Long-Term Operational Changes Case Study Examples
Albatross Company is a manufacturing company established in 1976 to manufacture bell and snag hook anchors. The operation strategies used by the company have partly relaxed in recognizing the essence of employee welfare and production efficiency hence reducing its profitability. A successful operations management blends operation activities along with the core values as outlined in the balanced scorecard (Stevenson & Sum, 2009). A balanced scorecard expands beyond output and includes the role of suppliers, workers and the surrounding environment to the overall productivity. This paper will delve into understanding the company’s derailing factors and derive operation strategies needed improve efficiency, productive quality and sustain the company’s competitive advantage over rivals
Integrated supply chain system
Successful firms enhance their competitive advantage by producing quality products and services at a low cost in order to maximize profits. Firms interconnect all its operation intermediaries that include suppliers, employees, company shareholders as well as external players that sustain a company’s penetration in the marketplace. One such strategy that Albatross Anchors should adopt is an integrated supply chain system. The supply chain system is a long-term operation strategy that concentrates on tracking the flow of raw materials and finished product among the suppliers. The value-chain based system extends beyond the traditional supply chain method that I currently used by the company (Kannan, & Tan, 2005). The system is computerized and hence able to monitor and link information pertaining to supply and demand gaps.
For example, Albatross Anchors Company uses rail and trucks to supply raw material and finished products. Unfortunately, the company s reluctant to monitor the trains and the trucks as well as assessing the frequency of their travel based on demand. Consequently, the shipping expenses could be rising and thus reducing profitability. Adopting the supply chain system helps in analyzing demand and supply gaps that guide the management in directing manufacturing department in quantity production.
Establish different separate manufacturing processes
Albatross Anchors company is facing an operation deficiency of combining production process with different production chains. According to the information displayed, bell and snag hook anchors have different manufacturing procedures thus demand different machines and skills. Unfortunately. The management uses a single process with a view to saving cost. The process invites idling costs that occur when a machine stops working while waiting for the next batch of products. Among the key consequences of the process is machine fatigue, defective finished products, and increased operation costs. Idling costs range from machine fuel costs, maintenance costs and manpower idling costs. The ultimate problem reflects in the demand-supply incoherence. Installing different machines for snag hook and Bell anchors reduces job collisions among workers- a factor that contributes adversely to employee morale and dedication. Further, the approach could have a long-term effect on slashing production cost below $11.00 and $8.00 respectively.
Technology improvement and safety management
Technology improvement is a complementary factor in production and service delivery that strengthens a company’s competitive advantage. Firms capitalize on technological changes through research and development to foster quality product differentiation in response to consumer demands and influence from intense competitiveness. Albatross Company has lagged in technology hence derailing quality production and reduced profitability. The company should adopt just-in-time production technique- a manufacturing strategy used by Toyota for eliminating operation waste during production. Under this technique, a company produces products based on market demand thus reducing warehouse costs. For that reason, the management ought to introduce high-tech machines that would strive in eliminating slack time during manufacturing. Antiquation process should accompany expanding warehouse space in a bid to subdue the rising lead time and cost. Lead cost occurs when there is a mismatch of manufacturing period and ordering process. Increased lead cost could sublime switching cost that would ease the degree of the consumer shift to competitors.
Short-term operational changes
Short-term operation strategy creates a basis for companies to advance towards long-term sustainability of a firm’s competitive advantage and customer satisfaction. The aim short-term strategic approaches are that they create value for company’s operations by fostering integrated relations across all business segments.
Open-layout working environment
Albatross anchor Company has been quoted as inefficient in administrative structure and incoherence in employee interaction. In manufacturing process, most of the operation segments interrelated in various ways and organizational segment is a core factor in production efficiency. The management should introduce an open layout working environment to facilitate employee interaction and easy monitoring of their operations. Besides, employee should undergo in-house motivation training and seminars to equip them with up to date managerial function strategies.
Environmental change: separate administrative from manufacturing area
Good working environment I a boost to employee operations and the degree of output to the company’s production. The company ought to separate administrative and manufacturing areas to avoid air and noise pollution emanating from making building. The approach would shield the business’s operation cost derived from pollution. Notably, the administrative workstation should be able to communicate easily with manufacturing department through proper record keeping.
Worker's productivity assessment
This is a short-term strategy whose goal is to maximize individual or team input to the overall productivity. The management should analyze the contribution of each person and link the data with the overall output. The goal of the approach is to eliminate employee under-output and laxity. Consequently, the company’s would be able to evaluate the course of employee under-performance and employ relevant resources to revamp the productivity. The essence of this undertaking is to boosts employee morale and dedication towards achieving the firm’s set target.
Gain sharing and profit-sharing
Most companies fail to recognize the equivalence of employees’ contribution towards the realization of production and revenue target. Issues of underpayment and inadequate social welfare for workers have been attributed to affecting indirectly to a firm’s productivity. According to management theorists, employees working environment and motivation should rhyme with a company’s commitment towards productivity and customer satisfaction. Albatross Anchors Company could derive a strategy to apportion part of the net income to the employees as a sign of motivation. This approach complements transformative leadership strategy where workers are blended to be part of the firm’s achievement.
Cross training of workers is a tactical management approach where employees are subjected to varied working strategies with a goal of improving the overall performance. The principal aim of the approach is that it shields the company from unilateral practices and opens-up to market variation changes in management (Slomp & Molleman, 2002). For instance, employees in the manufacturing department could be trained in administrative and strategic management skills to boost their production efficiency and cost-effective production. Gaining practice versatility strives at increasing employee retention and expanding their skills basket that promote work performance.
Ergonomics is a strategic management practice that accommodates the interests of workers to improve their performance. This method draws reference from the balanced scorecard management approach that assesses the ease of employees in their operating environment in fostering employee morale (Dul & Neumann, 2009). For instance, the company should consider introducing recreational facilities such as gym for workers to relax their muscles and deter the risks of fatigue. Further, furniture equipment should be standardized to meet employees’ working environment demands and enable ease of interaction.
Albatross Company has been reluctant in implementing safety standards in the manufacturing and administrative segments of the company. Such an issue adversely affects employee productivity and lowers their motivation. Albatross anchors management should manufacture workers with safety attires such as boots, aprons, and gloves. In addition, buildings should be equipped with fire control equipment as well as training employees on personal –protective measures and reactions in case of unforeseen accidents. Besides, the management should consider allocating safety allowances to the employees’ salary as a way to boost their morale and increase the level of retention.
Albatross Anchors Company needs to sustain competitive strategy by incorporating the components of a balanced scorecard that fronts customer satisfaction and employee welfare as core objectives towards company productivity. Reduction in lead time cost and idling machine cost will improve production efficiency and subsequently reduce the 35% profit deficiency margin. Conclusively, operation strategy should rhyme along the company’s corporate values strategy to attain the set goals of quality production and minimize maintenance cost.
Stevenson, W. J., & Sum, C. C. (2009). Operations management (Vol. 8). Boston, MA: McGraw-Hill/Irwin.
Kannan, V. R., & Tan, K. C. (2005). Just in time, total quality management, and supply chain management: understanding their linkages and impact on business performance. Omega, 33(2), 153-162.
Slomp, J., & Molleman, E. (2002). Cross-training policies and team performance. International Journal of Production Research, 40(5), 1193-1219.
Dul, J., & Neumann, W. P. (2009). Ergonomics contributions to company strategies. Applied ergonomics, 40(4), 745-752.
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