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Operations Management

summative report – extended response

Cody Pretorius                                                                                                             Year 12 Business Management

Table of Contents

Introduction 1

Strategic Highlights 1

Financial Highlights 1

Operating Highlights 1

Looking Ahead 1

Concept of Operations Management 2

Production System 2

Operations Management Strategy 3

Processes Choice 3

Facilities Choice 3

Quality Choice 3

Statement of Cash Flows 3

Planning and Control 4

Inventory Management 4

Production Control 4

Maintenance 4

Quality Control 4

Evaluation of Manager 5

Conclusion 6

Reference List 7

Appendix A 8

Appendix B 9

Introduction

Rocky Point Mulching is a Sugar Cane Farm and Sugar Cane Mulch processing plant which is family owned and operated; the only one of its kind in Australia. The company originates from humble beginnings dating back to 1949. The organisation has come a long way, now supplying its products all across Australia. (\"Premium Garden Products | Organic Gardening | Rocky Point Mulching\", 2017).

Concept of Operations Management

Production System

Production systems are transformation processes that convert resources and materials into useful goods and/or services. Common resources used in production systems include labour, capital and land (Production System | Industrial Engineering, 2017). The labour phase refers to the work done by the employees of the company. The capital means the financial affairs of the production process; commonly used for machinery, equipment and materials and the land accounts for the landmass and infrastructure; buildings (Production System | Industrial Engineering, 2017). The production system is made up of three key elements; inputs; i.e. raw materials, the equipment and machinery, processes and outputs; the product. The productivity of the production system is what measures its efficiency. (Mylonas, Harvey & Hodges, 2007).

The production system at Rocky Point Mulching consists of two main aspects; the machinery and the transport. Firstly, the potting mix, growing media and gardening soils are produced by the sister company of Rocky Point Mulching known as Green Fingers. This comprises the inputs of the cooperation. The process stage begins when the potting mix, growing media and gardening soils arrive at Rocky Point Mulching, from where they are packed into bags by machines, the next and final machine puts a plastic cover around the bag; called a hood for protection from the weather before it is placed onto a pallet and taken away by a forklift. This brings about the second part of the process; the transport. The forklifts then transport the loaded pallets and pack them onto trucks, before they are dispatched to retailers, such as Aldi.

Operations Management Decisions

The customary roles used in operations management are planning; which covers the strategizing and setting of objectives in the business, organising; allocating the organisational structure and allocation of resources, leading; the communicating with the workers and control; upholding standards and evaluating the production process. These four aspects of operations management are commonly known as POLC (Management Principles The P-O-L-C Framework, 2017). These four roles of management in business cover the two main facets of decision making; namely, the human resources side of management and the maintenance of machinery and equipment.

The roles of the Operations Manager at Rocky Point Mulching embody POLC management.

Ethics and Social Responsibilities

The ethical and social responsibilities in operations management refers to the moral and behavioural standards of the organisation as well as the social and often environmental outcomes of the businesses actions (Ethical and Socially Responsible Management in the Operation Function, 2017). Various aspects that are important to the operations management role are managing the inputs of the company and the suppliers; i.e. that the business is receiving environmentally sustainable materials, cheap in cost and to the standard of the company and government. Managing staff; human resources is another essential responsibility of an operations manager (Johnson, 2017).

It is a practice at Rocky Point Mulching that when new workers join they are given a company handbook; outlining the code of conduct and ethos of the organisation which uphold the moral and behavioural standards of both Rocky Point Mulching and the government. The regulations listed in the company handbook also maintain and help manage the human resource aspect of operations management. This is done through company rules barring explicit use of language, rudeness, bullying and harassment. There is also a culture within the company of reporting instances where employees breach these rules and appropriate action is taken; making it easier for the operations manager to uphold the ethical and social responsibilities of his job.

Operations Management Strategy

Processes Choice

Process choices are often needed in operations management for decisions to be made on the type of technology; specifically, the machinery that should be used along on production process. The decisions made surrounding the technology used in the production should focus on making sure that the technology involved is capable of handling the overall capacity of the production process; namely, all the materials (Mylonas, Harvey & Hodges, 2007).

