Write an analysis on the significance of supply chain management and how it functions inside a firm after speaking with at least one actual expert who works in an operational area. Additionally, figure out the overall cost of production for the scenario that is given.
Introduction
In the current economic climate, businesses may use suppliers to outperform their rivals. Effective supply chain management may reduce a product’s cost while maintaining or even raising its quality, an advantage that can set a firm apart from competitors in the eyes of customers. As a result, suppliers are now a crucial component of the majority of company plans.
Companies have embraced the ideas of just-in-time (JIT) and lean manufacturing to cut out waste and refocus on areas where value can be added. Many American businesses still operate under the assumption that it is preferable to rush the product through their processes and build the inventory required to serve the customer. As a result, they are unfamiliar with the idea of manufacturing only the amount of a part necessary to meet immediate needs. The pull mechanism used by JIT is characterized by small lot sizes, fast changeover, adaptable resources, a simplified design, and consistent plant production. JIT and lean manufacturing complement each other effectively because lean manufacturing places a strong emphasis on process simplification and waste reduction.
Companies that make use of these technologies rapidly learn that waste reduction efforts must extend beyond the manufacturing area. To create a flexible, fluid process that puts the consumer first, the marketing, engineering, and buying departments must all coordinate their efforts. These best practices can only be implemented if the entire business cooperates.
Scenario
Assume you were just employed by ABC Manufacturing, a small manufacturing business established two years ago, to serve as the operations manager. Although the business has had some success since its founding, there have lately been a number of manufacturing problems. To put the business back on track, you were engaged to make and execute recommendations for changes.
The president of ABC has stated that initial planning for the production of a new valve product has already been completed. They have completed the basic planning to locate suppliers for the various parts utilized in the valve, and they have a final product design.
The president is unsure about the best way to organize the supply chain for this new product, though. He speculates that ABC may not have designed the supply chain optimally, including how and where inventory is stored for certain of their current items. He is also typically aware of supply chain ideas like just-in-time (JIT) manufacturing and outsourcing, while he is aware that those notions might come with challenges and trade-offs.
The president has asked for your recommendations related to the supply chain for this new product, in relation to a specific outsourcing decision. You have decided it would be helpful to interview at least one operations manager at a different company to better understand the key concepts.
Preparation
Interview at least one real-world expert who works in an operational field before finishing this evaluation. The purpose of the interview is to learn more about how the business converts inputs into products that are useful to its clients. This might be a small or large business, family-owned or publicly traded, focused on services or products, a bakery, restaurant, or auto factory. An excellent choice can be your present employer. The purpose of this interview is to understand the importance of operations management through the eyes of the company. Although many businesses don’t employ all best practices, they do include some of them or may be starting to.
In your interview, be sure to at least touch on the following topics:
What makes supply chain management crucial to a business?
What tools does the organization utilize for operations management, including supply chain management, to support best practices?
What associations or collaborations does the business have with other businesses?
How does the business obtain materials and/or components for its goods or services?
How is the production process interconnected with component parts?
What are the main compromises of JIT manufacturing?
What are the main trade-offs when choosing outsourcing?
Components
Complete both of the evaluation elements listed below.
Interview component: Following your interview, utilize the data to create an analysis that satisfies the following objectives:
- Describe the value of supply chain management to a business.
- Describe the tools used to support best practices in operations management (including supply chain management).
- Talk about any collaborations or alliances that a corporation could have in order to further its operations management strategy.
- Describe the process through which a business obtains the materials and/or components for a product or service.
- Describe the integration of the component parts into the manufacturing process.
- Describe the main compromises made by JIT manufacturing.
- Describe the main trade-offs to consider while outsourcing.
- component of the scenario
Consider the following exact hypothetical outsourcing case for the latter part of this analysis:
ABC has estimated that it can produce the new valve product in-house for a fixed cost of $27,000 and a variable cost of $8 per unit. According to the firm president, ABC will reportedly sell 4,800 of these valves year (unit volume = UV). The president of ABC has been approached by Jay Production, a tiny but well-known firm that specializes in outsourcing mechanical production, and they have offered to produce this new valve for ABC for an annual charge of $29,000 plus $6 per unit.
- Give the algebraic formula for calculating the valve’s total yearly manufacturing cost (TC) (using TC, FC, VC, and UV as variables).
- If ABC manufactures the valve, figure out the entire yearly production cost and submit it.
- If Jay manufactures the valve, figure up the entire yearly production cost and send it.
- Which is preferable in terms of yearly production costs overall?
