Importance of Operations Management in Business Organization

Operations Management in
Business
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TABLE OF CONTENTS
INTRODUCTION
TASK 1
1.1 Importance of Operation management for organizations
1.2 Analyze the operations functions of Fulham Furniture
organization
1.3 Process model for Fulham Furniture organization
TASK 2
2.1 The importance of the Three Es to organizations
2.2 Assess the impact of the tension between cost minimization
and quality maximization
2.3 The significance of the five performance objectives
TASK 3
3.1 Linear programming adds value to a given production
process
3.2 Evaluate critical path analysis and network planning
3.3 The need of operational planning for the organization
TASK 4
4.1 Operational outcomes for Ashley Furniture
4.2 A network plan indicating the resultant critical path
4.3 Quality Management Techniques to improve the operations
CONCLUSION
REFERENCES
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INTRODUCTION
Firms use operations management effectively to ensure and sustain
efficiency in their workplace. Operations management consists of all the
activities from transforming of ideas to finished products design. This
research report describes the importance of operations management for
Fulham Furniture organization. It explores that how linear programming adds
value to a given production process and manages quality of products in a
significant manner.
TASK 1
1.1
Operation management plays an important role in business operations.
It deals with the design, operations and improvement of the organizational
structure.
Benefits of operation management for the firm are described as below:
Financial and Human resource management: When companies

effectively manage their resources then cost is reduced and firm can
get tangible as well as intangible benefits in a significant manner. The
firm can carry out its objectives by effective execution of its operations.
It can grasp market opportunity by using minimum resources and
generate maximum output (Meneghetti, 2002).
Production: It is helpful for an organization in managing physical
manufacturing & assembly and successful delivery of products on time.
Enhance performance: Organizations can improve their products
quality (robustness and product functionality) and increase flexibility
(appointing skilled staff members) through successful implementation
of its operations.
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Time management: Operation management helps firm to increase
the efficiency and productivity of tasks, so all functions are completed
on time with effective utilization of resources (Bakliwal, 2011).
Manufacturing activities: The operation management department
contributes in production planning activities which determine how
goods will be produced, location of plant, the facilities that will be
required to fulfill the tasks and how manufacturing will be laid out.
Once the production process starts, it helps the managers to
continually monitor and schedule all the activities in a well planned
manner. Finally, it ensures that goods are produced according to
specific needs and standard quality is maintained.
Facilities decisions: It helps firm in taking facilities related decisions
like site selection (minimize shipping costs, from where raw materials
come to the plant, distance of plant from city), availability &
appointment of skilled employees, forecasting, capacity planning etc.
1.2
The firm is focused on the special kind of the customers who want high
quality of office furniture. It works optimally with modern technology like PC,
Internet, scanners and other high tech-items.
Relationship management: The Company is following strategic

thinking approach and use of best technology at work place to increase
the awareness among people. The firm is maintaining good
relationship with suppliers and purchasers. This ensures timely delivery
of its products to customers. It involves material management and
logistics operations related activities (Jones and Robinson, 2012).
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Production planning: The firm designs and manufactures furniture in
UK and supplies its products at national and international level. The
company used Lean production tools to increase the capacity and
reduce wastage and production cost. This technique helps the
company to minimize its internal and external failure costs and
improve its cash flow management process.
Research & Development: The firm has been investing in R& D
activity and has come up with stylish furniture products. In addition to
this, it also provides ways to alter design to save its manufacturing
costs. It keeps its prices low as compared to other competitors so more
customers are attracted towards brands (Plenert, 2002).
Quality products: The firm is offering good quality office furniture at
lower price as compared to other business rivals. It provides various
office furniture related products. The company has its own warehouse
department which stores big pieces of furniture. Due to this, it is easy
for the company to make quick delivery of products. The corporation
has quality control department which inspects and tests raw materials
and also monitors the customer complaints. It analyzes the product
fault report and takes corrective actions to improve the quality of
products (Michael and Nigel , 2003).
Other functions: The other functions of the firm, which contribute in
success of the departments of the organizations, are research &
development, customer support, marketing & sales and production in a
well planned manner.
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1.3
The process model of the organization is categorized into several parts
which are described as below:
Identify the needs: It is the first step in which company identifies the
needs of customers. By establishing a short term strategy, firm
understands the requirement of customers and based on that furniture
products are designed (Plenert, 2002).
Market research: It is used in all stages of product life cycle. The firm
has been investing in R& D activity and comes up with stylish furniture
products. With the help of research, the organization analyzes its
current market position and gathers information about their
competitors. Based on that, the company develops its market strategy
and captures wide geographical area in a significant manner.
Procurement process: In this process, the goods are acquired from
an outside or external source. It considers the needs of the purchaser
in terms of quality, quantity, time, and location. In this stage, the
company identifies the suppliers and communicates with them about
the quotation. Further, firm negotiates with distributors relating to raw
material, price and availability of products (Tantoush, 2005).
Aggregate planning: In this process, the requirement of raw
materials, capacity levels, production, inventory and stock outs are
identified. The firm includes several parameters like production rate,
workforce and inventory holding cost in planning process to effectively
design the products and achieve its goal in well planned manner.
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Production control: After raw materials purchase, firm starts
production process and manufactures the products. Manager is
involved in scheduling and monitoring activities. They take the
feedback from customers and respond to feedback and make
adjustment where needed (Murthy,2005).
Quality control: After product development task, firm delivers
products to the clients. QC ensures customers that the product
provided to them are of good quality. Quality is measured with help of
total quality management process and it is used to compute the quality
of the products in terms of zero defects, idle time and minimum
wastage etc.
Task 2
2.1
The economy, efficiency and effectiveness are three major elements
which are used in performance auditing.
Economy: The UK designers and innovators are amongst the best in

