Operation Management
Executive summary
It is common knowledge that every one of the successful companies today sought and found a precise understanding of how it could create advantage in the operations system and delivery options of the business organisation in order to address detailed customer specifications. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets.
This paper explores the concept of Fordism and its contributions to the current operation management practices and critically examines supply chain management considerations that business organizations employ at present. Discussion and analysis of the ever-changing, complex and competitive business environment issues and considerations that characterise different business industries today resulted to the conclusion that although the strict application of core Fordism ideologies will not prove beneficial, the contributions of the concept continue to be effective in significant aspects of business operation management in the 21st century.
Introduction
In today’s fast and technological modern world, the challenge that the Information Man faces is time’s nature of putting things in order and in place in the best and most effective way. Life has changed since the invention of the computer which dictated man to deal with things in the most efficient way possible. In the world of big international business industries where transactions and other business operations are governed by law, cultural differences and mutual trust, efficiency counts largely as a common entrepreneurial aim.
Companies employ detailed business plans and strategies in order to gain several benefits from its competitors such as increased profits and enhanced customer relations as company objectives. Gaining customer loyalty is a corporate challenge today in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide. The changing business world allowed customers to change as well. Company management had shifted their focus on their clients or customers so as to stay successfully in business with the need to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. With the advent of technological innovations, logistical decisions about delivery operations, stockholding, warehousing and economies of scale get more complex solutions in today’s business environment.
The Concept of Fordism
Before the advent of the production management ideals of Ford, it was ’s principles of hierarchical, fixed and compartmentalised manufacturing activities; work especialisation and division of labor, and product-oriented output definition which were common among manufacturing and industrial business organizations (1997). aimed to control the production system by employing unskilled workers and requiring the standard output while offering incentives to higher workload production. This production management practice was widely criticized for its inhumane production system with regards to employee conditions and was then replaced by Fordism (1990).
Fordism is a production ideology pioneered by during the post-war decades in the Western industrial countries which supported domestic mass production and allocation of relatively higher wages among laborers. Ford was credited for improving the production methods during that time through developments in the assembly line methods and manufacturing as implemented by Ford Motor Company. Under the concept of Fordism, mass consumption considerations were integrated with production accountabilities in order to sustain economic growth (, 1984). Moreover, the Fordism philosophy has greatly influenced business operation management strategies that have transformed through time so as to address the current demands in the highly complex and competitive market environment. These include the principles of lean management, flexible system production, also called the Japanese management system, total quality management, just-in-time inventory control, leaderless work groups; globalization of consumer goods markets, faster production life cycles, as well as intensive product/market segmentation and differentiation (1984).
But according to (1977) the main contributions of the concept of Fordism particularly to the area of mass production/consumption are most relevant in the process engineering aspects of business organisations following the idea of product standardisation through efficient use of tools and gauging systems which almost allowed the interchangeability of products. This resulted to movable and continuous assembly lines characterised with single and repetitive task performance (1990). The moving assembly line which was first implemented in 1914 increased labor productivity and permitted significant price reductions (, 1978). But the application of the concept of Fordism in the current supply chain management calls for critical examination which this paper will address in the succeeding discussions.
Supply-Chain Flow Management
According to (2004), supply chain management is considered as one of the most important strategic aspects of any business enterprise where decisions about coordinating of production of goods and services, store inventory, list of suppliers, and cost-effective and timely distribution are made. Supply chain management functions in order to design and manage the processes, assets and flows of material and information to answer the needs and demands of the customers and clients.
The supply chain is traditionally characterised as a stable system in which components and goods move smoothly from supplier to assembly customers. In addition, supply chain refers to the suppliers, distributors, wholesalers and retailers that involved in manufacturing a product and getting it to consumers (, 1995). Supply chain is also defined as a network of independent or semi-independent corporation bodies collectively accountable for procurement, developing and or manufacturing and distribution scheme connected with one or more groups of related products (, 1996). Research study shows that supply chains increase in their complexity as the number of nodes increases ( 1998). Supply chain design models are making decisions worth millions of dollars, usually without integrated analysis of the variability of the proposed system ( 1998) 's interview study found that Supply Chain managers are responding to such pressures by increased back loading, improved vehicle routing, greater load consolidation, the redesign of packaging and changes in the ordering system ( 1998).
