While reading The Goal, it became evident that there were operating decisions that needed to be made in order for Al’s plant to turn the corner and make a profit. Some of the decisions Al needed to make were outlined in our text book, and include, but are not limited to: process and capacity design, inventory, scheduling and quality. The plant was also in need of determining which strategy of competitive advantage they would ultimately employ. Further, Al would have to use each of the “plinc” acronyms (plan, lead, influence, negotiate and communicate) at some point of a decision throughout the novel.
Examples of Operation Management Decisions
Process and Capacity Design
This decision was an integral factor in The Goal and is especially important within manufacturing firms. Initially, one of the main issues Al’s plant had was being consumed by severely past due orders to customers. Al believed because his plant had new technology (robots) this would improve efficiencies during production. Unfortunately, the measurement tools Al and his staff were using were not telling the entire story. While it looked like his plant was producing products at a very efficient cost and rate, they still were behind on orders. More importantly, they were losing money. They hadn’t yet figured out what the ‘goal’ was; to make money.
By taking a closer look at all of his machines’ inputs and outputs, Al and his team were able to identify which machines had bottlenecks and implemented new processes and procedures to appropriately deal with capacity and inventory flow at each station. For example the team implemented putting red or green flags on products. This initially let employees know which product to work on first.
The inventory examples were very interesting. In the beginning, Al’s team didn’t always have the product they needed to finish a job, but inventories were up. This meant the plant was producing products that weren’t needed so they could show the division that cost efficiencies were improving. Once they identified the bottlenecks and made adjustments, the plant was able to produce products for orders in a much more timely fashion. Customer satisfaction increased because orders were finally arriving on time. Once the plant learned how to truly run its operations, they were able to offer orders quicker and eventually faster than their competitors. It’s pretty evident that Al’s plant was strategically competing on response due to increased:
Reliability – Orders were delivered when promised, sometimes quicker.
Timeliness – The plant was able to cut down lead times from 5-6 months to 2-4 weeks.
Flexibility – Worked with Bucky and the constraints of the plant to win a large order.
Previously, the management felt that workers should be doing something (working) 100% of the time. With the new processes in place, some workers could be idle for 20-30 minutes at a time. Finally, it was determined that it wouldn’t hurt the bottom line for an employee to be idle at times because those costs were already accounted for. Plants that had employees working 100% of the time increased inventories, but didn’t increase throughput.
Additionally, it was determined the plant could operate efficiently by decreasing batch sizes. Further, more throughput meant more revenues and income to the bottom line.
Last, they began to have different parts go through heat treatment at the same time instead of waiting to heat treat the same types of products together. This freed up a bottleneck which demonstrated why scheduling is so important.
Quality is also a huge part of Operations Managers responsibility as outlined in The Goal. Al moved QC in front of bottleneck areas so that products with issues could be discarded before they went through these machines. Previously, QC was towards the end of the process, and items that went through bottle necks that…