Principles Of Operation Management Case Study

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Key Roles of Operations Management in Ford’s Success

Operational management refers to as the process of enhancing the efficiency of the organization by defining the structure, practices, processes and administration of the business. It helps in maximizing the profit of the organization by managing and organizing the day to day working of the firm. This assignment will include the importance of the operation management in the Ford organization. The company was incorporated on June 16, 1903 and founded by Henry Ford. The company aims at manufacturing luxury cars and provides automobile under its brand name. In 2022, the company is having an annual turnover of 158 billion U.S. dollar and having a global market share of 5% (Turnover and market share of the Ford, 2022). The most successful ford car is Ford F-series which had a sale of over 26 million till now. The report will also highlight the role and function of the operational management and the technique which could be used for the taking efficient decision. The report will describe various modern implementation techniques. The importance of the continuous quality importance in the organization will be discussed through the assignment. Various approaches will determine and the plan will be formed through which the quality could be improved. Various recommendations will be provided through which the operational efficiency will be improved.

Part 1 Operations Management Strategies and 4V Analysis at Ford

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1. Role and function of operational management and the implication of 4V strategy for the ford

Within Ford, the role of the operation manger is to arrange all the resources needed for the manufacturing purpose and aim at managing the process and operations of the business. There are functions which the manager needs to fulfill for effective working of the organization that are as follows:

Operational planning: This involves monitoring the manufacturing and the production of the goods on the daily basis. This also includes the performance evaluation of employees and setting off the controlling process for inventory management.

Finance: Under this the manger determines the budget of the project and identifies sources through which the finance could be collected at effective rate.

Product design: Operation manager of Ford conducts a market research and communicate the result to project designing team.

Quality control: Determining the quality of the actual product and then comparing based on the standard are done by the mangers (Olsen and Tomlin, 2020). They identify measure through which effective control could be exercised.

Forecasting: On the basis of this, the manager of Ford forecasts the demand of product and identifies the best marketing policy for promoting the product. Estimation regarding the cost of sourcing and manufacturing is determined.

2. Analysing the effectiveness of operations managemen by using 4v framework

4V’s framework of the Ford: It is the types of approach which aim at understand structure, nature and challenges in carry out the particular business operations. The 4v include volume, variety, variation and the visibility (4V analysis of Ford, 2023). The framework for the ford company is as follows:

Volume: This step include identify the number of the good produced in a year by the organization. Ford has the production capacity of 13000 units in year which help in attending the economies of scale.

Variety: This includes the difference in the number of product produce and the type of product offered by the organization. The company provides variety of cars, trucks, utility vehicles and luxury cars. Among these the company provides 8 types of cars which mean that company need to faces may challenges regarding its complex process and supply chains.

Variation: Under this the prediction regarding the change in demand is identified so that effective measure can be taken. It has been identified that, in 2022, the demand for the ford product has been increased by 9%.

Visibility: It refers to the attention the clients need in understanding the product (Benjaafar and Hu, 2020). The company provides high viability product which indicates that the personal attention should be provided to each costumer in undertaking the technology.

Contribution of the supply chain

The company is using the direct channel of the supply which includes FedEx (FDX), Cisco (CSCO) etc. The company is using effective supply chain as they are operating through more than 14000 tiers and able to create successful supply chain.

3. Relationship between operational management and tactics:

In the context of Ford, the operational strategy and tactics undertaken by the management are highly interrelated. The standards are determined through management which needs to be applied effectually. Function of operational management involves planning regarding the manufacturing of the product and service provided (Al-Bayati, Albertand Ford, 2019). Determination of all the required resources and technology needed are decided through effective strategy which impact on the operation of the management. While conducting market research, the tactics helps us in deciding what areas needed to be covered and through which sources the research should be conducted.

In the forecasting process also the management strategy help the operational manager by providing the steps through which they can do effective estimations (Global Carex Group, et.al, 2021). In the quality control process the standard are set through the implication of the strategy that are performed by the operational managers. For example: Finance department provide information to marketing department regarding efficiency of marketing strategies used. This has been done as finance department analysis changes in sales and profit due to investment in particular marketing strategy.

