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Operations Management not only refers to the production of finished goods or services, but also other kinds of operation so that one firm's finished goods or services can be delivered to the end-users or to the distributors. As said above, Operations Management includes the following tasks management such as Marketing management, Human resource management, Production management, Logistic management...
This paper aims at the applications of Operations Management. It is required to study the ways of Operations Management applications of the selected firm. Moreover, it is necessary to point out its progress and shortcoming while doing business.
As Schroeder, R.G. et al. (2011) stated in the textbook, Operations Management that, "The operations function of an organization is responsible for producing and delivering goods or services of value to customers of the organization. Operations manager made decisions to manage the transformational process that converts inputs into desired finished goods or services".
Operation Management is an important field in an organization because it helps managers in that organization to make its products and services to be meet with the satisfaction of its customers.
Operations can be divided into three parts:
Decisions- They refer to make decisions. Decision-making is a means that leads to effective operations of an organization. It involves in the task of choice for proper and suitable solutions that can solve the problems or enhance the results of the tasks the organization should be performed. Decision-making can be divided into two types: Decision-making can be performed by an individual, or by a group of individuals.
Function- It refers to the duties of the Management Council or the operations manager that comprise planning, organizing, leading, and controlling how to do perfectly their duties in production and sales tasks.
Process- It refers to the performance the duties of planning, organizing, leading, and controlling which can be accomplished leading to the organization's predefined goals.
The principles for Operations Management
1. Business Process Reengineering- This task can bring about some benefits to the firm when it can perform the performances of enhancement of engineering in its organization.
This task can be used as proceeding to the roots of redesign and reorganization of an enterprise so that the owner of that enterprise can not only lower costs, but also increase quality of service in which information technology plays the key-role for those ultimate sources of the change.
2. Lean System- Taiichi Ohno "is credited with creating the Toyota Production System (TPS), which is one of the better known implementations of Lean Thinking anywhere in the world. The concepts of lean were born out of the severe resource constraints in postwar Japan, which leads us to next week's process improvement program. Lean Thinking is ideal for mature (energy), slow growth (automotive), low transaction industries (small business) or an organization where mathematical tools are not common. Lean begins to use systems thinking and considers all of the process interactions. However, lean is still a reductionistic approach focused on eliminating waste (cutting costs). What needed is to balance the resources released through Lean or Six Sigma improvement programs with an increase in throughput and need for resources. Otherwise you enter a cost cutting, job losing cycle and your process improvement program will grind to a halt". (Retrieved from http://www.bizmanualz.com/information/2005/07/14/lean-thinking-for-process-improvement.html).
Lean system is used to reduce waste in organizations to make their operations more effective.
3. Kanban System- "In the manufacturing Kanban system, a machine shop supplies components to final assembly. Assembly is a manual operation with little setup and produces in lot sizes of one, to customer requirements. Machining is more automated and has significant setup costs. Machining produces in batches to amortize the setup and sequence parts to minimize tool changes".Â (Extracted from http://www.strategosinc.com/kanban_1.htm).
Kanban system is mainly used to control the sequence of works to meet the main assembly schedule.
4. Six Sigma- Majority of companies around the globe typically operate at about 4-sigma precision - or nearly 99% perfection. The Six Sigma way is to understand the customers' needs, gather valuable information and data from the processes, and make accurate statistical analysis from it to improve the processes. At the end of the day, making it to the 6Î£ level is learning from the mistakes and successful process deployments in the past, and getting the required support from co-workers and the valuable backing of top management. If companies are able to make 6Î£ take place in their respective backyards, quality control becomes an unnecessary preoccupation-and companies will definitely have a happy, satisfied and growing customer base. (Extracted from www.dummies.com/how-to/content/six-sigma-principles.html#ixzz11GYvbTPF)
Six Sigma is used to understand the customers' needs, get valuable date and information from the processes, and from it, make accurate statistical analysis to improve the processes.
5. Forecasting- It refers to the tasks of forecasting which can happen at present and at future time.
6. Theory of Constrains- "(TOC) is a management approach that emphasizes the importance of managing constraints. A "constraint" or "bottleneck" is any thing that prevents you from getting more of what you want. Study of constraints or bottlenecks, keeping their record and taking necessary steps to improve them is also known as bottleneck accounting" (Extracted from http://www.accountingformanagement.com/theory_of_constraints.htm).
