Operations is the manufacturing and service processes that are used to transform the resources employed by a firm into products/services desired by the customer. Manufacturing takes raw resources and produces a physical product such as car or furniture where as a service produces an intangible product such as a call center or a hospital. For example, a furniture manufacturer first receives materials from its suppliers. They then manufacture the raw materials to produce furniture it can then distribute to local furniture stores. Another example of services goods would be an insurance company.
An auto insurance company produces an intangible good, an insurance policy that meets a client’s specific insurance needs and requirements. Although, it can offer many types of insurance programs, they are all tailored to meet a client’s need and provide them with protection and peace of mind. Supply chain is the process that moves information and material to and from the manufacturing and service processes of the firm. These includes the logistics processes that physically move product and the warehousing and storage processes that position products for quick delivery to the customer.
Business Operations Essay Example
In simple terms, it is the management process of the flow of goods. 2. Larry’s Auto Body Repair Shop had revenues that averaged $60,000 per week in April and $50,000 per week in May. During both months, the shop employed six full-time (40 hours/week) workers. In April the firm also had four part-time workers working 25 hours per week, but in May there were only two part-time workers and they only worked 10 hours per week. What is the percentage change in labor productivity from April to May for Larry’s Auto Body Repair? April May 6Full time Workers6Full time Workers 40FT Hr/wk40FT Hr/wk
4Part time Workers2Part time Workers 25PT Hrs/wk10PT Hrs/wk 340Hours of Labor260Hours of Labor (6*40+4*25)(6*40+2*10) $60,000 Revenues$50,000 Revenues 340Hours of Labor260Hours of Labor 176. 47Labor Productivity/Hr192. 31Labor Productivity/Hr (60k/340)(50k/260) 8. 97%Percentage Change in Labor Productivity (192. 31-176. 47)/176. 47 3. What dimension of competitiveness does time-to-market performance in product design and process selection affect? Provide some examples from market leaders or your personal experience in the business world: ~Responsiveness to Customer Needs
Product design and process selection are vital elements in any successful marketing campaign. Time to market performance means that the quicker you bring a design to market, the more units you can sell provided that your design and process are fundamentally strong. Computers. Technology is quickly changing, though from a customer standpoint, their needs are changing at a quicker pace. The average design change in the market is currently at 6-9 months for all major corporations (Dell, HP, Toshiba). Corporations have realized the importance of providing quicker supply to the needs of their customers.
Another aspect is the smartphone market, its highly expected that a “new” Apple IPhones enter the market every 12 months if not sooner due to customer needs and demands. In my personal career, the life span of medical products has a longer shelf life due to patents in place. Customer needs my be high, but due to the high investment in R&D, most competitive manufactures can only meet those needs every 7-10 yrs. 4. What is process variation? What are the types of variations? Provide definition for each and an example. A type of variation that occurs when there are differences in multiple instances of the same process.
Process variation is important in the Six Sigma methodology, because the customer is always evaluating our services, products and processes to determine how well they are meeting their critical to quality’s (CTQs); how well they conform to the standards. Organizations want their organizations to perform with a predictable range. If someone is making soda, the soda cans should contain approximately 12 ounces. If some cans produce only 11 ounces, customers and the authorities will be upset and may lead to fines. If each can contains 12 ounces plus or minus .
01 ounce, this may satisfy the company, customers, and regulators. Factors include: •resource variation (e. g. cans are slightly larger or smaller) •human (e. g. setup employees did not set fill rate correctly) •wear and tear (equipment is slightly worn out) •Information system (e. g. did not translate targeted fill rate correctly) •line speed (line went too fast or too slow during filling •temperature (different fill rates depending on temperature) –Never fill your car with gasoline during high heat during the day or you will get slightly less gas. •new process •new equipment
•new workers •new materials 5. Why does volatility of demand have a higher effect on a service delivery system than on a manufacturing system? A service cannot be inventoried and thus must be produced as demanded. Customers interact directly with the service delivery system and each may have unique needs or will require different levels of service. Consumer behaviors can magnify volatility of demand very significantly in service operations. 6. What are the advantages and disadvantages of using a make-to-order process compared to the advantages and disadvantages of a make-to-stock process
To answer the question I looked at how MTO vs MTS compare in an ERP system as we discussed in class. The major difference is that in make-to-order, production orders are linked to one or more sales orders whereas in make-to-stock production, orders are the result of production planning, which in its turn is based on a sales prognosis. Make-to-order: •The ERP system must have a strong and intelligent link between the sales order module and the production process module in order to transfer sales orders into production orders.
•Monitoring of individual production orders must be possible in order to meet the customer’s demands and to keep them informed about the progress of their orders. Production orders must traced back to sales orders. •The ERP system must enable a highly flexible processing of orders in order to meet irregular sales demands. •The ERP system should strongly support the inventory manager and the purchasing department, to ensure an uninterrupted flow of components and to keep stocks as low as possible. •You should take measures to reduce the risk of inefficiency and wastage. Make-to-stock:
•The ERP system must have strong statistical capabilities in order to support the sales forecasting process. Of course sales forecasting relies mainly on market expectations and projections but the statistical data provided by the ERP system is useful additional information. •The sales forecast will be transformed into a production planning, similar as in make-to-order production. •Make-to-stock leads to an evenly spread production schedule which is good for efficiency and effectiveness. •However there is still need for flexibility to adjust to suddenly changing market circumstances.