4. Techniques and framework for the effective management decision:

 There are various techniques and framework available which help manager in taking appropriate decision regarding various operations in the organization. They help in identifying various solutions for the problem faced by the organization. This in turn further assists in which help in increasing the efficiency of the organization.

Principles Of Operation Management Case Study

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• Risk analysis: This technique include the identification for the total risk that company is going to face. These help in facing the all the uncertainty and identify whether the company should take this decision or not. The benefit form the decision is evaluated on the basis of the risk involve which make the decision making easier.
• Cost benefit analysis: This analysis involves deciding on the cost that the project involves and the worth of incurring that cost (Chowdhury, et. al, 2020). This technique involve identify all the implicit and the explicit cost and final decision is taken after evaluating the same. This involve identify the cost for all the other alternative present so that the most beneficial project will be selected by the mangers.
• Force field analysis: This technique involves identifying all the restraining and the driving forces which are impacting the decision. This will provide deep understanding of all the positive and negative factors which are involving the decision. Problem solving, change management and the conflict resolution could be easily done through this technique.

5. Modern techniques of the operation decision making:

Earlier decision was made by considering the traditional method of the decision-making process which does not include the mathematical models. Under this method the solutions are obtained by applying scientific approach of the decision-making and collect all the quantifiable variables to solve management problem. Some of the modern techniques which can be used by Ford are as follows:

Break-Even Technique: It is referring to as identify the total revenue and cost of the firm and through comparing them the state of no profit and no loss is determined (Kumar, et. al, 2020). This refers as the level where the total profit earned forms the selling off output is zero. Through this analysis the manager is able to identify the level of profit at each level which helps in deciding the feasibility of the project. This analysis help management in getting clear information regarding total time require in converting investment into profitable business. This assist in decide on pricing strategy that will help in covering cost and earn an adequate amount of profit.

Inventory model: This help in taking decision through which the stock of the inventory never fall too high or low. This helps in determine the exact level of inventory the company should stock according to the demand in the market. This aim at reducing the carrying and ordering cost for the inventory by taking effective inventory management decision. By using this model, management could make effective decision regarding controlling cost by identifying exact number of labor required and producing appropriate number of products that result in reducing wastage.

Linear programming: This is the technique which aims at the allocation of the limited resources in most effective way so that optimum result could be obtained. This involves combining of the two variables which will help in maximizing the profit and minimize the cost thereon. Mathematical equations are used through which the technique could be implemented properly.

Decision-Tree: under this technique of the effective decision making the manger determine all the risk associated with the decision and outcome which they going to enjoy after completion of the project (Howlett, et. al, 2019). This is done in the form of the diagram which includes information regarding all the available project and the project with minimum risk and maximum profit are selected from that.

6. Implementation of the techniques in the operation of the ford

The company uses this strategy in taking effective decision which will help in solving the problem. The implementations of the techniques within Ford are as follows:

• There are various risk associate with the ford company which includes production capacity of the machinery, intense competitor, nonpayment of the full amount of the consumer, labor issue which are impacting the decision of the manger. Ford should use risk analysis technique through which they could identify various machine which could be used for the production. They should identify production capacity for the entire machine and the best should be selected.
• By cost benefit analysis it has been identify that the company is not efficient in controlling their cost (Ikumapayi, et. al, 2020). For example: £11 per car cost is exceeding than the standard set. By incurring the cost the company will be able to get the benefit of £49.5 million.
• The driving force for the success of the ford company is the strong brand, innovation, strong financial performance and the global presences. The restraining forces in the ford success are the new entrants in the industry, threat of substitute and the competitive rivalry. Ford has paid highest attention on creating the brand image and reputation which will help in overcoming all the restraining forces.
• Through Break even technique; the company will be able to decide the appropriate cost for the product so that the estimation profit did not keep low to the cost. Organization is using activity based costing through which they can understand the actual cost and determine the level where the revenue and cost will be equal.

Under the inventory control model the ford aim at using the just-in–time model which emphasis on the getting the parts of the automobile at the time they actually need it. This help in reducing the cost and help in effective inventory control.

