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Operation Management in Business

Role of Operation Management in a Business Organizatio

INTRODUCTION

Operations management plays critical role in every organization. It is the area which deals with designing, controlling and overseeing the process of redesigning operations of business (Anh and Matsui, 2011). It possesses the duty to ensure that business operations are efficiently carried out. The present study covers operations management with respect to Furniture Supplier Company. The organization provides finished goods to leading furniture retailers. The report entails to understand nature and importance of operational management. Further it covers link between operations management and strategic management. Moreover it is comprises of the ways to organize typical production process. Lastly it includes techniques for production in an operational plan of an organization.

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TASK 1

Importance of operations management

The importance of operational management to furniture supplier company:

Manages operational business system: Operations management is the heart of every business (Craighead and Meredith, 2008). It assists the firm in designing, improving as well operating the system so that product and services within Furniture Supplier Company can be delivered and produced in an appropriate manner.

Ensures effectiveness in the business: Operations management is helpful for business in making efficient and effective utilization of available resources (Smith, Bruyns and Evans, 2011). The resources in the organization include human and financial resources.

Improves productivity: It plays a very significant role in improving the overall productivity of business. Through this the furniture supplier company can maintain the quality of products and services manufactured by them (Foropon and McLachlin, 2013). Thus will result in increasing its profitability.

Organizes products and services: The product management is comprised of several stages that begins with idea generation and ends with sales of product. The Furniture Supplier Company can use operations management in scheduling its products and sales related activities (Kloppenborg, 2011). With the assistance of core competencies organization can design unique branding, selling and manufacturing techniques. This would act as an aid for them in getting an edge over competitors.

Analysis of operations functions of organization

Following are the functions of operations management of Furniture Supplier Company:

Time management: Operations management functions at managing the time of activities in an efficient manner (Massis, 2010). Moreover it ensures that project is accomplished within specific time without causing any delay to it.

Cost management: It is the most significant function performed by operations management. It helps the Furniture Supplier Company in allocating the cost to several activities of the project plan (Mahadevan, 2009). In addition to this it facilitates the organization in reducing its expenses thereby results in management of overall cost.

Quality management: Another major function performed by operations management is supervision of quality. Thus through this firm is able to assure quality of products and services. This will improves the overall efficiency and productivity of Furniture Supplier Company.

Allocation of resources: Operations management plays critical role in making effective utilization of resources (Shetach, 2009). Moreover the production process will flow smoothly when resources are organized and allocated in an appropriate manner within Furniture Supplier Company.

Evaluation of operations management of organization by using process model

The Furniture Supplier Company has very complex operations management which requires efficient decision making. The theories and models such as deterministic, random system, probabilistic and open as well as close system can be used to evaluate the operations management of Furniture Supplier Company. The company has open system. This is because it has regular communication with external environment (Talib and et.al., 2011). Business obtains raw material and provides finished goods to the outside environment. The process model of the company is probabilistic. It is due to its predictable nature. The values of future outcomes are judged on the basis of probabilistic evaluation (Vereecke and Muylle, 2006). This system assist firm in determining the future demand for products and services. It assist firm in managing capacity. The open system is also effective for firm as it will help it in delivering the products to the furniture retailers on time. The operations system of Furniture Supplier Company is open. This is because the firm needs to interact with external business environment. With the assistance of such  company can function effectively. The raw material offered by supplier is inputted in order to gain desired set of outcomes. Further transformation of material take place whereby the conversion of raw material is carried out into final output. The conversion process includes several elements. These are people, environment, technology and structure. Later finished product is produced that is offered to target customers.

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Three E’s in Furniture Supplier Company

Three E’s includes economy, efficiency and effectiveness which are explained as such:

Economy: The Furniture Supplier Company needs to manage its financial resources. Economy is the element which is concerned with organization of cost within the firm. It is the concept of financial management that measures the expenses that firm incurs while producing and delivering the services as well as products (Furniture industry, 2014). With economy in operations business can attain its desired goals within specific period of time.

