Production and Operations Management

Introduction

Production and operations management is a very essential part of any manufacturing process. This is because production, just like operations represent the key factors that determine the cost and revenues accrued by a business. As such, it is necessitated that a business has to be vigil when analyzing its operations and production processes so as to attain both comparative and competitive advantages against its competitors. Based on this theoretical knowledge and framework reiterated by diverse literature collected in relation to this paper, it is prudent to analyze and present an argumentative essay that analyses the efficiency of the current production and operations process by applying relevant theories and models. The case study of High Country Furniture and Joinery is the focal point for this argument as it exhibits the basic efficiencies and inefficiencies that of streamlining could augment towards increased profitability as well as operational efficiency. Using the cause analysis, it is noticeable that the High Country Furniture and Joinery Business has managed to maintain a working production and operations process but the increase in both standard and custom order for furniture has in the recent past caused a strain on the business. The main cause of this inefficiency is attributed to the factory layout where equipment are grouped by function rather than process (Ruffa, 2008).

Reflecting back on the basics of the case scenario in question, the High Country Furniture and Joinery is a reputable brand name that has existed since the 1950’s when the company was started by Bill Williamson. At that time, the company had branded itself using the proprietors name, and this made it stand out as a family venture which could neither attract the employees or the customers that it so much desired. With the change of management to Elspeth Cook who is recognized as the daughter to Bill, the business was renamed to High Country Furniture and Joinery. The name is a reflection of the companies competency evidenced with its high quality products. The company the attracted highly trained professional employees and coupled with the consistent changes in company structure, policies and objectives, it improved into serving a bigger and diverse market. This is shown using the company’s ability to manufacture both the custom made furniture and standard furniture. Basically, the employees are specialized in the manufacture of joinery designs and timber furniture including staircases. Previously, Bill had invested much of the company’s resources into the production of general joinery that were made to order furniture pieces. Furthermore, Bill had specialized in cabinet making, staircases, internal joinery among other basic furniture works. The tradition of attaching a small brass plaque to the Company’s furniture has stood out as being strategic branding techniques which has associated the company with quality products which are made using state of the art technologies complemented by tactful craftsmanship explored from a specialized team of employees (Bongiorni, 2009).

An aspect of authenticity is also embedded into this product’s courtesy of small brass plaque. Because of the proper branding, the company has for a long time established a reputation in the manufacture of staircases and joinery which have become its major source of income in spite of the decline in the sales and revenues collected from the production of cabinets (Flinchbaugh & Carlino, 2006). Because of the specialization in the production of fewer lines of products, the company has become widely distributed in the Australian Alps. Secondly, the staircases have associated the company with craftsmanship that has in return helped the company attract specialized, professional and highly competent employees. Third, a good brand has associated the firm with a group of high income earners and lastly, the handcrafted and internal joineries had become a benchmark by other companies.

In the light of these adjustments in the production and operation activities, High Country Furniture and Joinery under the seasoned leadership of Elspeth decided on a merger with Megan Jones who is also an experienced marketer  operating a chain of home décor shops in the same locality. The merger comes begun in the onset of 2013, and it is attributed to the increased sales especially of the standard furniture which is the motivation behind the analysis of these production and operation processes. The agreement made between Elspeth and Megan was the starting point for increased demand for a small range exclusive handmade furniture pieces which led to the diseconomy of scale that the High Country Furniture and Joinery Company is currently facing. This is because Megan made more sales than it was anticipated hence demanded that Elspeth arranges for initial requirements to be manufactured (Senge, 2005). Moreover, initial demand had previously met expectations whilst custom-designed furniture and staircases continued to dominate the company’s sales; therefore, the firm’s traditional work accounted for 60 and 70 percent of the production volume and revenues respectively.

