Upgrading Production and Operations Management

With competition getting stiffer from both within and from other countries, it is a matter of survival to upgrade your production and operations management. It is likely that you will find more opportunities to make significant improvements in the production department because technological and system innovations are far more numerous there rather than in areas such as finance and marketing.

While the multinationals and large firms are very scientific in their approach, most of the small- and medium-sized manufacturers go about the process of production planning in a disorganized manner. While there are differences that dictate a diverse method, SME’s would still benefit from a more systematic approach.

Generally, production planning starts with the estimate of needed capacity. An accurate forecast of demand is needed to compute this. This is logical in larger firms, but some small- and medium-scale enterprises could not afford this and settle for the scale they can afford, despite the demand.

It must be noted that there are many other strategic questions to consider in estimating production capacity. A company may decide that it will be cheaper to just import the items instead of manufacturing them here. In cases where the demand is fluctuating, the capacity may be set to accommodate only the minimum level, with peak demand to be filled up by outsourcing.

After determining capacity, planning the layout of the production comes next. Space for every function, equipment, storage, etc. must be allocated. The work flow must be studied to minimize the transport distance between the work stations or source of raw materials. A frequently forgotten factor is the safety and comfort of the production workers.

After the layout is finalized, the search for a suitable facility follows. There are a large number of considerations in getting an ideal facility; some of the major ones include: size of the facility, cost of rentals, sufficient power supply, proximity to market, proximity to sources of raw materials, proximity of source of skilled manpower, zoning, convenient and legal waste disposal, and other factors.

Having set up your facility, you must now set production policies. One of the most popular policies now is just-in-time manufacturing wherein the inventories of parts, semi-finished and finished products are reduced to the barest minimum. Some of the advantages of this system are minimized storage costs and capital needed, and reduced set-up time.

Effective production and operations management is essential to cope with the influx of cheap goods abroad. Gone are the days when gut feel management is sufficient. You must either modernize your operations or be forced to close down. Those in charge must learn more about this topic.

BusinessCoach, Inc., a leading business seminar provider, conducts seminars on Production and Operations Management. You may contact them at 727-5628 / 727-8860 / 0915-205-0133, or visit their website www.businesscoachphil.com for details.

Click here to view details of the seminar: Production and Operations Management Fundamentals »

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.