7. Recommendation for improving the performance of the organization

Ford could use following measures to improve its operational efficiency:

• Document and review processes: The Company should focus on recording all the aspect of the task regarding the duration, cost, profit etc. This will help in evaluating the performance on regular interval and the changes could be monitored through this process.
• Increases inter-department communication: The Company should focus on improving the communication channel between the various departments as this will help in improving the effectiveness of the work. This will reduce the confusion among the employees of the organization and accurate responsibility could be allotted to each one (Priyanka and Kumar, 2020).
• Focus on customer service and sales responsiveness: This include providing the full information regarding the product provided to the costumer which will help in retention of the employees in the organization. The company should focus on faster reply to the customer by using automation.
• Track KPIs and performance metrics: The Company should evaluate its performance on the basis of the standard set at the beginning of the project. This will help in identify the various changes that had occurred over time and the measure that will help in improving the performances.
• Adopting effective inventory control measures: The Company should aim at adopting effective inventory control measures which will help in reducing the cost for the organization (Priyanka and Kumar, 2020). This will help in effective estimation for the inventory that could be needed in the future and the time for placing the order.

Part 2 Continuous Quality Improvement Strategies at Ford

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1. Various Continuous quality improvement (CQI) approaches for the company:

Continuous quality improvement refers to as the processes through which the process and the quality of the good manufacture are improved. This is the techniques aim at improving the outcomes, operation, work environment and the regulatory compliance which will help in achieving efficiency by the organization (Jasti, et. al, 2022). There are various approaches which Ford can adopt for improving the quality of the operation. Some of them are as follows:

• Kaizen Continuous Improvement: This approach aim at reducing the cost by eliminates the waste. This is based on the approach that the small ongoing changes will impact the organization on the huge impact. It was best suited in the manufacturing industry where the manger could implement this to increase the productivity and reducing defects. Ford has successful implemented this model to improve its operations and efficient in reducing the waste
• Lean Six Sigma Continuous Improvements: This model aim at reduce the malpractices and errors and reducing the deviation in the actual performance over the standard set (Behrens, et. al, 2021). This aims at following the set process which could help in improving the efficiency and help in risk assessment, benchmark skills and design process. The company has successfully implemented this strategy which helps in eliminate the 2.19 billion wastes in the previous year.
• Total Quality management: Every individual work in the organization is responsible for the success of the project. This model aims at finding appropriate measures through which the quality of each of the member in the organization is evaluated. This will help in achieving the long term goals of the organization (Budreviciute, et. al, 2020). Training and development session have been conducted for the employees who help in achieving the goal. The company had tried to reduce the fatigue and burden of the employees by improving the working environment of the organization.

2. Continuous improvement plan for the Ford Company

This plan includes the 4 steps which the company needs to undertake for effective planning, which are as follows:

Plan: Ford has introduced the new vision which aims at improving the innovation of the Company and creating a team who know how to win in every situation. For effective implementing the strategy the firm should focus on improving the innovation for which the company has adopted Dirt detection system which can help in analysis the surface and paint imperfection while preparing a perfect model. Motivational and the training session could be arranged by the company which will help in improving their situation of the employees and increasing their efficiency.

Do: Under this step the company will implement the plan according to the strategy which has been formulated. All the step will be followed as per the schedule and no deviation will be allowed from the initial polices and the processors (Wang, et. al, 2021). For indulging innovative practices Ford will train the employees in using the machinery and help in developing their skills.

Check: Now as the new technology has been included, the quality ad the effectiveness of the technology will check by applying it one product. This will help in identifying the effectiveness of technology and the efficiency with which the employees are working. Feedback will be taken from the manufacturing team which help in identify the competence if the technology.

Act: Once the positive review has been collected from the team the technology will be used for the entire production cycle which will help in improvement in the quality of the product offered.

3. Approaches to achieve organizational objective:

By effectively implementing the improvement plan the company will able to reduce the cost of the production and help in bringing innovation in the country. This will help in attracting new costumer and the chances of the fault in the manufacturing process could be reduced. The company could achieve organization goals in the following method:

The goal of the company is to create smart vehicle and becoming most trusted company in the world. Ford could attain these goals by employing the technology which will help in reducing in the faults in the final product.

The company should focus on creating various incentives for the costumer which will help in sustainable growth of the organization. They should focus on creating strategies which can help in attracting various costumer and helps in increasing the retention of the costumer with the company.

