Operations Management Strategies

The operations management strategy adopted by an organization must be one that supports the successful implementation of the organization’s overall strategic plan. This section looks at how operations management strategies are implemented to achieve both organizational efficiency and effectiveness.

The development of efficient and effective operating systems for any organization are based on management drawing up suitable solutions for:

? Strategic planning decisions

? Tactical planning decision

Strategic planning decisions

• Organizational capacity - How many products can be produced?
• Location - Where are the products to be produced?
• Process - Which production methods should be used?
• Layout - How should the work stations and equipment be arranged?

Tactical planning decision

• Aggregate planning - What is the annual production plan for all products or services to be produced?
• Master scheduling - How many of each product will be produced in a specific time period e.g.. monthly?
• Materials requirement planning - What resources are needed to meet the master schedule?

Operations Management Strategies

The operations management strategies outlined in this section outline specific tools organizations use to reach their set objectives. This section will review:

• Capacity planning.
• Facilities location planning.
• Process planning.

Capacity Planning:

Cell-unit layout is layout is based on group-technology principles in which equipment dedicated to sequences of operations is grouped into small unit areas. These units provide efficiencies in material and equipment handling and in inventory management.

One advantage of the cell-unit layout is that the employees work in units that facilitate teamwork and joint problem solving. Staff flexibility is enhanced because one employee can operate all equipment in the unit and travelling time between equipment is kept to a minimum.

Facilities Location Planning:

Facilities encompass the land, buildings, plant and equipment, and other major physical inputs that substantially determine productive capacity and involve significant capital investment. Facilities issues confronting managers focus mainly on expansion and contraction decisions, facilities location and facilities layout.

The preferred location of the facility will be determined by the availability of employees with specific skills, government zoning regulations, employee costs, environmental regulations, utility costs and proximity to suppliers and markets.

Process Planning:

Once a product or service has been designed, the organisation must plan for its actual production. This involves assessing the production methods currently available (e.g. project, batch or continuous) and determining which of these is appropriate for the organisation.

This decision will be based on the nature and number of goods or services to be produced, the space available and the activities that need to be carried out by employees in the actual production process. This will also involve determining the layout of the organisation's facilities and how they will be used in the production process.

Product Layout:

A product layout is one in which equipment and tasks are arranged according to the progressive steps involved in producing a single product. Many fast food restaurants use the product layout with activities associated with producing the goods arranged in sequence. The product layout is regarded as efficient when the organisation produces large volumes of identical items. This duplication of functions can be economical only if the volume of products produced is high enough to keep each area working on the specialized products.

Cell-unit layout:

Cell-unit layout is layout is based on group-technology principles in which equipment dedicated to sequences of operations is grouped into small unit areas. These units provide efficiencies in material and equipment handling and in inventory management. One advantage of the cell-unit layout is that the employees work in units that facilitate teamwork and joint problem solving. Staff flexibility is enhanced because one employee can operate all equipment in the unit and travelling time between equipment is kept to a minimum.

Fixed-position layout:

The fixed-position layout is one in which the product remains in one location and tasks and equipment are brought to it. It is used to produce a product or service that is either very large or one of a kind. The product cannot be moved from function to function or from process to process along an assembly line. This layout is not good for high volume but is necessary for large, bulky items and custom orders.

Operations Management - Facilities Layout Planning:

Facilities layout planning is based on finding a physical layout or arrangement that will enable efficiency of production and be accepted by employees of the organisation. The following types of organisational layouts are reviewed:

• Process Layout
• Product Layout
• Cell-unit Layout
• Fixed-position Layout

Process Layout:

A process layout is one in which all of the equipment that performs a similar process, function or task is grouped together.

The advantage of the process layout is that it has the potential for economies of scale and reduced costs.

The drawback to the process layout is that the actual path or track that a product or service takes may become too long and complicated. A product may need different processes performed on it and thus must travel through many different areas before production is complete.

Product Layout:

A product layout is one in which equipment and tasks are arranged according to the progressive steps involved in producing a single product.

Many fast food restaurants use the product layout with activities associated with producing the goods arranged in sequence. The product layout is regarded as efficient when the organisation produces large volumes of identical items.

This duplication of functions can be economical only if the volume of products produced is high enough to keep each area working on the specialized products.

Cell-Unit Layout:

Cell-unit layout is layout is based on group-technology principles in which equipment dedicated to sequences of operations is grouped into small unit areas.

These units provide efficiencies in material and equipment handling and in inventory management. One advantage of the cell-unit layout is that the employees work in units that facilitate teamwork and joint problem solving.

Staff flexibility is enhanced because one employee can operate all equipment in the unit and travelling time between equipment is kept to a minimum.

Fixed-Position Layout:

The fixed-position layout is one in which the product remains in one location and tasks and equipment are brought to it.

It is used to produce a product or service that is either very large or one of a kind. The product cannot be moved from function to function or from process to process along an assembly line.

This layout is not good for high volume but is necessary for large, bulky items and custom orders.

Operations Management - Planning and Scheduling

In operations management planning and scheduling of work processes are of vital importance. This sections reviews the following planning and scheduling practices routinely used in organizations:

• Aggregate planning
• Scheduling
• Materials requirement planning
• Maintenance control

Aggregate Planning:

Aggregate planning involves the overall planning of production activities and the resources required for the production process for a specific time period e.g. a year.

The plan will set out total stock levels, production targets and employee requirements for that time period.

Scheduling:

The aggregate plan leads to the establishing of a master production schedule (MPS). This schedule establishes a production plan concerned with producing specific products to meet the needs of customers and takes into account the specific capacity requirements of the organization over a designated time period.

It is concerned with:

? Establishing and implementing appropriate lead times required to obtain the necessary materials and human resources to be used in the production process and with delivery times to customers.

? Specifying both the type and quantity of each item that needs to be produced in a given time frame.

? The production specifications to be implemented to produce these products.

? The employee and inventory requirements for this level of production.

Materials Requirement Planning:

Materials requirement planning is the planning involved in obtaining the required resources to meet the master production schedule for each specific product to be produced. A computerized system may be used to identify these specific requirements.

Maintenance Control:

Maintenance control refers to the strategy of minimizing the breakdown of equipment so that minimal disruption to the production process occurs. This maintenance may be proactive, reactive or random.

Key Performance Indicators:

The following list includes some examples of key performance indicators.

• The level of costs
• The level of waste
• The inventory turnover
• The level of wages
• The number of machine down-times
• The number of absenteeism
• The level of customer satisfaction
• The level of employee satisfaction
• The level of profit and profitability
• The number of industrial disputes
• The number of government regulation breaches
• The number of production targets met