Operations strategy for a small manufacturing business

¶ … Business

Manufacturing Business

Owning a business can be difficult and challenging, but can also be highly rewarding. This paper will address a manufacturing business that will employ a minimum of 20 people. When a person has employees, how he or she operates the business changes drastically as compared to a business where the owner is the only "employee." With that in mind, it is vital to be aware of the issues the business will face and how those issues should be handled in order to allow the business to grow and prosper. The first thing that needs to be done is to create a good strategy by which the business will operate. That will be addressed in the following pages, along with how the strategy impacts the process selection and product design. Additionally, supply chain management and total quality management will also both be discussed, along with just-in-time manufacturing and how it impacts the quality assurance of the business and its continued success.

For purposes of this paper the business will have 25 employees and will be making a small product. This product is useful on its own, and can be used in commercial or residential applications. There is no service that comes with the product (such as set-up, technical support, etc.), because none of those are necessary. The product is not something to eat or drink, because the quality controls that come along with consumable products of that nature are far beyond the scope of this discussion. Because the product is a want and not a need for the people who purchase it, the demand can fluctuate and the product is not one that will cause panic or upset in a large segment of the population if it were to disappear from store shelves. People may begin to forget about it, but they will not have their lives deeply affected because they did not have the item available to them.

Operations Strategy

The operations strategy for this business involves several areas, because a strategy for operations must include everything the business will go through in order to produce a final product (Kalpakjian & Schmid, 2005). That means the business will need to:

Determine the exact requirements for the product the business will be creating and selling to others.

Determine the number of employees required to ensure the business operates correctly and efficiently.

Determine the equipment that will be needed to manufacture the products the business will sell.

Determine the companies that will purchase the product once it is created, as there is no point in hiring people and putting a great deal of money into the making of a product no one has agreed to buy.

Meet with companies to determine whether they will purchase the product as-is or whether modifications are needed in order for the majority of retailers to take interest in purchasing the product.

If necessary, make appropriate changes to the product until it comes into line with what the majority of retailers will purchase. Repeat as necessary and before investors are vetted.

Vet investors, and locate those who will be willing and able to move forward with the business.

Acquire the funds that will be needed to purchase the equipment, hire the employees, and purchase the components and parts needed to assemble and package the final product.

Contract with the companies who will be buying the product once it has been manufactured, and get specific first order numbers so the company will know how many items to create.

Train the hired employees on the equipment to the point they are safe and reliable, and the product is made correctly.

Ensure quality control of the products that are being created and maintain the machines to keep them operating at maximum efficiency.

Ensure ongoing sales and customer satisfaction with the products that are going to market, which can allow for future growth and development of the business as it acquires more customers.

Naturally, there are many more steps that have to be addressed in between those large milestones, but those will be created in the form of intense planning and development for the business as it moves from one milestone to the next. It is highly significant for any business to move forward as quickly and easily as possible if it wants to see success and growth, but moving too quickly can also overextend a business and cause it to collapse because it simply became too big too rapidly (Kalpakjian & Schmid, 2005). To avoid that with this business, careful measure will be taken before any significant change and before any type of expansion, to ensure there is a need for the expansion and the market will sustain it.

Product Design and Process Selection

Because the operations strategy requires that market contacts have been carefully and thoroughly made and vetted before acquiring the employees and the equipment to begin manufacturing the product, there is less likelihood of the company having immediate financial trouble almost before it even gets off the ground. The design of the product and the selection of processes for the business are both affected by the operational strategy, as well (Kalpakjian & Schmid, 2005). Clearly, the product will be designed as something the companies to which it will be sold want to purchase. If the companies have concerns about the prototype product, changes can be made in order to bring the product more carefully in line with what the market demands. The processes for the business will be affected that way, as well, because the changes that may need to be made to the product could not only affect how soon the product will go to market and how soon employees will be hired, but could also greatly affect how many employees are hired and what equipment is needed for manufacturing.

That is not to say that the business will simply rearrange its product and processes to suit the whim of a particular market or potential retailer, but only that this information will be taken into consideration. If most retailers express concern about purchasing the product for sale, and they all have the same or a similar concern, that is something that will have to be addressed by the manufacturing business before it can see success with its product. A new and improved product can then be shown to the retailers, and there is a higher likelihood that they will be interested in purchasing that product. That will delay the beginning of the actual manufacturing, and it may also change and adjust the process to the extent that different machines are needed or a different layout of the machines within the plant is required. This should all be thoroughly addressed before any equipment is purchased or any employees are hired to manufacture the product.