Operations management is heading ever so increasingly into a technology based production process. This is in the form of IT and electronically controlled forms of technology. Barcoding is being used at Rocky Point Mulching for data collection. The benefit of this is that data collection in their industry is happening in real time; therefore, they are capable of booking items from production straight into the warehouse. This also helps with the management of the inventory; through data capture.

Facilities Choice

A critical part of operating an organisation is the location of its facilities. Facility choice is the operations management surrounding the plant; i.e. the factory, and the equipment; i.e. machinery and vehicles (Mylonas, Harvey & Hodges, 2007). The location of the company; has both its advantages and disadvantages. This affects the efficiency of the business; through its vicinity to the market; the customers and suppliers (Location Choice and Site Planning, 2017). This impacts on the sales of the company. Facility choice further affects the various costs of the business; i.e. the transport costs.

The site that Rocky Point Mulching is located at is very advantageous as it is situated in between Brisbane and the Gold Coast and just seven kilometres from the Pacific Highway; hence, opening itself up to a large market in a relatively close vicinity. This location is also beneficial as it allows for cheaper transport costs. When goods and services are transported from the site to retailers; for every two hundred kilometres an extra fee is added to the transport costs. Therefore, when transporting to Brisbane or the Gold Coast, the cost of the transport is not expensive; especially comparing it to what the price could be if the site of the company was in Central Queensland. The disadvantage of the location of the business is seen when transporting into other states.

Quality Choice

The quality choice in a business is the constant examining of goods and services along the production process. The strategy of quality choice is largely focused on consumer protection laws and government regulations. Furthermore, quality choice helps in highlighting the inadequacies of the quality of the final product (Mylonas, Harvey & Hodges, 2007). The quality choice of operations management is often intertwined with the quality control of a business.

Planning and Control

Inventory Management

In operation management, maintaining the optimum amount of each inventory item is of high importance. The purpose of inventory management is to provide an uninterrupted production process, where customers are able to receive service at the minimum cost; without the business facing losses, due to an inflated number of unsold goods (What is Inventory Management?, 2017).

Managing the inventory comprises of balancing the number of finished products that are kept in the inventory, known as the number of weeks of stock you have to cover the number of weeks of sales. At Rocky Point Mulching, this is done through evaluating the periods of the year where their products are in demand. In Spring, more products are sold at Rocky Point Mulching; therefore, a larger number of stock is kept in the inventory. Whereas in Summer, sales are far scarcer; and as a result of this, less stock is kept in the inventory. This is because, too much stock in the inventory leads to wasted goods and capital. Whilst having too little stock results in the organisation not living up to the demand of the market.

Production Control

Utilising various types of control techniques is essential to the role of an operations manager to achieve the utmost performance in the production process (Production Planning and Control, 2017). This part of the production system is largely about regulating the inventory and utilising your resources to the optimal degree, on the basis of being cost efficient. This is commonly done through a number of planning and scheduling techniques used in the production process (Mylonas, Harvey & Hodges, 2007). Another vital aspect of the production control is the management of employees.

The key to controlling the production process is increasing the productivity of the company. The operations manager at Rocky Point Mulching uses his employees, equipment and machinery to their prime capacity to increase the productivity of his cooperation. This positively effects the rest of the production process as when the machines are running the workers still need to get paid by the hour, then there are machines that need to be maintained; so that they constantly work; a form of preventative maintenance. This also affects the management of the inventory in regards to sales as a malfunctioning machine will affect the productivity of the organisation, thus affecting the amount of output held in the inventory.

