Strategic operations and supply chain management

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Design in operations

The role and importance of design in Operations Management in all its aspects from the choice of process including the design of products and services, of supply networks, of layouts and of jobs and work organisation.

Essay

Operations management has developed as an area of business management involved in the production of products and services in an efficient manner utilising fewer resources. As it is, the subject involves the concept of understanding the operations of a business in its entirety and hence is relevant to all areas of a business or an organisation. All kinds of organisations develop either a product or service and several operations are involved in its development from the supply side to the delivery side. An efficient and effectively designed operations management reduces the costs, increase revenue and hence contribute to overall profitability for the organisation. From a business perspective, developing an operations management philosophy including supply chain management improves the performance parameters and the value-added processes of quality, time, flexibility, dependability and gain advantage in the process of the organisation.

Since every business organisations have a certain kind of processes which develop the products and services, it is necessary to develop a design in conjunction with the products and services to be manufactured. Hence from the design perspective, the products and services which needs to be produced is analysed in conjunction with the choice of processes and the best process is selected. However, according to Kok and Graves, (2003) sometimes the products and services are designed in conjunction with the choice of process available to an organisation. Apart from the choice of processes and the design of products and services, it is necessary to evaluate the importance of supply networks, design of layouts, of jobs and of work organisation design in the operations management concept. The following sections of the present report evaluates the necessity of understanding the various elements of operations management and the importance of efficient and effective design of products and services, supply networks, layouts, jobs and work organisation.

The operations managers are responsible for designing the processes they manage which influence the products and services manufactured. Every decision taken about the process can be considered as a design of the process and according to Levi and Kaminsky, (2004) the design process is very much aligned with the design of products and services to be produced. Sehgal, (2009) have also stressed that design of processes has a higher correlation with process design. Various types of processes are the project process, batch process of mass process, continuous process. While these are concerning with the processes involved in the manufacture of products, the services involve professional service, service shop and mass service (Hugos, 2011).

As can be seen from the below figure the variety of the products when increased and when the volumes are low, a project type process is adopted and on the other hand when the variety is limited or the products to be produced are standardised and requires high volumes a continuous for mass production process design is adopted. When coming to the design of processes for developing services, the professional services involve producing knowledge-based services with higher level of customisation. The examples are consultants, doctors etc. whose services to the customers are highly specialised and customised. On the other hand a mass service type process can be adopted where the service to be delivered does not vary between the customers and the volume of such type of services or the number of customers to be served is high. Examples are call centres where specific type of processes are standardised. On this basis and from the below figure it can be understood that the choice of process is very much related to the type of product or the service to be produced and provided to the customers.

 

Figure 1 – Choice of process based on type of product and service

Source – Adapted from – Kok and Graves, (2003)

As indicated previously while the choice of process and the design of processes are in alignment with the products and services to be produced, it is also necessary to design the products and services so that an efficient process can be adopted. According to Levi and Kaminsky, (2004) many organisations try to adopt higher levels of standardisation in order to cater to a mass customer base. On the other hand Sehgal, (2009) have suggested that higher levels of customisation is necessary to attract a variety of customers. The debate between customisation and standardisation can be seen throughout all areas of businesses from marketing to supply chain management. However, the design of the product and services has to be essentially based on the organisational objectives which are one of the prime considerations in the strategic phase of operations management design (Pycraft, 2000).

Nevertheless when designing a product or service it is also necessary to design the process which will contribute to an effective method of producing the products and services. According to Huan, Sheoran and Wang, (2004) some of the products and services are designed in order to be produced through an effective process which reduces the cost of production and the time involved and hence increases the profitability from the overall reduction in the cost of production. However this may not be possible for every type of product and service as the design of product and service involves the concept generation, screening of the products and services, developments, improvements and final design. In the initial phase of concept generation, the inputs from various stakeholders and especially the users of the products and services are an important factor (Huan, Sheoran and Wang, 2004). The other factors to be considered are the products and services available in the market and their futuristic requirements.

