Operation Management

Introduction

Operation management focuses on carefully managing the processes to produce and distribute products and services. Overall activities of operational management include product creation, development, production and distribution. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluation (schmenner,1985).

Operational management often includes substantial measurement and analysis of internal process. Ultimately, the nature of how operation management is carried out in an organization depends very much on the nature of the products or services in the organization .In this case, the main goal of this paper is to provide an analysis to the business operation of AB Machines Tools.

Question 1

Innovations drive companies to the success and its not always the technology enables this but there are many forms of innovations in different industries and some of these specific innovations dominate over technology which is always rash as the number one factor.Firstly innovation types like disruptive, application and product dominate the technology adoption life cycle. Then, second suite of innovation process, experiential, and marketing types comes to the force. Later, Business model innovation reframes an established value proposition to the customer and Structural innovation capitalizes on disruption to restructure industry relationship (Moore,G. 2004).In AB innovations like product, application, process, experimental, marketing and structural were highlighted for over many years.

Product and application Innovation:

Product innovation is crucial for a firm to get a competitive advantage in the business. AB machine tools used the Product innovation, Asquith-Butler designers and senior management followed technological developments and continuously redesigned their products to exploits new technology. For example, Asquith radial drills and Butler shaping machines were produced with extend of technology. Innovation was the order winning and qualifying criteria in AB machine tools. Imaginative design solutions are most essential for LE and VN applications. Also, computer Numerical Control (CNC) superseded the hard wired Numerical Control. These product new technologies also provide major cost benefits. , for example �Multiplex’ where a single wire replaces the complex wiring.

AB used application innovation in phase3 by the introduction of Flexible manufacturing systems where they are expect to extend their products LE and VN to new market to support new customers like general engineering companies who are very cost sensitive and they require more integrated technology and customization (Moreton K., 2005).

Process and experimental Innovation:

The most important innovation type for the AB Machine tools is the process innovation and AB used it with latest technology and function to reduce the overall functional complexity. They used Robotics, advanced material handling devices to handle the products in their shop floor for their efficient and effective utilization. They used Materials Requirements Planning (MRP) to integrate the various companies manufacturing activities like Demand management, Customer orders, Forecast Demand, Master Production Schedule, Inventory records and Purchase Order and helped to reduce redundant process and to eliminate the unwanted process. They also used manufacturing planning and control to manage their operation effectively. Company implemented the Computer Integrated Manufacturing (CIM) which integrated system based function of suppliers and customers. It eliminated the process delay by sending and receiving purchase-order, invoice and cash payment through conventional postal services. They achieved a secured link between company and suppliers to transfer secret on-line information with the help of internet.

A little experimental innovation can be seen where they change surface of products and slightly the option ranges at the end because as the life cycle says it’s important to go for doing experimental innovation for the advances which enable wider marketing advantage (Moore A., 2004).

Marketing and Structural Innovation:

AB Machine Tools followed Marketing Innovation; initially they were focused on price sensitive market sector. In phase3, they intended to move profitability market segment by reducing their range to LE and VN products, which has less competitive with high profitability. The marketing department followed Stage payments to collect payment, with customers varied from contract to contract. Moreover, in Phase3 the company planned to increase the promotional and marketing focus on VN and LE products in order to increase the demand.

The company followed Structural Innovation by identifying high competition with low level competitor for all range of HE,TE products, even though 80% of output from those classification and they restructured their process to high profitable market with LE and VN products. Their expectation behind merging is strong brand, access a competitive advantage and providing all products under one umbrella, which describe the implementation of structural innovation, and still they add more structural innovation through phased strategy. This structural innovation on merger has given them a greater advantage of creating a strong image and strong customer relationships with great product coverage.

Question 2

A supply chain consists of the network of organizations that supply inputs to the business unit, the business unit itself, and the customer network. The main use of supply chain management is to integrate the entire process of satisfying the customer’s needs all along the supply chain. This includes procuring different groups of raw materials from multiple sources, transporting them to various processing and assembly facilities, and distributing them through appropriate distributors and retailers to the final consumer. (Meredith J, 1999). Analysing AB machines case study adopting assemble to order (ATO) planning will increase the competitive advantage of the company and it reduce the risk factor. More than that, the time for this adoption is only one year.

As organisations have continued to reduce production costs and improve the quality, functionality, and the speed of delivery of their products and service to the customers, the costs and delays of distributing those goods and services are taking a greater and greater fraction of the total cost and time. (Meredith J,