Operations Management in Business

Executive SummaryOperations Management department mainly oversees the designing of product while controlling the production process. It ensures that business operation are both effective with respect to meeting customers requirement and efficient in terms of utilizing fewer resources to produce the required output. It converts the inputs into outputs through transformation process by adding values to the former. The operations of the company must be monitored and managed properly so as to reap maximum benefits out of minimum investments. The aim of this study is to understand the role and importance of operations management for the efficient and effective production of the goods and services. Extensive research through books and websites has been done.The study has been divided into two tasks. The first task explains the importance of operations management for Baumhaus Wholesale Furniture and analyzes the operations function of the given organization. It has also explicated the Three Es and tension between cost minimization and quality maximization. Evaluation of five performance objectives has also been carried on. The second task elucidated the linear programming, evaluated critical path and network planning and explained the need for operational planning and control of production process. The layout has been designed for the Baumhaus Furniture and Critical Path Method has been employed for preparing bathroom unit At last, Quantity Management techniques have been discussed.

Table of ContentsExecutive Summary3Introduction3Task 13LO 1 Nature and Importance of Operational Management3LO 1.1 Importance of Operations Management for organization3LO 1.2 Analysis of Operations Management3LO 1.3 Evaluation of Operations Management through Process Model3LO 2 Relationship between operations management and strategic planning3LO 2.1 Importance of Three Es3LO 2.2 Impact of Tension between cost minimization and quality maximization3LO 2.3 Significance of the five performance objectives3Task 23LO 3 Organizing typical production process3LO 3.1 Linear programming3LO 3.2 Evaluation of Critical Path Analysis and network planning3LO 3.3 Importance of Operational Planning and Control3LO 4.1 Application of relevant techniques for the production of an operational plan3LO 4.1 Define operational outcomes and possible Layouts of Furniture3LO 4.2 Network plan for resultant critical path3LO 4.3 Project Management and Quality Control Techniques. improve operations3Conclusion3References3

IntroductionOperation management practice has been key to achieve competitive advantage for organizations no matter they are in service or manufacturing industry. It addresses the various questions encountered by them in its choice of manufacturing technology, maintenance of quality etc, by establishing performance measures using scientific tools and techniques. It main aim is to control the costs and keep it at its minimum and increase the revenue through careful planning and control (Mahadevan, 2010). For the current study Baumhaus Wholesale furniture supplier has been selected. They have a great range of furniture designed in-house and provides services to retail outlets, Internet Traders and drop-shippers, Hotels and Hospitalities and also to commercial buyers (Baumhaus wholesale Furniture, 2014). Task 1LO 1 Nature and Importance of Operational ManagementLO 1.1 Importance of Operations Management for organizationOperations Management is a management of processes or sub-processes which consists of well-defined inputs and process that adds value through conversion leading to a value-added output. However, it can be defined as an effective and efficient way of carrying out a business process such that it leads to the accomplishment of the goal/ objective usually related to an organization for the creation of maximum feasible surplus with the stipulated time (Kachwala & Mukherjee, 2009). Its principle can be uniformly applied to both manufacturing as well as service industry. Value Addition for Baumhaus Furniture

Figure: 1; Source: Made by Student (2014) based on Kachwala & Mukherjee (2009)