Maintenance

Maintenance in terms of the production process is about sustaining your equipment and machinery, so that all work along the production line is carried out in the most competent manner possible (\"Facilities and Maintenance Management | Operations Management | Business, Management | Textbook | Book\", 2012). Maintenance is made up of two main parts; preventative and corrective. Preventative maintenance refers to a regular schedule of checking and repairing your assets, to make sure that they are still running the way that they are supposed to. This is done to preserve the lifecycle of equipment; it further helps in organising in advance in a situation where the product needs to be replaced. Corrective maintenance is the responsive part of maintenance. Corrective maintenance occurs when equipment or machinery breaks unexpectedly; thus, affecting the production process (Mylonas, Harvey & Hodges, 2007).

Maintenance is kept orderly through a checks and balances system. This can be seen when there is an area of quality deviation along the production process. In a situation such as this measures are implemented that force the operators to ensure that the products quality is maintained before it is moved onto the next stage of the production process. The most common measures used are engineering controls such as; physical variables that force the outcome of the product to be of a high quality. Engineering is the preferred at Rocky Point Mulching. This is because including human beings in the maintenance of a company can lead to human error; as people make mistakes, people get tired, people forget and they have days off. For this reason, it is best to have employees check and assure that the quality is of a high standard, rather than to have people physically making the product, in turn, making it most beneficial to eliminate the human intervention in the production process.

Quality Control

The quality control of operations management are the procedures intended to ensure that manufactured products or performed services adhere to a set of quality criteria or requirements for the customer (What is quality control (QC)? - Definition from WhatIs.com, 2017). The procedures used in quality control are becoming increasingly used in operations management due to quality awareness. The goal of quality control is to reduce or eliminate the number of errors along the production process. Quality control creates an environment in the company where management and all workers strive for perfection (Investopedia, 2017).

The operations manager at Rocky Point Mulching ensures that

Evaluation of Manager

Conclusion

Name

Title

Tel Telephone

Fax Fax

Email

Reference List

Ethical and Socially Responsible Management in the Operation Function. (2017). The Engage Wiki. Retrieved 20 February 2017, from http://wiki.engageeducation.org.au/business-management/unit-3/area-of-study-3-the-operations-management-function/ethical-and-socially-responsible-management-in-the-operation-function/

Facilities and Maintenance Management | Operations Management | Business, Management | Textbook | Book. (2012). Icmrindia.org. Retrieved 21 February 2017, from http://www.icmrindia.org/courseware/Operations%20Management%202nd%20Edition/Facilit-Mainten-Manage.htm

Investopedia. (2017). Quality Control. Investopedia. Retrieved 20 February 2017, from http://www.investopedia.com/terms/q/quality-control.asp

Johnson, J. (2017). Business Ethics and Social Responsibility. Meeting Tomorrow. Retrieved 20 February 2017, from https://meetingtomorrow.com/content-library/business-ethics-and-social-responsibility

Location Choice and Site Planning. (2017). Boundless. Retrieved 21 February 2017, from https://www.boundless.com/business/textbooks/boundless-business-textbook/operations-management-10/planning-for-operations-73/location-choice-and-site-planning-349-7837/

Management Principles The P-O-L-C Framework. (2017). www.tutorialspoint.com. Retrieved 20 February 2017, from https://www.tutorialspoint.com/management_principles/management_principles_polc_framework.htm

Mylonas, A., Harvey, J., & Hodges, J. (2007). Business Organisation and Management for Queensland (1st ed.). South Yarra, Vic.: Macmillan Education Australia.

Operations Management - Ch.10 Quality Control. (2017). Ids355.wikispaces.com. Retrieved 21 February 2017, from https://ids355.wikispaces.com/Ch.10+Quality+Control

Premium Garden Products | Organic Gardening | Rocky Point Mulching. (2017). Rpmulching.com.au. Retrieved 6 February 2017, from http://www.rpmulching.com.au

Production Planning and Control. (2017). Managementstudyguide.com. Retrieved 20 February 2017, from http://www.managementstudyguide.com/production-planning-and-control.htm

Production System | Industrial Engineering. (2017). Encyclopedia Britannica. Retrieved 14 February 2017, from https://www.britannica.com/technology/production-system

Shumate, B. (2017). 10 Strategic Operations Management Decisions. Operations Mngt. Retrieved 12 February 2017, from https://shumateblog.wordpress.com/2014/10/05/284/

