There are a number of recent trends in productions and operations management, as the discipline is evolving and the world of business is changing.
Consumers are growing ever more aware of the impact that companies have on the environment and they are able to use their purchasing power to incentivize companies to reduce the negative impact on the environment. This leads to greater adoption of operations management practices like Lean Production and Just-In-Time, whereby products are made to order rather than large amounts of raw materials and inventory being stocked and wasted. It is also in the interest of companies to implement these practices as it enables faster incrementally changes to their product to better suit customer needs – which can be a source of competitive advantage.
Total Quality Management (TQM) also reduces the amount of waste in the production process and is a continual commitment to improving the quality of products. This also means products are more durable and have a longer life-time, which means there is less consumer-end waste.
Similarly, globalization has made consumers very aware of the impact that companies have on society and the world. With some companies more economically powerful than a lot of countries (World Bank, 2016 The world’s top 100 economies: 31 countries; 69 corporations), they have the power to positively impact the world, and consumers are beginning to expect that from them. This is putting pressure on companies to audit their supply chains to maintain good and ethical standards and practices. Nike and Primark were both negatively affected by poor supply chain management when their suppliers’ workers were seen to be treated poorly.
Manufacturing organizations are now looking to servitize their offerings. In other words, companies are giving away their goods as a means to sell a service. Rolls-Royce is a good example of this: they give their airplane engines away for free by charging a fee for the maintenance. In fact, Rolls-Royce actually charge airlines “Power by the Hour”, which means that the airlines only pay whilst the airplane is in the sky. Rolls-Royce has sufficient confidence in the quality of their engines that it absorbs the maintenance costs.
In brief, the recent trends of operations management are:
(1) Lean and agile production methods with Total Quality Management to react to changes in customer needs and increasing quality expectations, whilst also satisfying the customers’ environmental concerns.
(2) A greater focus on supply chain management to maintain high ethical standards all around the world, due to globalization.
(3) The servitization of goods, whereby, manufacturers are using products to sell services.
Sometimes called “lean production,” lean manufacturing is a series of methods designed to minimize the waste of material and labor while maintaining or increasing levels of production. This results in a net improvement in total productivity.
Lean manufacturing’s roots lie in Japanese manufacturing with the Toyota Production System. Lean principles pioneered by Toyota include “just-in-time” manufacturing, where inventory is kept at low “as-needed” levels; automation supervised by human workers to maintain quality control (known as jidoka); minimization of downtime and transportation, and others.
Ultimately, lean manufacuring is about eliminating that which does not add value, and delivering the best possible product to the customer as quickly and with as few barriers as possible.
Benefits of Lean Manufacturing
Lean manufacturing improves efficiency, reduces waste, and increases productivity. The benefits, therefore, are manifold:
- Increased product quality: Improved efficiency frees up employees and resources for innovation and quality control that would have previously been wasted.
- Improved lead times: As manufacturing processes are streamlined, businesses can better respond to fluctuations in demand and other market variables, resulting in fewer delays and better lead times.
- Sustainability: Less waste and better adaptability makes for a business that’s better equipped to thrive well into the future.
- Employee satisfaction: Workers know when their daily routine is bloated or packed with unnecessary work, and it negatively affects morale. Lean manufacturing boosts not only productivity, but employee satisfaction.
- Increased profits: And, of course, more productivity with less waste and better quality ultimately makes for a more profitable company.
Agile manufacturing is a term applied to an organization that has created the processes, tools, and training to enable it to respond quickly to customer needs and market changes while still controlling costs and quality.
An enabling factor in becoming an agile manufacturer has been the development of manufacturing support technology that allows the marketers, the designers and the production personnel to share a common database of parts and products, to share data on production capacities and problems particularly where small initial problems may have larger downstream effects. It is a general proposition of manufacturing that the cost of correcting quality issues increases as the problem moves downstream, so that it is cheaper to correct quality problems at the earliest possible point in the process.
Agile manufacturing is seen as the next step after lean manufacturing in the evolution of production methodology. The key difference between the two is like between a thin and an athletic person, agile being the latter. One can be neither, one or both. In manufacturing theory, being both is often referred to as leagile. According to Martin Christopher, when companies have to decide what to be, they have to look at the customer order cycle (COC) (the time the customers are willing to wait) and the leadtime for getting supplies. If the supplier has a short lead time, lean production is possible. If the COC is short, agile production is beneficial.
- Companies can respond quickly to change. This is done by retaining some mass production properties while remaining flexible. This is called mass customization.
- New designs are based on the customers’ needs which mean that the customer will have a wider variety to choose from.
- Since the company is constantly changing according to the customers’ needs, their customers may be more satisfied.
- Highly skilled personnel are required to operate an agile manufacturing company.
- Shortages will occur if there is a sudden grows in demand both with respect to volume or variety.
- Maintenance cost is expensive.
- On the other hand, if the demand suddenly drops during a high production rate, the products could not be sold.
- Installation costs are high because of interchangeability.
- Management of these systems is hard and intensive planning and management is required.
- Due to short life-cycles, machinery and workers need to keep up-to-date because of new technologies.
- The complex machinery could add to the cost if there is a breakdown, which will increase the production down time.