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Discuss one current issue in Operations Management

OM is a dynamic field; everyday new challenges are posted by global enterprises creating new
issues. One of these issues is “Managing Supply Chain” or we can say “Managing global
supplier, production and distribution networks”.

With the emergence of the concept of globalized/ scattered firms the simple concept of
manufacture and distribute has vanished for many firms. What yesterday was an easy process is
today a complex system as the manufacturing firm can be scattered till anywhere in the world.
Therefore this creates a new issue of “Managing global supplier, production and distribution
networks”.

This issue needs serious and special attention for smooth production and operations
management. The complex interrelation of a material and finished products if not handled
smartly, can lead to some very serious and disastrous results. There are some common errors in
managing supply chain inventories which needs to be discussed, these errors are:

1. When working collaboratively in scattered sites, the operational goals of each site can
differ from overall supply chain goals, hence if it is not tackled properly for effective
customer service can result in inefficiencies of the overall chain.
2. Providing miscalculated delivery times to the customer is yet another problem. When
customer places an order it not only expects on time delivery but if the order is late the
customer needs an explanation with proper status of the order. So a better managed
supply chain will directly result in customer satisfaction and lower late penalties.
3. The mismanagement of information related to production of goods on a single site or on
multiple production sites. Often the due to inefficient information systems the
inventory/backlog status, future production plans etc. are not properly linked leading to
tedious and inaccurate retrieval processes. Moreover this may lead to the aforementioned
problem of miscalculated delivery dates as well.
4. Another error in managing supplies is ignoring uncertainties. These uncertainties can be
of many kinds like late delivery, inappropriate raw material, prolonged manufacturing
times etc. so to be a successful operations manager one should consider these variables
and devise a proper slack time to combat the magnitude of these problems.
5. Mismanaging the internal customer, often it is observed that worst suppliers were found
to be the company’s own manufacturing plants causing serious delays in delivery times.
Therefore an operations manager should try to devise strategies and decisions to avoid
discrimination of internal customer.
6. Poor coordination for compiling a customer’s order is yet another pitfall when talking
about multi-sited production companies. To cope with this problem the company should
use a merging centre dedicated for compiling customized orders.
7. The assessment of inventory costs is also very considerable. Along with cost of capital,
warehousing and storage costs, the costs of obsolescence and the cost of reworking on

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existing inventory to make it useful, should also be included. This helps in the realistic
estimation of the costs of inventory.

There are some remedies for effective management of supply chain an operations manager
should work on:

1. Product should be designed not only for functionality and performance but the resulting
costs and service implications should also be considered.
2. Integrate efficient databases throughout the supply chain.
3. Planning and control support systems must be devised to keep the level of autonomy of
different sites in line.
4. To manage the global supplier and stakeholders of a company, the incentives/rewards
policy should be redesigned, so that instead of individual goals employees work for team,
group or collaborative goals.
5. Expand the view of supply chain i.e. if you are focusing on improving supply chain you
must also focus on information technology and other related areas for the maximum
efficiency of the company’s supply chain.

Conclusion:

Operations management is a very vast field and I’ve discussed just a small issue of this field.
And hence if we deal as “no problem is a small problem” we can see many other small issues
like the discussed one, which if worked and solved smartly are beneficial otherwise “no problem
can be a very big problem”.

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Bibliography:
http://community.mis.temple.edu/mis3580sec003f09/files/2009/09/R03-Managing-Supply-
Chain-Inventory.pdf

http://www.jstor.org/pss/25061976

Operations Management for Competitive advantage, 11th Ed., Tata McGraw-Hill Edition 2006

http://mba.zainbooks.com/terms/management/current-issues-in-operations-management.shtml

Fariha Shams Butt 104632-037