importance of operations management in business

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Operations Management inBusiness

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TABLE OF CONTENTSINTRODUCTION

TASK 11.1 Importance of Operation management for organizations1.2 Analyze the operations functions of Fulham Furnitureorganization1.3 Process model for Fulham Furniture organization

TASK 22.1 The importance of the ‘Three Es’ to organizations2.2 Assess the impact of the tension between cost minimizationand quality maximization2.3 The significance of the five performance objectives

TASK 33.1 Linear programming adds value to a given productionprocess3.2 Evaluate critical path analysis and network planning3.3 The need of operational planning for the organization

TASK 44.1 Operational outcomes for Ashley Furniture4.2 A network plan indicating the resultant critical path4.3 Quality Management Techniques to improve the operations

CONCLUSIONREFERENCES


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INTRODUCTION

Firms use operations management effectively to ensure and sustainefficiency in their workplace. Operations management consists of all theactivities from transforming of ideas to finished products design. Thisresearch report describes the importance of operations management forFulham Furniture organization. It explores that how linear programming addsvalue to a given production process and manages quality of products in asignificant manner.

TASK 11.1

Operation management plays an important role in business operations.It deals with the design, operations and improvement of the organizationalstructure.

Benefits of operation management for the firm are described as below:

❖ Financial and Human resource management: When companieseffectively manage their resources then cost is reduced and firm canget tangible as well as intangible benefits in a significant manner. Thefirm can carry out its objectives by effective execution of its operations.It can grasp market opportunity by using minimum resources andgenerate maximum output (Meneghetti, 2002).

❖ Production: It is helpful for an organization in managing physicalmanufacturing & 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 implementationof its operations.


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❖ Time management: Operation management helps firm to increasethe efficiency and productivity of tasks, so all functions are completedon time with effective utilization of resources (Bakliwal, 2011).

❖ Manufacturing activities: The operation management departmentcontributes in production planning activities which determine howgoods will be produced, location of plant, the facilities that will berequired to fulfill the tasks and how manufacturing will be laid out.Once the production process starts, it helps the managers tocontinually monitor and schedule all the activities in a well plannedmanner. Finally, it ensures that goods are produced according tospecific needs and standard quality is maintained.

❖ Facilities decisions: It helps firm in taking facilities related decisionslike site selection (minimize shipping costs, from where raw materialscome to the plant, distance of plant from city), availability &appointment of skilled employees, forecasting, capacity planning etc.

1.2The 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 strategicthinking approach and use of best technology at work place to increasethe awareness among people. The firm is maintaining goodrelationship with suppliers and purchasers. This ensures timely deliveryof its products to customers. It involves material management andlogistics operations related activities (Jones and Robinson, 2012).


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❖ Production planning: The firm designs and manufactures furniture inUK and supplies its products at national and international level. Thecompany used Lean production tools to increase the capacity andreduce wastage and production cost. This technique helps thecompany to minimize its internal and external failure costs andimprove its cash flow management process.

❖ Research & Development: The firm has been investing in R& Dactivity and has come up with stylish furniture products. In addition tothis, it also provides ways to alter design to save its manufacturingcosts. It keeps its prices low as compared to other competitors so morecustomers are attracted towards brands (Plenert, 2002).

❖ Quality products: The firm is offering good quality office furniture atlower price as compared to other business rivals. It provides variousoffice furniture related products. The company has its own warehousedepartment which stores big pieces of furniture. Due to this, it is easyfor the company to make quick delivery of products. The corporationhas quality control department which inspects and tests raw materialsand also monitors the customer complaints. It analyzes the productfault report and takes corrective actions to improve the quality ofproducts (Michael and Nigel , 2003).

❖ Other functions: The other functions of the firm, which contribute insuccess of the departments of the organizations, are research &development, customer support, marketing & sales and production in awell planned manner.


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1.3The 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 theneeds of customers. By establishing a short term strategy, firmunderstands the requirement of customers and based on that furnitureproducts are designed (Plenert, 2002).