The key elements of an operations system, for the Baumhaus Furniture, are as follows:Input: To start off with a production process one requires inputs like land, labour, capital, raw material etc. The Baumhaus Furniture must have a sufficient capital, to support their everydays requirement and relevant manufacturing processes and technologies so as to produce high quality products (Tomar, 2009). Transformation Process: They are central or focal point of the operations system and ensure the conversion of inputs into useful outputs by either acting upon or carrying out transformation of other elements. The main transforming resources for Baumhaus Furniture will be staff and facilities i.e. equipment and process technologies etc. (Mahadevan, 2010)Output: The operation system uses inputs to produce a value added product/ finished goods as an output required by the customer through the process of transformation. It may include finished goods, maintain good relations with furniture retailers etc. Operations management is important for the Baumhaus Furniture as no strategy will be successful without proficient operation management as it need to understand how the goods and services, they are manufacturing/ fabricating, are produced and delivered, and how the various activities of operations should be established. LO 1.2 Analysis of Operations ManagementThe Baumhaus furniture company supplies doors, wall units, bathroom unit etc. to the retailers (Baumhaus wholesale Furniture, 2014). With the advent of process concept, managerial function at Baumhaus focuses on continuous improvement and elimination of errors. They have achieved it by following the PDCA (Plan, Do, Check and Act) Cycle, a concept given by Wlater Schewarts and popularized by Edward Deming. The key components of PDCA Cycle of Baumhaus furniture are as follows:Plan: The Baumhaus Furniture spends considerable amount of effort, data and time to work out plan before starting their work for the bulk orders like furniture for offices, furniture rework for the house etc. They choose the best alternative which consumes the least amount of resources on a time phased manner while satisfying the maximum wants. Do: Once they prepared the plan they execute it. However, they always made it sure that resources like woods, machines and labours are available as decided and calculated at the planning phase which must be available in right quantity, quality, time, place and cost. The plan is executed with the help of sequential process flow chart. Check: Even during the execution phase, they keep a check on the process, by periodically measuring the defined control points, that it is as per the planning or any deviation is being noted. In case of deviations, Baumhaus Furniture has back up actions so that deviations can be rectified with required corrective actions. Act: In case they have identified the deviations, they check out the root cause of the same and take preventive and corrective actions so that it can be brought back to the track. However, they note these deviations and its cause so that it can be avoided in the planning phase of next order. Besides, following the PDCA Cycle, they also ensure the safety of their workers and are within the laws and regulations of UK. LO 1.3 Evaluation of Operations Management through Process ModelAll operations, producing goods and services, use the process of transformation to do the same and so are used by the Baumhaus Furniture. They use the available resources to change the condition or state to produce outputs. This process model works on the concept of system theory. System can be defined as set of components and inter-relations between them which is so configured that it produces desired outputs while operating in the context of its environment (Gibson, 2006). A thorough analysis of systems will help managers of Baumhaus Furniture to deconstruct a process and make improvements in the same or introduce a new system with due regard to planning, structure and relevance.Open and Closed System: Open system takes into account the interaction of environment, and considers that as environment changes continuously, the operations must also change and adapt to the environment change. Whereas closed system view treats operations as an independent of its environment (Brown, et al., 2013). The Baumhaus Furniture follows the concept of open system where they collectively take into account the changes of environment, trends, requirements etc. Probabilistic and Deterministic System: Probabilistic system states that the occurrence of given events cannot be predicted. However, there behaviour can be described in terms of their probability, with certain degree of errors attached to the predicted behaviour. On the other hand, deterministic model states that occurrence of all events for the given situation is known with certainty. The Baumhaus Furniture follows the deterministic model as if they plan for set of work.Sub-Systems and System-Interfaces: Every system has sub-functional or components called sub-system, that full-fill the condition of system itself. At the same time, they also play a specialized role in the operation of main system. System Interface is the area of contact between one system and other having well defined boundaries (Sauber & Vetter, 2013). The Baumhaus Furniture works in its sub-systems wherein inputs, through transformational process, are converted to output.LO 2 Relationship between operations management and strategic planningLO 2.1 Importance of Three EsValue, added to the product in transformational process and also after that, has been the main reason for choosing a particular brand by customer over another. For the Baumhaus Furniture, the reliability, durability of their goods, novelty, designs, products features and functions including the staffs courtesy in selling customer support services can make a big difference to customer value (Murthy, 2006). However, this relies upon effective operational strategy whose performance can be determined by following factors:Economy: It covers the financial element as need of cost reduction has always dominated the market so that the organization, in operation, can remain competitive.. Operation Management helps in reducing the costs by planning the whole production process wherein quantity and quality of product and labours are pre-determined (Saxena, 2009). Hence, Baumhaus Furniture can reduce the inventory cost, waiting time cost, labour leisure cost etc. to attain economy.Efficiency: It can be referred as maximum output with minimum inputs or the optimal utilization of available resources. This can be achieved, by the Baumhaus Furniture by reducing the downtime like machine breakdown, waiting time etc to the optimum level (Roy, 2007). Operational efficiency for Baumhaus Furniture will be the ratio of outputs to the inputs. Effectiveness: It has more dimensions than efficiency Operational effectiveness measures how well organization runs in the given environment and takes into account both, efficiency of resource inputs and usage and further effectiveness of overall management involved in achieving the desired sets of goals and objectives (Langabeer, 2008). The inventory control management of Baumhaus Furniture must ensure the effective material management and quality control. Hence, the economy, efficiency and effectiveness can be measured through four dimensions i.e. Reliability, Quality, Dependability and CostLO 2.2 Impact of Tension between cost minimization and quality maximizationTo excel in the business, organization has to produce goods on time and at minimum cost so as to gain the comparative advantage over their competitors in the industry. In doing this, however, they need to maintain the quality of goods and services they are delivering to customer, while working within the framed laws so as to avoid interface with legal bodies. Operations Management plays significant role in achieving the said strategic objective of the firm as it overlaps the various functions like finance, marketing, HR etc. where each component has a defined role aimed at cost minimization and quality maximization. Baumhaus believes in maintenance and further enhancement of their established and reputed standards for their customers especially with regard to quality of the product. To ensure the achievement of the same without incurring losses on quality part, they recycle the screws and unused/ distorted nails and also use the small pieces of useless woods in the fabrication or designing of their furniture. This reflects their commitment of delivering quality products to their customers. However, there exists great thrift between minimization of cost and maximization of quality as usually high quality comes with additional cost. There are other companies also in same industry who are competing to win the huge customer base. Hence, cost minimization must be backed by economies of scale wherein all business activities must be centralized so that costs like transportation, loading etc. can be curtailed (Sharma, 2006). Baumhaus Furniture has all its facilities located at one place and also they prefer to take bulk orders so that economies of scale can be achieved. The advent of globalization has also facilitated the purchase of raw material from different parts of the world at affordable price. The businesses can also apply the concept of flexibility by bringing in various sub-assembled products which will help them in cutting cost. Hence, Baumhaus tries to maintain and improve its quality by incorporating some practical efforts of reducing costs. LO 2.3 Significance of the five performance objectivesAll businesses frame strategies to seek survival and competitiveness within its environment in the long run. Operations Management provides a proactive approach within the organization to achieve the said objective through its fiver performance objectives represented below:Five Performance Objectives

