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Question

As the company examines various methods to assess its performance and design processes, it is looking for an analysis of the existing workflow production process and the factors that most directly impact such measurements. As a review, the most common metrics for production processes are as follows:

 

  • Quality: the number of defects associated with a given product
  • Cost: material and labor cost
  • Timeliness: how quickly products are manufactured and delivered
  • Flexibility: the degree to which the production process can be adapted to produce other products or specific products more quickly
  • Productivity: a ratio of outputs divided by inputs
  • Efficiency: a ratio of actual outputs divided by standard (or expected) outputs, multiplied by 100% to give a total efficiency percentage
  • Cycle time: the total time it takes to complete a production process
  • Theory of Constraints and Queuing Theory

Using course materials and other research, complete the following:

  • Explain how each measure can be applied to the company’s production planning process. Can the company use each one? How?

  • Rank the criteria listed above in order of importance to the company’s production planning strategy detailing your rationale for such a ranking.

  • Identify other measures that might apply to the company and explain them.

Answer

                                        A Research on Production Process

     

Question 1.Explain how each measure can be applied to the company’s production planning process. Can the company use each one? How?

                An outstanding company is required to have an efficient and effective production process to enable it to stand out and have a competitive advantage among its competitors. The components of production process namely as  quality, cost, timeliness, flexibility, productivity, efficiency, cycle time and theory of constrains and queuing theory which vary in terms of their importance are some of the tools used by companies in their production analysis. These are not the only ways to measure productivity rather there are other tools that companies use in their performance analysis and design.

To satisfy customers it is a requirement for a company to offer quality in terms of product and services. It needs to ensure that they offer exactly what the customers need and want and at an affordable price and also ensure that they make their delivery on time. 

It is essential for a company to ensure that it enjoys economies of scale which is the cost advantage that arises with increased output of a product in their production process. A company can achieve these through incorporating cost effective techniques in their process. One way to achieve this is by using standard costing which is preferred by most companies because it gives a clear outline of accounting for different types of costs such as labor cost, material cost and overhead cost (Saha, 2016). 

Customers can be very impatient and would most likely get frustrated when their needs are not meet on time, so it’s of great importance for a company to stick to its production timeline so as to meet deadlines. A happy customer means profit to the company because they will most likely refer others to the company and will themselves trade with the company. Thus timeliness has to be in the planning process.

Flexibility is whereby a company is able to respond positively to it external environment i.e. political environment, economical environment, socio cultural environment, technological environment and ecological environment. By understanding these factors a company will be able to strategies on how to stay ahead of its competitors and stay in the market. Productivity is measured in terms of how efficient a company is in its production process. It ensures that a company is well organized and uses; control charts, the theory of cause and effect to improve it.

The ability to avoid wasting materials, efforts, energy, money and time in production is known as efficiency. Companies have to be efficient in their production. Production process takes place in stages and different products takes different time cycle. Products that have long time cycle holds resources which would otherwise be sold to create profit. By understanding these stages a company can create ways to cut down production cost and the time taken for delivery (Saha, 2016). 

Question 2. Rank the criteria listed above in order of importance to the company’s production planning strategy detailing your rationale for such a ranking.

Every organization faces bottlenecks and constrains in their day to day operations, thus there is need to identify these constrains and find ways to overcome them because it can be a hindrance to achieving goals and objectives a company. The theory of constrains by Eliyahu Goldratt gives a step by step procedure of identifying and evaluating constrains which is a great help to companies.

Queuing theory, a mathematical study of waiting lines whereby a model is constructed to predict queue lengths and waiting time. It’s a process that can be used to analyze and reduce process delays.

The production world is becoming  more diverse as a result of  the rapid technological innovations meaning the markets are becoming more and more competitive thus making them  unpredictable while companies tend to move towards an identified market segment as opposed to mass marketing (Kinney, & Raiborn, 2011). Innovations are fast tracking and this has greatly improved the production process by reducing product life cycle. Therefore quality, the number of defects associated with a given product, becomes the most important aspect followed by productivity which is simply a ratio of output divided by input. Next is the cost which includes both material and labor cost. Timeliness is also critical, as it indicates the manufacturing pace. Flexibility concerns the degree to which the production mechanism can be modified to produce other goods and efficiently (Kinney, & Raiborn, 2011). Productivity is the ration of actual outputs to inputs, while efficiency is the ratio of actual outputs compared to a set standard.

Question 3. Identify other measures that might apply to the company and explain them

Other measures that might apply to the company are;

First pass yield which is used to measure the level of rework in a production flow and is calculated for each operation (or step). This is done by comparing total units line and is used to measure the entire production flow, making it easier to know how effective the overall flow is performing (Sharma, 2006).

Inventory turns is an indication of how many times a company’s inventory is sold and replaced over a set period of time. It is calculated by dividing the cost of goods sold by the average value of inventory at hand during a defined selling period which can either be monthly, quarterly or annually (Sharma, 2006).

 

References

Kinney, M. R., & Raiborn, C. A. (2011). Cost accounting: Foundations and evolutions. Mason, Ohio: South-Western Cengage Learning.

Saha, D. (2016). Manufacturing performance management using sap oee. Place of publication not identified: Apress.

Sharma, S. C. (2006). Operation research: Inventory control and queuing theory. New Delhi: Discovery Pub. House.

MGMT 430/Inventory Management

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