Importance of Operations Management in Business

Operations Management in Business

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TABLE OF CONTENTS INTRODUCTION TASK 1 1.1 Importance of Operation management for organizations 1.2 Analyze the operations functions of Fulham Furniture organization 1.3 Process model for Fulham Furniture organization TASK 2 2.1 The importance of the ‘Three Es’ to organizations 2.2 Assess the impact of the tension between cost minimization and quality maximization 2.3 The significance of the five performance objectives TASK 3 3.1 Linear programming adds value to a given production process 3.2 Evaluate critical path analysis and network planning 3.3 The need of operational planning for the organization TASK 4 4.1 Operational outcomes for Ashley Furniture 4.2 A network plan indicating the resultant critical path 4.3 Quality Management Techniques to improve the operations CONCLUSION REFERENCES

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INTRODUCTION Firms use operations management effectively to ensure and sustain efficiency in their workplace. Operations management consists of all the activities from transforming of ideas to finished products design. This research report describes the importance of operations management for Fulham Furniture organization. It explores that how linear programming adds value to a given production process and manages quality of products in a significant manner.

TASK 1 1.1 Operation management plays an important role in business operations.

It deals with the design, operations and improvement of the organizational structure.

Benefits of operation management for the firm are described as below: ❖ Financial and Human resource management: When companies effectively manage their resources then cost is reduced and firm can get tangible as well as intangible benefits in a significant manner. The firm can carry out its objectives by effective execution of its operations.

It can grasp market opportunity by using minimum resources and generate maximum output (Meneghetti, 2002). ❖ Production: It is helpful for an organization in managing physical manufacturing & assembly and successful delivery of products on time. ❖ Enhance performance: Organizations can improve their products’ quality (robustness and product functionality) and increase flexibility (appointing skilled staff members) through successful implementation of its operations.

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❖ Time management: Operation management helps firm to increase the efficiency and productivity of tasks, so all functions are completed on time with effective utilization of resources (Bakliwal, 2011). ❖ Manufacturing activities: The operation management department contributes in production planning activities which determine how goods will be produced, location of plant, the facilities that will be required to fulfill the tasks and how manufacturing will be laid out.

Once the production process starts, it helps the managers to continually monitor and schedule all the activities in a well planned manner. Finally, it ensures that goods are produced according to specific needs and standard quality is maintained. ❖ Facilities decisions: It helps firm in taking facilities related decisions like site selection (minimize shipping costs, from where raw materials come to the plant, distance of plant from city), availability & appointment of skilled employees, forecasting, capacity planning etc.

1.2 The firm is focused on the special kind of the customers who want high quality of office furniture. It works optimally with modern technology like PC, Internet, scanners and other high tech-items. ❖ Relationship management: The Company is following strategic thinking approach and use of best technology at work place to increase the

awareness

among

people.

The

firm

is

maintaining

good

relationship with suppliers and purchasers. This ensures timely delivery of its products to customers. It involves material management and logistics operations related activities (Jones and Robinson, 2012).

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❖ Production planning: The firm designs and manufactures furniture in UK and supplies its products at national and international level. The company used Lean production tools to increase the capacity and reduce wastage and production cost. This technique helps the company to minimize its internal and external failure costs and improve its cash flow management process. ❖ Research & Development: The firm has been investing in R& D activity and has come up with stylish furniture products. In addition to this, it also provides ways to alter design to save its manufacturing costs. It keeps its prices low as compared to other competitors so more customers are attracted towards brands (Plenert, 2002). ❖ Quality products: The firm is offering good quality office furniture at lower price as compared to other business rivals. It provides various office furniture related products. The company has its own warehouse department which stores big pieces of furniture. Due to this, it is easy for the company to make quick delivery of products. The corporation has quality control department which inspects and tests raw materials and also monitors the customer complaints. It analyzes the product fault report and takes corrective actions to improve the quality of products (Michael and Nigel , 2003). ❖ Other functions: The other functions of the firm, which contribute in success of the departments of the organizations, are research & development, customer support, marketing & sales and production in a well planned manner.