4. Role and importance of strategic Risk Analysis (SRA)

Risk analysis refers to as identify and managing the potential risk which are impacting the organizational ability in achieving the goals. Values of the shareholders, corporation goals and the entire viability of the organization are negatively impacted by the strategic risk (Strategic Risk analysis of the Ford, 2023). SRA plays an important role in facing the uncertainty’s by the organization by identify all the potential risk and help in achieving the goals. The importance of the strategic risk as analysis is as follows:

Business decisions are more efficient by applying this analysis as this provide base for the company on which further decision can be taken.

Through this analysis the company is unable to identify the potential threads which the company cab face which help in developing effective strategies.

Help in improving the profits of the organization by developing effective strategy regarding the risk and threat.

Risk assessment by the ford company

For identification of the risk the ford has conducted internal and external analysis by using UN sustainable development Goals Index. Due to Covid 19 the company is facing financial crisis which is estimated to prevail for long time. Market disruption, market volatility and the regulatory constraints are the risk affecting the success of the organization. As the company is facing the legal and regulatory risks as the products fault are creating an environmental issues which are made ford facing negative press, lawsuit and government inquires. There is high rate of credit risk the company is facing which includes customer debt payment burden and the high rate of unemployment.

5. Strategies available for managing the risk of the company:

• There are various strategies which the company issuing for the reducing or eliminating the risk. Some of the strategies which the company is implementing are as follows:
• As the company is facing the risk of the creating an environment issue, the manager has focused on using more advance and innovative technologies in manufacturing. This will help in reducing the emission from the vehicles and protecting the environment.
• Ford is required to employ Enterprise Risk Management process which aim at identify all the risk and the opportunities available to the company. This aims at review the position of the business at the regular interval and identifying all the external and internal factors affecting the company.
• There is various legal regulation and the guidelines which the company is facing so to fulfill at the company has adopted the “Global water manufacturing”. This strategy helps in reducing the consumption of the fresh water by 15%. The company has sustainably attained the reduction in carbon footprint by adopting the advance technology.
• Ford is facing the risk related to fewer sales due to his high prices so to overcome this. The company has adopted the Aggregation strategies which help in attain the economies for scale by adopting the standardization in its production process.
• There is lack of awareness regarding Ford’s working to its vendor, employees and customers. To overcome this risk company is conducting “Journey to ford’ event for new employees that helps in getting better insight of company’s operations.

6. Recommendations and the importance of SRA

• The company should pay focus on the implementing the strategic risk analysis as this will help in ascertains the various internal and external factors which could affect the growth of the organization (Kam, et. al, 2021).
• Early identification of the obstacles and barrier helps in identifying effective solutions. Through the SRA the company will able to analysis the effectiveness of the plan and the obstacles that can impact the success of the organization.
• Financial risk is the biggest crisis the company could face in none evaluating the risk. The SRA help company in identify the factors and the risk which can potentially creating the financial burden on the company. The company could easily identify the measure to solve the problem by identify the sources through which the finance could be collected at effective rate.

Conclusion

It has been concluded form the report that the operational management and the systematic risk assessment play an important role in the success of eth organization. Operational manger aim at the improving the planning process, quality of the operation and help in effective forecasting. The 4V analysis of the ford company helps in determining that the company is able to attain economies of scale, providing variety of the product and the demand has been increasing over time. It has also identified from the report that there exist a relationship between the operational management and the strategy as the tactics provide a base on which further decision are taken. Risk analysis, cost benefit, field force analysis, breakeven point and inventory model are the various techniques which Ford is using for the effective decision making. It has also been indentified from implication of the techniques that the company is not able to effectively control the cost. Inventory control and document review are the method which the company could improve its operational efficiency. It has also been identified that the SRA help the company in identifying the various risks which are associated with the company. The company aims at improving the quality of the production by adopting new and innovating technology for the manufacturing process. Kaizen and TQM strategy has been used by Ford for the fulfillment of organizational goals and objectives.

