You are on page 1of 7

Operations Management Assignment Introduction Company X is a bakery specializing in the manufacturing of quality wholemeal bread; the bread of Company

X is sold in the local supermarkets and other retail outlets. This paper is divided into four main parts. In the first place, this paper will draw a simplified map of the production processes of the bakery. Secondly, this paper will take the view point of the manager of the production to discuss the importance of the stock holding and just-in-time (JIT) principle in managing the supply network. Thirdly, based on the discussion in the second party of the paper, this paper will discuss the essential skills, attitudes, personal qualities and techniques which are important for an operation manger. Finally, the authors observation of Tesco Metros evening discounting practices and supply shortages will be discussed.

Part I - The Map of the Production Process of Company X The production process map of the bakery from the buying of the raw materials to the delivery of the bread to retailers is drawn and presented in figure 1. Figure 1 - The Process Map of Company X


r o d u c t i o c h e d u l e

e m a n d F f o r t h e N P e r i o d

o r e c a s t e x t S a l e s

a l y

A m s i ni s

o u n t s o f S a l e s t h e P r e v i o u s P e r i o d

a t e r i a l e q u i r e m P l a n n i n g

e n

a w O r d

R a w M a t e r i a l a t e r i a l R a w D e l i v e r y a n d e r i n g S t o R e c e p t i o n M

M a t e r Ri a a l w r a g e P r e p

M a t e r i a l a r a t i o n

t o

r a g

a c

a g i n gF

i n

i s h

e d

r o

s s e m b l y u c t F i n i s h i n g

P r o d u c t i o n a n bd u l k f e r m e r o u n m d i o n u g , l , da in n b a k i n g e t

( e . g . M n t a t i o n dg c )

i x ,

i n

r a n s pt o o r t i n R e t a i l e r s

Part II The Importance of the Stock Holding and JIT Principle in the Managing of the Supply Network

It is understood that operation management concerns with the production of goods and services and that operation management is a transformative process that turn factors of production including labour, financial capital, raw materials and energy into outputs of products and services (Slack et al. 2007: 2). Therefore, in the context of Company X, operations management is responsible for maximizing the overall efficiency in the bakerys entire production process in order to minimize production wastes (costs) and to satisfy customers, thereby ultimately achieving growth and profits in the market. From the nature of a bakery and the bakerys production process map (figure 1), it is not difficult to see that accumulation of inventory constitute an important form of waste. Indeed, Williams et al. (1989) points out that for a typical manufacturing firm such as Company X, raw materials, working progress and finished goods are three different types of inventory. As indicated in figure 1, Company X uses past market information to forecast and order an amount of inventory. Since Company X does not use the inventory immediately to produce bread, the bakery incurs costs by storing the inventory and by delivering the inventory to the warehouse (Hutchins 1999). Further, the lead time of Company X may be unnecessarily long because the Company X needs to deliver the raw material from warehouse to production. And during the production process, Company X may incur extra costs of handing and storing walk-in-progress. For example, the bakery may need time to process flour and may need additional spaces to store the processed flour before putting them into oven. And after the wholemeal bread is made, the bread may be stored again before it is delivered to the retailers. The lead time and the storing costs thus increase Companys overall operating costs. It is believed that Company Xs production lead time can be shortened and production costs can be reduced by introducing a Just-In-Time production system to manage its supply network. As defined by Calvasina et al. (1989: 41), JIT is a system of production control that seeks to minimize raw materials and WIP inventories; control (eliminate) defects; stabilize production; continuously simplify the production process; and create a flexible, multi-skilled workforce. As pointed out by Calvasina et al. (1989), JIT production system is widely regarded as one of the most significant advancements in companys manufacturing processes. According to Turnbull (1988), the fundamental rationality of the JIT is to procure raw materials and produce goods in just the right amount and at the right time in order to eliminate the muda (a Japanese word meaning production waste) and to achieve level scheduling (Naylor et al. 1999l; Shah and Ward 2003); that is, as summarized by Drury (2002: 557), the ultimate goal of JIT is to convert raw materials to finished products with lead times equal to processing times, thus eliminating all non-value added activities. Indeed, the implementation of JIT requires company X to reorganize the production into small flowlines, and use kanban or signals to coordinate production among different production flowlines (Drury 2007).

