Operations Management Reports Examples
One of the most important fields of activities management of enterprises of various sectors is inventory management which relates to the production of goods and service delivery. In conditions of market economy the issues of rational and efficient organization of processes and control the movement of material and financial flows in the company became particularly relevant since their solutions tend to increase the logistics efficiency on the enterprise as well as the sales of manufactured products. It is necessary to optimize the inventory levels and their effective use together with minimize the working capital invested in these reserves and stocks.
The objective necessity of stock foundation is related to the nature of production and reproduction processes. The main reason is a mismatch in space and time of production and consumption of material resources. Another need in stock forming is particularly important to the continuous increase of the division of labor. Increasing productivity is due to the expansion and deepening of the process of specialization and cooperation, which resulted in final product production involved with an increasing number of enterprises. The need of movement of the means of production between these enterprises leads to an increasing number of stocks, in both magnitude and nomenclature. Stocks formation is also associated with the need to ensure the continuity of the production process at all its stages. Carrying out the supply contracts and products transportation may deviate from the scheduled dates and batch sizes of delivery. At the same time, food production must be delivered regularly. Therefore, the presence and state of stocks primarily depends on the rhythmic work of the enterprise.
The availability of stocks allows uninterruptedly implement the established production program. Also, the stocks formation allows fluctuations in demand (unpredictable increase in the intensity of the output stream) since the demand on any commodities can be predicted with a high degree of probability. Also, discounts for the purchase of large batches can also cause the creation their stocks in the warehouse of the enterprise. On the other hand, the company, which has been able to anticipate inflation in the economy, creates a margin for profit by increasing the market price. In addition, the accumulation of reserves is often a necessary measure to reduce the risk of delivery shortage (or undelivered) raw materials necessary for the production process on the enterprise. In this regard, the company that focuses on one main supplier is in a more vulnerable position than the company that is building its activities on contracts with several suppliers (Muller, 2003).
Thus, summarizing from the above, we can consider the stocks as a form of the materials flow. Availability of stocks is costs. However, their absence is costs as well, but they are expressed in the form of a variety of losses. Despite the fact that the stocks maintaining is associated with certain inventory costs, entrepreneurs have to create them, as the lack of stocks can lead to even greater loss of profit. So, together with lots of positive aspects of stockpiling the company incurs significant costs on their formation and maintenance. And, the more effectively you manage the inventory, the less money is needed to maintain the required level of inventory in stock.
There are many formal methods of inventory control. Some of them are quite simple in terms of the calculations, while others require knowledge of complex mathematical techniques and methods, but any inventory control model should answer the questions of how much to order and when. Answering them allows creating a strategy of inventory management on the enterprise.
Total Quality Management
On order to survive in modern market competition the enterprise must coordinate its activities to direct and control an organization with regard to quality. These activities usually include the development of policy and quality objectives, quality planning, quality management, quality assurance and improvement. For each company and for each industry quality is a crucial tool to maintain and improve its competitiveness. Besides the quality of production processes is becoming increasingly important, the continually improve performance gives certain advantages in production costs, in contrast to its competitors. Thus, the quality is no longer a factor in the company’s image; it definitely became a matter of survival in the market.
Quality can be explained with different definitions. The oldest definition created in the depths of production companies is conformity to acceptance requirements. Unfortunately, quality assurance organizations providing services (like shops, hotels, legal and consulting companies, etc.) has their own characteristics of this notion. They differ so much since the service providing companies do not result in material production, which can be measured by mechanical and / or physicochemical parameters. In contrast to manufacturing, where production and consumption of products the customer is achieved in stages, in a different time and place, companies providing services, often create a service and its consumption takes place immediately the same place and at the same time (as an example - a restaurant). Service companies are also often directly contact the consumer, which creates additional requirements for the functioning of the organization. Thus, the quality control system must be a potential consumer-oriented system improving people’s satisfaction with the product or service and in order to be competitive on the market, provide for a constant decrease in the real value of products or services.
The range of activities identifying the concept of quality was expanded with such interest groups companies as investors, employees, suppliers, associations and society as a whole. Parallel to this there was a serious effort to integrate individual approaches and methods of management in the overall concept of integrated management. In connection with this the society experienced the increased importance of process-oriented enterprise management. The notion of total quality management (TQL) is a reflection of this quality management development. Originally TQM was introduced by the Ministry of Defense in the USA. The notion originated as a result of changes in the term of “Total Quality Leadership” due to the fact that the word “leadership” is not fully consistent with the interpretation of the topic of war, i.e. TQM was understood as a guide for the implementation of “total quality”. The initiative of a clear definition of the term “total quality” came from the leadership of the nine leading industrial corporations in the USA, and in 1992 the joint efforts of leading scientists and consultants concerned with quality issues, has been given a clear definition of the term (Prajogo, 2005).