the world. Review of economy is primary element of performance
measurement. It means acquiring the resources at low cost. The
factors like recession, lack of skilled labor, demand, customer service,
lead time and environmental issues influence the working of the
organization. The company designs high quality office furniture
products which are stylish and low cost. As compared to other
competitors, firm has used assembling strategy in which high quality
interlocking wood pieces are assembled for developing products. These
features enhance the quality as well as give pleasure to the customers.
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The UK furniture and furnishing company encompasses a diverse range
of products based on customer characteristics. For domestic and
household purposes, the firm has been designing furniture which is
available in retail outlets. The company also designs products for
public area like hospitals, restaurants and residential accommodation.
For offices, it produces furniture such as work stations, seating tables
and other items which are suitable for office environment (Loch, 2007).
Efficiency: It refers to the relationship between input and output
process. The performance of the firm is measured in terms of
efficiency which means that firm is using its resources effectively or
not. If company fails to utilize its resources in an optimum manner then
corrective action will be taken by auditors to improve the situation.
When performance is measured then the administrative cost,
operational costs and past performance etc. are also taken into
account.
Effectiveness: The products designed by the company should be
uniform, good quality and optimal quantity plus the most important
thing is that they should be offered at low price as compared to other
business rivals. The furniture products which are developed by the firm
are eco-friendly in nature. If all the staff members of the organization
are involved in decision making process and they do their job
effectively then effectiveness of the firm will increase and various
products can be offered to customers (Greasley, 2007).
2.2
There is a paradoxical relationship present between cost minimization
and quality maximization. It creates challenge for the company to maintain
good quality as well manage cost. In global era, cut throat competition is
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present in the market and customers are demanding more quality of
products without spending too much. The company is faced with difficulties
in allocating cost and it may lead to conflicts and higher competition rather
than healthy cooperation with in the firm. It demotivates the employees of
the company when unfair cost allocations are made and profit oriented
target is set too high (Fulham furniture, n.d). It creates tension among staff
members and they will not perform well. The cost minimization aim is to
deliver goods and services in most cost effective ways. It is a difficult task
for the firm. In this situation, value analysis is helpful for the company
because it reduces cost by eliminating wastage of materials. The benefits of
striking a balance between cost minimization and quality maximization are
lower unit costs, high gross profit margin, higher operating profit, improved
cash flows and enhanced return on investment.
Material substitution has influenced through misbalancing between cost
and profit. It increases ambiguity and unnecessary parts so operation cost
will increase. It decreases the reliability, manufacturability and profit of the
firm. Process engineering can be used by firm for enhancing the productivity
and efficiency (Heizer and et.al., 2009).
Market driven products improvements: Created tension affects the
market driven approach of the company. Customers are paying for stylish
furniture design, so the firm is adopting value engineering that helps the
organization to understand how to produce product that match the demand
of major customer segment.
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2.3
The operation management of an organization is influenced by
performance objectives which are described as below:
Cost: This is an important factor which influences the performance of