Efficiency: This element deals with optimum and effective utilization of resources. Furniture Supplier Company can run its business operations in smooth manner only when it allocates resources to different business activities in an appropriate way (Olsen and Sætre, 2007). Efficiency of the firm is the best way through which business can achieve its set targets.

Effectiveness: Objectives and targets can be important basis through which effectiveness of firm can be measured. The evaluation of performance of Furniture Supplier Company can be examined on the basis on how effectively it has attained its defined targets (Fitsimmons, 2009). This element plays critical role in the success as well as survival of business in long run. Moreover its assist firm in making quality improvements.

Explanation of tension between cost minimization and quality maximization

Quality maximization and cost minimization are the two different aspects in every organization. It is difficult for Furniture Supplier Company to keep balance between both these factors. In complying with the same, various issues arise which create tension for the firm. In short run it is difficult for company to produce furniture in large volume (Boer, 2003). Thus due to this, cost of goods is maximized which ensures that quality is managed throughout the production process. However in long run Furniture Supplier Company make produce products in bulk which will result in cost minimization. But at the same time it is difficult to manage quality of products produced on large scale. The bulk production will result in minimizing the cost and the quality too (Akpolat and Pitinanondha, 2009). If company has adopted certain upgraded technology then this will act as an issue which will maximize the quality but will have affect on the cost of products produced. When the raw material cost is high then cost of products produced by Furniture Supplier Company will automatically increase. The firms require skilled labors in order to maximize the quality. Thus this will adds to the cost as company will have to make payment of huge amount to such labors.

Evaluation of significance of five performance objectives

The five performance objectives include cost, flexibility, quality, dependability and speed. These objectives are significant for the success of every business organization. There evaluation is as follows:

Cost: It is the most significant objective of the firm. Furniture Supplier Company needs to reduce the expenses so that its overall cost of products can be minimized. This will have impact on the sales and profitability of the firm (Pansiri and Temtime, 2008). Increase in cost reduces the amount of sales because less number of individuals are interested in purchasing high priced commodities.

Flexibility: This objective of firm that is flexibility assist it in adopting changes as and when required (Young, 2009). This facilitates the Furniture Supplier Company to strengthen its operational management system.

Quality: Quality objective of the firm is the major criteria that affect its overall performance (McCrie, 2011). The quality standards will assist business in attaining success by bringing improvement in its actual performance.

Dependability: The most significant aspect is the customer convenience. Dependability objective of firm depends on how timely organization makes supply of products and services to customers.

Speed: This performance objective highly depends on the company’s capability to meet the customers demand on time (Reyes and Giachetti, 2010). This will help the firm to gain recognition as well enhance its production process.

TASK 2

Linear programming and evaluation of critical path analysis and network planning

Linear programming is the technique through which Furniture Supplier Company can attain best possible outcome. This includes maximization of profit or minimization of cost. It is a mathematical model whose needs are presented in form of linear relationships. This technique is used in order to find best solution to problem that arises due to improper resource allocation. It can only be applicable when there is existence of linear relationship among the variables (Linear programming, 2014). It can lodge cost functions of limited class. Thus the problem that has complex cost function will not be solved through Liner programming. It is also known as linear optimization. This is because it optimizes the outcomes based on specific set of constraints. Linear programming is the most significant part used in operational research. It is used in business as well as economics but it may not be beneficial in solving engineering problems.

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Critical path analysis

Critical path analysis is a project management technique that assists Furniture Supplier Company in scheduling its operational activities as well as managing complex projects. It facilitates firm in identifying the task that are required for completion of project on time. Critical path method calculates the longest path that can be used in order to accomplish different business project (Ravi, 2008). It examines the shortest time to complete the project. This technique determines the activities that are critical for project completion and also the activities that can be delayed without carrying the project for longer. The delay made in the critical path activities will have direct impact on the planned completion date of project. Critical path analysis assists Furniture Supplier Company in gaining insight to whether or not the project will be accomplished within it specified time period (Mishra, 2009). Moreover it facilitates the company to keep track on the activities of project from starting to end so as to ensure that deliverables are manufactured on time. It also helps business in knowing whether proper allocation of resources to different project activities is made or not.