TOC can be used to maximize operations by identifying and scheduling their bottleneck resources.
7. Material Requirements Planning- "Materials Requirement Planning (MRP) is a scheduling procedure for production processes that have several levels of production. Given information describing the production requirements of the several finished goods of the system, the structure of the production system, the current inventories for each operation and the lot sizing procedure for each operation, MRP determines a schedule for the operations and raw material purchases. This add-in provides all the features necessary to formulate and solve small examples" (Extracted from http://www.me.utexas.edu/~jensen/ORMM/omie/computation/unit/mrp_add/mrp.html".
MRP is a plan that can help operations to meet the materials' requirement depending on the order of the customers.
8. Enterprise Resource Planning- ERP can perform the following tasks: (1) Reduce overheads and inventory; (2) Timely responsiveness; (3) Market share and image enhancement; (4) Faster design to manufacturability; (5) Keep up with technology changes; (6) Only way for integrated system for a client with multiple locations. (Extracted from http://www.erpfans.com/erpfans/erpdefinition/erp050.html).
EPR is a system of integrate all activities of an organization such as marketing, human resources, sales, finance into one system to help it to save cost, increase competitive capacity, and get profits for long term.
The above principles can be applied and implemented in organizations to improve their operations effectively. With these principles, the people in an organization that have the responsibility to implement them are not only the managers, but also all of its employees.
However, there are some cautions in implementing each principle in an organization.
For example, in each organization, the relationship between its managers and employees is very complex. Therefore, to make it better is not an easy task. In addition, Material Requirements Planning is not easy to apply in organization because the materials' requirement depends on their suppliers, for instance.
The principles applied in the selected firms as follows:
1. Business Process Reengineering
2. Lean SystemÂ
3. Six Sigma
5. Material Requirements Planning
6. Enterprise Resource Planning.
The functional units and the Board of Directors of Bianfishco have performed the following Operations Management Systems (like in the above-mentioned systems):
"Binh An Seafood Joint Stock Company- Bianfishco (belongs to Dieu Hien Group) established in 2005, started to operate at the end of 2006, specializes in farming, processing and exporting seafood (Tra, Basa fish) with the largest scale and the most modern plant in Mekong Delta. The invested capital in Bianfishco until 2008 is about 1,000 billion VND. Its location is at two lots: 2.11 and 2.17 Tranoc II, Industrial Zone, Cantho cityÂ with total area about 90,000 square meters.Â Binh An Seafood Joint Stock Company has grown up as today is the common result of all officers and employees who have constantly strived to better during last time and worked shoulder to shoulder with "The Captain", Madam Pham Thi Dieu Hien - the Chairwoman of the Management Board, concurrently General Director of Binh An Seafood Joint Stock Company. She has lead Binh An ship off to introduce to friends all over the world about products ensuring Prestige - Quality reaching the international rigorous standards such as: HACCP, HALAL, BRC, IFS, ISO/IEC 17025, ISO 22000:2005Â and conquering the fastidious markets as: USA, EU... Recently, Bianfishco honored to be presented the "Century International Quality Era Award" by the Business Initiative Directions Organization in Spain due to creative application of quality management system model - QC100. Binh An Seafood Processing Plant locating at lot 2.17 Tranoc II, Industrial Park, Cantho City has total area over 30,000 square meters, with the process capacity of 500 tons of raw pangasius materials per day, contributed to solve the employment to more than 5,000 workers in local area. Especially, our plant equipped with brand - new and modern machinery by famous firms such as evaporative condenser: Evanpco - Belgium, IQF Freezers: Mycom - Japan, Flake-ice machines: Geneglace - France, Cooling water systems: Guntner - Germany, Skin removing and grading machines: Marelec - Belgium, Cold Stores: PoliStamp - Italy â€¦ and many other specialized equipment from USA, ASIA. Salvaging available by-products fromÂ processing plant, Bianfishco bravely built "Pangasius by-product plant" with a large scale and area of 7,500 square meters, installed domestic and oversea equipment, technology process. The invested capital is over 20 billion VND with the capacity of 300 tons by-product per day. Bianfishco has proactively established a closed aquaculture program in farming and processing so we invest 300 billion VND to build "Seafood Processing Plant" (opposite to Binh An Seafood Joint Stock Company) with the area of 30,000 square meters and the capacity of 300 tons granulated meal per day. The equipmentÂ has been chosen by specialists basing on the most modern technology of France, USA and Asia. Our products satisfy fresh