Clint Jan Salvaña

2012-51494 MM Block B – M213

Consolidated Reflection Papers

Operations management deals with varous functions of production and operations

within a business unit. It focuses on developing and managing the company’s operations
in order to generate quality products while maintaining the time frame (Shim and Siegel,
2009). Technically, operations management is the design, execution and control of
operations that convert resources into desired goods and services and implement a
company’s business strategy. Aditionally, it is concerned with the administration of
business practices in order to create the highest level of efficiency attainable and also to
maximize profts.

Every company focuses on developing the effective means of production process

in order to deliver quality products to its consumers. This helps the company in minimizing
the defects and wastage while focusing on the cost optimization (Slack, Jones and Johnston,
2013). The purpose of operations management is to deliver quality products to consumer
while developing the effectiveness of their internal business operations. The operation
management of different industries focus on managing their product quality, process and
capacity management, production layout, inventory management, aggregate plans, and
supply chain.

Process and Capacity Strategy and

Location Strategy

There are various issues concerning the practices of management to deliver

expected and required outcomes in an organization. To combat these issues,
technique and strategies were developed and improved. Issues concerning to the
processes and demands of an organization were combatted by means of
conceptualizing ideas behind process strategies and capacity management. Process
strategies are the interventions made to make the best out of an organization.
Management uses their current and available resources rather than outsourcing and
in turn spending more. Process strategies would also entail higher quality assurance
and better management. Capacity management means meeting consumer demand
in an efficient way. From my experience specializing in the quality and operations
side, capacity planning is one of the key aspects of our operations. It determines the
number of goods or services which can be produced within a given time. On one
hand, if there’s too less capacity, it indicates that customers won't be satisfied. On
the other hand, if there’s too much capacity, it would result in the operation being
under-utilized which will give higher fixed costs and affects our profitability.

There are four basic strategies in process strategy, these four were: process
focus, repetitive focus, product focus, and mass customization. The idea behind
process focus is that business really put special attention on what the practices and
procedures that are most important to them. For example, in a restaurant, I can think
of three processes that is vital for them to operate optimally and these are: the
kitchen, the servers, and the counters. Even though marketing puts up great effort
with their advertisements and the management puts up great effort with other
dimensions, the restaurant would still fall short if the kitchen, servers, and counters
are not good. In context, the process would really speak for itself. Repetitive focus
is based on mass production and in the consistency of the processes that usually
takes place in product production. This process strategy is also based on modules
of operation. My take on this is that, this process has specific area that needs to be
supervised. We can generate an example from our restaurant setting of which there
is a need to put the food together, serve the food, and send it out to customers. This
vital process are repetitions in nature and needs focus to deliver quality and higher
productivity. The idea behind product focus is easily understand if taken the
meaning from the words itself. Product focus is used when the product is at the
center of attention in an organization. Good or services that are essential and needed
were focused to accomplish “lots of production” or high volume. Lastly, mass
customization is a focus that is placed on products that are needed for specific
reasons, for specific periods of time, and for consistent changes. Mass
customization can also be perceived as fast production that changes consistently.
One example that I can relate is the idea behind various Christmas trees. Its
production is high during Christmas seasons which is an example of production for
specific reason and specific period. To speed up and improve the concept of process
strategy, various attributes and advancements took into place. Example of these are
the emergent of robots, various tools, various process improvement, technology,
etc.

Capacity strategy and management, by definition is the maximum output in

a period. The definition can be understood easily based on the specific meanings
from the definition. As an example, if an organization decides to produce more
products or plans to produce a new product, they always start with deciding how
much capacity is needed considering the factors that affect capacity. This includes
the number of workers and machines, skill set of workers, defects, suppliers,
government regulations, etc. From my exposure in managing operations, this is
what consists of capacity planning. Lack of capacity planning can result in under
or over capacity and would incur unnecessary costs in exploring ways to reduce or
increase capacity. Also, lack of capacity planning can trigger a series of undesirable
events such as poor delivery services, an increase in work-in-process and bring
about dissatisfaction in the minds of every personnel and the team involved.