❖ Market research: It is used in all stages of product life cycle. The firmhas been investing in R& D activity and comes up with stylish furnitureproducts. With the help of research, the organization analyzes itscurrent market position and gathers information about theircompetitors. Based on that, the company develops its market strategyand captures wide geographical area in a significant manner.

❖ Procurement process: In this process, the goods are acquired froman outside or external source. It considers the needs of the purchaserin terms of quality, quantity, time, and location. In this stage, thecompany identifies the suppliers and communicates with them aboutthe quotation. Further, firm negotiates with distributors relating to rawmaterial, price and availability of products (Tantoush, 2005).

❖ Aggregate planning: In this process, the requirement of rawmaterials, capacity levels, production, inventory and stock outs areidentified. The firm includes several parameters like production rate,workforce and inventory holding cost in planning process to effectivelydesign the products and achieve its goal in well planned manner.


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❖ Production control: After raw materials’ purchase, firm startsproduction process and manufactures the products. Manager isinvolved in scheduling and monitoring activities. They take thefeedback from customers and respond to feedback and makeadjustment where needed (Murthy,2005).

❖ Quality control: After product development task, firm deliversproducts to the clients. QC ensures customers that the productprovided to them are of good quality. Quality is measured with help oftotal quality management process and it is used to compute the qualityof the products in terms of zero defects, idle time and minimumwastage etc.

Task 2

2.1The economy, efficiency and effectiveness are three major elements

which are used in performance auditing.

Economy: The UK designers and innovators are amongst the best inthe world. Review of economy is primary element of performancemeasurement. It means acquiring the resources at low cost. Thefactors like recession, lack of skilled labor, demand, customer service,lead time and environmental issues influence the working of theorganization. The company designs high quality office furnitureproducts which are stylish and low cost. As compared to othercompetitors, firm has used assembling strategy in which high qualityinterlocking wood pieces are assembled for developing products. Thesefeatures enhance the quality as well as give pleasure to the customers.


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The UK furniture and furnishing company encompasses a diverse rangeof products based on customer characteristics. For domestic andhousehold purposes, the firm has been designing furniture which isavailable in retail outlets. The company also designs products forpublic area like hospitals, restaurants and residential accommodation.For offices, it produces furniture such as work stations, seating tablesand other items which are suitable for office environment (Loch, 2007).Efficiency: It refers to the relationship between input and outputprocess. The performance of the firm is measured in terms ofefficiency which means that firm is using its resources effectively ornot. If company fails to utilize its resources in an optimum manner thencorrective 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 intoaccount.Effectiveness: The products designed by the company should beuniform, good quality and optimal quantity plus the most importantthing is that they should be offered at low price as compared to otherbusiness rivals. The furniture products which are developed by the firmare eco-friendly in nature. If all the staff members of the organizationare involved in decision making process and they do their jobeffectively then effectiveness of the firm will increase and variousproducts can be offered to customers (Greasley, 2007).

2.2There is a paradoxical relationship present between cost minimization

and quality maximization. It creates challenge for the company to maintaingood quality as well manage cost. In global era, cut throat competition is


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present in the market and customers are demanding more quality ofproducts without spending too much. The company is faced with difficultiesin allocating cost and it may lead to conflicts and higher competition ratherthan healthy cooperation with in the firm. It demotivates the employees ofthe company when unfair cost allocations are made and profit orientedtarget is set too high (Fulham furniture, n.d). It creates tension among staffmembers and they will not perform well. The cost minimization aim is todeliver goods and services in most cost effective ways. It is a difficult taskfor the firm. In this situation, value analysis is helpful for the companybecause it reduces cost by eliminating wastage of materials. The benefits ofstriking a balance between cost minimization and quality maximization arelower unit costs, high gross profit margin, higher operating profit, improvedcash flows and enhanced return on investment.Material substitution has influenced through misbalancing between costand profit. It increases ambiguity and unnecessary parts so operation costwill increase. It decreases the reliability, manufacturability and profit of thefirm. Process engineering can be used by firm for enhancing the productivityand efficiency (Heizer and et.al., 2009).Market driven products improvements: Created tension affects themarket driven approach of the company. Customers are paying for stylishfurniture design, so the firm is adopting value engineering that helps theorganization to understand how to produce product that match the demandof major customer segment.