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1.3 The process model of the organization is categorized into several parts which are described as below: ❖ Identify the needs: It is the first step in which company identifies the needs of customers. By establishing a short term strategy, firm understands the requirement of customers and based on that furniture products are designed (Plenert, 2002). ❖ Market research: It is used in all stages of product life cycle. The firm has been investing in R& D activity and comes up with stylish furniture products. With the help of research, the organization analyzes its current

market

position

and

gathers

information

about

their

competitors. Based on that, the company develops its market strategy and captures wide geographical area in a significant manner. ❖ Procurement process: In this process, the goods are acquired from an outside or external source. It considers the needs of the purchaser in terms of quality, quantity, time, and location. In this stage, the company identifies the suppliers and communicates with them about the quotation. Further, firm negotiates with distributors relating to raw material, price and availability of products (Tantoush, 2005). ❖ Aggregate planning: In this process, the requirement of raw materials, capacity levels, production, inventory and stock outs are identified. The firm includes several parameters like production rate, workforce and inventory holding cost in planning process to effectively design the products and achieve its goal in well planned manner.

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� Production control: After raw materials’ purchase, firm starts production process and manufactures the products. Manager is involved in scheduling and monitoring activities. They take the feedback from customers and respond to feedback and make adjustment where needed (Murthy,2005). � Quality control: After product development task, firm delivers products to the clients. QC ensures customers that the product provided to them are of good quality. Quality is measured with help of total quality management process and it is used to compute the quality of the products in terms of zero defects, idle time and minimum wastage etc.

Task 2 2.1 The economy, efficiency and effectiveness are three major elements which are used in performance auditing.

Economy: The UK designers and innovators are amongst the best in the world. Review of economy is primary element of performance measurement. It means acquiring the resources at low cost. The factors like recession, lack of skilled labor, demand, customer service, lead time and environmental issues influence the working of the organization. The company designs high quality office furniture products which are stylish and low cost. As compared to other competitors, firm has used assembling strategy in which high quality interlocking wood pieces are assembled for developing products. These features enhance the quality as well as give pleasure to the customers.

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The UK furniture and furnishing company encompasses a diverse range of products based on customer characteristics. For domestic and household purposes, the firm has been designing furniture which is available in retail outlets. The company also designs products for public area like hospitals, restaurants and residential accommodation.

For offices, it produces furniture such as work stations, seating tables and other items which are suitable for office environment (Loch, 2007).

Efficiency: It refers to the relationship between input and output process. The performance of the firm is measured in terms of efficiency which means that firm is using its resources effectively or not. If company fails to utilize its resources in an optimum manner then corrective action will be taken by auditors to improve the situation.

When

performance

is

measured

then

the

administrative

cost,

operational costs and past performance etc. are also taken into account.

Effectiveness: The products designed by the company should be uniform, good quality and optimal quantity plus the most important thing is that they should be offered at low price as compared to other business rivals. The furniture products which are developed by the firm are eco-friendly in nature. If all the staff members of the organization are involved in decision making process and they do their job effectively then effectiveness of the firm will increase and various products can be offered to customers (Greasley, 2007).

2.2 There is a paradoxical relationship present between cost minimization and quality maximization. It creates challenge for the company to maintain good quality as well manage cost. In global era, cut throat competition is Toll Free : +44 203 3555 345 Email : help@onlinedissertationwriting.co.uk

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present in the market and customers are demanding more quality of products without spending too much. The company is faced with difficulties in allocating cost and it may lead to conflicts and higher competition rather than healthy cooperation with in the firm. It demotivates the employees of the company when unfair cost allocations are made and profit oriented target is set too high (Fulham furniture, n.d). It creates tension among staff members and they will not perform well. The cost minimization aim is to deliver goods and services in most cost effective ways. It is a difficult task for the firm. In this situation, value analysis is helpful for the company because it reduces cost by eliminating wastage of materials. The benefits of striking a balance between cost minimization and quality maximization are lower unit costs, high gross profit margin, higher operating profit, improved cash flows and enhanced return on investment.

Material substitution has influenced through misbalancing between cost and profit. It increases ambiguity and unnecessary parts so operation cost will increase. It decreases the reliability, manufacturability and profit of the firm. Process engineering can be used by firm for enhancing the productivity and efficiency (Heizer and et.al., 2009).

Market driven products improvements: Created tension affects the market driven approach of the company. Customers are paying for stylish furniture design, so the firm is adopting value engineering that helps the organization to understand how to produce product that match the demand of major customer segment.

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2.3 The operation management of an organization is influenced by performance objectives which are described as below: Cost: This is an important factor which influences the performance of corporations. If company develops products which are of good quality and reasonably priced as compared to other rivals then more customers are attracted towards the products. By reducing ambiguity and reducing unnecessary parts of the operation, firm can reduce its cost. With help of value analysis, firm can manage its administrative and operational costs. It can be achieved by economies of scale which enables the company to produce large quantity of products at very low prices (Pitt, 2001).

