Operations Management Success of Manufacturing Company

Question: Describe about the Operations Management for Success of Manufacturing Company. Answer: The essence of any business is to cater the needs of customers by enhancing the services and goods and in the process developing value for the customers and solving their issues. The Success of any manufacturing company is very much dependent on the way company manages its production and operations. Production and operational management talks about implying business organizations and management concepts in the development of the goods and services. This project is all about the production and operation management processes in the Hawkesbury Cabinet Company, which was a customized kitchen cabinet production company. This company was initially being managed by Fung and Mei who used to look towards the operations of the company together. Later, they both diversified their roles and responsibilities. Fung was handling the production and operational part while Mei was taking care of the financial and overall management. Initially, the focus was on customized products but later they decide d to bring in new operational line of standardized kitchen cabinet products. This essay discusses the issues faced by the company in their operational and production line(Chen et al., 2006). In the case study, it was identified that the company is going through three main issues. One of the main issues was related with the current production systems and processes used by Hawkesbury Cabinets. Hawkesbury Cabinets initially used to focus on custom-made kitchen, with most of the customers consulting with Mei for developing their unique kitchen but as the reputation of company went up accompanied with sales; company started the production of small-standardized designs for kitchen cabinetry for new small builders(Kumar Suresh, 2008). Because of the new projects of standardized kitchen designs, company has been facing serious issues in its production and operational activity management. Starr (2006) reveals that the most prevalent problem was because of the rise in the demand of standardized products, regular scheduling of the operational work changed completely. Choice of specific manufacturing system is very critical for the profitability. Different types of production require different types of manufacturing system. One manufacturing system cannot be fitted to all types of production. In current situation, the company is using Job shops manufacturing system which is suitable for customized production only. While in this case, companys order book comprises of one big portion of standardized products which requires totally separate manufacturing system. One of the major drawbacks of such systems is higher lead time. Priority was given to the customized kitchen products over standardized products in case of trade- off as profit margins are higher in such products. Due to this lead-time of the standardized orders increased and moreover, because of this reason the company used to keep the standardized pieces idle in some or other sections which increased their issues related with space and lead time costing. Company was not perfect in inventory control purposes(Vrat, 2014). Lead-time is an important part in the operational activity management and many a times companies have to lose their hand from their competitive position because of high lead-time. It not only increases the inventory cost but increase the delivery time also which may hamper the companys profitability in a big way. It was happening with the Hawkesbury Cabinets, the current production system was more focused on making customized products but because of the wrong decision of taking ample contracts of standardized products, the work completion timings were not being matched. According to the research study of (Stevenson, 2010) it can be judged that company was not realizing that it was losing profit margins also. Because of the increase in the unwanted inventory stock, current operation systems were becoming the reasons behind pushing manufacturing capacity to the limit(Slack et al., 2010). Another issue faced by the company was related with the effect that the company was facing because of the new operational line of standardized kitchen products(Hayes, 2000). Choe, Booth and Hu have mentioned in their research that there is strong association in companys production competence with its business performance. Company can improve its business performance by following a proper manufacturing system which is aligned with the companys business strategies. Any mismatch may result into deteriorated business performance (Choe et al., 1997). The same thing happened with the company. Companys business strategy was to increase its revenue by going beyond the customized products. However, the company was seeing rise in the profits and sales but at the same time, company was not able to keep their promise of delivering the best quality in right time. Apart from this, the clients of such products are very price-sensitive as well as profit margins are low. Same workshops as well same c raftsmen were being utilized for both customized and standardized products. Because of the new operational line of standardized kitchen, much of the capital amount was tied up in the raw material inventory, work in progress and finished good production(Semal, 2005). The cost were further increasing as the company took the nearby warehouse on rent for accommodating the inventory which was increasing day by day. The new line of standardized kitchen cabinets resulted into longer promised delivery times and because of the current layout, no space was left in the expansion process(Van Wassenhove Corbey, 1998). Operation management involves the activities of overseeing, designing, controlling the process related with the production of the kitchen cabinets and it was quite visible from the operational management of the company that it was not managing it in a proper way. Operation management is very important for the business operations as it forms the heart of the organization by control ling the system of the operations. It is the operational management which deals with the designs, operations, and improvement of the system. Any kind of mismanagement in the same affects the bottom line of the company and the same was happening with Hawkesbury Cabinet Company. The main mistake committed by the company was that they were going on a right track until and unless they took the decision of dividing the core competence area of manufacturing in two sections, customized and standardized kitchen cabinet. The third and the main issue which was identified, in this case study was about the impact of the operational activity on the financial structure of the company. This issue was the most important one. Operational activities are the backbone of the company and any kind of mismanagement in the same leads to serious effects on the financial structure. It is a fact that the cost of production is very much dependent on the production method which is being implemented. The cost varies with the choice of production method. It is the responsibility of a production manager to adopt a systematic approach to control the cost of production to ensure estimated profitability(Starr, 2006). It was seen that the owners of the company were happy by seeing that the new operational line of standardized cabinets was contributing around 14% in the total profits, but on the same side, they were missing the fact that the profit percentage was not increasing the way it was increasing, during the time of cust omized operational line only. The new operational line enhanced the costing structure of the company and because of that that expenses of the company increased. Warehouse rent cost was one of the costs, which increased because of the movement of the company towards builders standardized kitchen cabinets. Apart from that, such clients are price sensitive as well they are very strict about the delivery requirements. The profits margins were decreasing because of the increase in the lead-time and delayed deliveries. Managing the business practices within the organization was the major challenge faced by the Mei and Cheng. Lack of alignment of manufacturing systems with the business strategies was one of the reasons behind this issue. Differences in the business procedures had detrimental effects on the operations, when they affected the efficiency of the delivery of the quality kitchen cabinets. The efficiency of the customized kitchen cabinet production was hampered because of the inclination of the company towards standardized kitchen cabinets for small builders. However, in the initial time, the new operational line came up as a profitable one until and unless their operations were in control but later, many issues surrounded the companys operations and production management system. References Chen, J.S., Chen, M.C., Liao, W.J. Chen, T.H., 2006. Influence of capital structure and operational risk on profitability of life insurance industry in Taiwan. 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