Operational management is an important area in a business that is concerned with the management of operational activities in a manner that leads to the better overall satisfaction of customer needs and demands. In order to perform the production of goods and services, businesses makes use of various operational strategies and tactics so that a higher efficiency in the production process can be achieved and ultimately, the timely and cost effective meet out of the customers’ need can be attained. The management of operational activities in a business is mainly the responsibility of the operational manager as he is responsible for managing each and every area in the production process. However, the overall management of business requires proper strategies and policies in action so that each and every task can contribute towards higher level of efficiency (Lewis and Slack, 2003). As a result, it has been argued that the operational management of business activities should be performed in a manner through considering the principles and policies as applicable to the field of operations management.
This essay is mainly focused towards analyzing a case on Craft Shop or Factory with a view to perform an application of the operational management principles, theories and models in order to analyze the issues as listed in the case study. The main objective of this case study analysis is therefore to locate the major problems within the case and this is through the application of operational management principles and concepts. In performing the analysis of the problems in the case, initially there will be a discussion on certain important concepts of operations management along with their advantages and disadvantages, and their important characteristics. This will be followed by a critical analysis of the case to identify the major operational management problems that are listed under it. A thorough analysis of the problems is performed with the application of relevant models and principles of operations management.
The two important concepts that mainly represent the performance of the operational management functions within organization or in carrying out the production function in an organization are job shop and flow shop. The management of processes within organization is a crucial function of the operation manager, and they determine the overall effectiveness of the operational activities as performed. The effective management of operational processes helps in achieving advantages in the form of cost efficiency, better customized products suiting the needs and priorities of customers, and it also ensures timely delivery of finished products to the final consumers.
The management of processes can thus be ensured by the operational managers through two different types of processes including job shop and flow shop. The flow show can be defined as a process whereby a manufacturing facility produces one or two similar products through the application of high volume specialized equipments. One of the examples of flow shop is assembly line of production. Contrary to this, the job shop operational process is mainly a manufacturing facility that produces several different products in smaller batches. One such example of job shop is a machine shop. This implies that the core differences between both these processes are in terms of their production levels as flow shop emphasizes on the production of one or two similar facilities whereas the job shop emphasizes on the production of several products in smaller batches (Sarin, 2007).
In terms of advantages of job shop facility is concerned, it has various advantages in terms of high production mix facility, higher flexibility in performing processes, higher production volume elasticity, low obsolescence and high robustness to machine failure. Its major disadvantages include low capacity utilization and very hard scheduling process because of variability in the production process. Contrary to this, the flow shop has the major advantage of better capacity utilization because there are few types of products being produced that allows for standardization. The major disadvantage with the flow shop is that it is less flexible as compared to the job shop. These advantages and disadvantages of flow shop and job shop are required to be considered by an operational manager in order to make their selection in performing the production processes (Meredith and Shafer, 2009).
An identification of the important processes of operational management indicates that both the job process and flow process are crucial to an organization. However, the analysis of the case of Klassy Kitchens Pty Ltd indicates that there are various problems faced by the company in relation to the management of its operations. A critical analysis of the case indicates that the problems are identified mainly in relation to the processes that are carried out in meeting the needs of different types of customers. From the case analysis, it has been assessed that the Klassy Kitchens is specialized in providing customer made kitchen cabinets and this is mainly performed through applying a customized approach whereby the individual customer requirements are met for the kitchen cabinets design.
However, with the increase in sales and the demands for the cabinets, there are several low volume contracts that are signed to supply small spec builders1 with a range of higher quality. As a result of this contract, the Klassy Kitchen was required to manufacture limited range of kitchen cabinets in small batches. This has resulted into a more standardized approach in performing the manufacturing of kitchen cabinets by the company, and this has been regarded as the initiating factor for problems faced by the company in managing its operations. With the demands increases for standardized production of cabinet kitchen, Klassy Kitchen has applied this standard approach to production in its existing production facility. In addition to this, Klassy Kitchen also continues to focus on its customized approach to designing cabinet kitchens as it becomes the core source of revenue to the company, and it also accounts for higher profitability (Greasley, 1999).
As a result of this two fold approach to satisfying customer requirements, the problems are started creeping into the production processes of Klassy Kitchen. The existing employees are required to pay attention towards both the customers that ask for customized kitchen cabinets and also the customers that ask for standardized cabinets in the form of limited range of kitchen cabinets in the form of small batches. The employees were initially responsible for performing customized design only and with the increase in demands for standardized products, the level of pressure has increased on them and this has affected the performance to a significant level. They need to produce both the customized designs as well as standardized designs in the same factory and this has reasonably increased the level of expectations from them to satisfy the needs of different customers’ types of the company (Bakliwal, 2011).
