at the issue of capacity so as to respond to emerging market scenarios. The company may wish to undertake capacity changes in response to a competitor threat or government policy changes (Mahadevan, 2007).
Firms that have low volume of products and less variety mainly use output measure of capacity. However, firms that have low volume and high variety of products measure capacity in terms of amount of input that it can process in a given period. Thus, Strickly Furniture can effectively measure its capacity in terms of the number of inputs, which it can process in a given timeframe. This is due to the fact that the company processes many furniture products ranging from tables, chairs cabinets and dining room sets.
Capacity planning decisions usually vary with regard to the time horizon in which decisions regarding the same are made. The time horizon may be long term, Medium term or short term. Long-term capacity decisions emphasize on investment in capacity to meet the projected long-term growth of the company. Firm can expand their capacity through investment in more resources in certain parts of the operating system. They can also expand the capacity through investment in additional plants, mergers, and acquisition of other operating units. The medium term capacity planning decisions are mainly focused on how to balance the available capacity with demand. The company can increase the usage of the available capable so as to maximize output. This may be through either overtime or additional shift of the workers. Short-term capacity decisions are mainly concerned on how to make maximum use of the available capacity and ensure certain uncertainties do not lead to idleness of capacity (Mahadevan, 2007).
One of the major issues which faces Linderman Industries is capacity planning. The company intends to makes capacity planning decisions for the medium term, which will ensure the successful integration of Mexican managers in the running of the subsidiary company. Carl sources the staff that will help in the integration of the subsidiary internally from employees of the organization who are in other departments. However, this method of sourcing capacity is difficult as the method reduces capacity, albeit temporarily, in other divisions of the organization. Thus, the division managers are bound to resist the reduction in capacity of their divisions.
Quality and productivity
The quality in the context of a business organization can be broadly categorized into two main categories; product quality and process quality. Product quality refers to the ability of a product to meet or exceed the customer expectations on the product functionality. High quality products usually cost much more than the other products, which are in the market, are may generally have high demand compared to the other products, which are of a lower quality. However, overdesigning of some products may make them to be very expensive and hence not desirable to the customers. On the hand the products may be under designed hence making them to be of low quality, which makes customers despise them. Thus, business organizations must ensure that their products are not overdesigned or underdesigned (Shim & Siegel, 1999).
The process that is involved in the production of the goods must also be of high quality to ensure efficiency in the production of the goods. Therefore, a company may produce high quality goods, which are regarded highly by the customers and the market in general but still fail if it does not use high quality processes in the production of the products. Lean manufacturing ensures that the products are produced in an efficient way with minimal wastage of time and resources.
Total quality management
Total quality management refers to an organization's endless quest to have perfect quality. Total quality management attempts to produce products which are deemed to be of high quality by the customers. An important aspect of total quality management is that it attempts to integrate quality into the very fabric of the business organization. It is therefore integrated into the strategies, business culture and management systems of the organization. Thus total quality management attempts to ensure that zero defects are produced or sold to the customer. This is as opposed to the conventional Acceptable Quality Level (AQL) belief which allows some of the defective products to be sold to the customers (Shim & Siegel, 1999).
One of the principle aims of total quality management is making a product to be of high quality the first time it is made. This results in better productivity of the employees as less time is spent on the repair or rework of the product, which ensures that the employees have more time to be involved in the manufacturing of the products. Less defective products also save the company costs incurred in repairing or remodeling the products to meet the set standards. Thus effective total quality management is geared towards prevention of defective products rather than correction of the defective products.
The costs of implementation of a total quality management programs is far much less compared to the amount of finances that the organization will save if it implements the program. Total quality management enables the business organization to eliminate or reduce costs related to repair or reworking of the products, inspection of the rework, testing of the rework, warranty costs and returned material (Shim & Siegel, 1999). In addition total quality management helps reduce or eliminate the reduced confidence of the customer on the company due to the presence of products which are defective and hence do not meet his /her expectations.
By implementing a total quality management approach in its production Strickly Furniture would be able to reduce or eliminate the costs, which the company incurs in repairing defective productive products. In addition, this would reduce the costs associated with inventory of parts that are used for repair of the defective products. Total quality management will help in saving time, which the employees spend in repairing the defective products hence increasing their productivity, as they will have more time to be involved in manufacture of new products.
Total quality management provides a systematic method on how a company will improve the quality of the products and services. It therefore provides long term methods in which the quality control of the products of an organization would be maintained. In addition, the total quality management provides a structured approach on how the organization would identify and solve problems, which it may be faced with and are related to quality. Statistical quality control is one of the essential elements of total quality management. The methods, which are proposed by the program, should therefore be supported by the statistical quality control of the company. Thus total quality management attempts to ensure that it incorporates all the members of the organization in the formulation of relevant programs (Shim & Siegel, 1999).
Total quality management has the distinct characteristic of being customer focused; whether the customer is external or an internal unit within the organization. Thus total quality management ensures that managers and employees are customer focused and continuously try to find means that will meet or exceed customer expectations. Due to the extensive nature of a total quality management program, it must be supported by the top management of the organization for it to be successful. This is the main reason that makes Linderman, the president of Linderman Industries solve the problems, which exists between Conway and the engineering vice president in favor of Conway.
This is mainly because the engineering department is not extensively involved in the total quality management program of the company. The department that is extensively involved in the application of the program is the manufacturing department. Therefore, the company president would like to have any disputes between himself and the manufacturing vice president and would therefore rule in favor of the manufacturing vice president had Conway taken the dispute to him (Shim & Siegel, 1999).
