Posted in Operations & IT Articles, Total Reads: 670
, Published on 16 August 2016
Operations is prevalent in anything and everything around us. Be it how an organization controls its production process to how a fruit seller manages sells his fruits, Operations is present everywhere. There are production analysts, production engineers and managers who design, control and manage the operations processes. In this article we will take a look at what all comprises operations management and how it is done.
Let us take a very simple example first – a fruit seller buying and selling fruits in his shop. This may sound easy, but you will realize how this simple job may get tricky. So what all is associated with procuring and selling fruits? Firstly, you need to have your shop where you are selling fruits in a strategic location – where customer footfall will be more, proximity of shop from supplier location, distance between the warehouse and the shop. Secondly, you have to think about demand for fruits, how much you are going to buy and how much you are going to stock. Fruits are perishable items. So it is difficult to store them for a long time. Now if you buy less and demand is more, you lose customers to other vendors; if you buy more and demand is less, then your fruits may perish and you incur losses. To add to this, demand varies on weekdays and weekends. Next there are transportation costs and carriage losses. All these factors govern the running of this fruit shop and operations is at its core. Without proper planning and execution, it will be difficult to run this shop.
We will take a few more cases. Ever thought about how an airlines work? Planning, scheduling, quality management are at its core. An Airlines has to manage a large fleet of data - customer details, airlines data and others. Resource handling, scheduling flight timings, sending notifications to customers, location layout for handling queues, managing delays, all are a part of operations management at an airlines facility.
Coming to the production layout. Operations is at the heart of manufacturing industry – from vehicle industry, products based industry to services industry, all require an efficient operations management system. Procuring raw materials, planning the production, organizing your resources, making them work efficiently, meeting demand products and organizing the sequence of production for these products are a key part of an operations system in this industry. IT operations and analytics is also playing a key role in organizing various manufacturing processes.
In Oil and Natural gas industries, IT operations is playing a crucial role. It is helping in integration of different factories at different locations, planning their processes, reducing wastes. Few terms associated with operations in this field are: Pipeline Risk Management, Optimization in exploration, Production Optimization, Storage Optimization, Optimization in drilling, Market Effectiveness and a few others. Location analysis, exploring areas for oil production, transportation and storage of oil are essential measures of oil and natural gas production management.
There are various principles of operations management that are followed worldwide. Toyota’s Lean Management system is one such principle. This principle deals with reducing wastes from various areas in terms of production, processing, transportation, waiting time, etc. The main goal of this principle is to reduce and remove inconsistency and reliance on a handful of resources only and to eliminate wastes. Toyota Lean Manufacturing system is one of the most efficient systems in the world. They follow the system of just-in-time manufacturing system which helps them reduce wastes and have lesser inventory. Effective inventory management means less storage costs, lesser losses and with proper demand forecasting this is possible. Toyota are the leaders in production in the world and this explains why. They also believe in continuous improvement. Business environment is always changing and so one needs to be abreast of the challenges ahead. There needs to be a proper vision to meet these challenges and a proper plan for execution for meting these challenges and goals. ‘Kaizen’ is one such term for improvement continuously and also striving for innovation and evolution to meet these challenges.
There are few terms like this which one should know in relation to operations management – Kaizen, Kanban, 5s. ‘Kanban’ is a part of lean manufacturing system and deals with scheduling system. It is basically an inventory management system. Supply chain management deals with these aspects. How a process flow occurs starting from suppliers, manufacturing plant, assemblers, wholesalers and retailers are dealt with here. 5s deals with seiri, seiton, seiso, seiketsu, and shitsuke. These are five Japanese words that deal with organizing the workplace.
These five words basically mean – Sort, Set, Shine, Standardize and sustain. ‘Sort’ includes removing unnecessary materials from the work location. Segregate the useful items from the not so useful ones and remove the unwanted ones. ‘Set’ implies arranging these items so that it is easier to find later. Keep things at their places everyday. It reduces search time and search costs. Also when different workers are working on the same tools and equipment on different shifts this helps them to work easily and not waste time and energy searching for these items. ‘Shine’ implies you keep your workplace clean and safe and maintain it that way continuously. ‘Standardize’, as the name suggests, implies maintaining the best practices, setting a standard for all to follow. What has been your winning point should be shared and set as a standard for others to follow. This will increase harmony and organizational efficiency. Finally, ‘Sustain’ implies you keep working in this order, maintain this system, instill this principle in new employees through regular training programs. Put regular checks in place; this also helps in maintaining efficiency.
Along with this, statistical control charts and control mechanisms play an important role in operations management for maintaining quality and reducing waste. These are a part of total quality management and lean manufacturing system. IT Analytics and operations is helping the processes standardized and reducing defects and increasing quality.
So we see that operations is everywhere. It is a vast field and you can gain expertise in this field through various management and training programs that are organized in organizations. Hands-on-experience, knowledge of your workplace and the hunger to learn, analyze and suggest constructive changes are key to this industry. Most importantly, just look around. There are ample examples around you that will show you how operations play a crucial role in our everyday life.
This article has been authored by Sourav Saha form IIM Raipur
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