As such, companies at present are deploying supply-chain management (SCM) systems to enhance efficiency across the product lifecycle by streamlining procurement, production, fulfillment, and distribution processes. To help ensure that an SCM solution provides the intended return on investment, the enterprise network infrastructure must work together seamlessly since its effectiveness depends on the ability of users to access up to the minute information across the supply chain. Organisations usually share proprietary corporate data with external suppliers and partners while ensuring maximum security. This requires integration of applications and data across multiple geographically dispersed supply chain partners, as well as internal integration with legacy systems. All these efforts are focused on improving the customer relationship of companies that belong in the manufacturing industry.
Discussion and Analysis
Most companies find it impossible to create any kind of sustainable competitive advantage based on product alone as successful companies sought and found a precise understanding of how it could create a customer-cantered competitive advantage. Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In this light, reliance to the internal resources of the organisation will not do if environmental considerations of the company are not likewise taken into account. These include the significant market characteristics that directly and indirectly influence and dictate the strategic business implementation and sound decision-making from the options available. The forecast of subsequent political, economic, and social implications that change will result to also needs to be identified and enumerated to ensure the success and development of the organisation as well as the welfare of the general public.
The best suppliers continuously update and upgrade their service deliveries in order to answer the demands of their customers. Customers have the ever-increasing demand on getting their hands into the products which can lead to change in supplier if expectations are not met. This meant that organisations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centred. Rethinking and reformulating the organisation on the other hand, entail the consideration of several factors such as various processes, technology, the environment as well as the success factors of people (, 2000). Hence, in order to bring out exceptional customer services within the company operations, the management should employ fine-tuned organisational restructuring. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (1997). In the electronics industry, business organisations are never ceased in employing means to satisfy the requirements and tastes of the consumer population through intensive research and development. This is evident in the confounding issues of market volatility, technological uncertainty (, 1999), and fast product life cycle (, 2002).
Moreover, it is a management philosophy that seeks to integrate all organisational functions such as marketing, finance, design, engineering, production, customer service, and others to focus on meeting customer needs and organisational objectives (2000). A considerable number of electronic companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganisation. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations necessitates human resource purposes to realign and relocate itself (, 2001).
As opposed to the core ideals of Fordism, the current business environment is characterised with the relevance and value of customer participation and not just consumption accountabilities as the most significant consideration in implementing operation strategies. In the case of contract manufacturing, service providers highly take into account the specific requirements of their clients through customisation of services and goods. This is evident in short life cycles and increased variations among products in order to supply for the fast-paced product differentiation due to highly demanding and varying consumer tastes. As such, the focus of Fordism in the technicality and standardisation of goods and services neglects the open and active participation of customers in influencing and to some extent dictating the succeeding market trends.
Organisations that capitalise on customers' active participation in organisational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (, 1979; 1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers’ satisfaction. Business organisations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to (1990), if consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organisation.
Every business wants to have a regular customer base because customers dictate profits and how the customer is treated will reflect on whether the customers will remain loyal with the company or not. Gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide (, 1997). At present, business firms invest on researches that will define their target customer groups that they believed they could serve best. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets. (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
The development of Quality Management System is one of the quality management approaches that address the business setting at present. It was developed to (1) save thousands of dollars each year by avoiding the waste associated with a paper quality system, (2) harness the creativity of employees while maintaining control of their projects, (3) perform tasks that are clearly assigned, defined, communicated and focused, (4) spend less time managing the quality system and more time improving the value stream, (5) reduce training costs by integrating procedures with training, (6) provide a management system that provides the who, what and when, and (7) provide the metrics to drive your organisation to ever-higher levels of performance and success which works just as well for small as large companies ().
The machine is known in the ease of its use and installation as well as its cost effectiveness in dealing with wastes in most quality systems thereby saving time and money for the software. It can integrate information, reports, graphs, and other tools that work together to simplify and deliver information for improved business operations which minimise the time spent on other software programs (). But evidently, the lean quality management approach can be discerned to have been significantly based on some of the aspects and considerations of the concept of Fordism. At present many production companies, particularly those in the manufacturing industry, use and implements the improved applications of Fordism principles.
The Value Chain of Production System Model below illustrates how companies at present gain competitive advantage by adding value to the overall operation of the organisation through efficient production system (2006). Business firms that utilise the value chain management strategy also consider increasing the companies’ relationship with its shareholders by separating the business system into a series of value-generating activities, namely: (a) inbound logistics, (b) operations, (c) outbound logistics, (d) marketing and sales, and (e) customer service. In effect, from the receiving and warehousing of raw material from the suppliers, all through out the manufacturing and production process, as well as in the entire the distribution and sales of finished goods, the value-generating activities are supported by the infrastructure of the firm, its human resources management, and the technology it uses (., 2005).
