Modern Business in Comparative Perspective

Modern Business in Comparative Perspective

Production and operations management are recognized as essential factors in a nation’s economic growth. The process involves the transformation of the production and the operational inputs into outputs, which, when distributed meet the customers’ needs. It also involves the duty of ensuring the efficiency of business operations with regard to using as fewer resources as possible, and effective with regard to meeting the customers’ needs (Barnes 2008).  Moreover, production and operations management focuses on managing the process which converts inputs (materials, labor and energy) into outputs (goods and services). Major economies across the world have generated different approaches to production and operations management due to various reasons. Accordingly, the essay investigates why major economies generate different approaches to production and operations management. The essay also discusses whether these differences have significantly influenced the competitive advantages between countries.

One approach to production and operations management generated by the major economies is the location of the production facilities. Location decisions are based on the long term policy and forecasts, for instance, company’s expansion policy, expected diversification of the products and/or services, the changing markets and the changing raw materials sources, among others (Boyer & Verma 2010). Several factors influencing the location positioning including, but not limited to: location of raw materials, nearness to market, the climate, and culture. Location of production facilities for the operations is a long-run capacity decision that involves a long-term commitment regarding the geographically fixed factors which affect business organizations in a country. It is a vital strategic decision-making for organizations since the selection of location is a key decision that involves large investment in building the plant and machinery. Moreover, an inappropriate location of the facilities may result in waste of the entire investments made in the plant and machinery equipment (Jones & Robinson 2012). Consequently, location of the facilities must be based on a company’s expansion policy and plan, diversification plans for products, changing raw materials sources and other factors. Proper location of the facilities leads to an optimal location which will bring about the maximum comparative advantages to the company. As such, the benefits of locating firms strategically include easy and quick access to the market, raw materials and labor, thereby reducing the operating costs.

Capacity planning refers to the long term strategic decision that determines a company’s ability to supply products and/or services. In other words, capacity planning describes the method of determining the production capacity required by a company to meet the changing demand for its products and/or services. Methods of capacity planning vary by industry or services though a lot of the principles are identical (Espinosa Salazar & Walker 2011).  A long term view can cover months and even years where operations policy is required. The policy should cover the overall organizational capacity, warehouses, machinery, computer up-grades, and investments in new facilities. Medium term perspective schedules the present capacity to best balance or meets the demand. This normally involves the manufacturing and/or requirements planning, staffing rotas machine scheduling and the materials requirement planning. Short term daily adjustments are also present in capacity management and aggregate plans assist in assigning production and service capacity to meet the demand.

The various classes of capacity planning include lead strategy, match strategy, lag strategy and adjustment strategy. Lead strategy refers to increasing capacity in anticipation of an increased demand. Moreover, lead strategy is normally aggressive whose goal is to lure consumers away from the business’s competitors by enhancing service level and cutting the lead time. Lead strategy also aims to reduce stock-out costs. Lag strategy is adding the capacity only after an organization is operating at full capacity or excess as a result of increase in the demand (Netessine & Tang 2009). Lag strategy is a more traditional strategy; it reduces the risks of wastes; however, it can result into customer loss either through low service levels or stock-out. Match strategy refers to adding the capacity in little quantities in response to the changing market demands. Adjustment strategy, on the other hand, is adding or decreasing capacity in little or great amounts as a result of consumers’ demand or as a result of major changes to the product (Netessine & Tang 2009). As such, capacity planning is useful in reducing the inefficiencies that result from the discrepancy between capacity of the organization and demands of customers. This, in turn, reduces production and operational costs leading to an increase in profits for the organizations. Capacity planning provides the ideal scenario for a business is to realize a match between the supply and the demand, thereby reducing wastages and unnecessary costs.

