UWE Competing Through Operations

Capacity and Performance

Student Number - 11016918

11016918 22/11/2012

Student Number - 11016918

CTO Assignment

22/11/2012

CTO Coursework Assignment Capacity and Performance

Student Number - 11016918 22/11/2012
Contents
CTO Coursework Assignment Capacity and Performance ........................................................................... 1 CTO Coursework Brief. ................................................................................................................................................... 2 A: Five Performance Objectives .................................................................................................................................. 2 Five performance objectives Options Electrical Services LTD ................................................................... 3 References ........................................................................................................................................................................... 6

Student Number - 11016918

CTO Assignment

22/11/2012

CTO Coursework Brief.

You are required to conduct research into a named organisation that offers a product, a service or both. To meet the objectives of this assignment you will need to gain access to an operation and collect information and data that will assist in addressing the following tasks:

A. Which of the five performance objectives (that the operation might attempt to achieve) do they consider most vital to their success in their marketplace? You should explain your findings by analysing your field data (primary research findings) using appropriate academic theory, tools and models to justify your conclusions. B. Critically appraise how the named organization meets its customers demands in a fluctuating market. For this element you have to consider the capacity strategy being followed, you should consider all the variables and identify, if any, constraints on capacity. C. How does the capacity strategy support the performance objectives for the named organisation?

A: Five Performance Objectives

A company should be concerned to satisfy its customers requirements for fast and dependable services at reasonable price, as well as heyeah slping its own suppliers to improve services they offer. Slack et al. (2001) argue that there are five operations performance objectives: One wants to do things right. Examples of good quality are that all parts are made to specification, the product is reliable and the product is attractive. What is needed to do things right will vary according to the type of operation. one wants to do things fast. Speed is important inside and outside the operation. Outside, the customer has to wait for the product. Inside, speed is essential to keep inventories down, simplify planning etc. one wants to do things on time. This gives predictability, which is useful for example, to simplify planning, to reduce stops due to lack of parts etc. one would want to change what one does. 2

Quality

Speed

Dependability

Flexibility

Student Number - 11016918

CTO Assignment

22/11/2012

Cost

There are needs to be able to vary or adapt the operations activities to cope with unexpected circumstances or to give customers individual demands. i. The ability to change the volume of production. ii. The ability to change the time taken to produce. iii. The ability to change the mix of different products or services produced. iv. The ability to innovate and introduce new ideas and concepts. The cost objective: one would want to do things cheaply. This includes for example, producing goods and services so that they could be priced competitively and still making profit. Since the process of calculating costs is outside the scope of the method package, it has very much been left out. It could however, be done in parallel to or just after applying the method package in a design project.

Karlsson, A. (2002).

Five performance objectives Options Electrical Services LTD

These operations performance objectives are analysed here in relevance to Options Electrical Services LTD

1)

Doing things right by providing error free goods and services, which will satisfy the customers, is known as quality.
Another performance objective is speed, which means by doing things fast, to minimise the time between the order and the availability of the product or service that gives the customer e speed advantage. The TMCs techniques are focussed operations that reduce complexity by using simple and small machines, which are robust and flexible. By rearranging layout and flow to enhance simplicity improves speed of production. On the coursework, statistics show that in the late 1980s, the output per worker was as much as two or three times higher than US or European plants.

2)

Student Number - 11016918

CTO Assignment

22/11/2012

3)

Third performance objective is dependability that means doing things in time for customers to receive their gods or services when they are promised. TMC includes Just-in-time (JIT) production system with multi skilled worker that work as a team, and with 'kanban control' has allowed them to deliver products as promised. Improving efficiency and quality is a concern not only of managers and technical experts but also of all employees. So, by doing this, TMC gives a dependability advantage to its customers.

4)

A clear result of responding to a dynamic environment is that organisation change their products and services and changes the way they do business. This performance objective is known as flexibility. (Peters, T., 1998) argues that we must learn to love change and develop flexible and responsive organizations to cope with the dynamic business environment. In the TMC plant it means the ability to adopt its manufacturing resources so that it can launch new models. The coursework analyses that, Toyota was able to achieve high level of flexibility, producing relatively small batches of different models with little or no loss of productivity or quality. TMC during the years has provided a range of options that customers are able to choose.

5)

One major operations objective, especially where companies compete with prices is cost. Low price is a universal attractive objective to customers, which can be achieved by producing goods at lower costs. In order to do things cheaply, TMC seek to influence the cost of goods and services, so for the future TMC has planned to shift their production of multipurpose vehicles and pick-up trucks on different countries around the world (e.g. Argentina, South Africa). Also, internally, cost performance is helped by good performance in the other performance objectives that TMC has managed to produce high quality vehicles at a reasonable prices.

Five Performance Objectives

Capacity Leading Strategy

Advantages Always sufficient capacity to meet demand, therefore revenue is maximised and 4

Disadvantages Utilisation of the plants is always relatively high. Risks of even greater (or even

Student Number - 11016918

CTO Assignment customers satisfied. Most of the time there is a capacity cushion which can absorb demand is forecasts are pessimistic. Critical start-up problems with new plants are less likely to affect supply to customers. Always sufficient demand to keep the plants working at full capacity, therefore unit costs is minimised. Over-capacity problems are minimised if forecasts are optimistic. Capital spending on the plants is delayed.

22/11/2012 permanent over capacity if demand does not reach forecast levels. Capital spending on plant early

Capacity-lagging strategy

Insufficient capacity to meet demand fully, therefore reduced revenue and dissatisfied customers. No ability to exploit short term increases in demand. Under-supply position even worse if there are start-up problems with the new plans

Student Number - 11016918

CTO Assignment

22/11/2012

References
Slack, N et al. (2011). Operations Strategy. Harlow: FT Prentice Hall. p129. Slack, N et al. (2001). Operations Strategy. Harlow: FT Prentice Hall. p364. Karlsson, A. (2002). Developing High performance Manufacturing Systems. PHD, Royal Institute of Technology. p106.