Operations Management Principles Db 1

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As organizations grow historically over a period of time, certain systems and practices that were once effective and desirable become counterproductive in a changed environment. Hence it is essential to periodically examine the systems and practices and make the required changes. A change in the top leadership provides an opportunity to do this.

Inventory levels are always a worry for top management and rightly so because high inventory levels block up operating funds and hence add to costs. There are two types of finished goods inventory levels. The inventory levels of MTS products exist awaiting orders from customers. Some of these MTS products are slow moving and can be shifted to the MTO category. However this needs to be done in consultation with the customers of these products so that they are not inconvenienced. To simply reduce the level of the MTS products can adversely affect customer service levels, because of stock outs. In order to effectively reduce the inventory levels a greater co-ordination is required with the customers. The regional distributors need to have better forecasting techniques. Such techniques will help the company and distributors both to reduce inventory levels. E-commerce is a great tool for reducing lead times. (Stevenson, 2007, p.696) Electronic and continuous access of inventory levels with the distributors can lead to automatic generation of production schedules without having to wait for distributors to place orders. The inventory levels of MTO products exist awaiting production of minimum shipping lots. Since delivery is largely through UPS, the fixed costs for delivery are minimal and MTO goods can be shipped as soon as produced. Again this change must be made in consultation with the customers.

Customer support staff is crucial to generating competitive advantage. However a dedicated customer support group located near the airport is counterproductive. It is removed from both the customers who need the service and from the designers who create new opportunities for the service. It would be a good idea to do away with the customer support staff at the airport and divide the functions between the manufacturing representatives and the design staff located at the manufacturing bases. The manufacturing representatives will have to be trained to provide basic customer support. Those manufacturing representatives dealing with original equipment manufacturers will also have to be trained to communicate new design concepts to the equipment manufacturers. Once the basic concepts have generated interest, specialist design people can interact with the equipment manufacturers to demonstrate how the design changes can lead to mutual benefits. Rather than wait for customers to specify what design changes they need, the company should proactively suggest design changes. This will be a key to increasing customer satisfaction.

Considerable improvement can be done in both the effectiveness and efficiency of the internal supply chain. The effectiveness of the supply chain is hampered by the organization structure

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