“Operations management is about developing and managing value-adding processes, and supporting these through various tools, techniques and methods.” This report focuses on Eastern Gear Inc. – an American company which manufactures gears however it is time for the company to revise its current operations management and therefore the aims of this report are to:
- Define operations management and describe its application within manufacturing.
- Explain the role of operations management strategy in the company’s overall competitive strategy.
- Explain why small inventories are preferred by most organisations.
- Identify the competitive advantage and value-added contributions that the operations function makes to the organisation.
- Analyse the operations environment for relevant trends, especially major changes in technology.
Issues and Problems
The main problem affecting the current operations at Eastern Gear is its facility layout and logistics. Presently the factory is laid out in a production or job-shop layout style and as highlighted by current observation this causes bottlenecks in production as highlighted by the statistics that 90% of each product’s time is spent waiting for a machine. According to Daft (2000) this type of facility layout is best suited to an organisation that produces huge volumes of identical products – this would explain why there seemed to be an apparent failure of the current layout since the company manufactured customised gears for customers based on the customers’ blueprints. Another problem to consider, although small, is the availability of warehouse stocks; currently it seems as though the organisation does not keep any stock of raw materials in inventory. Theoretically and practically warehousing creates an expense however it is important to always compare benefits and costs and in this case it seems as though the benefits of keeping an inventory will by far out weigh its costs e.g. The one to two weeks currently lost waiting on raw materials can be converted into lead time. Last but not least another major problem is that of wastage; when customers change their order design in the middle of production it means that a design must be created from scratch. The current implications of this is lost time and material. Therefore in the following section the researcher will attempt to provide viable soluti