food source from two farms: Area 1 is in Tan An commune, Binh Tan district, Vinh Long province; Area 2 is in Tan My commune, Cho Moi district, An Giang. The total area of two farms is over 50 hectares and yearly production reaches 20,000 tons. All farming process is strictly applied standards such as BAP, VIET GAP to guarantee fresh products from input material source. WithÂ the aspire to raise up the potentiality of Vietnamese seafood process, farming; especially in Mekong Delta, on December 2nd , 2008, Bianfishco began to build "Vietnam Pangasius Research Institute" at lot 2.11A Tranoc II, Cantho city with the area of 2,000 square meters and the initial invested capitalÂ is about 30 billion VND. Bianfishco Pangasius Research Institute is the first seafood institute establishedÂ with purpose of researching all kinds of fingerlings, food and biology technology concerning aquaculture farming and processing fields, testing elements of biology, chemistry, physic, antibiotic, controlling quality to guarantee food hygiene. This is a place assembling specialists, engineers from domestic and foreign countries to come for researching, working under an appropriate treatment and long-term development.
Breaking through in own wayÂ (Business Process Reengineering)
With desirability of improving value of products processed from Tra, Basa fish; and increasing income for farmers, in 2009, Bianfishco has summoned up strength in investment in machinery, equipment so that Binh An Seafood Institute can early start operations and achievements of seafood research has been applied in practice from now on. The most special issue is experiment, research of fingerlings, selection of gene, suitable fish meal and nutrition ingredients for fish, fish diseases, the best precautionary, treatment and method of breeding. Further issue is producing Tra fish that is rich in content of Omega 3, breeding fish with microbiologic enzyme, etc. Now, Bianfishco has quickly been known as "bright point" of seafood process and export in the whole country by many people. Not long ago, at the beginning of October in 2009, Bianfishco and the President - General Director, Madam Pham Thi Dieu Hien affirmed her position in the U.S.A market by setting up representative office in Beverly Hills City and completing all procedures for construction of Bianfishco Market in San Francisco. This is system of wholesale market, underwater world combining with tourism trade in order to introduce, sell all products of the company in forms of retail and wholesale; not only introducing to American about Vietnamese seafood products but also contributing in advertisement of special images of culture that strongly bear the stamp of rivers in the South Vietnam. Tra, Basa fish of Vietnam is now straight into system of big supermarkets in the U.S.A such as Ipura, Cosco, Walmart but no need going through intermediate imports.
Many people make question: "Why does Bianfishco select the U.S.A market - which is well-known with strict system of quality control and food safety and hygiene?". Madam Pham Thi Dieu Hien confidentially said: "Being able to entry into the U.S.A market, it will be easy to entry into other ones because the control system is strict as much as the quality of products is affirmed (Forecasting). Thanks to affirming quality of products, in the year of 2008, Bianfishco was enjoyed zero rate of antidumping tax for the products exported into the U.S.A market. From the year of 2009, we will continue enjoying these preferential regulations in three years. Bianfishco currently has farming area of raw material which is 100 ha in width and applied aquaculture technology under Global Gap standards; therefore we do not hesitate at strict technical standards of the U.S.A market". All aquaculture process and export of Bianfishco ensure the strictest standards in management and especially in field of food safety and hygiene, such as ISO 9001/2000, HACCP, BRC, IFS, ISO/IEC 17025, etc. In order to have this advance, Bianfishco invested in construction of process factory in total area of over 30,000 m2, capacity of 500 MT fish per day, 54,000 MT of finished fillet per year, create careers for over 5,000 local labors. At the same time, Madam Pham Thi Dieu Hien bought 30 ha of island in Hau river (being of Binh Tan district, Vinh Long province) in order to excavate fishpond and invest 60 ha in breeding seafood in An Giang province. In order to set up close aquaculture process and take full advantage of available source of by-product, Madam Pham Thi Dieu Hien invested 20Â billion VND in construction of process factory of by-product with capacity of 300 MT of by-products per day. To take the initiative in food source, ensure quality of products supplied into market, the company also invested 300 billion VND in construction of process factory of fishmeal with capacity of 300 MT of fishmeal per day; building cold storage with capacity of 5,000 MT and re-frozen area to proactive the output and satisfy with orders from many partners. With system of waterfall, flower garden, verdure park in the factory precinct and modern system of water treatment, Bianfishco process factory is currently considered as one of the cleanest factories in Vietnam.
