Operations Management: Matching Capacity With Demand
Operations management is the process of managing the business processes efficiently and effectively. It involves the designing, monitoring, and modification of different operations related to business while producing goods or services. The aim behind all operations management strategies is to make it sure that all business processes and operations are efficient enough in terms of resource utilization and use minimum possible resources, at the same time all business processes and operations are effective in terms of fulfilling needs and wants of customers (Wilson, 1995).
All companies and organizations require effective and efficient operations management strategies irrespective of the nature of the business. Each and every organization which is involved in the production of products or providing different services, requires do manage the operations and business activities. The main concern of operations management is with the process of converting inputs into outputs. The raw material, labor, energy, etc. are all inputs which are converted into outputs in the form of products or services (Slack, Chambers, & Johnston, 2004).
Operations management is very important and crucial for any organization or business. It has strategic importance in the overall business decisions. The influence and impact of strategies related to operations management are two folds. Firstly, it influence the cost associated with the production of products or services. Secondly, it also influence the way products and services are produced or delivered and this in turn effect the revenues, if the customers will be satisfied with the quality or products and services there will be more sales revenues. Hence, by influencing both cost and revenues the operations management strategies have major and crucial impact on the associated profits (Wilson, 1995).
The major concern of operations management is with the effective and efficient business processes. So in order to come up with effective operations management strategies it is important to understand the business processes. In broad terms business process is the collection of all related tasks and activities associated with the production of products or services. All business processes have a particular goal or aim; there are certain inputs which are converted into outputs through the business process and for this process of converting inputs and outputs different resources and relevant information are used. There are different associated activities in a business process which have to be performed in an order, and a value is created for the customers by performing all these activities effectively and efficiently (Hall, & Johnson, 2009). The business process or production process involves two sets of resources that are: transforming resources and transformed resources (Slack, Chambers, & Johnston, 2004).
Transforming resources are the one which are involved in the process of transforming inputs into outputs. The transforming resources are further divided into two types that are: facilities and staff. The facilities involve the machinery, buildings, and other associated items, while staff is all the human resource used in the process of transformation and performs all transforming processes and activities (Slack, Chambers, & Johnston, 2004).
The other set of resources involved in the business or production processes are the transformed resources. The transformed resources are the raw materials and other components which are converted or transformed into the final product (Slack, Chambers, & Johnston, 2004).
4 V'S OF OEPRATIONS:
Different types of operations are differentiated from one another on the basis of four dimensions known as four V's of operations which are:
1. Volume: the quantity of products and services produced or delivered through business operations.
2. Variety: the different types of products and services produced or delivered through business operations.
3. Variation: the change in the demand with changing time and context.
4. Visibility: how much the internal processes and working is transparent to the external customers.
The implication of these four V's of operations is that they make it easy to predict the level of associated cost with the business operations and processes. Apart from this, they also help in predicting demand and effectively managing the capacity with demand. The operations having high volume, low variety, low visibility, and low variation, involves low cost and it is relatively easier to manage the capacity with the demand (Slack, Chambers, & Johnston, 2004).
OPERATIONS PERFORMANCE OBJECTIVES:
The objectives of effective operations performance are wide and extensive. From the organization's point-of-view the effective and efficient operations are required in order to cut the costs and increase the revenue (Slack, Chambers, & Johnston, 2004). The well performed operations not only reduce the cost of production but also enable the managers to predict the supply and demand and hence they are able to match the capacity with the demand. The five performance objectives of operations are: quality, dependability, speed, cost, and flexibility (Slack, Chambers, & Johnston, 2004).
ORDER WINNERS AND QUALIFIERS:
Another important concept associated with the operations management is of order winners and qualifiers. Terry Hill was the one to come up with the terms of 'order winners' and 'order qualifiers', these terms refer to the concept that the internal operational activities and capabilities should be organized in managed such that they are able to give outputs on basis of which company is able to get a competitive advantage and success in market (Bozarth, & Handfield, 2006). The order winning and qualifying factors are first to be identified by the company and then the operations and business processes should be designed in such a way that they are able to provide those order winning and qualifying factors in order to succeed in the market place. This is another important factor in which facilitates the process of matching capacity with the demand (Slack, Chambers, & Johnston, 2004).
The most important concept within the operations management is that of capacity management. The capacity management is associated with the process of matching capacity with the demand. For any organization or company it is important to match the capacity with the demand. If the capacity is more than the demand then the organization is underutilizing its capacity and there is wastage of resources and other associated inputs. If the capacity is less than the demand then the company has to face the issues and problems in the market as it is not able to meet the requirement and demand of the customer. In order to avoid these situations the management should be able to predict the demand and adjust the capacity according to the predicted demand. The base capacity should be planned and set by carefully analyzing the market and predicting the demand. The base capacity is then adjusted according to the fluctuations in the demand in order to effectively meet the requirement and demand of the market and avoid any wastage (Klassen, & Rohleder, 2001).
TOYOTA PRODUCTION SYSTEM -- MATCHING CAPACITY WITH DEMAND:
Toyota Production System (TPS) is believed to be the one of the most efficient and effective production and operational system in the world. It is also one of the most studied production system in the field of operations management. Toyota in order to meet the changing requirements and demands has constructed its production system on the concept of Just in Time (JIT) which is also known as the lean manufacturing system (Securityman, 2008). The company with the help of its suppliers has been able to develop an efficient system in which the raw materials and other supplies are made available just in time when needed by the production department. The production or manufacturing in according to the pre-determined and predicted demand in order to match the production capacity with the demand. The production or operation system of Toyota is characterized on the basis of five zeros which are: zero paper, zero inventories, zero downtime, zero defects, and zero delay (Securityman, 2008). The company keeps the inventories to minimum…