What is Inventory Management?. (2017). BusinessDictionary.com. Retrieved 20 February 2017, from http://www.businessdictionary.com/definition/inventory-management.html

What is quality control (QC)? - Definition from WhatIs.com. (2017). WhatIs.com. Retrieved 7 February 2017, from http://whatis.techtarget.com/definition/quality-control-QC

1.5 Planning, Organizing, Leading, and Controlling | Principles of Management. (2017). Open.lib.umn.edu. Retrieved 14 February 2017, from https://open.lib.umn.edu/principlesmanagement/chapter/1-5-planning-organizing-leading-and-controlling-2/

Appendix A

Appendix B

In relation to operations management, what qualifications do you have? What occupations have you had prior to working here?

Qualifications: Degree in Mechanical Engineering, Diploma in Supply Chain Management, Certificate in Cost Accounting.

- The mechanical engineering degree helps in the understanding of the machines that they get production output from.

Supply chain management incorporates planning production and the buying of materials.

Occupations:

- Been a maintenance manager in various companies for three years.

- A production manager for five years – the balance of his careers.

- A supply chain planner for four years.

- Consulting engineering for six years.

Worked in different aspects of the roles of an Operations Manager.

An Operations manager has production as well as engineering and maintenance reporting to them. Main goal is to get as much output from your machinery as you are capable of.

Production System -

What equipment, machines, vehicles and raw materials are involved in producing your final product? How are each of these used in the process?

Machinery – You need the product itself. A sister company onsite (known as Green Fingers) produces the potting mix, the growing media and the gardening soils. Rocky Point Mulching then receive these items; they then go through a machine that packages the mix, the next machine takes the packaged bags and puts it onto a pallet; for transportation purposes such as the use of forklifts. The final machine puts a plastic cover over the bag called a hood for protection from the weather; as well as for the convenience of customers; i.e. Aldi, takes the plastic form off and the bag is not full of dust or weathered by the elements.

Transport – The next step of the process is to arrange trucks to collect the loaded pallets and deliver them to the stores. Forklifts are used to lift and tie down the pallets onto the trucks, before they are dispatched to various retailers.

Inputs: The product itself; the potting mix.

Processes: The potting mix is packaged by machines, and covered with a protective, plastic hood.

Outputs: A packaged, covered bag of Rocky Point Mulching potting mix.

Operations Management Decisions -

What are the responsibilities and roles that you as the Operations Manager has to follow?

Management of people, as people are used to run the machinery and drive the forklifts. There is also the human resources side; to ensure that people are fulfilled in their job, happy with their working conditions, that they are at work and they are working safely.

Following procedures, not just about having good machines and the right equipment, but it’s about having the right people to run those machines; a major part of the job.

Ethics and Social Responsibilities –

How do you maintain the ethical and social requirements of the company? What are the laws and regulations that the organisation is required to abide by?

Ethical and Social Requirements – When people join Rocky Point Mulching, there is a company handbook which is given out; this outlines the company’s code of conduct and ethos. Zero tolerance to rudeness, swearing, bullying and harassment. There is a culture of reporting this in instances where this is the case and appropriate action is taken.

Laws and Regulations – You have two facets, what the government requires; Queensland state law; regarding good labour practice and labour law surrounding people’s basic conditions of employment. There is also an independent workers body known as Fair Work Australia; this is for people who are unhappy with the way they are being treated, although this is not what you want the situation of your company to get to. In your own factory you can make your own rules, where workers can sign up to your code of conduct; i.e. at Rocky Point Mulching, swearing and rudeness is barred. But these rules cannot contradict or supersede the government regulations

Processes Choice -

What forms of technology are used in producing your final product, if any?

IT and electronically controlled forms of technology is used more and more. Barcoding is used for data collection. In industry, it is all about real time; you want to book it from production straight into the warehouse. Things that aid you there are electronics, barcoding and adventuring software that automatically does a lot of the data capturing.

Facilities Choice -

What are the advantages and disadvantages to the location of your facility? Why was this location chosen?