Network planning

Network planning comprises of the activities that are required for the proper completion of project. The program evaluation and review technique can be used for the purpose of network planning. Through this firm can determine the time, cost and resources that are acquired by different activities (Greasley, 2007). Network planning makes it easier for business to investigate critical path and associated activities. It also evaluates the relationship between dependency and precedence of breakdown structure at Furniture Supplier Company.

Need for operational planning and control

The following are the needs for which operational planning and control is very essential:

Quality assurance and control: Operational planning is needed for the purpose of evaluating the quality of the products that are being produced in Furniture Supplier Company (Bettley and et.al., 2005). In order to manage quality it lays emphasis on quality management techniques such as six sigma and variance analysis, etc.

Inventory planning: Through operation planning and control, firm can determine the amount of stock needed so that production process may run smoothly.

Future forecasting: Furniture Supplier Company requires operational planning so that it can make estimation of future sales, production, demand and quantity of stock needed. Thus with this organization can plan its strategies that can bring success to it.

Capacity planning: The resources and inventory in the organization can be managed using operational planning (Talib and et.al., 2011). Thus this will result in increasing the overall production capacity of firm. Further it will enhance the turnover of the Furniture Supplier Company.

Project management: Operational planning is needed by firm in order to formulate its project plans. The reason to this is that operational planning assist business in managing resources. Thus with this firm can make appropriate allocation of the available resources (Kloppenborg, 2011). The technique of Gantt chart can be implemented by Furniture Supplier Company in to order to monitor and control the project plan.

Designing of possible layout for producing furniture and its operational outcomes

 The available layouts for the company are product, process and hybrid layout. Under product layout the equipments and work stations are based on the product line. However in case of hybrid layout both product and process layout is included. The best layout, from those available for Furniture Supplier Company, is process layout. It is also referred to as functional layout. Under this the activities which are similar are grouped together. For each department skilled labors exist that are expertise in their field (Ingram, 2014). In process layout there is huge flexibility. The flow of material may change as per the process of product. The company here is designing products for business as well as personal purpose. The furniture process includes the following purpose swamilling process, kiln dry process, sploting and cutting process, planning and drilling process, sanding process, assembling process and packaging process (Manufacturing Process of Furniture, 2014). Each product manufactured will passes through this process. Each of the process contains individuals who are expertise in their respective area. In process layout the departments are made on the similar activities that are required to be performed for production of goods.

The Network plan is developed on the basis of certain assumption that is company’s sales is 10000 units and for testing 10 trails are taken by Furniture Supplier Company. This is comprised of 250 defects.m that is sales return. This reflects that defects in per million opportunities or trails is 2500 that came in 4.3 level of sigma. Thus it can be depicted that good quality of products are manufactured by Furniture Supplier Company. However in order to obtain six level of sigma company needs to emphasize on total quality management process (Massis, 2010).

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CONCLUSION

It can be concluded from the study that operational management is significant in every organization. This is because it assists business in increasing its productivity, effectiveness and operational system. The role of economy, effectiveness and efficiency is critical to Furniture Supplier Company. It can be analyzed that there are five performance objectives which includes cost, dependability, flexibility, quality and speed. The network plan for the packaging activity is designed in the study and critical path analysis also done so that longest path having shortest duration can be analyzed.

REFERENCES

  • Akpolat, H. and Pitinanondha, T., 2009. A Framework for Systematic Management of Operational Risks. Asian Journal on Quality.
  • Anh, C. P. and Matsui, Y., 2011. Relationship between quality management information and operational performance: International perspective. Management Research Review. 34(5).
  • Bettley, A. and et.al., 2005. Operations Management: A Strategic Approach.
  • Boer, H., 2003. Guest editorial: New challenges in operations management. International Journal of Operations & Production Management.
  • Craighead, W. C. and Meredith, J., 2008. Operations management research: evolution and alternative future paths. International Journal of Operations & Production Management.
 
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