Dependability: The firm can grasp the market opportunity by overcoming its dependability on other manufacturers. The company should fragment its task in small level and fix the role and responsibility of individuals so they can achieve their target in a significant manner. It helps the firm to complete its tasks on time and fulfill the promises made to the suppliers and customers in well planned manner.

Flexibility:

The organization dMaking the Products convenient-

evelops furniture which is flexible and easily portable. This advantage helps the firm in form of increasing its sale revenue and customer satisfaction. Other than this, company can also use competition advantage through personalization and customization (Leseure, 2010).

Quality: By designing high quality assembly, it gives pleasure and provides good services to the customers. The company can improve

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the quality of products by offering healthy working environment to the employees so they will contribute in success of the organization.

Speed: The furniture manufacturer company uses high technology ergonomics to improve the business process and there are many computers used by the firm for designing furniture in more lucrative way. It is the duty of manager to ensure that things are done fast in order to reduce the lead time.

TASK 3 3.1 Linear programming is a mathematical model which is helpful for the organization in terms of cost reduction and profit maximization. This tool supports management in identifying and diagnosing the problem in the most effective way. It will be helpful for the firm in formulating the problem and describing the issue in terms of variables, constraints and objectives. Linear programming model assists in allocating the resources of the organization in the most effective way. The Fulham furniture organization has faced problems regarding cost, staffing and quality of products. In this situation, this model will be beneficial for solving such kinds of problems and helpful in profit planning. It is easy for the corporation to solve problems or reduce the cost of business and manage work under limitations and restrictive conditions in an effective manner (Mahadevan, 2010).

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3.2 Critical path analysis ensures firm that they make best use of machinery, people and materials. It is a very detailed process and defines a logical route which directs the business, reduces cost and saves time. CPA method provides guidance to the firm that how a project is completed in shortest possible time. It identifies the relationship between the activities involved in the project.

Network planning is an effective marketing method that is used by the firm to enhance their sales and contract based on introductions and referrals.

The Fulham furniture organization offers various kinds of products in several countries. CPA and Network planning are very beneficial for the firm to expand their business in wide geographical area by making effective network design (Leseure, 2010). These tools are helpful for the company to complete the project on time and utilize resources in an efficient manner. It forces the manager to think in a logical manner.

3.3 Proper operational planning is necessary for the firm because it manages and controls labor, material and the capital effectively. It identifies the inputs to produce the desired quantity and quality of output in the most efficient manner. To handle this, short term managerial decisions should be made to meet the ongoing demands. There are many factors like cost, quality, workforce management, market trends and competitors’ actions which are influencing the organization’s performance and can deviate the company from its path and future forecasting. In this situation, operational planning is very important for the Fulham furniture organization because it is useful for demand forecasting as well as fulfillment the future order given time period (Brown and Lamming, 2013).

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in a

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Task 4 4.1 There are many operational outcomes for the Fulham furniture organization which are described as follows: Quality- Quality of the products is very important for the firm because customers demand more stylish furniture in less price as well as better quality as compared to other competitors. Company has been making great efforts in reducing ambiguity that is arising in production process and eliminating the waste by using economies of scale to produce much better products to supply in a proper manner (Panneerselvam, 2012.).

Attract

more

suppliers

and

customers

towards

products:

Fulham furniture has captured the market opportunity through increasing its number of warehouses and offering quality products while other business rivals are focusing mainly on business expansion.

It is the best marketing strategy which helped the company in earning great profits and maintaining relationship with suppliers as well as customers.

Making

the

Products

convenient-

By

increasing

number

of

warehouses, the firm will be in a position to easily deliver goods to customers and reduce transportation cost. It is very beneficial for the company to deliver products in very less time so it becomes the strength of the organization (Render, 2009).

4.2 The network plan can be used for understanding the process of creating office wooden chair.

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A. First the Raw materials is arrived to the firm B. Cutting the wood and giving shape C. Polishing the cut wood D. Polishing wood enters in machine E. Assemble all the parts and cushions are designed F. Again polishing and final touch given to chairs.

G. Chairs are ready for delivery to the customers Activity A B C D E F G

Order Done First After A After A After B After C After D &E After D, E & F

Estimated time 5 6 8 9 11 8 4

Time length for each task is estimated and it is clear that each task will only be started when the previous one will b finished. All the activities can be shown in the network diagram.