Plant layout and material handling are also an important approach to production and operations management generated by economies. Plant layout refers to a mechanism that involves the knowledge of space requirements for facilities and their proper arrangement in order that steady and continuous flow of the production cycle occurs. Barnes (2008) described a plant layout as the action of planning an optimum facilities arrangement, including the personnel, storage space and operating equipment.  It also includes materials handling tools and all the other supporting services together with design of the finest structure to accommodate the facilities.  Basically, there are two different kinds of plant layout; product layout and process layout. Product layout is common in the assembly line and is inclined towards the products which are being manufactured. Process layout is mainly oriented around processes which are used to manufacture the products. In general, product layout is relevant to high-volume recurring operations, whereas process layout is used for the low-volume specially made goods.

A good plan layout provides comfort to employees and caters to their tastes and likings. Moreover, a good plan layout provides good and better working conditions and also minimizes delays in the production and makes efficient use of the available space (Nicholas 2011). Better plan layout also provides improved control over production cycle by facilitating more flexibility for any changes in the product design. Material handling is the transfer of the materials from store room to machines and from one machine to another during the manufacturing process. It also refers to the science and art of moving, packing and storing products in different forms. It is a specialized practice for modern manufacturing firms, with 50-75% of the production cost (Nicholas 2011). This cost may be decreased by the appropriate section, operation, and maintaining material handling equipment. Material handling equipment increases output, enhances quality, accelerates the deliveries, and reduces the production cost. As such, material handling is a major consideration in designing new or existing plants.

Mass production refers the production of huge amounts of the standardized products, especially on the assembly lines. It involves making numerous copies of the products, very fast, using the assembly line methods to send partly complete products to the workforce who each work on individual steps, instead of having an employee work on an entire product from beginning to finish (Jones & Robinson 2012).  Economies associated with mass production stem from different sources. For one, the primary benefit is the reduction of non-productive efforts of all types. This is because the workers spend little or even no time preparing or retrieving materials and tools. Therefore, the time used to create a product through mass production is less compared to the one used when using the traditional methods. Moreover, the possibility of human variation and error is reduced; this is because tasks are mainly performed by machinery (Jones & Robinson 2012).  As such, the reduction in the labor costs and the increased production rate enables companies in an economy to produce larger quantities of products at lower costs than using the traditional non-linear techniques.

Therefore, mass production enables firms within an economy to achieve higher production rate with shorter cycle time and higher capacity operation as a result of line balancing. Moreover, mass production requires less skilled operators, has low inventory process and low manufacturing cost per unit (Suri 2010). Nevertheless, mass production tends to be inflexible since it is hard to adjust a design or a production process after the production line has been implemented. Moreover, all products manufactured on an individual production line shall be identical, and introducing varieties to satisfy the individual tastes is difficult. However, some varieties may be achieved through applying different decorations and finishes at the end of a production line when necessary.

Companies select various ways of product and service designs, which are: standardization, delayed differentiation, mass customization, robust design and modular design. Deciding the correct method establishes improved productivity and efficiency for the operations. Product Design mixes ergonomics with the product as well as business knowledge to produce concepts and ideas and transform them into usable physical objects and/or services (Starr 2008). Product design covers the whole range of the activities from conception, manufacturing, experimenting to the product launch. Product design conceptualizes and evaluates themes and ideas they find profitable and make them tangible through the products by use of a systematic approach. On the other hand, service design refers to the activity of planning and organizing individuals, communication and the material components so as to improve the service quality. It describes the interactions between a service provider and the customers along with the customers’ experience (Starr 2008). The two most essential issues in the service designs are the level of variation in the needs and the level of the customer contact that determines how  the service can be standardized. A higher degree of customer interactions translates to a higher the possibility of selling the services. In their useful life, a lot of products and services undergo four stages, which include; introduction, growth, maturity, and decline. Since the demand for each of the four stages may vary, different strategies must be applied to attain optimum product and/or service performance in each stage.

