Operation Management

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prerequisites for lower-level segments, which are separated by arranging periods (e.g., weeks) so that requesting, creation, and gathering can be planned for convenient fruition of end things while stock levels are kept reasonably low (Stevenson, 2012).

MRP is designed to answer three questions: what is needed? How much is needed? And when is needed?

There is an increasing need to implement a total business solution which supports major functionalities of a business. Enterprise resource planning (ERP) software is designed to meet this need, and has been widely adopted by organizations in developed countries. Meanwhile, ERP is beginning to appear in many organizations of developing countries. (Huang, Palvia 2001)

Enterprise resource planning (ERP) is a paradigm that emphasizes the importance of considering the impact of manufacturing decisions on the supply chain and of other vital interactions within the business in the decision-making process. (Hicks, Stecke 1995)

BICYCLE SHOP example- a bicycle shop is ordered by a customer (credit sale); the order is recorded on the ERP program, which updates the stock of bicycles a replacement is automatically ordered from the manufacturer; the customer is sent an invoice; when payment is made accounting records are updated the ERP program could also handle a bicycle-repair orders; sales to plan staffing over the next few months.

Effective integration of decision making processes can be achieved with the use of the right software package.

Decisions based on the most capable method to generate more productive and financially best option which includes the Input-Transform-Output process, plays a significant role for making a firm successful. MRP and ERP helps to reach that optimum goal which helps the firm to make the best possible choice.

Logistic &Supply chain management

The lack of good supply chain coordination can lead to frequent changes in production schedules, expedited transfers and shipments in distribution, excessive stock-outs, erratic levels of customer service, lack of visibility into future demand, and inventory in the wrong place and at the wrong time.

Supply chain management (SCM) is the key coordination of business capacities inside of a business association and all through its inventory network with the end goal of incorporating supply and request administration (Stevenson, 2012).

Supply chain management involves functions such as demand forecasting and planning, distribution inventory planning, and plant capacity planning and scheduling. The right mix of strategy, education, and systems can have a very high impact on a manufacturer’s overall operations and ultimately its bottom line (Stewart, 1997).

High quality planning is simply not possible if the inventory data is inaccurate or out of date or if the formulation information is incomplete. The forecasting system requires accurate sales history. The distribution requirements planning system requires accurate inventory balances. The capacity planning system requires meaningful plant capacity and product structure (recipe) information.

Managing inventories:

Inventory management is the process of efficiently overseeing the constant flow of units into and out of an existing inventory.

There is frequently misunderstandings about the relationship between safety stock, reorder point, reorder batch size and customer service levels.

One real time example is in many chemical companies, develop production plans around -”days of supply” or "cover period.” Some will derive their figures by simply dividing annual demand by the number of forecast periods without taking into account seasonality, trends, or the cost of production and carrying costs. Low-volume products generally should be produced less often with a longer cover period so that changeover costs (which are generally lower than carrying costs) are reduced. On the other hand, high-volume products should be produced more frequently. The relationship of volume to cover period has an impact on safety stock and service levels. The shorter the cover period, the more frequent the production; and with lower safety stock, service levels are higher. The converse is also true. (Jüttner & Baker, 2007)

The inventory policy system builds upon the forecast and is the driver for distribution and production planning. It formalizes the process of setting stock policy and allows the planner to look at the tradeoffs between inventory investment and service levels. Naturally, the aim is to meet the target customer service levels while holding the minimum level of inventory. It can play a key role to success while competing globally.

Outsourcing:

Modern organizations, in order to reduce operational costs and become more competitive, have designed and implemented several key strategies. One is that of outsourcing.

Outsourcing is contracted and delegated one or more processes, not business critical, a specialist provider, to achieve greater efficiency in carrying out the mission. Outsourcing yields various benefits like reduced costs, reorganizing the staff structure, increase the level of working capital, improve the quality of products and services and reducing the level of business risk which are all components related to operation management.

Managing suppliers:

Supply chain managers are dependent on supplier’s .When they require different supplies for creating a product or a service, so managing suppliers and guaranteeing of all requests to meets quality control needs to be checked consistently for efficient production.

Transportation:

Transportation expenses are increasing, and they should be prioritized to compete especially in a global scale. The greater part of the world’s uses shipment as a cheaper channel than air or road. Logistics administration is the segment of store network administration that focusses on how and when to assemble items, and complete merchandise from their separate sources to their final destinations.

Innovation:

Innovation is either a new unique idea or utilization of innovative technology .The importance of innovation in today’s constantly growing technology market is more highlighted than ever as the start of a supply chain needs to be more efficient , less time consuming and optimum utilization of limited resources.

Globalization:

Understanding national and organizational culture becomes increasingly