For an organization to increase its capacity, it has various options to

consider. This could range from working overtime to building a new facility or a
plant. Building facilities now is part of the concept behind facility location. Facility
location is the idea of finding the right location for the manufacturing facility. In
choosing the desired location, several factors are to be considered some of which
are: customers proximity, workers, transportation, business area, free trade
zone/agreement, suppliers, environmental policy, etc. These factors play an
important role because they can contribute to the overall success of the venture in
location. For example, if the facility is selected in a location closer to the customer
as to reduce transportation cost and decrease time in reaching customers, the
business area concept comes from the idea wherein the location of the facility is
contributed to the presence of similar manufacturing units around the area, etc.
There are various techniques and methodologies used in ascertaining that a good
facility location is exhibited by the organization’s plan of expansion or transfer of
location. Some of which are: location break-even analysis, factor-rating method,
center-of-gravity method, and transportation model. The factor-rating method is the
most popular method in facility location strategy, this mainly because it uses a wide
variety of factors which can be included in the analysis. Location break-even
analysis is a method of cost-volume analysis used for industrial locations. The
center-of-gravity method finds location of distribution center that minimizes
distribution costs. This methodology considers: location of markets, volume of
goods shipped to those markets, and shipping cost. This model finds amount to be
shipped from several points of supply to several points of demand. It aims to
minimize total production and shipping costs. From my understanding, these
methodologies can be combined, used individually, can be tweaked to allow
changes, etc. This primarily because of the idea that mathematical methodologies
are flexible enough to account for various factors to be considered.

Overall, the utilization of the strategies and techniques can be a good

opportunity for an organization to be progressive. These methodologies and
techniques were shown to have a positive impact on other companies and I am sure
that if implemented in other organization, they can share the success stories of those
organization.

Layout Strategies and

Inventory Management

Layout strategy focuses on the strategic importance of layout decisions and

Inventory management focuses on the different elements and purpose of inventory
management. It was good to note the different innovations of McDonald’s in regard
to their layouts. These innovations contributed to different process efficiencies and
convenience to its employees. From their innovations, it shows that effective
facility layouts are one source of competitive advantage. Based on this, we can
generate an idea that the objective of layout strategy is to develop an effective and
efficient layout that will meet the company’s competitive requirements.

In designing layouts, there are things that need to be considered. These

considerations include higher utilization of space, equipment, the Improved flow of
information, improved employee morale and safer working conditions, improved
customer/client interaction, and flexibility. Upon application of these
considerations, efficient and better way of employee, customers, etc. experience
would be achieved. There are several types of layout, these are Office Layout,
Retail Layout, Warehouse Layout, Fixed Position Layout, Process Oriented
Layout, Work-cell Layout, and Product Oriented Layout. The office layout simply
employs the idea on how to position workers, equipment, and spaces/offices to
provide for movement of information. In retail layout, it allocates shelf space and
responds to customer behavior. Warehouse layout addresses tradeoffs between
space and material handling. Fixed-position layout addresses the layout
requirements of large and bulky projects such as ships and buildings. Process-
oriented layout deals with low-volume and high-variety production. Work cell
layout arranges machinery and equipment to focus on production of a single
product or group of related products. Lastly, product-oriented layout seeks the best
personal and machine utilization in repetitive continuous production.

From my point of view and learnings, it is clearly vital to know and establish
the best facility layout suitable for the company. By doing so, there will be positive
impact that it might contribute towards the efficiency and productivity of
employees. The respective types of layout can be applied based on what industry
or what the company is all about. For example, in a call center industry, they have
employed a work cells layout strategy. By utilizing this, the management can
organize people and machines (computers, Avaya Phone, etc.) into groups to focus
on single products or product groups.

Inventory Management was defined as the systematic location storage and

recording of goods in such a way that desired degree of service can be made to the
operating shops at minimum ultimate cost. There is a need to do inventory
management because there is a necessity in terms of doing inventory control to
maintain company’s goods. This will ensure good manufacturing according to the
production plan based on sales requirements and the lowest possible ultimate cost.
Inventory management also determines the amount of inventory to keep in stock,
this answers the question: how much to order, what to purchase, from where to
purchase, where to store, and when to replenish or order.