John and Huxley, (2012) states that given the summarized overview of the company, due attention is, therefore, drawn towards the layout of the factory that apparently is suited to the high variety of work produced. Function rather than process groups the production equipment. For instance, the saws are located in one side of the factory. The CNC routers are centrally placed in a spacious area, and the powered wood-working machines and tools are provided with effective dust attraction systems to safeguard the employees from health related risks. Paint and lacquer booths are located at the back of the factory and are provided with state of the art fume and particle extraction systems to ensure a safe environment. There are several furniture assembly areas, as well as a larger area for the assembly of staircases; thus the layout for the production equipment and their arrangement in the firm is one cause for alarm.  This observation is made contrary to the observation of the designer of the production unit layout and efficiency principles.

Drawing from the journal “Developing a Manufacturing Plant Layout Utilizing Best-in-class Concepts of Lean Manufacturing and Theory of Constraints of Optimal Macro-Flow” by Merwan Mehta of the East Carolina University, it is theoretically documented that the process of developing a layout for a manufacturing firm needs both the work of science and art. Therefore, despite the several engineering works that have been used by industrial engineers as well as manufacturers for many years, there are standard requirements that have to be achieved. In this case, the argument is drawn between the need for grouping similar operation processes or arranging the processes in order so as to facilitate production from the input stage all through to the transformation process and lastly to the output or inputs in case of continuous production process.

In order to attain this objective, there are a set of mathematical and statistical formulas that have been postulated in support of factory layouts that have the intrinsic potential of triggering optimizing the outcome accrued from the production and operations processes (Krick, 2008). The production demands and pressures presented by the increased competition pegged on comparative advantage and economies of large scale production demand that the adoption of the lean production techniques as one way of maximizing productivity by reducing the production time while at the same time eliminating waste of resources by enhancing the flow of products as they pass through the production processes. Womack and Jones, (2013) specifies that among the determinants of lean production techniques are such production and operations tools such as First in First Out abbreviated as FIFO, pacemaker processes and the management time frame tool.

These production techniques are seconded by the Theory of Constraints abbreviated as TOC. This is a management theory of philosophy tailored towards enhancing the production capabilities of the company and concentrates production and operation processes towards meeting the diverse needs of the customers (Francis, 2012). Applying this theory in the case of High Country Furniture and Joinery implies that the theory of constraints could be a viable tool towards enhancing or influencing the thought process of Elspeth Cook towards realizing that the factory layout could be a leading factor in the lost production time and constraints towards attaining customer demands within the stipulated time.

This argument is ably augmented by the observation made by the company accounts who expressed his concern that the company, in spite of its increased production, had indicated that the profitability was not meeting the forecasted budgets and returns (Hunt & Robert, 2008). Furthermore, the costs were escalating especially those incurred in the production of the standard furniture line. Conversely, the inefficiency of the production process was leading to a tie up of inventory that became an unnecessary burden for the High Country Furniture and Joinery Company. The tied-up inventory was associated with raw materials, finished goods and work in process which accumulated towards the increased expenses on storage and warehousing because of the limited space, therefore, more space was to be rented to accommodate the increase in the volume of inventories. The management also noted that there was a significant increase in the lead time for both product lines; the custom and the standard orders thus the delivery time became longer than that promised and in the long run such a trend could compromise the good reputation accorded to the company.

Worst of all, the production time was being pushed, and this limited the space for expansion because the company layout was already crowded with the grouped production equipment which were suited to the various production processes. To this end it is highly acknowledged that the application of TOC will help towards the synchronization of production in such a way that the flow of the production process will be enhanced. By so doing, the High Country Furniture and Joinery Company will generate more revenues, as opposed to accumulating unnecessary production and operations costs. It is arguable that the best production tool supported by the Theory of Constraint (TOC) is the drum-buffer-rope abbreviated as DBR (Tompkins, 2010). This is supported by the adjustment of accounting policies and principles to focus on throughput accounting as well as fostering constraint management.

The main argument posted, and it has been identified as a challenge towards the attainment of TOC and lean production in firms such as the High Country Furniture and Joinery include the complexity experienced during the implementation stage. Most firms often miss out on the gist of the tools that are macro-flow (Hunt & Robert, 2008). Theoretically, macro-flow is identified as an optimization process that enhances the entire flow of operations and processes within the company layout. Macro-flow has been empirically proven to contribute towards avoidance of sub-optimal production even within the narrowest of departments. Civil engineers, on the other hand, support that the macro-optimization can be complemented by creating efficient plant layouts. The types of floor plans to be used for the construction of manufacturing industries has been a contentious subject among engineers and business analysts who emphasize on the basic of economizing on space rather than the artistic or engineering works regarding aesthetic and efficiency respectively.