By dividing the production process into small units and concentrating control in a small a number of operators, the motivation of workers may be higher as they are having greater controls and decision making authority, thereby increasing the overall efficiency of Company Xs production process (Hutchins 1999). More importantly, as pointed out by Turnbull et al. (1992), organizing production in such a way can reduce the need to coordinate the different production departments that a product needs to pass through. As a consequence, the total production lead time is greatly reduced as a product is no longer required to pass through all the different production departments (Turnbull et al. 1992). Further, it is rightly pointed it out by Hutchins (1999), Dalci and Tanis (2004) and Turnbull et al. (1992) that JIT production system can also enhance the overall the overall-valued added of a product. Indeed, successful implementation of the JIT system requires Company X to establish long-term relationship with few suppliers, ideally one per component or family of parts rather multi-sourcing (Fuller 1995). The implication is therefore that Company X would have to establish long-lasting relationship with suppliers who are reliable to ensure JIT delivery and able to offer the highest quality raw materials (Turnbull et al. 1992). By sourcing from only a small number of highly reliable and high quality consumers, the transaction costs in dealing with suppliers are reduced and the entire production process can be simplified.
Moreover, it is understood that JIT system is indispensable for achieving an overall lean supply chain management. As pointed out by Naylor et al. (1990), lean production management is a multi-facets approach in managing production and supply chain. In addition to the elimination of all forms of waste (including time) and ensuring a level schedule, a lean system also emphasizes customer relationship management, quality management, and information flow within the entire supply chain, thereby ultimately developing an highly integrated supply chain that are free from internal barriers that impede the flow of material, resources and information (Corondo et al. 2006. Chapter III The Essential Characteristics of an Operation Manager

According to Barnes (2008: 37), an organizations operations strategy comprises the totality of the actions and decisions taken within the operations function. In more detailed, Leong et al. (1990) points that a manufacturers operations management consists of two board decision making areas: 1) structural areas and 2) infrastructural areas; and each of these two decision making areas are further divided into 10 subareas listed as follows: 1) Structural Decision Making Area Facilities (e.g. the size and location of the production facilities, etc) Capacity (e.g. working hours, the patterns of shift, number of staff, etc) Process Technology Supply Network (e.g. the choice and number of suppliers, etc)

2) Infrastructural Decision Making Area Operations planning and controlling systems Quality management

Organization structure Human resource management Product development and R&D Performance Measurement Based on the above characteristics of operations management, an operations manger is therefore a generalist in the business organization; in other words, an operations manager must possess different professional management skills and knowledge and be able to used her/his versatile professional management skills and knowledge to help coordinating the different business functionalities to maximize the entire production efficiency. Therefore, in the bakery industry in which Company operates, the ideal operation managers should have a well-rounded knowledge about the trend of the bakery industry, good technical knowledge in the production system of bakery products, good knowledge about the tastes and preferences of bakery products consumers, as well as good interpersonal skills in dealing with the heads of other departments and the employees. Moreover, due to the rapid progress in information and communication technology, a large number of highly sophisticated decision making tools and computers systems have been developed over the past decades specifically for supply chain management (Corondo et al. 2006). Hence, in addition to having general professional management skills and knowledge, an ideal operations manager should also have highly specialized knowledge in using the latest analytical tools and techniques and the latest sophisticated e-supply chain management systems. Part IV Tescos Discounted Practices in the Evening and the Shortages of Supply

The author has observed that the Tesco Metro in Exeter High Street discounts a variety of products every evening; many of the products are perishable or raw foods including fish, meat, sandwich, and packaged meals. On the other hand, the author has realized that Tesco occasionally fails to provide sufficient goods to satisfy customers. Indeed, in a number of occasions, the items that the author demanded were sold out and the author had to go to other supermarkets for getting the items. In other words, Tesco missed the opportunities to make a profit. During the authors study of the module Operations Management, the author has learned that maximizing operations efficiency and reducing wastes in the production process is a primary goal of operations managers. To achieve this goal, companies, particularly large business corporations over the past two decades have adopted and constantly upgraded their eBusiness supply chain management system such as the Collaborative Product Commerce System (CPC) that linked suppliers, companies and consumers together to achieve a lean and agile supply chain, thereby aiming at improving the accuracy of forecasts of market demand, reducing lead time and eliminating waste in the supply chain.