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2.3The 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 ofcorporations. If company develops products which are of good qualityand reasonably priced as compared to other rivals then morecustomers are attracted towards the products. By reducing ambiguityand reducing unnecessary parts of the operation, firm can reduce itscost. With help of value analysis, firm can manage its administrativeand operational costs. It can be achieved by economies of scale whichenables the company to produce large quantity of products at very lowprices (Pitt, 2001).Dependability: The firm can grasp the market opportunity byovercoming its dependability on other manufacturers. The companyshould fragment its task in small level and fix the role andresponsibility of individuals so they can achieve their target in asignificant manner. It helps the firm to complete its tasks on time andfulfill the promises made to the suppliers and customers in wellplanned manner.Flexibility: The organization dMaking the Products convenient-evelops furniture which is flexible and easily portable. This advantagehelps the firm in form of increasing its sale revenue and customersatisfaction. Other than this, company can also use competitionadvantage through personalization and customization (Leseure, 2010).Quality: By designing high quality assembly, it gives pleasure andprovides good services to the customers. The company can improve


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the quality of products by offering healthy working environment to theemployees so they will contribute in success of the organization.Speed: The furniture manufacturer company uses high technologyergonomics to improve the business process and there are manycomputers used by the firm for designing furniture in more lucrativeway. It is the duty of manager to ensure that things are done fast inorder to reduce the lead time.

TASK 33.1

Linear programming is a mathematical model which is helpful for theorganization in terms of cost reduction and profit maximization. This toolsupports management in identifying and diagnosing the problem in the mosteffective way. It will be helpful for the firm in formulating the problem anddescribing the issue in terms of variables, constraints and objectives. Linearprogramming model assists in allocating the resources of the organization inthe most effective way. The Fulham furniture organization has facedproblems regarding cost, staffing and quality of products. In this situation,this model will be beneficial for solving such kinds of problems and helpful inprofit planning. It is easy for the corporation to solve problems or reduce thecost of business and manage work under limitations and restrictiveconditions in an effective manner (Mahadevan, 2010).


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3.2Critical path analysis ensures firm that they make best use of

machinery, people and materials. It is a very detailed process and defines alogical route which directs the business, reduces cost and saves time. CPAmethod provides guidance to the firm that how a project is completed inshortest possible time. It identifies the relationship between the activitiesinvolved in the project.

Network planning is an effective marketing method that is used by thefirm to enhance their sales and contract based on introductions and referrals.The Fulham furniture organization offers various kinds of products in severalcountries. CPA and Network planning are very beneficial for the firm toexpand their business in wide geographical area by making effective networkdesign (Leseure, 2010). These tools are helpful for the company to completethe project on time and utilize resources in an efficient manner. It forces themanager to think in a logical manner.

3.3Proper operational planning is necessary for the firm because it

manages and controls labor, material and the capital effectively. It identifiesthe inputs to produce the desired quantity and quality of output in the mostefficient manner. To handle this, short term managerial decisions should bemade to meet the ongoing demands. There are many factors like cost,quality, workforce management, market trends and competitors’ actionswhich are influencing the organization’s performance and can deviate thecompany from its path and future forecasting. In this situation, operationalplanning is very important for the Fulham furniture organization because it isuseful for demand forecasting as well as fulfillment the future order in agiven time period (Brown and Lamming, 2013).