So, the total quality management is a comprehensive philosophy of administration, and a set of tools and methods for its use. The historical development of ideas led to the need for quality quantitative assessment of compliance of existing quality systems of enterprises and organizations, the general principles of TQM. This systematic, integrated and organized work style, aimed at continuous improvement has the following principles in its heart:
involvement of employees that enables organizations to capitalize on their ability;
approach to quality system as a system of business processes;
system approach to management;
TQM includes a success-oriented team with charismatic leaders, influencing colleagues to achieve quality results; and the only way you can get out of the vicious circle of requirements and censure. TQM blames nobody to cause the problem – it is sealing the solutions instead. Obviously, it is critically against the authoritarian management style (Yusof, 1999).
Intangible feelings are most commonly associated with services. Here, one of the main factors can be run-time services. It is a tangible feeling more fully associated with the qualitative characteristics of products. Since we can hold, feel, store and observe the manufactured product, we can easily measure its defects and disadvantages. Currently, the quality of the product depends on the quality of production processes. A noteworthy feature is that with increasing wealth varies spectrum of requirements and hence range of sensations. And this, in its turn, changes the requirements for the quality of production processes, which should lead to a change in product quality indicators. Such a change in the quality of production processes is based on the quality improvement program and is accompanied by continuous improvement. Therefore, improving the quality of the program will be one of the key moments in the company to improve product quality. At the same time, the quality of production processes is determined by five main components: people, equipment, materials and methods. The second component, which guarantees high quality of production processes associated with the use of appropriate equipment, appliances and tools. High quality production processes cannot be achieved without the use of high quality materials (raw materials, components and semi-finished items). An outstanding example of implementation TQM is Toyota, which combines all the above mentioned together with excellent use of management practices, including system management, organization management, providing or creating a certain style of leadership, as well as the introduction of modern manufacturing solutions, both in management and in improving the technology. In addition, Toyota provides creation of the necessary moral climate conducive to productive work as each employee and workforce as a whole (Amasaka, 2012). Reminding of Toyota we imagine a high-quality comfort and reliable automobiles and this image is based on long-term formation of stable quality of production processes at the plant and stable high quality of production.
Supply Chain Strategy
Facing with the globalization of business and aggressive competition, today's companies are forced to seek new sources of competitive advantage. In this case, the focus begins to shift from the search for increased efficiency by reducing costs (this development has reached a certain limit) in the direction of increasing value proposition for the customer. Understanding the mechanism of modern creation of competitive advantages is impossible without a thorough analysis of the concept of supply chain management, which has already established itself as an effective way to reduce costs and claims to be a new level of creation of competitive advantages (Cooper, 1997).
In the past two decades, supply chain management has become a dynamic concept and at the same time one of the most common management strategies. Initially, supply chain management interpreted as coordinate the flow of materials from the supplier to the manufacturer and then - through distribution channels to the final buyer. The supply chain is a sequence of flows and processes that take place between the various counterparties (link) circuit and combined to meet the demands of consumers for goods and services. In the supply chain inventories are seen as a form of existence of material flow, applied to links of the supply chain performance remains, the replenishment and shipment of inventory. When deciding on the level of stock in the supply chain focuses on the ratio of the level of reserves in the related links, rather than the level of stock in a separate unit, which is typical of the traditional approach to dealing with stocks.
In service sector the service chain management is very similar to the supply chain management. It also considers and plans the activities of the company from the very beginning of the cycle to delivering. A great challenge of this type of management if that the service companies are very strictly connected to the schedule and planning in order to satisfy all the customers and at the same time stay competitive. Such company’s assets are often networking and expensive, such as telecommunication, water, gas, electricity and networks. But despite such great spending regarding expensive assets, the service companies reduce their inventories and other related costs. The main goals of service chain management are minimization of customers’ waiting time and resources’ idle time while maximizing employees’ performance and experience. A great example of such service company using chain management is a call-center. They often provide their employees with good working conditions in order to increase their interest in work and efficiency. At the same time the employees are strictly controlled on the points of accuracy, competence, kindness, etc. in order to increase the customers’ satisfaction with the service the company provides (Voudouris, 2008).
Amasaka, K., 2012. Science TQM, new quality management principle the quality management strategy of Toyota. Sharjah, U.A.E.: Bentham Science.
Cooper M., Lambert D., Pagh J., 1997. Supply chain management: More than a new name for logistics. The International Journal of Logistic Management. 8,1–14.
D.I. Prajogo, 2005. The comparative analysis of TQM practices and quality performance between manufacturing and service firms. International Journal of Service Industry Management., Vol.16, No.3, 217-228.
Fogarty, D., & Blackstone, J., 1991. Production & inventory management. Cincinnati, OH: South-Western Pub.
Muller, M. 2003. Essentials of inventory management. New York: AMACOM.
Voudouris, C., Owusu, G., Dorne, R., Lesaint, D., 2008. Service Chain Management. Technology Innovation for the Service Business, 1, 56.
Wright, D., 1980. Inventory management. Wellington, N.Z.: Cost and Management Accounting Division, New Zealand Society of Accountants.
Yusof S.M., et al., 1999. Critical Success Factors for Total Quality Management in Implementation in Small and Medium Enterprises. Total Quality Management. 10 (4&5) 803-809.