Supply Chain Management

Managing a supply chain can be difficult, but it is highly important when keeping a business running smoothly (Hines, 2004). There are four different areas of supply chain management that have to be considered: structuring, sourcing, purchasing, and managing. Only when all four are in balance is the company most likely to be successful and keep its supply chain moving properly so as to keep manufacturing a product to meet demand (Hines, 2004). The structure of a supply chain will ultimately determine whether it will break down at any point, and how often those breakdowns may occur. By structuring a supply chain effectively and efficiently, a business can receive its inventory of parts, create a product, and turn that product back out to the world without any serious pauses or hang-ups that could occur (Hines, 2004). Unstructured supply chains do not help a company at all, and they can even cause a company to fold because of unreliability in having work available to employees and having products that can be purchased by retailers for resale to their customers.

Supply chains must have trusted sources (Hines, 2004; Cooper, Lambert, & Pagh, 1997). If the raw materials do not arrive on time all the time, how will the products get created and shipped on time every time? Yes, there can be some occasional delays due to circumstances that are completely beyond human control. Natural disasters, for example, can disrupt supply chain and their sourcing. Overall, however, the company must find a good, trusted source from which it can purchase raw materials (Hines, 2004). The company must also know about purchasing the raw materials and how often that should be done. That is why managing the supply chain is so very important. Companies that do not purchase their raw materials on time and keep up with inventory and ordering can frequently run out of something they need in order to complete a product. If they miss deadlines for shipping and delivery of that product too many times, the stores that buy from the company and carry that product will likely stop placing orders. A company can become a victim of its own poor supply chain management if it fails to be careful and conscientious of what it is doing in that particular regard (Hines, 2004; Cooper, Lambert, & Pagh, 1997).

Total Quality Management

Total quality management (TQM) is an excellent strategy for providing a competitive advantage (Cua, McKone, & Schroeder, 2001). By making everyone in the company responsible for quality at each and every phase of the operation, the business is more likely to be made aware of quality problems quickly, so they can be corrected. Any business can have a problem with quality because of an employee's misunderstanding, a machine that is not calibrated correctly, or even a supplier that sent the wrong raw materials by accident. This is not necessarily a reflection on the ability of the business to create a good product, but more of a standard possibility of which all businesses should be aware. Overall, one does not have to get overly aggressive about quality. One only needs to charge everyone in the company with the duty of reporting quality problems right away. That makes all of the employees feel important and also ensures that each one of them is watching out for the quality of the business and the product (Cua, McKone, & Schroeder, 2001).

There should be a quality control check at the end, of course, but with TQM the majority of quality problems that could impact large numbers of products are caught in the early stages where they can be corrected before they cost the company too much money. Not all companies practice TQM, and that makes it a good strategy to gain a competitive advantage that can be used to get ahead of other businesses that make the same or similar products. Quality problems will be lessened, and TQM can also help a company to avoid any problems that come with late delivery of goods because they did not pass the quality check. A company that consistently uses TQM greatly lowers its risk of sending a dangerous product to market and possibly getting sued for accidents or injuries (Cua, McKone, & Schroeder, 2001).

Just-in-Time Manufacturing

The concept of just-in-time (JIT) manufacturing is a simple one, but it is also highly effective for many companies (Hirano & Makota, 2006; Ohno, 1988). The most important element of this type of manufacturing is that the raw materials arrive just as they are about to be used by the company manufacturing the product. That is done in order to stop the company from needing to store the raw materials. It can cut down significantly on costs, since there are no large areas needed (bought or rented) for storage of raw materials before they can be used (Ohno, 1988). When a company orders too much inventory of raw materials, those materials have to be stored somewhere before they can be used at a later date. Not only is that costly, but there is also the potential for damage to the items before they are used. Depending on what kinds of raw materials are stored the damage can come from animals and insects, man-made problems, or a natural disaster such as a flood or a severe storm. It is not always possible to avoid these kinds of things, but it is possible to avoid having a large amount of inventory (Hirano & Makota, 2006; Ohno, 1988).