•Purchasing must take into account the projected future need for components in relation to already fulfilled production quota. 7. What is process capability Index, provide definition, formula and what it is used for and how do we know that a process is capable? The process capability index is the ratio of the range of values allowed by the design specifications divided by the range of values produced by a process. The formula is: The process capability index shows how well the parts being produced fit into the range specified by the design specifications. A Cpk larger than one indicates process is capable.
8. What is Kanban, what does it mean and how is it utilized; what is the process followed to determine the number of Kanban needed? (Hint, don’t over think this portion of the question, this is a simple answer and does not require more than a line or 2). Kanban is a signaling device used to control production. It is the process of tracking inventory through a production line. Kanban cards are a key component of kanban and signal the need to move materials within a manufacturing or production facility or move materials from an outside supplier in to the production facility.
The kanban card signals the depletion of product, parts, or inventory that, when received, the kanban will trigger the replenishment of that product, part, or inventory. Consumption therefore drives demand for more production, and demand for more product is signaled by the kanban card. Kanban cards therefore help create a demand-driven system. An accurate estimate of the lead time required to produce a container is key to determining how many Kanban’s are needed. k= Expected demand during lead time + Safety Stock + Size of the container / SIZE OF CONTAINER k=DL*(1+S)/C 9. What is Strategic sourcing?
Why are companies involved in strategic sourcing? Is your company or company you know involved in this practice? Site some examples. What is VMI; what is the purpose and benefits of VMI? Strategic sourcing is the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the needs of the business. As a result of globalization, sourcing implies a more complex process suitable for products that are strategically important. Strategic sourcing requires analysis of what an organization buys, from whom, at what price and at what volume.
Strategic sourcing differs from conventional purchasing because it places emphasis on the entire life-cycle of a product, not just its initial purchase price. Companies today are involved in strategic outsourcing to maximize the effectiveness of their supply chains. Strategic sourcing is a body of knowledge that can help increase efficiency and reduce costs. In order to remain competitive and relevant in today’s competitive markets, it is necessary to utilize the most beneficial cutting-edge tools. Effective strategic sourcing can make a tremendous positive difference to the supply chain of companies of all sizes.
I’ve experienced strategic sourcing in my current role. In the last 5 years, my industry (Medical Sales) has begun to shift the majority of their IT support services overseas. They the majority of their IT call centers are in India. The benefit to our industry was the reduction in cost by employing low-cost English speaking labor, benefit reductions for those employees, lower overhead cost for facility and most importantly we were able to higher individuals with a higher education background. This implementation improved our efficiency. Finding the highly-skilled support 24 hrs/day requires the company’s to reduce cost and take it overseas.
VMI is when a customer allows the supplier to manage the inventory of an item or group of items. In this process, the vendor assumes the task of generating purchase orders to replenish a customer’s inventory. One of the benefits of VMI is it helps reduce cost and time. This process helps maintain a certain level of inventory to meet customer demands. VMI is about improving visibility of demand and product flow in a supply chain, facilitating a more timely and accurate replenishment process between a supplier (vendor) and an inventory site (customer, distributor, distribution center, etc. ). 10.
What is forecasting, why is it important? What is it used for and by which departments? Provide some examples on how this is used in your industry; if you can’t give an example about your company you can use an example from any other business. Site the 4 types of forecasting and describe each. Forecasting is an important function that affects every significant management decision. Forecasting helps the management team across multiple departments make better decisions based on relevant information and helps minimize making errors. Forecasting is important for any organization during the planning process.
Finance and accounting use forecasts as the basis for budgeting and cost control. Marketing relies on forecasts to make key decisions such as new product planning and personnel compensation. Production uses forecasts to select suppliers; determine capacity requirements; and drive decisions about purchasing, staffing, and inventory. Currently we are in the process of finalizing our business plan for next year. We are trying to set business objectives for the following year based on historical business data, market information, and economic data also plays a big role in our forecasting.
In our process we having many departments involved from marketing, finance and sales management, managed care and global sourcing to assist in the forecasting process. There are four types of forecasting; Qualitative, Time series analysis, Causal relationships, and Simulation. Time series analysis is forecast in which past demand data is used to predict future demand. The data may include several components such as trend, seasonal, or cyclical influences. Causal relationship forecasting involves using independent variables other than time to predict future demand.
This independent variable must be a leading indicator. Many apparently causal relationships are actually just correlated events, so care must be taken when selecting causal variables. Simulation models allow the forecaster to run through a range of assumptions about a condition of a forecast. Qualitative forecasting is used to take advantage of expert knowledge. Useful when judgment is required, when products are new, or if the firm has little experience in a new market. Examples include: •Market research