Manufacturing sub-processes are part of the complete process in order to produce the needed goods in production. As VP for operations, part of the responsibilities is to make it sure that the products demanded by the market as articulated by the marketing department are used. Basically, the for VP operation should be concerned with the production of goods and processed using the necessary processes and their combinations under the best quality of goods produced and the least cost. Some times there is a conflict between cost and better quality hence the VP operations is being made to decide the make balance of the two, that is the incremental benefit on added quality should result to higher incremental profit.
Since operations deals with how the company is performing and may be refined in different sub-processes in production as design, material acquisition, assembly, testing and other process, the VP operation must be able strike a balance of the processes involve to attain the objective of best quality under least cost situation.
The production process converts into usable products, which may take the form of goods or services. The activity of production converts some resources, called input into goods and services, called outputs, as flow over some period to period. These goods are products to be sold to customers where the company stands to expect revenues. Production processes therefore is geared towards producing the best quality so that customers may buy these goods and so that there would be zero rejects. To attain however this quality of production requires that processes must be an integrated whole to allow inputs to flow in a proper manner and complies with standards set by the company.
1. Which of the changes being considered by the manager of Quality Parts Company are counter to the lean philosophy of the company? Lean production is a philosophy and a way of working involving eliminating all forms of waste (where waste is defined as anything that does not add value in the production process and supply chain). Many changes being considered by the manager are counter to lean ...
2.2 Setting standards
The setting of standards is one of the duties of the operations department. It is possible that the VP has direct responsibility to it or he has delegated the same to someone else for which the VP is still responsible. In implementing standards in the production and sub-processes involved, the VP is advised to do the following: He should be guided that the setting of standards (Greene, 1997; Droms, 1990) is a difficult and important problem for management.
Since time standards may have many valuable applications, it is worth considerable to make them as sound as possible. Hence if a time standard is set hastily, the VP will find it difficult to instill confidence not only in that standard but also in the entire standards program. He should remember that a ‘loose’ standard is difficult to change once it has been adopted.
The possibility is that a worker on a job having a “loose” standard becomes accustomed to the low requirements and there an attempt to ‘tighten’ the standard, the worker will charge that is attempting to speed up and that there is no need to exceed standard if management is going to take this as evidence that standard needs raising. It is for this reason that the VP for operations should set a basic policy of management that once a management standard is set for an operation, it will not be changed in some significant manner. With such a policy, management is faced with the problem of determining just what type of a change is significant.
Typically workers tend to make a number of small improvements in a job when it was timed, therefore a standard becomes especially important as basis for determining what is just when a job has changed enough to need a new determining a new standard.
The VP is also being informed that a production process depends on available technologies. Thus it is possible that the production process can lead to undesirable outputs when the technology is no longer appropriate because of better alternatives. He is therefore advised to be knowledgeable of the latest technologies and which are within the budget of his department so that necessary change of technology could be had. He is however advised to apply capital budgeting techniques where there is a need to estimate the cash flows of competing alternatives and the subsequent computation of net present values to determine which is a better alternative using cost of capital as discount rate.
... issue Order confirmation Goods receipt Order settlement Production order • Used to control production operations and associated costs • They define – Material produced – ... demand program. • If the production time is long in relation to the standard market delivery time, one can ... I/P MRP BOM Purchase requisition Planned order Define work center Routing Goods issue Release order Order confirmation ...
Standards may also be applied in term of the inputs used. Materials are therefore inputs since they are put into process when production is started. There are other inputs like salaries of workers who where involved , overhead which includes electricity , repairs and maintenance, depreciation and other expenses which are required to produce the product. The VP is advised to use only a standard after a careful study of the cost involved in production as basis of measuring performance in terms of cost control. By the use of standards on cost the VP will have the power to control cost and hence improve efficiency in the operation of the factory or the machines.
2.3 Work improvement
Another way to improve efficiency is by the use of work improvement. The VP for operations should understand that he is set to produce quality products but at the same control cost. He can therefore employ the work improvement by being aware of what operation involves. He could ask the following questions to attain work improvement: (1) Can some element of the work eliminated? If there is any step that need not be done at all or any motion that is completely wasted, it should be eliminated.
(2) Can some part of the operation be combined? If two parts of an operation can be done jointly, combining will improve it. (3) Can the sequence be changed? (4) Can the operation be simplified? He must remember that that the simple way is usually the easiest, least expensive and best way (Massie, 1987).
A business enterprise must survive, grow, and prosper. Cost Control and Cost Reduction are activities necessary for ensuring that these objectives are fulfilled. With the liberalization of the Indian Economy and Globalization, there is now a cut throat competition from various concerns of the world. As a result there is now a race to secure a place for survival. This has increased the importance ...
(Massie, 1987) The VP for operation should answer these questions while being aware also with cost saving as result of work improvement.
2.4 Inventory control
Another way to attain operational efficiency is to control inventory (Meigs and Meigs, 1995).
It is assumed that the VP for operations has both inventory control and production control. Since production directly affects the three main types of inventories: raw materials and parts, work in process, and finished goods, it is very logical to expect the inventory should also be under his power. Raw materials must be ordered to arrive in time for production.
In the production process, raw materials must be carefully computed to prevent waste. Since the production process determines the size of the materials to be placed in the work in process; the VP for operations must make it sure that he is perfectly aware of the production process which must make it sure the expected output of production must go either into the finished goods inventory or directly to the customer.
The VP for operations can also handle inventory control handles by knowing the answer to the following questions: (1) What is the optimum amount of inventory to carry? (2) What is the economic lot size for an order from a supplier from a production department? and (3) What system of controlling inventory should be used? If he can answer these questions, there could be a lot of ways to improve efficiency and effectiveness in operation (Greene, 1997, Massie, 1987).
Improving efficiency and effectiveness of each of the manufacturing sub processes individually and as a whole may be done in several ways. These include producing product within quality standards at least cost, employing capital budgeting technique in making capital expenditure involving operations for the company, setting a standard, improvement of work processes in terms of their contribution to cost and quality and the employing inventory control.
Droms (1990) Finance and Accounting for Non Financial Managers, Addison-Wesley Publishing Company, England
Greene (1997) American Production and Inventory Control Society Handbook, McGraw-Hill Professional
Multiple Choice 1. Which of the following is NOT a problem commonly found when monitoring? a) Organizations collect data that are easily gathered b) Gathered data are not the most important to reach the organization’s goals c) There is an undue emphasis on measuring objective output performance d) Inputs measurements are used as a proxy for output completion Answer: c Difficulty: Hard Response: ...
Massie, (1987) J. Essentials of Management, Prentice-Hall, Inc
Meigs and Meigs, 1995, Financial Accounting, McGraw-Hill, Inc., New York USA