Operations Management and Manufacturing Process Semi-Finished Product

Question: Describe about the Operations Management and Manufacturing Process for Semi-Finished Products. Answer: Introduction The process of converting raw material or semi-finished products into final or finished products using labour, machinery and other important resources is known as manufacturing. The process of manufacturing is carried out by every business organisation so that it can fulfil the demands of the customers (BusinessDictionary.com, 2016). Every business organisation in this world, whether operating in service sector or in a production sector, has to manufacture products or services either themselves or by outsourcing it from a third party. Manufacturing is the process that is essential for the stability and robustness of an economy. It not only strengthens an economy but also facilitates the flow of money and other resources within an economy (Makingitincalifornia.com, 2016). Every company in the world has a design for its manufacturing process or providing its services. A manufacturing design process allows the companies to streamline their operations, reduce their operational costs, allocate adequate and proper resources, increase the overall efficiency and ensure that the final products meet the quality standards. The design of the manufacturing process for a firm can vary from industry to industry, firm to firm and can also vary according to the products that the company produces. Clothing Industry Clothing or garment industry is one of the biggest industries in the world. It contributes significantly towards the economies of various countries. The clothing or the garment industry comprises of production of clothing and garments, fashion industry, fashion retailers and trading of second-hand clothes and textile recycling. Though the ready-made garment industry has been highly criticised by some people for the use of sweatshops, child labour, piece work, etc. but it still remains a fact that we need clothes to wear and this industry cannot die ever. ABC Company is one of the biggest clothing multinational companies that has its working operations in two countries but has retail outlets in almost 28 countries. Famous for its designer and trendy clothes, the company was started in 1976 in France. The company has since then achieved success due to its ability to start up new trends and respond to the market demand quickly. The company has such a streamlined manufacturing process that it takes the company 7 days to 2 weeks to design a new garment and make it available on the shelves of all its stores. Thus, by managing its operations properly and using a very efficient supply chain system, the company has been able to gain competencies in the market and maintain it in the long run. Factors Effecting Manufacturing Process Design Clothing industry is an industry where the process of manufacturing has to be highly streamlined and without any errors as garments with defects is wastage and a burden on the finances of the company. In case of ABC Company, the manufacturing process has to be even more efficient as it carries out its manufacturing operations in two countries alone whereas the final products are to be shipped to almost 28 countries. Therefore, the manufacturing process should be highly accurate, streamlined and has to be designed according to the variables that affect the company and the industry. Let us now discuss some important variables that have been shaping the manufacturing process design of the company since its very beginning: Nature Of The Business/Industry Clothing industry is an industry which experiences very high competition at a global level. Customer these days have the choice of purchasing garments and clothes right from their smartphones, which gives them a million products and brands to choose from. In such a scenario, it was crucial for the company to build a brand and reputation for itself. The companys manufacturing process design reflects the nature of the business or the industry and also reflects the mind-set of the company, which was to build a reputation and brand image in the market by maintaining high quality of products. The company has restricted all the manufacturing process within its headquarters i.e. in-house manufacturing. Keeping all the production process within the house makes it possible for the brand to maintain quality standards as it can keep a closer check on the process. Outsourcing the manufacturing process can make it difficult for the company to ensure quality of gar ments. The company has designed its process in such a way that it can keep a closer look and make necessary changes in the required time. Frequent Changes In Market Trends one of the main features of the garment industry is that it experiences frequent changes in market trends and designs. The change in clothing and garment trends can be experienced in real time and companies manufacturing clothing articles in millions can become vulnerable to such market factors. If a company produces excess quantities of garments, a quick change in the clothing trend can outdate those million articles and can incur huge loss for the company. ABC Company has designed its manufacturing process in such a way that it manufactures articles in a very controlled manner. It operates five days a week and does not operate at its full capacity. It keeps its maximum work capacity for seasonal times or periods when the demand as at its peak levels. The company has established such an efficient system of supply chain management that it takes a maximum of two weeks for the company to makes its new products available on the shelves of all its store s. Thus, the company manages to keep its operations lean and manufacture articles only in the quantity required by various stores. The quantities of garments shipped to the showrooms are according to the orders placed by the store managers. The store managers are given the responsibility