Standardization can be great for companies that create common products since there are not a lot of things one may do so as to make them distinctive and keep down their prices. Standardization products contain interchangeable elements, which increases productivity and reduces the production costs. Standardization has numerous important benefits as well as disadvantages (Salameh & Burtonshaw-Gunn 2013). For example, design costs for the standardized products are low. Moreover, scheduling of the work inventory handling, buying, and the accounting activities are habitual. As such, it makes the quality to be more consistent. Nonetheless, standardization is associated to a number of drawbacks like: it decreases variety provided to the consumers resulting in less appealing; second, the high costs related to design changes make it inflexible to improve.

Mass customization refers to a strategy which companies use to integrate customization and at the same time practice standardization. Mass customization keeps the costs low and adds variety to the product. There are two tactics making mass customization feasible; they include the delayed differentiation and the modular design. Companies that consider delayed differentiation choose not to finish a product because of unknown consumer preferences. Modular design describes a type of standardization where the parts are classified into modules to enable easy interchanging or replacement. Product and service designs are essential factors to consumer satisfaction since organizations are supposed to satisfy their consumers constantly for the organizations to gain a competitive advantage in the market (Nicholas 2011). They can do this through improving the current products as well as by designing other new products. The design is made of; research, design, production, life-cycle, safety in using, maintainability, reliability regulatory and legal matters. Organizations too need to consider ‘sustainability’ while designing their products and/or services. The aspects related to sustainability include: life-cycle assessment, value analysis, remanufacturing and recycling.

In conclusion, production and operations management is considered an essential factor in a nation’s economic growth. It generally involves the transformation of the production and the operational inputs into outputs, which, when distributed meet the customers’ needs. Location decisions are based on the long term policy and forecasts, for instance, company’s expansion policy, expected diversification of the products and/or services, the changing markets and the changing raw materials sources. Proper location of the facilities leads to an optimal location which will bring about the maximum comparative advantages to the company. Capacity planning refers to the method of determining production capacity required by a company so as to meet the changing demand for its products and/or services. Capacity planning is valuable in reducing the inefficiencies resulting from discrepancy between capacity of the organization and demands of customers. This, in turn, reduces production and operational costs leading to an increase in profits for organizations and a comparable advantage over the rival companies.

Plant layouts are mechanisms that involve the knowledge of space requirement for facilities and their appropriate arrangements for steady and continuous flow of the production cycle. Ideally, a better plan layout often provides comfort to the employees and caters for their tastes and preferences. Moreover, they provide better working conditions and also minimize delays in the production and makes efficient use of the available space. Better plan layouts also provide improved control over production cycle by facilitating more flexibility for any changes in the product designs. Accordingly, all these approaches to production and operations management significantly influence the competitive advantages between countries, especially through the comparative advantages gained.

 

References

Barnes, D 2008. Operations management: an international perspective, Thomson, London.

Boyer, KK & Verma, R 2010, Operations & supply chain management for the 21st century, South-Western/Cengage Learning, Ohio.

Espinosa Salazar, AM & Walker, J 2011, A complexity approach to sustainability: Theory and application, Imperial College Press, London.

Jones, P & Robinson, P 2012, Operations management, Oxford University Press, Oxford.

Netessine, S & Tang, CS 2009, Consumer-driven demand and operations management models: A systematic study of information-technology-enabled sales mechanisms, Springer, New York.

Nicholas, JM 2011, Lean production for competitive advantage: A comprehensive guide to lean methodologies and management practices, Productivity Press, New York.

Salameh, M & Burtonshaw-Gunn, S 2013, Essential tools for operations management tools, models and approaches for managers and consultants, Wiley, New Jersey.

Starr, MK 2008, Production and operations management, Cengage Learning, Ohio.

Soyka, PA 2012, Creating a sustainable organization: Approaches for enhancing corporate value through sustainability, FT Press, New Jersey.

Suri, R 2010, It’s about time: The competitive advantage of quick response manufacturing, CRC Press, New York.

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