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Task 4

4.1There are many operational outcomes for the Fulham furniture organizationwhich are described as follows:

Quality- Quality of the products is very important for the firm becausecustomers demand more stylish furniture in less price as well as betterquality as compared to other competitors. Company has been makinggreat efforts in reducing ambiguity that is arising in production processand eliminating the waste by using economies of scale to producemuch better products to supply in a proper manner (Panneerselvam,2012.).Attract more suppliers and customers towards products:Fulham furniture has captured the market opportunity throughincreasing its number of warehouses and offering quality productswhile other business rivals are focusing mainly on business expansion.It is the best marketing strategy which helped the company in earninggreat profits and maintaining relationship with suppliers as well ascustomers.Making the Products convenient- By increasing number ofwarehouses, the firm will be in a position to easily deliver goods tocustomers and reduce transportation cost. It is very beneficial for thecompany to deliver products in very less time so it becomes thestrength of the organization (Render, 2009).

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


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A. First the Raw materials is arrived to the firmB. Cutting the wood and giving shapeC. Polishing the cut woodD. Polishing wood enters in machineE. Assemble all the parts and cushions are designedF. Again polishing and final touch given to chairs.G. Chairs are ready for delivery to the customers

Activity Order Estimated timeA Done First 5B After A 6C After A 8D After B 9E After C 11F After D &E 8G After D, E & F 4

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

Node Number NodeEarlier Starttime

Node

Task

21 A

1

Task durationLatest Finishtime


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

Earlier start time: The earlier start time is 0, and then B & C will not startfor 5 hours (0+5), Activity D starts after activity B & C finish and it takes 11hours (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 Das is takes only 20 hours.

3

52

4

6 71

A

5

B

6

D

9F

8

G

4C

8

E

1


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

524

2 5

413

632

73610

A

5

6 9F

8

G

4C

8

E

1

311

B D

5242 5

5

413

13

632

7361

0

A

5

6 9F

8

G

4C

8

E

11

311

DB


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Critical path: This can be done through the nodes where EST and LFT aresame. This means there will be no delays in completing the next task withoutdelaying the campaign. With help of striking line critical path is shown in thefigure (FIRA, 2010).

5242 5

5

413

13

632

7361

0

A

5

6 9F

8

G

4C

8

E

11

311

DB


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4.3Total quality management is the used in business for improving the

operations. It is usually applied at front-line where production and low-levelmanagers are deeply involved. It is beneficial for the firm especially in theareas of field service rework and scrap. The quality of products can be testedunder close inspection process and if they are matched up to mark thenfurther delivered to the clients. TQM has a strong emphasis on the productsthat if they are good then only are cleared otherwise they are sent back totake actions. Other benefits of quality management techniques are setbenchmarking, employee empowerment, reduced cost and design quality ofproducts in a significant manner (FIRA, 2010).

CONCLUSIONThe research report concluded that operation management and

strategic planning are helpful for companies. It is necessary for FulhamFurniture to get success by maintaining the quality of products and reducingcost as compared to other business competitors. Also TQM, Linear planning,Critical path analysis and Network planning are important tools that help theorganization to achieve its goals in a well planned manner.


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REFERENCESJournals

● Boer, H., 2003. Guest editorial: New challenges in operationsmanagement. International. Journal of Operations & ProductionManagement. 23(10). pp.1108 - 1113.

● 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 industrialdistricts. 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 operationsmanagement research. International Journal of Operations & ProductionManagement. 25(4). pp.371 – 394.

Books

● Bakliwal, L.V., 2011. Production and Operation Management. PinnacleTechnology.

● 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 UniversityPress.

● 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: CriticalPerspectives on Business and Management. 4. Taylor & Francis.

● Murthy,R.P.,2005. Production And Operations Management. New ageinternational.

● Panneerselvam, R., 2012. Production and Operations Management. PHILearning Pvt. Ltd

● Plenert, J.G.,2002. International Operations Management. CopenhagenBusiness 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]. Availablethrough <http://www.fira.co.uk/document/fira-competitiveness-report-2010.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/strategy_and_implementation_summary_fc.cfm>. [Accessed on: 31th July2014].


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