According to Netland and Alfnes, (2011) once several concepts for products and services are generated, screening needs to be conducted from the perspective of the feasibility of producing it through an efficient process and the acceptability from the customer. The design phase also should evaluate the risk involved in the entire phase of product development to delivery and mainly from a financial perspective. According Sharifi, Ismail and Reid, (2006) a design funnel is utilised in order to narrow down the initial concepts through screening by considering the feasibility, acceptability and risk. According to Lee and Severance, (2007) the product and service designer also needs to understand the process through which it is produced in order to reduce the overall cost of the product. One of the specific examples of a well-developed product but unsuccessful in the market is the Tata Nano which is specifically designed for mass production in a cost-effective manner but the acceptability from the customer was very low.

When designing the product and service, and choosing the specific type of process, it is also necessary to evaluate the inputs to the production process mainly from the supply and demand side. The inputs for the production of products and services have to come from the suppliers of the company and hence the network of suppliers and their ability to provide supplies in a timely manner has to be considered in the design of operations management. However VanVactor, (2011) also indicates that the demand side or the customer’s ability to purchase the products or the demand in the market should also be understood before designing the operations. Leeman, (2010) have indicated that the primary suppliers could have an immediate bearing and its effect on the production process and hence significant risk in delays can be avoided by developing a well-designed supply network.

The supply network not only involves the suppliers to the company but also the demand side. Hence in the operations management process, the decisions relating to the development of supply network also is an important factor in generating an efficient and effective design of operations management. Various types of supply networks in the supply side are outsourcing of several or part of the production process. The concepts of integration of the operations within a one organisation and evaluating the capacity requirements in a long-term manner are also important decision-making variables in the design of operations management. The design of operations management also has to consider the location of the production process and according to Stadtler and Kilger, (2005) several factors would have a bearing on the location such as the transportation costs, the markets to be served, the raw materials etc. There would also be the influencing factors of the cost of labour, the land, energy etc.

The choice or design of process, products and services to be produced and the supply networks are the higher level design factors in an organisation’s operations management process. There are also smaller minute aspects involved in the process design and even the supplier network design such as the design of layouts, various jobs and the work organisation. The layout is the way in which the raw materials or the components or the factors involved in the production process are positioned relative to each other and with the various transformational processes involved in the layout (Chopra and Meindl, 2009). The decision with respect to a specific layout in an operation of the production of the product or service has to be considered with respect to the resources available and the transformation process in order to make it into the final product of the service desired. The different types of layouts are fixed position, functional, cell, product and mixed type of layouts.

As indicated in the below figure, the design and the choice of a specific type of layout is dependent on the variety of the product and service and the importance of regular flow or continuity of the delivery of product and service. When there is a level of standardisation and higher volumes involved product type layout is adopted where specialised equipment is utilised with high process rates in order to increase the volume of production. On the other hand when the demand of the specialisation required for the products and service is increased a functional or fixed type layout is adopted where the labour intensity is high, the processing rate are low and consequently there is a specialisation in the products and services produced (Chopra and Meindl, 2009).

 

Figure 2 – Choice or design of Layout

Source – Adapted from Chopra and Meindl, (2009)

One of the minutest or the intricate details of operations management design are in the design of job and work organisation. According to Boyer and Verma, (2009) job design is the way in which the employees function in a specific setting or within an office and how the employee interacts with the process and the other employees. The employees or the human resources are the most important resources of modern-day organisations especially in service-based organisations. Hence it is necessary to identify the functions of the job in terms of the conditions under which the specific function has to be fulfilled, the technical processes in the job, the allocation of task, the time required etc. (Dolgui and Zaikin, 2005).