Although, the increase in the sales and requirements of customers regarding the kitchen cabinets products has been highly efficient from the point of view of overall performance of the company, yet such increasing demands should be adequately satisfied by the infrastructure and equipments within the company (Nair, 2002). However, an analysis of the case of Klassy Kitchen Pty Ltd indicates that the growth in the sales and demands for kitchen cabinets is neither supported by the infrastructure nor by the equipments installed in the company. Initially, Klassy Kitchens operates in a single manufacturing facility in Cabramatta and it accounts for the manufacturing of both the custom and standard kitchen cabinets. Apart from this, this is accompanied by general purpose machines in producing the wide variety of custom designed cabinets whereas Alcorta (2004) asserts that the specialized processes of the production process in a company should be adequately supported by the specialized equipments.
The lack of supportive equipments in allowing the company in performing the standardized production of kitchen cabinets is therefore another major problem that was faced by Klassy Kitchen in its production process. In addition to this, the analysis of the flow process and job shop process above indicates that these processes to production differ significantly between each other and as such, combining them would pose significant threats to an organization. As per Bell (2005), the equipments utilized in producing products according to different processes should not be grouped together and they should be kept separately to carry out the production process in separate manner. However, the case analysis of Klassy Kitchen indicates that the factory layout has various types of equipments that are grouped together. This has also contributed towards an increase in the problematic situation for the company (Bell, 2005).
The analysis therefore indicates that the problems at Klassy Kitchen in its production process mainly arises because of the combination of both the standardized process and customized process together in performing the manufacturing of kitchen cabinets and this is without an appropriate production control mechanism in operation. This problem can be better understood from the application of cause and effect diagram as indicated below:
The cause and effect diagram above clearly indicates the problematic areas as in respect to the Klassy Kitchen as it mainly highlights the problems in the organizational processes, people and the plant, and the resulting impact is lack of production control. The problems with respect to people management are mainly identified in terms of lack of adequate employees in managing the customized as well as standardized production process, whereas plant problem is identified in terms of its poor maintenance, as the equipments are grouped together and they are not managed well leading to their improper maintenance. Apart from this, the problem within the production process is identified in terms of lack of adequate control with respect to standard production process, and as a result, the entire problem leads lack of proper control over the entire production process. The consideration of both the customized and the standardized production processes at the same time has been the major contributing factor towards the root cause of problem in the operational management at Klassy Kitchen.
The management of job shop production process has been highly difficult as indicated by Swamidass (2000) because the job shop production process grows larger and it thereby becomes highly difficult to perform its management. The problems in the form of long product throughput times and very large in-process inventory levels often cause difficulties in the effective management of these production processes, and as a result, this process is considered as highly difficult. In the job shop process, the parts spend 95% of the time waiting in queue and it thereby makes the inventory management process in a cost efficient manner as highly difficult. The impact of this job shop production is also experienced in respect to Klassy Kitchen as it has also started experiencing problems in the efficient performance of its production processes. The problems in the form of higher level of work in progress have affected the profitability performance of the company in terms of lower overall profit (Swamidass, 2000).
Because of combining the customized and standardized production processes, the company has started experiencing problems in respect to making proper scheduling tradeoffs. This is because there are increasing numbers of orders received for the production of standardized products whereas company does not want to reduce its customized production process because of higher profitability as provided by them. As a result, customized kitchens were always given a higher level of priority because of higher profit margins associated with them, and this has created problems in terms of proper scheduling of the processes. The improper scheduling of processes has been root cause of the problem being identified in respect to the work in progress, as the standardized processes were mostly stopped to allow the performance of the customized production process and this has affected the operations in terms of larger work in progress of the raw materials for the standardized product lines.
Because of the problems as identified in respect to the management of operational process, its impact has been evident in respect to the overall profitability performance of the company. This is mainly in terms of lower profitability levels despite an increase in the sales volume of the company for the cabinet kitchen products. The impact on profitability performance of the company is mainly because there is huge amount of capital and resources that have been blocked as work in progress in the standardized manufacturing process, and this has contributed towards rising inventory costs, charges in the form of cost of capital, and the growth in the ledgers of debtors and creditors. The problem of work in progress has contributed adversely towards satisfying the customers, as there has been an increase in the delivery time from what is promised to customers. This has resulted into higher chances of customers getting dissatisfied because of delay in the delivery of kitchen cabinets and ultimately, impact is in the form of decline in the profitability performance.
Apart from the problem of increase in the lead times in performing the manufacturing and delivery of cabinets to customers, there was no space left in the layout and this leads to inappropriate management of operational processes in performing the production processes for both categories of production. Staff always looks for better working conditions, and a well established infrastructure in supporting them is crucial from the point of view of encouraging their overall morale in performing the business processes (Isles, 2010). But in respect to Klassy Kitchen, the management of operational infrastructure was not that effective as it is completely occupied with equipments and the same staffs are responsible for managing both the standardized and customized designing of kitchen cabinets. As a result, it leads to decline in the morale of the employees in contributing their maximum efforts for achieving better production and customer satisfaction.