Figure: 2; Source: Waters (2007)Cost: It is the ability of the Baumhaus to produce goods on low cost and hence, it is the requirement of finance to obtain the requisite inputs (which can be transforming or transformed resources) and further management of the transformational process to produce finished goods. The major costs involved are employees (avg. 15%), facilities (avg. 30%) and raw materials (avg. 55%) (Neely, 2007). Flexibility: It can be classified into range flexibility and response flexibility wherein former is the ability of the company to cope with wide range of requirements of the market while later is the ability to change quickly (Neely, 2007). The Baumhaus Furniture should maintain flexibility in its operations and adopt according to the market situation quickly.Quality: Being multi-dimensional, it is not only conformance to specification given but covers wide range of other dimensions like performance and features of products, reliability, technical durability, perceived quality, serviceability etc (Galloway, et al., 2012). Hence, Baumhaus Furniture has to assure that they are fulfilling most of the dimensions perceived important by their client.Dependability: It indicates the reliability that Baumhaus Furniture owns towards its customer i.e. doing things consistently and delivering it on time (Brown, et al., 2013). Baumhaus must fulfil its adherence towards price performance, Safety, Schedule, delivery performance and must keep its promises towards its customers. Speed: It shows the ability of the Baumhaus Furniture to deliver its products with as short time delay as possible between the order placed by the customer and delivery made by the company (Jones & Robinson, 2012). However, there are five kind of speed i.e. Quote generation, Delivery Speed, Production Speed, Delivery frequency and New Product development Speed (Jones & Robinson, 2012). The analysis of above five performance objective will help the Baumhaus Furniture in understanding their performance with respect to the set standard.

Task 2LO 3 Organizing typical production processLO 3.1 Linear programmingLinear Programming helps in optimum allocation of available resources and hence, act as a successful decision making aid in all industries (Mahadevan, 2010). Linear Programming is a methodology wherein linear relationship between the various system elements can be modelled enabling the study of system behaviour and find the best decision set that manager should make to optimize the systems performance while considering the constraints (Mahadevan, 2010). Linear Programming can be effectively used in the production and operation management, transportation etc. wherein the objective is profit maximization through cost minimization (Chary, 2009). There are many constraints in the operation of Bauhmaus Furnitures like capacity in terms of making furnitures, quality, saleability etc. For ex. For making chairs and tables, they can calculate the raw material available like wood planks, logs etc. and their skilled labour. Using Linear Programming they can decide that how much labour they can use to produce the required sets. LO 3.2 Evaluation of Critical Path Analysis and network planningNetwork Planning is planning through forming network of inter connected activities. It can be either through or PERT. Critical Path Analysis or Network Analysis is a management technique which has been developed for planning, scheduling and controlling any project (Galloway, et al., 2012). It prepares list of activities involved in a project and fixes the inter-relationship between them, establishes optimum sequence and draw the schedules of the same (Karanjkar, 2008). The benefit of using Critical Path Analysis as scheduling technique within the planning process of the given project is that, it helps in developing and testing the plans robustness, it identifies the task which must be completed on time or tasks that can be delayed in case reallocation of resources is required to catch the missed or over running task (Jessop, 2014).The Critical Path Analysis will help the Baumhauss managers in allocating the resources in best possible manner and hence, can minimize the time and cost for the given order. LO 3.3 Importance of Operational Planning and ControlPlanning and control are the two most important of the managements process wherein planning involves consideration of input allocation at various junctions of production management so as to achieve the defined output (Chary, 2009). On the other hand, controls are the corrective measure taken by the Baumhaus Furniture when there is variable in actual output from the desired one by aligning the actual with the planned output. Hence, planning mainly consists of evaluation and determination of utilities and products inputs to achieve the desired goals and objectives (Chary, 2009). Some important techniques of operational planning and control are as follows: Techniques of Operational Planning and Control