For the total quality management program to be successful, it must integrate the employee participation in the programs. All the employees must be involved in the implementation of the program, which will facilitate the teamwork of the employees. In addition, there must be effective communication in all the levels of the organization as to the expectations of the program. This facilitates the adjustments of employees of the organization to fulfill the commitments of the total quality management program. Employee involvement may also necessitate the undertaking of various training programs to educate them on the requirements and methods of implementation of the total quality management program.
The organization must also put in place standards and measures, which will be used in the program. The standards facilitate the organization to undertake corrective measures and evaluate progress of the total quality management program. One important consideration is that the standards should reflect customers' expectations and changes that the company needs to undertake to ensure that the customers' requirements and expectations are met by the business organization.
The ultimate success of the total quality management program is intricately associated with how the company undertakes rewards and recognition schemes. Effective reward and recognition schemes should be focused on rewarding groups or team members since the successful implementation of the program is reliant on the group activities and not individual contribution.
Continuous improvement is a business philosophy, which seeks to continuously improve the performance of operation that the business is involved in. continuous improvement seeks to undertake small incremental changes in an organization, which promotes its efficiency. Continuous improvement is not concerned with the size of the changes; its main emphasis is that the changes will be ongoing in an organization. Thus, continuous improvement ensures that the momentum for change does not diminish (Slack, 1999). However, to be relevant the continuous improvement must strive to address the needs of the customers and the competencies of the competitor. All this will ensure the stability of the business organization (Lowson, 2002).
Continuous improvement differs from breakthrough improvement in that the later places great emphasis on creative solutions and encourages the individual employees of an organization to think freely. It does so by facilitating the complete rethinking of the organization's operating systems. However, continuous improvement is not as radical or ambitious. It seeps into the wealth of accumulated experience on the operation systems within the organization. Thus, continuous improvement is highly reliant on the people who operate the systems for their improvement (Slack, 1999).
The success of modern organizations is reliant on the changes which the organization. Therefore, the organization must know how to deal with change management to achieve competitive success. Thus, the function of operational management has changed from seeking stability in the operational systems to managing changes within the organization. The changes, which the business organization needs to effectively facilitate and manage, include:
- Product innovation: this refers to the creation or modification of the existing products to solve meet customer expectations and tackle competition
- Process innovation: this refers to changes in the process design, which facilitates effective use of the available resources by reducing time and wastage involved in production.
- Technology innovation: refers to the changes in technology, which simplifies certain activities that are undertaken by the organization.
- Time-to-market innovation: customer satisfaction is closely related to the time the products take to move from the manufacturer to the customer. Therefore, business organizations try to formulate changes, which will facilitate the changes in the time taken for the goods to reach the market.
- Marketing innovation: organizations must undertake extensive marketing campaigns to help capture the market. Organizations, which are able to effectively harness marketing innovation, would therefore have a competitive edge over the other companies in the market segment (Plenert, 2002).
Strickly Furniture and Linderman Industries should ensure that they have the philosophy of continuous improvement. Strickly furniture should continuously improve its process design to consolidate its position in the market. Continuous change in Linderman Industries is facilitated by Carl Conway, albeit with stiff resistance from some of the employees of the organization.
Every organization must keep a record of all the goods or materials, which it handles. Inventory refers to these material or goods that the company the company has on hand. Inventory includes raw materials, finished products, and unfinished products. Companies ensure that their inventory levels are as low as possible. This facilitates the easy control of the inventory. In addition, low levels of inventory reduce the labor costs associated with storing, transporting, and keeping the inventory records. Some of the products that the business organizations make are prone to obsolescence due to unforeseen market changes. Business organizations should therefore ensure that they keep low levels of inventory to help reduce losses associated with obsolescence of the products (Kamauff, 2009).
Inventory management ensures the continuous flow of materials that is sufficient for optimal operations while minimizing the costs. Inventory management involves the balancing of the inventory of different departments, which is often conflicting. Thus effective inventory management must involve not only the managing of the inventory but also managing the dynamics of conflicting objectives and strategies, which affect inventory. Inventory management include demand management, forecasting, planning, scheduling, calculating the value and costs of inventory, monitoring inventory and logistics (Kamauff, 2009)
The amount of inventory that a company needs is determined by several factors. These include:
- Reliability of supply and availability of alternative sources
- The production processing design
- Stability of the prices of the inventory
- Cost efficiency of buying goods in large quantities.
To help in reducing the costs incurred in inventory management business organizations should use lean production systems. Just-in-time inventory management would help a company greatly reduce the costs associated with inventory management. Improvement in the efficiency of the production operations would also help in the reduction of the inventory costs (Kamauff, 2009).
Strickly Furniture uses inventory accumulated during the low season to offset the shortages in production during the high season. Thus, the company is able to maintain a continuous production throughout the year and avoid laying off skilled employees who are vital for the company's success. Therefore, if the company receives a large order of furniture, the company would use the inventory to supply the customer if the order is made during the low season. However, if the order is made during the high season the company would need to schedule the work to ensure that the working of the order does not affect the availability of some of the products which are sold during the high season. Thus if the order is made during the high season it would take a longer time for the customer to be supplied with the finished products as opposed to the low season which may be instant if the company has similar products in the inventory.
Strickly Furniture and Linderman Industries strive to be the best in their respective market segments. The companies use operations management to help gain a competitive edge over other companies. Strickly Furniture would benefit greatly if it employs total quality management and lean manufacturing in its operation. As for Linderman industries, effective use of operations management practices would enable it form a good management foundation, which would be the springboard for its future success.