It is universally acceptable that the most efficiency measurements for a company layout have to be supported by adhering to the need to minimize on the floor space thus efficient engineering and planning could minimize the cost of production by a significant factor (Denscombe, 2008). It is proven that an efficient layout will also facilitate the handling of production materials thus minimize the cost of shifting materials from one production unit of the machine to the next thus minimum costs are maintained in material handling especially from one production process to the next. As observed in the case of High Country Furniture and Joinery, it is possible that optimizing on the factory layout could help contain the costs while reducing the bottleneck experienced during production by improving efficiency in the utilization of labor and production machineries. This is because an efficient and organized factory layout could eliminate production delays resulting from congestion and cramped warehouses.

Besides, streamlining operations could reduce chances of crowding of machines and improper handling of materials which cumulatively lead to a slowdown of the production processes (Denscombe, 2008). This has the effect of reducing the general output of the firm when both labor and machinery are at a constant. The implementation of the Theory of constraint will also be advantageous in maximizing production and operations flexibility more so given the current need by Elspeth to lower the production costs so as to maximize on the costs while increasing the units of the products produced in the two product lines; customized and standards handcraft furniture and joinery.

The second production and operations constraint faced by the High Country Furniture and Joinery Company is the increasing costs of handling materials and inventories in the warehouses and along the production line. Accordingly, there is the just in time theory or business principle. The JIT principle is defined as a deliberate yet an organized production strategy what is tailored towards improving the returns collected from the business. The theory underlying the Just-in-Time concept is that of maximization of return on investment while taking due care to reduce the costs incurred in the in-process inventory such as the carrying and storage costs. The theory is reliant on visual signals described by Kanban (Hunt & Robert, 2008).

In practice, the theory resonates on the same magnitude as the TOC because it is tailored towards reducing the constraints caused by overcrowding of inventories. The theory also focuses on the need to improve the manufacturing processes, the quality of output and streamline the operations by ensuring that they are efficient, therefore, it seeks to coordinate the efforts of the employees and that of the management and the resource allocation alike (Hill, 2007). JIT relies on lean manufacturing and inventory chain thus it is arguable that it has a direct correlation to the theory of constraint. . The origin of this theory has been argued as being proposed from either a Japanese industrial engineering model, statistical, behavioral sciences or production management.

Therefore, the bottom-line on which the theory is grounded is reflective of how inventory can be managed using best production and operations management practices. This theory has been supported by the development of a JIT system which is a software that focuses on having the right materials at the right time, quantity or amount and the at right place. By so doing, the safety net of the inventory is reduced thus reducing the overall cost of production and increasing the return on investments (Roman & Boyce, 2011). The theory is supported by philosophies borrowed from the Japanese culture of ordering for inventory whenever it is needed (Meyers, 2009). This is opposed to the classical theories that insisted on the need to store raw materials and unused inventory as they await being absorbed into the production process as inputs.

In conclusion, this paper emphasizes on the need to apply the theory of constraints as well as embracing lean production as the best practice towards averting the possible negativities and inefficiencies that could impact the profitability, growth and development of the High Country Furniture and Joinery. The application of the JIT concept has been applauded as having the potential to expose any hidden costs of storing inventories, therefore, making it relevant and applicable to the case presented in High Country Furniture and Joinery. The company is mandated to follow an array of methodologies so as to manage the consequences of changes towards heightened production capabilities (Senge, 2005). By so doing, the company will balance inventories with the available capital thus it will have both the working capital as well as reducing on the possibility of seeking for financial aid from financial institutions.

 

 

References

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Womack, J. P. & Jones, D. T. 2013. Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updated, Harper Business, Australia

ACED ESSAYS