corporations. If company develops products which are of good quality
and reasonably priced as compared to other rivals then more
customers are attracted towards the products. By reducing ambiguity
and reducing unnecessary parts of the operation, firm can reduce its
cost. With help of value analysis, firm can manage its administrative
and operational costs. It can be achieved by economies of scale which
enables the company to produce large quantity of products at very low
prices (Pitt, 2001).
Dependability: The firm can grasp the market opportunity by
overcoming its dependability on other manufacturers. The company
should fragment its task in small level and fix the role and
responsibility of individuals so they can achieve their target in a
significant manner. It helps the firm to complete its tasks on time and
fulfill the promises made to the suppliers and customers in well
planned manner.
Flexibility: The organization dMaking the Products convenient-
evelops furniture which is flexible and easily portable. This advantage
helps the firm in form of increasing its sale revenue and customer
satisfaction. Other than this, company can also use competition
advantage through personalization and customization (Leseure, 2010).
Quality: By designing high quality assembly, it gives pleasure and
provides good services to the customers. The company can improve
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the quality of products by offering healthy working environment to the
employees so they will contribute in success of the organization.
Speed: The furniture manufacturer company uses high technology
ergonomics to improve the business process and there are many
computers used by the firm for designing furniture in more lucrative
way. It is the duty of manager to ensure that things are done fast in
order to reduce the lead time.
TASK 3
3.1
Linear programming is a mathematical model which is helpful for the
organization in terms of cost reduction and profit maximization. This tool
supports management in identifying and diagnosing the problem in the most
effective way. It will be helpful for the firm in formulating the problem and
describing the issue in terms of variables, constraints and objectives. Linear
programming model assists in allocating the resources of the organization in
the most effective way. The Fulham furniture organization has faced
problems regarding cost, staffing and quality of products. In this situation,
this model will be beneficial for solving such kinds of problems and helpful in
profit planning. It is easy for the corporation to solve problems or reduce the
cost of business and manage work under limitations and restrictive
conditions in an effective manner (Mahadevan, 2010).
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3.2
Critical path analysis ensures firm that they make best use of
machinery, people and materials. It is a very detailed process and defines a
logical route which directs the business, reduces cost and saves time. CPA
method provides guidance to the firm that how a project is completed in
shortest possible time. It identifies the relationship between the activities
involved in the project.
Network planning is an effective marketing method that is used by the
firm to enhance their sales and contract based on introductions and referrals.
The Fulham furniture organization offers various kinds of products in several
countries. CPA and Network planning are very beneficial for the firm to
expand their business in wide geographical area by making effective network
design (Leseure, 2010). These tools are helpful for the company to complete
the project on time and utilize resources in an efficient manner. It forces the
manager to think in a logical manner.
3.3
Proper operational planning is necessary for the firm because it
manages and controls labor, material and the capital effectively. It identifies
the inputs to produce the desired quantity and quality of output in the most
efficient manner. To handle this, short term managerial decisions should be
made to meet the ongoing demands. There are many factors like cost,
quality, workforce management, market trends and competitors actions
which are influencing the organizations performance and can deviate the
company from its path and future forecasting. In this situation, operational
planning is very important for the Fulham furniture organization because it is
useful for demand forecasting as well as fulfillment the future order in a
given time period (Brown and Lamming, 2013).
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Task 4
4.1
There are many operational outcomes for the Fulham furniture organization
which are described as follows:
Quality- Quality of the products is very important for the firm because
customers demand more stylish furniture in less price as well as better
quality as compared to other competitors. Company has been making
great efforts in reducing ambiguity that is arising in production process
and eliminating the waste by using economies of scale to produce
much better products to supply in a proper manner (Panneerselvam,
2012.).
Attract more suppliers and customers towards products:
Fulham furniture has captured the market opportunity through
increasing its number of warehouses and offering quality products
while other business rivals are focusing mainly on business expansion.
It is the best marketing strategy which helped the company in earning
great profits and maintaining relationship with suppliers as well as
customers.
Making the Products convenient- By increasing number of
warehouses, the firm will be in a position to easily deliver goods to
customers and reduce transportation cost. It is very beneficial for the
company to deliver products in very less time so it becomes the
strength of the organization (Render, 2009).
4.2
The network plan can be used for understanding the process of creating
office wooden chair.
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A. First the Raw materials is arrived to the firm
B. Cutting the wood and giving shape
C. Polishing the cut wood
D. Polishing wood enters in machine
E. Assemble all the parts and cushions are designed
F. Again polishing and final touch given to chairs.
G. Chairs are ready for delivery to the customers
Activity Order Estimated time
A Done First 5
B After A 6
C After A 8
D After B 9
E After C 11
F After D &E 8
G After D, E & F 4
Time length for each task is estimated and it is clear that each task will only
be started when the previous one will b finished. All the activities can be
shown in the network diagram.
Earlier Start
Node Node
Node Number time
Task
1 A 2
Latest Finish Task duration