Rising new higher level (Material Requirements Planning)
In export, Bianfishco has its own way that is selection of customers in retail supermarket. Despite of this painstaking way, the price is higher. Having done business in many fields such as fast food, wooden trade, real estate, products with Bianfishco trade name are currently coming into 27 countries and territories in the world, even such strict markets as EU, the U.S.A. Bianfishco currently completes procedures in order to prepare for beginning construction of high-ranking department area and modern office building of Binh An House 1 at 83 Nguyen Van Troi, Phu Nhuan District, Ho Chi Minh City; and continues starting construction of high-class office building for rent, Trade Center of Binh An House 2 on Cao Thang Street, 3 District and some other projects in Ho Chi Minh City. Bianfishco was honored to be received "Platinum Technology Award for Quality and Best Trade Name" in Roma (Italy). This award was based on two basic criteria as quality of products and production factory that must be fitted up all modern equipment and machinery, applied high technology and production process. Other ways, Association collected information, opinions of EU customers who selected product quality of all companies in the world. This is the forth-honorable trophy that Bianfishco was selected and awarded by prestige organizations in the world. With desirability of affirming Vietnamese trade name in international market and guideline of taking "quality" as top criterion, immediately when starting operations, Bianfishco has successfully applied six targets of quality. Those are Quality of Life, Quality in the Farm, Quality in the Factory, Quality of the Products, Quality of the Services and Quality for You". (Extracted from Bianfishco- Press Release).
With the above-mentioned Operations Management System Bianfishco has overcome many obstacles while doing business and getting profits and benefits (Lean System and Six Sigma) as follows:
"BIANFISHCO HAS PROMOTED EXPORT TO THE U.S. According to the report, in the first eight months of 2009, Bianfishco exported 12.77 million tons of frozen Tra fish to different countries in the world, totaled US$ 34.05 million. In August 2009, Bianfishco exported 1,819 MT of output that was equivalent to US$ 5.5 million, while 782 MT of Tra fish export to the U.S market valued at US$ 2.86 million. Binh An Seafood Joint Stock Company (Bianfishco) is expected to export more than 70 containers to the U.S. market in August 2009. However, in accordance with the opinion of Mr. Vi Tran Tan Nang - Sales Director, Bianfishco has not still satisfied enough volume of inquiries from the U.S. in spite of making every effort. According to the report, in the first eight months of 2009, Bianfishco exported 12.77 million MT of frozen Tra fish to different countries in the world, totaled US$ 34.05 million. In August 2009, the company exported 1,819 MT of output that was equivalent to US$ 5.5 million, while 782 MT of Tra fish export to the U.S market valued at US$ 2.86 million. Mr. Tan Nang stated that Tra fish demand in EU was highly increasing due to the approach of Christmas and New Year's Day. However, the customers in this area and Middle East market have often inquired too low prices. Therefore, in August 2009, export value of the company "equally spread" to such markets as Spain, England, Germany, Holland, etc. but was not higher than that of previous months. Despite of making effort, Bianfishco only operates two third of process capacity now; due to it has to take much time for the workers to produce high quality products. According to the plan of August 2009, Bianfishco will export 70 - 80 containers of Tra fish to the U.S., but only over 50 containers has been exported to this area this year. In September 2009, besides standing with export to EU market, Bianfishco has continued "intensifying" to the U.S. market and made plan for increase in total Tra fish export to 30 markets reached 2,570 million tons" (Extracted from Bianfishco's Press Release).