Node

Node Number

Earlier Start time

Node

Task A

1

2 1

Latest Finish time

Task duration

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The chair manufacturing process shows the order in which the activity will be completed-

B

D

3

6

9

G

F

A

5

2

1

6

7

8 5 C 8

E

4

4 1

Earlier start time: The earlier start time is 0, and then B & C will not start for 5 hours (0+5), Activity D starts after activity B & C finish and it takes 11 hours (0+5+6). Activity E takes 13 hours (0+5+8). Activity F takes 24 hours (0+5+8+11). It is required for EST to choose long path and route A, B and D as is takes only 20 hours.

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B

D

3 11

6

9

A

63 2

5 24

2 5

1 0

G

F

736

8 5

E

C

4 13

4

1

8

Latest Time: Activity G must be completed by 36 hours. To calculate LFT take F (36-4=32). For activity A, the route will be chosen which give lowest LFT in the case 5 (13-8).

B

D 3 11

6

9

A 1 0

5 24

2 5 5

G

F 63 2

7 36

5 C

8

8 E

4 13

4

11 13

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Critical path: This can be done through the nodes where EST and LFT are same. This means there will be no delays in completing the next task without delaying the campaign. With help of striking line critical path is shown in the figure (FIRA, 2010).

B

D 3 11

6

9

A 1 0

5 24

2 5 5

G

F

5

63 2

7 36

8 4 C 8

E 4 13

11 13

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4.3 Total quality management is the used in business for improving the operations. It is usually applied at front-line where production and low-level managers are deeply involved. It is beneficial for the firm especially in the areas of field service rework and scrap. The quality of products can be tested under close inspection process and if they are matched up to mark then further delivered to the clients. TQM has a strong emphasis on the products that if they are good then only are cleared otherwise they are sent back to take actions. Other benefits of quality management techniques are set benchmarking, employee empowerment, reduced cost and design quality of products in a significant manner (FIRA, 2010).

CONCLUSION The research report concluded that operation management and strategic planning are helpful for companies. It is necessary for Fulham Furniture to get success by maintaining the quality of products and reducing cost as compared to other business competitors. Also TQM, Linear planning, Critical path analysis and Network planning are important tools that help the organization to achieve its goals in a well planned manner.

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REFERENCES Journals ● Boer, H., 2003. Guest editorial: New challenges in management. International.

Journal of Operations & Management. 23(10). pp.1108 - 1113.

operations Production

● Johnston, R., 2005. Service operations management: return to roots.

International Journal of Operations & Production Management. 25(12). pp.1278 – 1297. ● Meneghetti,A.2002. Perspectives on facilities management for industrial districts. Facilities, 20(10). pp.337 - 348. MCB UP Ltd. ● Pitt, M.,2001. Barriers to the operation of the facilities management: property management interface. 19 (7). pp.304 - 308. MCB UP Ltd. ● Sheu, C., 2005. The importance of national culture in operations management research. International Journal of Operations & Production Management. 25(4). pp.371 – 394.

Books ● Bakliwal, L.V., 2011. Production and Operation Management. Pinnacle Technology. ● Brown, S. and Lamming, R., 2013. Strategic Operations Management.

Routledge ● Greasley, A., 2007. Operations Management. SAGE. ● Heizer and et.al., 2009. Operations Management. Pearson Education India ● Jones and Robinson, 2012. Operations Management. Oxford University Press. ● Leseure, M., 2010. Key Concepts in Operations Management. SAGE. ● Loch, C., 2007. Behavioral Operations Management. Now Publishers Inc.

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● Mahadevan, B.,2010. Operations Management: Theory and Practice.

Pearson Education India. ● Michael L. and Nigel S., 2003. Operations Management: Perspectives on Business and Management. 4. Taylor & Francis.

Critical

● Murthy,R.P.,2005. Production And Operations Management. New age international. ● Panneerselvam, R., 2012. Production and Operations Management. PHI Learning Pvt. Ltd ● Plenert, J.G.,2002. International Operations Management. Copenhagen Business School Press DK. ● Render., 2009. Operations Management. Pearson Education India. ● Tantoush, T., 2005. Operations Management: A Strategic Approach. SAGE. Online ● FIRA, 2010. The UK furniture manufacturing Industry. [Pdf]. Available through <http://www.fira.co.uk/document/fira-competitiveness-report2010.pdf>. [Accessed on: 31th July 2014]. ● Fulham furniture, nt.d. Introduction about the company. [Online].

Available through <http://www.bplans.co.uk/uk_furniture_manufacturer_business_plan/strat egy_and_implementation_summary_fc.cfm>. [Accessed on: 31th July 2014].

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