A. Quantifiable Factors Affecting The Performance Of Operational Processes Case Studies Example
Introduction and Analysis – A-Cat Corporation
Description of the scenario
A-Cat is a manufacturing company dealing in the production of voltage regulators. The company requires transformers in the manufacture of voltage regulators/refrigerators. In order to meet the demand for refrigerators, the company must have adequate stock of transformers. The company has been facing challenges of overstocking and understocking of transformers. Overstocking increases storage costs thus reducing the operational efficiency of the company while understocking limits the company from meeting its normal production levels. The number of transformers needed is determined by analyzing the sales figures for the last two to three months as well as those of the last two years in the same month. These figures are then used to predict the number of transformers that will be needed.
The operations head has been tasked with the responsibility of analyzing data and presenting a report on the issue. The operations head gives descriptive statistics for 2006 to the operations manager who is tasked with providing and analyzing data for 2007-2010. The vice president of operations argues that the company needs less than 745 transformers based on the 2006 statistics. The operations manager believed that this is an understatement of the company’s requirement and argued that the number has substantially changed between 2006 and 2009. Based on the 2010 data and analysis of variance for data for years 2006 to 2008, the operations manager concluded that the demand had changed and that the current requirement exceeds 1,000 transformers. She is required to develop a model for forecasting transformer requirements based on the data for years 2006 to 2010.
Internal stakeholders, in this case, are the executives including the president, the vice president operations, and the operations manager; employees in operations, sales as well as those working in the stores. Shareholders are also stakeholders in this case since the performance of eth company’s operations affect the firm’s earnings and hence the return on shareholders’ equity. External customers are the suppliers of transformers and other raw materials and customers.
II. Analysis plan
The quantity of raw materials. The aim of operational processes is to provide quality products promptly. Operational processes are considered successful if the company can meet customer demands. If there adequate raw materials, the company will be able to meet its normal production levels and satisfy customer needs. If the quantity of raw materials is less than the amount required, the performance of operational processes will be impaired. Too much inventory of raw materials also reduces the efficiency of operational processes by unnecessarily increasing storage costs (Slack, Chambers & Johnston, 2010). In this case, both understocking and overstocking at A-Cat Company reduce the performance of its operational processes.
Resource allocation: The amount of financial and human resources allocated to the operational processes affect the performance of operational processes. If the company allocates adequate resources, operational processes will have appropriate technology and skilled employees thus improving its performance.
Data center capacity: One of the most important function in operational processes is quality control. Effective quality control requires reliable and complete data on present and past conditions. A large data center capacity will enable the company to maintain update data on operational performance variables. For instance, estimating raw materials requirements needs appropriate and up to date data that can only be maintained if the company has a large data capacity. In the case of A-Cat, the company relies on sales figures of the last two to three months and those of the last two years. As indicated by the ANOVA results, transformer requirement has changed hence relying on 2006 estimates leads to an understatement of the number required.
B. Problem statement
Accurate forecasting of raw materials and product demand is key to ensuring successful operational processes (Sharpe, De Veaux & Velleman, 2015). An organization should ensure that it has adequate raw materials in stock to meet its production levels. Having excess raw materials and finished products in stock is also unfavorable since it increases the cost of storing inventory. Estimating raw materials and finished product requirements should be based on a structured and data-driven approach. This requires the most recent data on the sales figures and production levels. Currently, A-Cat Company faces the problem of understocking and overstocking of transformers required to produce voltage regulators. The company’s operations manager has data for only 2006 to 2008 while the most recent data was for 2010. Consequently, the estimate of transformer requirements is not accurate since it is not based on the most recent data. Relevant stakeholders in the firm’s quality control processes do not have the necessary information for operational decisions. The company's vice president of operations, operations manager and other relevant stakeholders.
C. Strategy for improving sustainable operations
A-Cat can improve the sustainability of its operations by improving the capacity of its data center. This will ensure that there are up to data on sales and production levels. Besides, data should be automatically relayed to the relevant officers and departments of the company. Besides, the company should have a suitable model for estimating transformer requirements (Chiarini, 2015). This model should be developed from the most recent data implying that it should be regularly reviewed to reflect current conditions. This strategy will require significant investment in improving the firm’s information systems.
Chiarini, A. (2015). Sustainable Operations Management: Advances in Strategy and Methodology. New York: Springer.
Sharpe, N., De Veaux, R. & Velleman, P. (2015). Business statistics. 3rd ed. Boston: Addison Wesley.
Slack, N., Chambers, S. & Johnston, R. (2010). Operations management. Harlow, England: Financial Times Prentice Hall.