of placing orders for new articles and for the articles that are out of stock. Once the order is placed with the company, the company dispatches the order within one or two days so that the order reached the outlet as soon as possible. As discussed above, the company restricts all the manufacturing processes within the house itself. It allows the company to respond to change in market trends and any change that is experienced in dressing styles, trends, etc. The company produces clothes in a very controlled manner and as and when it experiences a change in the dressing preferences of people, it makes a quick change in the manufacturing process and introduces new designs in the market as soon as possible. Market And Consumer Demand the company has designed its manufacturing process in such a way that it has controlled the demand of the consumers in the market. The retail outlets experiences a high foot fall and the purchases made in the retail stores are very high as compared to other competitive brands. The reason behind this has been that the company manufactures a limited quantity of its stock. When the stock in the stores is very limited, the customer has to make a quick decision as the product might not be available on the next day if they come back to make a purchase. Further, the stock is produced in such a limited quantity that a customer might not find a month old product anywhere in the country as new stock is updated in the stores on a weekly basis. The company is aware that the demand for trendy and designer clothes is always high and by designing its manufacturing process in a very efficient manner, the company has been able to maintain quality and uniqueness of products , which ultimately increases the demand for the products of the company. Economic Factors another major factor behind the success of the company has been its ability to control the prices of its premium products through its manufacturing processes. The companys design of manufacturing process allows it to reduce the operational costs to a considerable extent and bring down the prices of its products. Where the rival products cost around 300-400$, the same products from ABC Company cost around 150-200$. The management of the company is aware about the fact that even during economic boom periods, people have a lot of money at their disposal and they buy more clothing products. On the other hand, the periods of economic downturns slow down the sales as people do not spend much on clothes. Thus, the company uses a manufacturing process that helps it in reducing the operational and manufacturing costs. The end result is that the prices of end products are cheaper than the competitive products even while the quality is high. In this way, the company manages to avoid putting up excess sales as the products are already available at competitive products and even when the company puts up a seasonal sale in all its stores, the response is tremendous (Smallbusiness.chron.com, 2016). Technological Factors the technology and the resources available to a company can also have a great effect on the manufacturing process design. If all the resources and machinery is easily available at single place, the manufacturing process becomes easier whereas if the resources or machinery is separately distributes, the manufacturing process design becomes more complicated and lengthy. For most of the companies out there, the flowchart is to first design, then forecast followed by outsourcing bulk production and logistics. ABC Company has its own way of designing things (Smallbusiness.chron.com, 2016). At ABC Company, the management believes that it is the design that matters and the rest can be easily done. The company has located all its resources, machinery and technology at a single place i.e. the clothes are designed, manufactures and shipped from the same facilities (Anon, 2016). The manufacturing process design of the company makes it a trend setter rather than being a co mpany which follows the trends set up by superior companies. Geographical Factors for a company that is into clothing industry and has to serve 28 countries by manufacturing products only from two countries, it takes a lot of efforts to design the manufacturing processes. It is obvious that the consumer demands and needs would not all be the same in all the countries and may vary according to the geographic factors and weather conditions, for example, consumers living in Canada would demand warmer clothes as compare to people living in India. Therefore, the company has to incorporate geographical factors when it designs its manufacturing processes. The designers of the company design separate garments for different countries, depending upon the climatic conditions and consumer requirements of that place. These products are then manufactured and then shipped to the countries for which they are manufactured. These are mainly those products which are to be used in cold weather, such as warmers, jackets, sweatshirts, etc. whereas other garments, such as denims, shirts, t-shirts, shorts, trousers, blazers, etc. are all similar for all the countries. Thus, the geographical factors of the countries also play a huge role in the manufacturing process design of the company. Lean Principles And Operations Managament Operations management is the process of administration of business operations and practices that aims at minimising the operational costs and achieving the highest level efficiency that can be possible for an organisation (Investopedia, 2010). The main objective of operations management is to convert all the resources into goods and services in the most efficient manner possible so that the organisation can maximise its profit. Lean principles are also a concept in the operations management which means to create more value for the customers using as few resources as possible (Lean.org, 2016). Today, the business environment has become highly competitive and the organisations are now