An organization’s main function is concerned with getting their jobs done; producing services for their customers. Operations management is crucial because it manages most of the organizational resources. All business organizations are concerned with how to survive and prosper in the future. Business strategies are thought of as plans or set of intentions that set up long-term plans and actions that are required to ensure the success of the organization in future. (Skinner 1969, p.135). However, no matter how big the plan, or how noble the intentions are, the strategy can only become meaningful in reality if it is operationally enacted.
The operations of an organization are strategically important especially because majority organizational activities contain the daily activities within its operational functions. A strategy is a myriad of daily operational actions, when considered in the wholeness that constitute the long-term strategic direction of the organization (Skinner 1969, p.143). Long-term success and survival of a business are dependent on the relationship between the organization’s strategy and its operations. The success of an organization is likely to bring results if short-term operational activities are in consistency with the long-term strategic intentions (Skinner 1969, p.144). The relationship between other business functions and operations is important. The operational functional objective is to produce services and goods required by the customer at the same time managing the organizations resources as efficiently as possible. This situation can lead to conflicts in the organization.
The conflicts that arise between the marketing functions and operations are likely to focus on the desire of marketing to make sure that operations focus on satisfying the customers. This choice may seem desirable; however, marketing will always want operations to be able to meet with the customer’s needs under all circumstances. The result is the demand to produce more variety, greater volumes, a faster response and, higher quality (Skinner 1969, p.145). These demands lead to less efficient operations. Organizational conflicts between accounting, operations and finance functions are likely to focus on the desire for accounting to require operations to manage the organization’s resources as efficiently as possible. This move tends to pull operations in the exactly opposite direction of the desired by marketing. Other conflicts between the human resource management and operations are likely to focus on issues of selection, recruiting, management and, training of those employed in operations. The operations function is at the heart of every organization, controls and, interacts with all the other organization’s functions (Skinner 1969, p.144). Achieving agreement about decisions lying within the remit of operations and, the basis of decision making is an essential part that ensures consistency of the action over time required for a successful organizational strategy.
Strategy in a business is essentially about how an organization seeks to prosper and survive within its environment over a long-term period. Decisions and actions taken within the organizational operations, directly affect the basis on which the organization can work. The method in which an organization secures, utilizes and, deploys its resources determines the extent in which the organization can successfully pursue its performance objectives (Skinner 1969, p.145). The performance objectives include
- Cost: The organizations ability to produce at low cost.
- Quality: The ability of the organization to produce according to the specification and without errors.
- Speed- the ability responds quickly to customer demands and thereby provides shorter waiting periods between when the customer orders services and products and the receiving time.
- Dependency- this is the ability to deliver services and products in accordance with the promises made to clients.
- Flexibility- this is the ability to switch operations. Flexibility comprises of up to four aspects;
- the ability to change production time
- the ability to change the production volume
- the ability to introduce new services and products through innovation
- The ability to switch the mix of different services and products produced.
Excelling in at least one or all of these operations performance objectives enables an organization to follow a business strategy based on a corresponding factor of competitiveness. However, it is important to realize that the success of any business strategy crucially depends on customers valuing the selected competitive factors from which the business strategy is based (Russell & Taylor 2000, p.100). The success of business strategies also depends on the ability of the organizations operations department to achieve excellence in their performance objectives. Matching customer requirements to operational excellence to the requirements of the customer lies at the center of any operations based strategy.
It is very unlikely that any single organization can succeed simultaneously at all five operations performance objectives. Attempting to do so would lead to confusion as the operations manager would be pursuing different objectives each at different times. The lack of clarity results in sub optimal performance resulting in a failure to excel in any operation performance objective. (Skinner (1969, p.143). Organizations consequently need to choose which of the five-performance objective they should give priority. As a result, the organization may have to trade-off below excellent performance in one of the operational aspects in order to allow the success of another. (Skinner1969, p.143) first proposed the concept of trade-off in operational objectives many years ago. He argued that operations were impossible to be ‘all things to all people’. Organizations needed to identify a particular task or goal for operations. The task could then be used as criteria against which all actions and decisions in operations could be judged.
While comparing the productivity between the manufacturing and service operations, one common basic claim has been that the characteristics of services call for a more holistic approach. These demands include customer-orientation to productivity (Blois 1984, 50). Several researchers have argued that productivity and quality are impossible to deal with separately in the case seen in services. Despite productivity emerging as a central concept for researchers on service, little agreement appears to exist about the nature and definition of service productivity (Anderson et al. 1997, p.229). Therefore, there seems to be a growing need for a thorough analysis of the concept of productivity in the context of services. The bulk of traditional service research has for long mainly focused on the identification of the characteristic differences between services and goods. Recently however, the goods dominant logic has considered services as a type of goods (intangible) implying the differences between services and tangible goods in terms of production and their distribution practices.