References

Books and Journals

• Al-Bayati, A.J., Albert, A. and Ford, G., 2019. Construction safety culture and climate: Satisfying necessity for an industry framework. Practice Periodical on Structural Design and Construction, 24(4), p.04019028.
• Behrens, J., Løvholt, F., Jalayer, F., Lorito, S., Salgado-Gálvez, M.A., Sørensen, M., Abadie, S., Aguirre-Ayerbe, I., Aniel-Quiroga, I., Babeyko, A. and Baiguera, M., 2021. Probabilistic tsunami hazard and risk analysis: A review of research gaps. Frontiers in Earth Science, 9, p.628772.
• Benjaafar, S. and Hu, M., 2020. Operations management in the age of the sharing economy: What is old and what is new?. Manufacturing & Service Operations Management, 22(1), pp.93-101.
• Budreviciute, A., Damiati, S., Sabir, D.K., Onder, K., Schuller-Goetzburg, P., Plakys, G., Katileviciute, A., Khoja, S. and Kodzius, R., 2020. Management and prevention strategies for non-communicable diseases (NCDs) and their risk factors. Frontiers in public health, 8, p.788.
• Chowdhury, M.T., Sarkar, A., Paul, S.K. and Moktadir, M.A., 2020. A case study on strategies to deal with the impacts of COVID-19 pandemic in the food and beverage industry. Operations Management Research, pp.1-13.
• Global Carex Group, Roalson, E.H., Jiménez?Mejías, P., Hipp, A.L., Benítez?Benítez, C., Bruederle, L.P., Chung, K.S., Escudero, M., Ford, B.A., Ford, K. and Gebauer, S., 2021. A framework infrageneric classification of Carex (Cyperaceae) and its organizing principles. Journal of Systematics and Evolution, 59(4), pp.726-762.
• Howlett, N., Trivedi, D., Troop, N.A. and Chater, A.M., 2019. Are physical activity interventions for healthy inactive adults effective in promoting behavior change and maintenance, and which behavior change techniques are effective? A systematic review and meta-analysis. Translational behavioral medicine, 9(1), pp.147-157.
• Ikumapayi, O.M., Akinlabi, E.T., Mwema, F.M. and Ogbonna, O.S., 2020. Six sigma versus lean manufacturing–An overview. Materials Today: Proceedings, 26, pp.3275-3281.
• Jasti, N.V.K., Venkateswaran, V., Kota, S. and Sangwan, K.S., 2022. A literature review on total quality management (models, frameworks, and tools and techniques) in higher education. The TQM Journal, 34(5), pp.1298-1319.
• Kam, A.W., Collins, S., Park, T., Mihail, M., Stanaway, F.F., Lewis, N.L., Polya, D., Fraser-Bell, S., Roberts, T.V. and Smith, J.E., 2021. Using Lean Six Sigma techniques to improve efficiency in outpatient ophthalmology clinics. BMC Health Services Research, 21, pp.1-9.
• Kumar, A., Luthra, S., Mangla, S.K. and Kazanço?lu, Y., 2020. COVID-19 impact on sustainable production and operations management. Sustainable Operations and Computers, 1, pp.1-7.
• Maphumulo, W.T. and Bhengu, B.R., 2019. Challenges of quality improvement in the healthcare of South Africa post-apartheid: A critical review. Curationis, 42(1), pp.1-9.
• Olsen, T.L. and Tomlin, B., 2020. Industry 4.0: Opportunities and challenges for operations management. Manufacturing & Service Operations Management, 22(1), pp.113-122.
• Priyanka and Kumar, D., 2020. Decision tree classifier: a detailed survey. International Journal of Information and Decision Sciences, 12(3), pp.246-269.
• Wang, L., Wu, W.M., Bolan, N.S., Tsang, D.C., Li, Y., Qin, M. and Hou, D., 2021. Environmental fate, toxicity and risk management strategies of nanoplastics in the environment: Current status and future perspectives. Journal of hazardous materials, 401, p.123415.

Online

• 4V analysis of Ford. 2023. [Online] Available through:< https://www.statista.com/topics/1886/ford/ >
• Strategic Risk analysis of the Ford. 2023. [online] Available through: < https://www.infrontanalytics.com/fe-EN/30019NU/Ford-Motor-Company/gprv-risk>
• Turnover and market share of the Ford. 2022. [Online] Available through:< https://companiesmarketcap.com/ford/revenue/#:~:text=According%20to%20Ford's%20latest%20financial,sale%20of%20goods%20or%20services.>