The health and safety, division of labour and scientific management principles are the other important factors to be considered in designing of jobs. In modern-day organisations especially in developed countries, the aspects related to health and safety practices are important. The division of labour contributes to improvement in the utilisation of the human resources and improve the productivity. The concept of scientific management has been developed for a long time although most of them were related to manual labour. However Kok and Graves, (2003), indicates that time study and motion study are still relevant in developing an adequate job design. According to Dolgui and Zaikin, (2005) the design of job should involve rotation, enlargement, enrichment etc. in order to ensure that the employees are motivated, and variety is provided in the job functions. According to Leeman, (2010) such concepts improve the motivation and commitment of the employees as they are having high stakes in the design of the job. The less monotonous characteristics contribute to improve productivity and improving the skills and capabilities of the employees.

Considering all the above it can be seen that the design of the operations management process involves several consequent design factors and choices to be made. There are high-level or strategic decision-making based on the types of choices available for an organisation and the types of products and services which will be acceptable to the customers. There are external factors contributing to the design variables as well as internal factors. However the important performance objectives in operations management are to achieve quality, speed, dependability, flexibility and cost. A well designed and developed process along with product and service can eliminate failures, errors, increase the rate at which the products and services are produced, ensure standardisation and predictability, allow for variations in different types of products and services and finally ensure the reduction in the overall cost to the organisation. The interrelationship between the product and service design and process design is an important factor to be considered and hence the design of any one component of the operations management would involve an evaluation of the other aspect as well. Hence in the design and screening phase, both the product and service as well as the choices available for the manufacture or the process of production has also to be considered in detail.


References

  1. Boyer, K. K. and Verma, R., (2009), “Operations and supply chain management for the 21st century”, Cengage Learning publications
  2. Chopra, S. and Meindl, P., (2009), “Supply chain management: strategy, planning, and operation”, 4th edition, Prentice Hall publications
  3. Dolgui, A. and Zaikin, O., (2005), “Supply chain optimisation: product/process design, facility location and flow control”, Springer publications
  4. Huan, S. H., Sheoran, S. K. and Wang, G., (2004) “A review and analysis of supply chain operations reference (SCOR) model”, Supply Chain Management: An International Journal, Vol. 9 Iss: 1, pp.23 – 29
  5. Hugos, M. H., (2011), “Essentials of Supply Chain Management”, 3rd edition, John Wiley & Sons publications
  6. Kok, A. G. and Graves, S. C., (2003), “Supply chain management: design, coordination and operation”, Elsevier publications
  7. Lee, C. W. and Severance, D., (2007) “Relationship between supply chain performance and degree of linkage among supplier, internal integration, and customer”, Supply Chain Management: An International Journal, Vol. 12 Iss: 6, pp.444 – 452
  8. Leeman, J. A., (2010), “Supply Chain Management”, Books on Demand publications
  9. Levi, D. S. and Kaminsky, P., (2004), “Managing the Supply Chain: The Definitive Guide for the Business Professional”, McGraw-Hill Professional publications

10. Netland, T. H. and Alfnes, E., (2011) “Proposing a quick best practice maturity test for supply chain operations”, Measuring Business Excellence, Vol. 15 Iss: 1, pp.66 – 76

11. Pycraft, M., (2000), “Operations management”, Pearson South Africa publications

12. Sehgal, V., (2009), “Enterprise Supply Chain Management: Integrating Best in Class Processes”, John Wiley & Sons publications

13. Sharifi, H., Ismail, H. S. and Reid, I., (2006) “Achieving agility in supply chain through simultaneous “design of” and “design for” supply chain”, Journal of Manufacturing Technology Management, Vol. 17 Iss: 8, pp.1078 – 1098

14. Stadtler, H. and Kilger, C., (2005), “Supply chain management and advanced planning: concepts, models, software and case studies”, 3rd edition, Springer publications

15. VanVactor, J. D., (2011) “A case study of collaborative communications within healthcare logistics”, Leadership in Health Services, Vol. 24 Iss: 1, pp.51 – 63

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