The concept of productivity is used to manage production efficiency when manufacturing. An example in services is when, due to the nature of production in the service processes as open systems, allowing the participation of the customers in some of the processes, such a concept of productivity is too limited.( Grönross & Ojasalo 2004, p.416). Services delivered in an organizational setting refer to emotional and embodies situations. The influence on emotions, embodiment and the phenomenological significance of expression on the productivity of service has not been the key focus in the research of service productivity so far (Skinner (1969, 140). The complexity of the relationship therefore, between customers and service providers can be acknowledged as an essential service processes characteristic (Grönross & Ojasalo 2004, p.418). Given the importance of the concept of service productivity to organizations, there is a need to summarize knowledge about this concept as a foundation for setting a stage for further future advances.
The uniqueness of research in productivity relative to services is highlighted by considering the way it pursues the goal of operations management. In general, operations management aims at making sure that operations in business are efficient when it comes to using as little resources as required. It is effective in meeting customer’s requirements as well. Its main concern is managing the process of converting inputs (material and energy into outputs (services and goods). Productivity is explained as the ratio of what operation produces to the requirements to producing it (Russell & Taylor 2000, p.226).
In order to create a model of productivity in service, it is crucial to distinguish between efficiency and effectiveness. These terms should be as related differently but as related terms. Efficiency is the degree to which an action generates a quantity of output using a minimum consumption of inputs or produces a given quantity of outputs from a provided number of inputs. Effectiveness however, indicates the ability of an organization to attain a purpose or a goal (Grönross & Ojasalo 2004, p.420). Efficiency relates the resources used to the output whereas effectiveness relates the goals set for the operation to the output. Effectiveness involves doing the right thing while efficiency involves doing things right. There is an existing clear distinction between productivity and effectiveness. Effectiveness is tied to the ability of company to attain its set objectives. Productivity however, concerns relating inputs and outputs. (Blois 1984, p.52) argued that increased productivity is not a good enough condition for enhancing the effectiveness of an organization. Productivity may in fact be increased at the cost of being effective in meeting the goals set for the organization (Blois 1984, p.52). According to the basic economic rationality principle, the target is to achieve the given result with minimal resources and at the same time get the maximum result using a given set of resources.
In a manufacturing environment, several measures are available to increase production of output. One of the options is to reduce cycle times through a process or product innovation. An alternative option is to eliminate the unproductive time causes, perhaps through introducing a preventive maintenance program (Grönross & Ojasalo 2004, p.422).This program reduces the risk of machines breaking down. Another option is to aim to eliminate the time that is wasted in producing poor quality goods.
This paper reviews Toyota Manufacturing Company as an example of the success in having a balanced approach in operations strategy in manufacturing companies. In quality as a performance objective, Toyota Manufacturing Company provides error-free services and goods. Toyota’s vehicles are ranked near according to the top in third party consumer-satisfaction survey. Toyota owns a successful record worldwide as it has been voted as the car of the year for several years by many market researches (Ahmed, A., 2003, p.34). Toyota Manufacturing Company also produces quality cars, which do not emit poisonous fumes as compared to more than 40 emission-control systems as well as dozens of new technologies that have led to the improvement of passenger car safety.
On speed as a performance objective, the Toyota Manufacturing Company’s techniques focus on operations that reduce complications by the use of small and simple machines that, are robust and flexible. The company has rearranged the flow and layout therefore enhancing simplicities and improving production speed (Ahmed, A., 2003, p.35) Statistics show that in the 1980’s, the work output per worker was as much two or three times higher than European or US plants.
On performance as a performance objective, Toyota Manufacturing Company includes a Just-In-Time production system with workers who are multi skilled and work as a team. Their ‘kanban control’ has enabled them to deliver their products as promised. The improvement of quality and efficiency is a major concern for technical experts, managers and, the rest of the employee (Ahmed, A., 2003 p.36). Toyota Manufacturing Company provides a dependability advantage to their customers by taking this action.
A clear result of responding to a dynamic environment is the way organizations change their services and products they same way they carry out business. This performance quality is referred to as flexibility (Ahmed, A., 2003, p.37). Researchers argue that we must learn to love change and develop flexibility and, responsive organizations that can cope with today’s dynamic business environment. In the Toyota Manufacturing Company plant, this means the ability to manufacture new car models by adopting its manufacturing resources. Toyota was able to achieve high flexibility levels by manufacturing relatively smaller batches of containing different models with or no loss of quality or productivity (Ahmed, A., 2003, p.38). The company over the years has provided a wide range of products for to choose.
One of the major operations objectives is cost especially where companies are competitive in prices. Low price is universally attractive object to customers of all occupations. Low prices can be achieved by producing the goods at a lower company cost. Inorder to lower production cost Toyota Manufacturing Company seeks to influence the cost of services and goods. The future Toyota Manufacturing Company makes plans to shift their production of pick-up trucks and multipurpose vehicles to different countries worldwide such as South Africa and Argentina (Ahmed, A., 2003, p.38). In addition, cost performance internally gets assistance by the good performance of the rest of the performance objectives that Toyota Manufacturing Company has managed to achieve.
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