Operations Management Optimising operations

The aim of an OM system is to extract maximum productivity and quality from the production process. This needs to be done in an ethical and socially responsible manner. How can an OM system be optimised?

Optimisation strategies 1.Facilities design and layout. a)Use of physical space. Adequate workspace must be provided in all areas to limit the number of bottlenecks and blockages to the flow of work.

Workspace should not be too large as employees will spend time moving and walking during the completion of tasks. b) Optimising the use of equipment Equipment must be easily accessible, reliable and operational. All equipment should be regularly maintained.

Regular maintenance may cost money but it ensures machinery is working and reduces downtime due to faults.

c) Location of raw materials, stock and finished products. The location of stock (or inventory) is important if the OM system is to operate efficiently. Parts and raw materials should be readily accessible and finished products located so they can be moved out quickly for easy delivery.

d) Layout of plant and equipment There are different types of layouts and it is important that the different stages of production are linked. Types of layout include: Fixed position/ project layout. Process/ functional layout – includes: batch production, mass production, assembly line, continuous flow production, mass customisation, cell production and lean manufacturing. Virtual factories

Optimisation Strategies 2. Technology Technology can offer considerable savings and improvements to organisational operations. Examples of automation include; Computer Numerical Control (CNC) Computer Aided Design (CAD) Computer Integrated Manufacturing (CIM)

Robotics Flexible Manufacturing Systems (FMS) Service industries – E-commerce, use of mobile phones and other information and communication technologies, Internet.

Optimisation strategies 3. Materials and supply chain management Supply chain management is the process of integrating and planning, implementing and controlling the OM system and transforming inputs into outputs. a)Inventory management Includes the storage of raw materials and components, unfinished production and finished goods.

b) Inventory control Is a system that determines how and when to store items and tracks the movement of materials. One system that is used is ‘Just in Time’ (JIT). This system involves the minimisation of inventory levels therefore reducing inventory costs. JIT eliminates the need for storage space and costs, however, there can be a problem is suppliers are not reliable and stock cannot be delivered in a timely manner.

c) Transport and distribution (logistics) An efficient system to transport the finished product to customers is also important. It might involved building up relationships with transport companies.

Optimisation strategies 4. Management of quality Quality is used to describe the degree of excellence in the product or service. Organisations must develop a reputation of reliability and quality is they are to be able to compete. Quality management programs aim to; minimise waste, reduce defects, obtain high standards and set quality benchmarks.

a)Quality control Involves the use of a series of physical checks at different stages of the production process to ensure standards are met and faulty products eliminated. It is a reactive system and occurs after the fault.

b) Quality assurance A quality assurance system aims to build quality into work processes. It is a proactive process which may involve an external party such as a certification body. Examples include; ISO (International Standards Organisation) or an Australian Standards mark.

c) Total Quality Management (TQM) TQM is a holistic approach to quality where all members of the organisation aim for continuous improvement. Employees are placed in a group known as a ‘quality circle’. TQM is an integrated, management-led effort aimed at improving performance at every level of the organisation. It is a continuous process.

There are three core concepts in TQM these are; 1. Continuous improvement 2. Customer focus 3. Defect prevention 5. Ethical and socially responsible OM Social responsibility in the OM system may include; Waste minimisation schemes, reduction of carbon emissions, safe working environments for employees, supply chain management and codes of ethics for suppliers, recycling of waste & materials.