In assessing how good or effective is the utilization of inventory

management in a company, there are a different set of tools that can be used. These
are, Stock Levels, Safety Stocks, Ordering system of inventory, Economic Order
Quantity, ABC Analysis, the VED Analysis, Inventory turnover ratio, Aging
schedule of inventory, Classification and codification on inventories, and inventory
reports. These tools are flexible in nature, this means that each tool could be
combined to evaluate the inventory management system of a company. Moreover,
there are different valuation of inventory and these are, FIFO (First in First out),
LIFO (Last in First out), Average Price Method, Base Stock, and Standard Price
and Market Price.

Overall, layout strategy and inventory management do really come hand on

hand. The effective usage of different concepts in facility layouts would provide
better inventory management system. For example, by effectively having a layout
that can easily stock, get, etc. the different goods of a company would have an
efficient inventory management flow. Overall, these concepts if integrated would
yield a better result for the company.

Aggregate Planning and MRP

Aggregate planning is a specific cycle of time which completes in one

whole cycle. This plan includes: (1) Business Plan; (2) Strategic Plan; (3) Corporate
Plan; and (4) Operations Plan. It is essentially a bigger picture approach to planning.
It is intermediate range capacity planning that typically covers a time horizon of 2
– 12 months or up to 18 months. Aggregate planning is also known as sales and
operations planning. Sales and operations planning is the intermediate range
decisions to balance supply and demand, integrating financial and operations
planning. In aggregate planning various mathematical techniques can be used to
obtain feasible schedules. These planning methods is to optimize the use of
resources which aims to avoid sudden changes in production and at the same time
reduce the total cost planning.

There are two aggregate planning strategies, one is the level capacity
strategy and the other one is the chase demand strategy. The level capacity strategy
maintains a steady rate of regular time output. The variations in demand are met by
using inventories or other options such as overtime, part-time workers,
subcontracting, and backorders. The chase demand strategy matches capacity to
demand. It is also the planned output for a period that is set at the expected demand
for that period.

From these strategy, I understand that there are several factors that needs to
be considered. Some of which are the company policy, flexibility, and cost. Ideas
to be considered from these factors are the constraints on the available options,
designing high steady output, and matching the demands with constraints.

Materials requirement planning (MRP) is a computer-based information

system that translates master schedule requirements for end items into time-phased
requirements for subassemblies, components, and raw materials. MRP is actually a
technique that uses the bill of material, inventory data, and a master schedule to
calculate requirements for material. It uses time phases material requirements based
on setbacks defined by a combination of the bill of material structure and assembly
lead times. The result of an MRP plan is a material plan for each item found in the
bill of material structure which indicates the amount of new material required, the
date on which it is required, and the new schedule dates for material that is currently
on order. It helps companies produce what they need, when they needed to meet
any demands that any consumers may have including deadlines. From what I
understand, the system works well with many different types of companies and is
efficient.
 To sum it up, MRP: (1) describe the inputs, outputs, and nature of materials
requirements planning processing; (2) explains the bill of materials; (3) explain
time-phased product structure; and (4) describe the differences between materials
requirement planning and enterprise resource planning. Basically, it answers the
three questions: (1) what is needed; (2) how much is needed; and (3) when it is
needed.

Overall, issues and topics I would really love to be expounded are the different
good and even bad practices or issues involving these relevant and wonderful strategies
under operations management. I would love to know more on how I can use the strategies
to do compromise if a bad situation happens. Furthermore, it is good to know more of the
best practices done by different respected companies utilizing these strategies. By looking
through how they are able to respond and implement the strategies, I can also make use
their ideas and somehow benchmark on it to my current company.

In conclusion, I was able to understand that operation management is really a

continuous and recurring process of which made it a dynamic concept. Effective decision
making would drive the performance of an organization. By utilizing different tools,
management would be able to generate better, fast, and quality decisions for the business.
GROUP RATINGS

Process and Capacity Strategy and Location Strategy

Criteria:

Comprehensiveness of Topic: 1.5

Participation with the class: 1.25

Organization of Discussion: 1.75

Topic Application: 2.0

Final Rating: 1.5

Layout Strategies and Inventory Management

Criteria:

Comprehensiveness of Topic: 1.0

Participation with the class: 1.5

Organization of Discussion: 1.0

Topic Application: 1.25

Final Rating: 1.25

Aggregate Planning and MRP

Criteria:

Comprehensiveness of Topic: 2.0

Participation with the class: 1.5

Organization of Discussion: 1.5

Topic Application: 2.0

Final Rating: 1.75