competing with each other at a global scale. In such a scenario, operations management plays a huge role in how the organisations achieve market competencies by implementing lean principles. In the above presented case, ABC Company has definitely used operations management and lean principles to achieve such a competitive edge in the global clothing industry. The company has efficiently identified the factors that add value to the products which it offers to its consumers. Let us now discuss some of the factors that have helped the company in adding value to the products and ultimately increasing the overall efficiency and decreasing the operational costs: Just-in-time production strategy the company follows just-in-time production strategy which enables it to reduce a lot of its operational costs. The company produces only a certain percentage of its stock before the start of a season while it manufactures at its full capacity during the season itself. Such a production strategy allows the company to keep its maximum manufacturing potential saved for the periods of peak demands and also allows it to respond to the changing market situation in a better way. In-house production another important strategy in the production design of the company has been to keep all the production process within its headquarters. The company has kept all its designers, production facilities, manufacturing units, storing warehouses in one place. Such a strategy streamlines the operations and makes it easier for the company to design, manufacture and ship products much quicker than most of the rivals. In most of the companies, the designers first design a new garment or cloth and then they send that design to the headquarters, which might be hundreds of miles away, for the approval of the management. If the management approves it then the design goes for production whereas if the management needs some changes in the design, the designers have to go through the same process all over again. The centralized system of design and production helps the company in streamlining its operations and implementing lean production in the organisation. Where other companie s manufacture garments in bulk quantities and cannot alter a design or units throughout a season, ABC Company is able to make real time changes in its designs and quantities even during seasonal demands. All this has been made possible only because of the operations management of the company. The company can restock its stores with clothing articles within two weeks, which proves its efficiency in manufacturing products and supply chain management. Further, by restricting all the manufacturing process within the headquarters, the company has been able to ensure higher quality products while the operational cost also decreases because all the operations being carried out in the same place (Study), 2016). Excellent scheduling the managers at each retail store of the company are allowed to place an order with the headquarters once every weak. Once the headquarters receive the order placed by the store manager, the order is prepared ad ready to be shipped within 24 hours. Once the stores receive the orders that they have placed, the stock is immediately put up on the display on the same day itself. The pace at which all the process is completed is kept steady and provides as an excellent factor for achieving market competencies (Study, 2016). Manufacturing in small and controlled quantities ABC Company has adopted an excellent strategy of producing orders or articles in small quantities. Manufacturing the articles in small and controlled quantities allows the company to maintain exclusivity of their articles and the customer has to make a very quick buying decision as the products are in limited quantity and can go out of stock at any time. Further, small quantities ensure that there is new stock coming up on weekly or monthly basis. Thus, the customers regularly visit the retail outlets of the company to check out their new stock and buy exclusive products. The strategy to manufacture articles in very small quantities also allows the company to first of all check the response of the consumers towards a new product. If the response is good, the company can manufacture those articles in a greater quantity while the articles which do not receive good response can be discontinued quickly to avoid financial losses or losses to the brand image (Study, 2016). Conclusion Thus, the company has been able to implement lean operations on the organisation very effectively and design its manufacturing process according to the variables that have the maximum impact on the companies operating in garment or clothing industry. The strategies adopted by the company reflect their mind set of streamlining all their operations in the best possible manner. Due to the ability of the company to streamline its operations and implement lean operations in the organisation, it has been able to maximise its efficiency in all the operations and reduce their operating costs. Such factors have also helped the company in bringing down the final prices of their products and giving a neck to neck competition to some of the top brands in the world in terms of prices, quality and exclusivity of the products. Where most of the companies in the world are struggling for their survival, ABC Company has established its success on the basis of its ability to manage their operations in the best possible manner so that the efficiency can be optimised and operating costs can be reduced to the minimum possible levels while ensuring high quality of products and greater customer satisfaction. References Buljubasic, T. (2016). Process Innovation Zara Innovation Excellence. [online] Innovationexcellence.com. Available at: https://innovationexcellence.com/blog/2013/11/18/process-innovation-zara/ [Accessed 31 Jul. 2016]. Anon, (2016). How does Zara manufacture clothes so fast?. 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