The location of Rocky Point Mulching is very advantageous as it is located in between the Gold Coast and Brisbane, and seven kilometres away from the Pacific Highway. In their industry, the transport cost makes up a large share of the expenses; so for them to deliver to Brisbane, they are not too far away. If they were based two hundred kilometres away, they would need to add additional transport costs to get it from that far away to the market. From a Queensland market point of view, they are very well situated; allowing them to have their products at a competitive price as transport is not a big cost.

Rocky Point Mulching also sell to New South Wales, however, the further you go past Sydney, the less competitive they become as there are other companies making the same products in Sydney; with the transport advantage over Rocky Point Mulching.

Queensland – very well situated, competitive.

Interstate – less competitive; due to the cost of the product and what it can be sold for is centred around if you have a big transport cost per bag, it pushes out the end price.

They focus on putting the maximum number of products on each truck, as every bag of goods will pay for the transport.

Quality Control -

How do you as the Operations Manager ensure that the output of this organisation is of a quality standard, what approaches do you use?

At the end of the day, it is the quality that the market wants. You have your system, factory, outputs and your capability to meet the market related standard of quality. Your customers will tell you if your quality is bad and you will have to respond and fix your systems, then they will keep buying your product. That your ultimate measure, that your customers continue to buy your products and getting feedback from them is very important.

Inventory Management -

What are the measures taken in controlling the inventory?

Their inventory is made up of two parts. One is the packaging and the other is the finished goods made. You do not want to make too much of your product; because you would have taken money and paid for raw materials, etc; that are now sitting in your warehouse as unsold products. But you do not want to have too little that when customers call up, you are out of stock. You have to try and get a balance; the term used for this is the number of weeks of stock you have to cover the number of weeks of sales; i.e. if you say you have two weeks of cover of stock then that means you can supply the market for the next two weeks. That is the measure in supply chain. In Spring, they make more product because they sell a lot more, but in hot months such as January, they do not get as much sales, therefore, they keep less stock.

Production Control -

What methods are used in order to record and increase the productivity of the organisation?

Production reporting, people that work the machines cost the company money per hour that they are at work. Then you have machines that run at a certain speed. So if the machines are not running you are still paying the people. The main measures are how efficient you use your employees to get the production out of the machines. If you are not organised then you will not have the materials for the machines, and the machines will not work, but you will still be paying the workers. An important aspect of management is paying the people at work by the hour, then you have machines that need to be maintained so that they constantly working. You also have people running those machines and running them at a speed that they are designed to run at. The effect of this is that the cost of the product coming out is as efficient as you can get it. You have fixed costs and the machines that have an output; it is about getting the most output from those machines by utilising your workers competently.

Maintenance -

How do you maintain control throughout each part of the production process?

You have a check and balance between each part of the process. You set it up so that if you have areas with quality deviation, you put measures or systems in place which force the operators to do something to ensure that it goes to the next stage with its quality maintained. The best thing to do is put engineering controls in place; physical things that force the quality, your lesser effective tools is when you get people to inspect things. You want your quality to be engineered in, as oppose to the human factor; as people get tired, people forget, people have days off. So the more that the machinery and the system can ensure that the quality is of a high standard, the better. You just want people to check and assure the quality, rather than to make it happen. You want to take as much human intervention out as possible.

Quality Choice -

What methods are used to guarantee that the quality of the mulch is of a high standard?

The sister company (Green Fingers) do a set of quality checks on the mulch before it is released to Rocky Point Mulching. They examine several aspects of potting mix and soil that the Australian standard requires; to do with PH and various other parameters, knowing that it is good quality. They also have labs. Rocky Point Mulching’s job is to check that the bags are sealed properly. They have production records where the team records all the settings on the machine and the batches of film that they get in from a third party who make the bags. They record all these things, so that they are able to trace if there is ever a problem. Every hour they also run checks, such as pulling the bags to see if it breaks, check the seals, check the weight; if it says thirty litres of product they make sure that that is the case.

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