The various problems as stated above are directly associated with the current problem of lack of production control at Klassy Kitchen, but an in-depth analysis of the case study indicates that there are certain other problematic areas that have given rise to the current problems of lack of production control at Klassy Kitchen. As for instance, in performing the expansion of business activities or in taking any major strategic decisions, a proper planning on the part of management is highly essential regarding the key important considerations that need to be made in achieving better overall performance (Dlabay, Burrow and Kleindl, 2011). But the case analysis of Klassy Kitchen indicates that there has not been any formal planning performed by the managerial personnel and the resulting impact is the ineffectiveness in the management of expansion as performed by the company.
Apart from the lack of planning, another major problematic area as evident in respect to the Klassy Kitchen is regarding its managerial structure. As for instance, there are various managerial functions that are required to be performed in ensuring the effective management of an organization’s operation, and these mainly include Human Resources (HR), Marketing, Finance, Accounting, Information Technology, Administration, Production and Operations etc. The responsibility of performing all these operational functions of an organization is given to specialized personnel, as accounting managers is responsible for looking after the entire finance related problems whereas the management of employees and the problems faced by them are resolved by the HR managers. This is mainly the task of specialized personnel is performed by the specialists, but this has not been evident in respect to Klassy Kitchen. Its analysis revealed that the problem is mainly the performance of all the important roles by Chinh and Anh Chu themselves.
Chinh is a master cabinet maker and Anh is a qualified interior designer. They have taken up their responsibilities according as per the specialization initially, but later when their company experienced higher level of growth, they have extended their roles to perform all the specialist functions in the organization. There was no formal identification of roles for the two owners, and their initiative to take the responsibility on their own regarding all managerial functions have contributed significantly towards the performance of the entire organization. The recruitment of a specialized production and control managers would have resulted into better management of company operations, and ultimately the situation for Klassy Kitchen would have been different in terms of its profitability performance. But this aspect has been completely ignored and it has resulted into adverse overall performance of the company in managing its operations in an efficient manner.
The entire analysis above indicates that the overall management of the operational strategy has not been performed efficiently at Klassy Kitchen and it has resulted into the ineffective management of the expansion in its business. In order to ensure the successful management of change as identified in the case study, it is essential that well established practices or models of change management should be applied so that the effective management of change process can be ensured as desired by the management. An important model of change management that can be applied in successfully performing the change is described as follows:
The model above discussed about six major stages to successful change management and the first step is mainly the creation of awareness and a sense of urgency about the need for change. As in case of Klassy Kitchen, the managerial personnel were the two owners such as Chinh and Anh Chu and once they have realized about the expansion of their business, they need to create awareness among the management team and should have sensed about the need for separate specialized personnel in handling core organizational functions. The next step to change management as per the model is to engage the culture, and as in respect to Klassy Kitchen, this implies that the owners should create a culture of managing different functions essential in handing the customized and standardized kitchen cabinet designs (Cowan, 2005).
The third step as per the change management model is to transform the culture, processes and people and this requires the Chinh and Anh to perform transformation in the organizational culture by way of encouraging employees in taking the production process for both the standardized cabinets and customized cabinets separately. This is followed by regular monitoring of results so that the problems as identified above may not occur and the change can therefore be ensured in an efficient manner. The monitoring is followed by providing feedback regarding the ways in which the employees are performing the processes of manufacturing cabinets and the feedback should aim at identifying the loopholes in the performance of employees. Finally, the change management model asserts that the change as introduced should be sustained with higher level of commitments from all the people within organization including the management as well as the employees (Cowan, 2005).
Overall, a critical analysis as performed of the Craft Shop or Factory indicates about various operational management problems that are faced by the organization in the case study. The analysis revealed that the problems are mainly associated with the operational management within organization as there is no proper management policy in performing the management of change that was experienced in the form of expansion of the business. The analysis revealed that the business was all about the manufacturing of Kitchen cabinets and the focus was mainly on providing customized cabinets to customers but with the increase in the demands for the standardized products, there has been shift in the focus towards producing standardized cabinets for the customers. However, due to higher level of profitability in respect to customized delivery of cabinets, the owner has continued to provide customized cabinets as well (Paton and McCalman, 2008).
This has significantly enhanced the requirement for additional capacity in performing the manufacturing process, but the owners have continued to carry out the standardized as well as customized production of cabinets under same plant with its existing employees without requiring the need to recruit additional employees. Apart from this, the other major problems as noted from the analysis of the case above include mainly the lack of production control and this is clearly evident from the absence of any planning process in performing the expansion. There was no planning with respect to considering additional workforce in handling the expansion in an efficient manner. The standardized production process as carried out was also without planning and it was not appropriately controlled as well. The plant was ineffectively maintained and since the management has taken up standardized production as well customized production at a time, this leads to inappropriate management of the entire production process. As a result of inefficiency in managing the overall production process, it has contributed towards inefficiencies in terms of higher work in progress and thus it contributes towards inefficient inventory management. These are the major problems that are identified from the case analysis as performed.