However, the company’s profit depends on the effectiveness and efficient implementation of strategic operations management in such a way that the customers will be able to pay of the production exceeds thus maximising the production system of the organisation. This operations approach likewise provides opportunities for enhancing product value and achieving superior product features (product differentiation) which can position the company better compared to its competitors, particularly when the company can enjoy its cost advantage strategy or when it has the ability to offer the goods and services at much lower price (, Inc., 2005). Collaboration on product design and development, integrated supply chain management practices, lean techniques in the manufacturing and production process, and enhanced customer relationship through research and development are the keys to increasing the value chain in the production system (2006).
Perhaps, every organisation wants to initiate a management system and strategy that could maintain the organisation’s capability, strength and competitiveness. It is important that the management team and the organisation per se should always open their mind for changes that they might encounter in order to cope and adapt to the latest development that are happening within and outside their environment. The major objective of change management is the introduction of innovative means and systems in the work organisation. Businesses must normally undergo change in order to evolve to a higher level of for instance, stability, management or production.
Organisations are neither the rational, harmonious entities celebrated in managerial theory nor the arenas of apocalyptic class conflict projected by (1980). (1996) believe that modern organisations passed by the guild structures and as organisations grew larger, skills become increasingly fragmented and specialised and positions become more functionally differentiated. (1964) had defined three approaches to organisation, which includes structure, technology and people (1964). New formal guidelines and procedures like organisation chart, budgeting methods, rules and regulations can also be structural approaches on inducing change. On the other hand, rearrangements in work flow through new physical layouts, work methods, job descriptions and work standards can be done as technological approaches. Some organisations stress on people approaches which includes alterations in attitudes, motivation and behavioral skills. This can be done through new training programs, selection procedures, and performance appraisal schemes.
Usually, the organisation is encouraged on settling on change management due to external influences, usually termed as the environment (, 2004). In addition, adapting factors crucial to the success of certain missions and the implementation of solutions to problems are common traits of a successful organisation (1998). The lack of such initiatives can throw an organisation into confusion, being stuck in traditional practices that cannot solve or handle the current problems faced. Thus, the lack of such factors stresses the need for a strategic organisational change. It is basically a flexible strategic planning process as opposed to a static form of strategic planning. Organisational change is part of and a result of struggles between contradictory forces, also change management practice is related with endeavoring to manage their competing demands.
(1998) emphasised the relevance of the search for global efficiency, local responsiveness, transfer learning and external alliances through proper information management in a particular business organisation. The search for global efficiency implies that the organisation must be able to coordinate and consolidate its activity within each relevant function to achieve available immediate economic opportunities. There should be a collection of comparative performance information from different locations around the world to support decisions on how effectively allocate resources and source requirements which may be facilitated by building a global data network.
Achieving local responsiveness implies limits to standardisation wherein the expectation is that organisations will want to identify some level of standard/core product, but also provide a variety of optional features which may be present or absent in the delivered product depending on local, legal, or market conditions. The co-ordination required for transfer of learning would seem to be along functional dimensions, across multiple locations involved in research and development, marketing, service, and so on. Meanwhile, inter-organisational information systems can provide new opportunities through vertical and horizontal information exchange for organisations to extend its economies of scope through external alliances between companies with different skills and cultures (, 1998).
Finally, in business industries where transactions and other business operations are governed by law, cultural differences and mutual trust, efficiency counts largely as a common entrepreneurial aim. Suppliers are vital parts of the manufacturing business from whom a business organisation agrees to get components or raw materials for their products. Good relationships between the supplier and the manufacturer should be maintained in order so as to ensure adequate and timely flow of materials and products to the consumers.
Conclusion
Communication technologies have paved the way for a lot of business organisations to enjoy economic growth and security in the competitive business industry not just in managing the finances of a company but also in directing the flow of supply and demands of the firm as well as in controlling the risks that are inherent in this managerial responsibility.
At the present business environment, the core principles of Fordism cannot be implemented and be successful as before. The world has changed immensely in the past several decades which called for subsequent changes in different business industries. However, it is important to take note that revolutionary changes have been productive and effective in meeting the demands of the public thereby improving the overall approach to efficient business management. Moreover, the need for these changes were recognised, addressed and made possible through the initial efforts of business personalities like who contributed immensely to successive positive transformations and modifications in effective operation management.
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