There is a vast body of literature documenting the characteristics and importance of operations management concepts and the latest eBusiness supply chain management systems (Johnson and Whang 2009; Lee and Whang 2004; Grieger 2003). Although these studies are suggesting that operations management concepts such as the JIT and the TQM and the latest eBusiness supply chain management systems can greatly improve the efficiency in companies operations processes, as far as the author knows, none of these studies are mentioning about the extent to which operating efficiency can be achieved. Indeed, the Tescos discounting practices in the evening indicate that it might never be possible for business organizations to correctly forecast the actual market demand, to achieve perfect operating efficiency and to eliminate all operating wastes. Given the fact that production and supply processes and consumers demand can be influenced by myriad factors, the author is sceptical about how successful the operations management concepts and the eBusiness systems are in achieving operating efficiency.

Conclusion The discussion in this paper has been structured around four themes. In the first part, this paper presented Company Xs production process map. In the second part, this paper highlighted that accumulation of inventory constitute an important form of waste and that production lead time of the bakery may be unnecessarily long. This paper argued that Company Xs production lead time can be shortened and production costs can be reduced by introducing a Just-In-Time production system to manage its supply network. In the third part, this paper argued that an ideal operations manager for Company X should possess different professional management skills and knowledge related to the management of a bakery and specialized skills in using the latest analytical tools, techniques, e-supply chain management program.

References Barnes, D. (2008), Operations management: an international perspective, London: Cengage Learning EMEA. Coronado, A. E. et al. (2001), Automotive Supply Chain Models and Technologies: a Review of Some Latest Developments, Journal of Enterprise Information Management, vol. 19, no. 5, pp. 551-562.

Drury, C. (2007), Management and cost accounting, London: Cengage Learning EMEA. Calvasina, R. V. et al. (1989), Beware the new accounting myths, Management Accounting, vol. 12, pp. 41 45. Coronado, A. E. et al. (2001), Automotive Supply Chain Models and Technologies: a Review of Some Latest Developments, Journal of Enterprise Information Management, vol. 19, no. 5, pp. 551-562. Grieger, M. (2003), Electronic marketplaces: a literature review and a call for supply chain management research, European journal of operational research, vol. 144, issue. 2, pp. 280 294. Hutchins, D. C. (1999), Just in time, London: Gower Publishing Ltd. Lee, H. L. and Whang, S. (2004), e-Business and supply chain integration, International series in operations research and management science, vol. 62, pp. 123 138. Leong, G. K. et al. (1990), Research in the process and content of manufacturing strategy, Omega, vol. 18, no. 2, pp. 109 122. Johnson, E. and Whang, S. J. (2009), E-business and supply chain management: an overview and framework, Production and operations management, vol. 11, issue. 4, pp. 413 423.

Naylor, J. B. et al. (1999), Legality: integrating the lean and agile manufacturing paradigms in the total supply chain, International journal of production economics, vol. 62, pp. 107 118. Shah, R. and Ward, P. T. (2003), Lean manufacturing: context, practice bundles, and performance, Journal of operations management, vol. 21, pp. 123 149. Slack, N. et al. (2007), Operations management, London: Pearson Education. Turnbull, P. et al. (1992), Buyer-supplier relations in the UK automotive industry: strategic implications of the Japanese manufacturing model, Strategic management journal, vol. 13, no. 2, pp. 159 168.

Turnbull, P. J. (1988), The limits to Japanisation: just-in-time, labor relations and the UK automotive industry, New Technology, Work and Employment, vol. 3, num. 1, pp. 7 20. Williams, K. J. et al. (1989), Why take the stocks out? Britain vs. Japan, International Journal of Operations and Production Management, vol. 9, num. 8, pp. 91 105.