Figure: 3; Source: Made by Student (2014)The Baumhaus Furniture must incorporate the above mentioned techniques for planning and control as it will help in managing the cost related to inventory storage and carriage, building more capacity and utilizing the current one in best possible way while maintain quality of the processes. LO 4.1 Application of relevant techniques for the production of an operational planLO 4.1 Operational outcomes and possible Layouts of FurnitureThere are two type of layout designing i.e. product and process layouts (Mahadevan, 2010). In process layout the arrangements are done on the basis of the process characteristics associated with resources and each department will be organized into functional groups whereas in product layout the product are placed to exactly follow the process sequence ordered in product (Mahadevan, 2010). Hence, Baumhaus Furniture should use product layout for making Open Bathroom Unit (Tall). Product Layout for Baumhaus FurnitureFigure: 4; Source: Made by Student (2014)It will help them to achieve their operational outcome (the outcomes that deals with functions, demands, resources and efficiencies) which is speed, flexibility, cost, quality and dependability for Baumhaus Furniture. The pre-decided work flow will help in increasing the speed and quality, as due to work specialization of labour on same machine, reducing the cost, as the same machine will be used to drill the different furniture. Flexibility and dependability will be enhanced by work and product specialization.Hence, product layout will help the Baumhaus Furniture to achieve their performance objectives.LO 4.2 Network plan for resultant critical pathCritical Path technique is very important for identifying that critical area of the project which must be executed on the given time frame and identifies the important activities and activities that can cause delay to the project (Chary, 2009). The network Plan, for making 50 bathroom furniture (Open Bathroom Unit Tall), is as follows:Network Plan

Figure: 5; Source: Made by Student (2014)

NumberActivitiesTime Reqd. (Days)1Design open bathroom unit32Get approved from the client23Order and receive the raw materials14Build open bathroom unit35Select Colour16Select Style17Finish Work 1Description of Activities

Table: 1; Source: Made by Student (2014)As, the critical path has the longest duration of time path A comes out to be the critical path.Activity Scheduling:Once critical path has been identified, now the earliest start time (ES), Latest Start time (LS), earliest finish time (EF), Latest finish time (LF) and slack can be calculated.

Critical Path Analysis

Activity LS (LF-t)ES (max. of immediate predecessor)LF (Min. of LS)EF ES+tSlack (LS-ES; LF-EF)1 (Critical Path)0 0 3 3 0 2 (Critical Path)3 3 5 5 0 3 4 3 5 4 1 4 (Critical Path)5 5 8 8 0 5 6 5 7 6 1 6 7 6 8 7 1 7 (Critical Path)8 8 9 9 0

Table: 2; Source: Made by Student (2014)

It can be inferred from the critical path method that there is no slack time for the activities on the critical path of the network. Hence, Baumhaus furniture has to be critical about the asterisk actives as any delay in them will delay the whole project. LO 4.3 Project Management and Quality Control TechniquesThere are various qualities managing tools and techniques available in the market. Fish Bone Analysis: The primary and secondary cause and effect relationship can be derived through Fish-bone Analysis or Ishikawa diagrams. There are four steps involved in the analysis of cause and effect (Mahapatra, 2010). Lets take the example of degenerating sales for Baumhaus Furniture. The first step will be to identify the problem which will be written at the head of the fish.

Fish Bone Analysis

Figure: 6; Source: Made by Student (2014)This step will followed by Brainstorming Session of sales team, managers, field workers etc.

Figure: 7; Source: Made by Student (2014) based on Rudy (2014)Once the chart has been prepared, the third step is Chart Analysis followed by Action Plan. Quality Circles: Baumhaus Furniture can form the group of four to ten employees (working for same line manager). These employees can meet once in a week and identify, analyze and solve their work related problems (Jones & Robinson, 2012). Using above quality management techniques, Baumhaus can control quality in its production system.ConclusionBeing a manufacturing firm, Baumhaus furniture has to control its production while converting inputs into outputs through transformational process so as to maximize profit and reduce costs. They can use the performance objective to check their performance against set standards. It can control quality through quality circles, fish bone analysis, six sigma etc. critical path method will help in finding critical path and avoiding any delays in production.

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