time
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The chair manufacturing process shows the order in which the activity will be
completed-
B D
3
6 9
G
F
A
5 6 7
1 2
8
5
E
C 4
4
8 1
Earlier start time: The earlier start time is 0, and then B & C will not start
for 5 hours (0+5), Activity D starts after activity B & C finish and it takes 11
hours (0+5+6). Activity E takes 13 hours (0+5+8). Activity F takes 24 hours
(0+5+8+11). It is required for EST to choose long path and route A, B and D
as is takes only 20 hours.
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B D
3
11
6 9
G
F
A
5 63 736
1 2 5 2
0 24
8
E
5 C 4
4
13
1
8
Latest Time: Activity G must be completed by 36 hours. To calculate LFT

take F (36-4=32). For activity A, the route will be chosen which give lowest
LFT in the case 5 (13-8).
B D
3
11
6 9
G
F
A
5 63 7
1 2 5 24 2 36
0
5
5
C 8
E 4
4
13
8 11
13
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Critical path: This can be done through the nodes where EST and LFT are
same. This means there will be no delays in completing the next task without
delaying the campaign. With help of striking line critical path is shown in the
figure (FIRA, 2010).
B D
3
11
6 9
G
F
A
5 63 7
1 2 5 24 2 36
0
5 8
5
4
E
C
4
13
8 11
13
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4.3
Total quality management is the used in business for improving the
operations. It is usually applied at front-line where production and low-level
managers are deeply involved. It is beneficial for the firm especially in the
areas of field service rework and scrap. The quality of products can be tested
under close inspection process and if they are matched up to mark then
further delivered to the clients. TQM has a strong emphasis on the products
that if they are good then only are cleared otherwise they are sent back to
take actions. Other benefits of quality management techniques are set
benchmarking, employee empowerment, reduced cost and design quality of
products in a significant manner (FIRA, 2010).
CONCLUSION
The research report concluded that operation management and
strategic planning are helpful for companies. It is necessary for Fulham
Furniture to get success by maintaining the quality of products and reducing
cost as compared to other business competitors. Also TQM, Linear planning,
Critical path analysis and Network planning are important tools that help the
organization to achieve its goals in a well planned manner.
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REFERENCES
Journals
Boer, H., 2003. Guest editorial: New challenges in operations

management. International. Journal of Operations & Production
Management. 23(10). pp.1108 - 1113.
Johnston, R., 2005. Service operations management: return to roots.

International Journal of Operations & Production Management. 25(12).
pp.1278 1297.
Meneghetti,A.2002. Perspectives on facilities management for industrial

districts. Facilities, 20(10). pp.337 - 348. MCB UP Ltd.
Pitt, M.,2001. Barriers to the operation of the facilities management:

property management interface. 19 (7). pp.304 - 308. MCB UP Ltd.
Sheu, C., 2005. The importance of national culture in operations

management research. International Journal of Operations & Production
Management. 25(4). pp.371 394.
Books
Bakliwal, L.V., 2011. Production and Operation Management. Pinnacle

Technology.
Brown, S. and Lamming, R., 2013. Strategic Operations Management.

Routledge
Greasley, A., 2007. Operations Management. SAGE.
Heizer and et.al., 2009. Operations Management. Pearson Education India
Jones and Robinson, 2012. Operations Management. Oxford University

Press.
Leseure, M., 2010. Key Concepts in Operations Management. SAGE.
Loch, C., 2007. Behavioral Operations Management. Now Publishers Inc.
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Mahadevan, B.,2010. Operations Management: Theory and Practice.
Pearson Education India.
Michael L. and Nigel S., 2003. Operations Management: Critical

Perspectives on Business and Management. 4. Taylor & Francis.
Murthy,R.P.,2005. Production And Operations Management. New age

international.
Panneerselvam, R., 2012. Production and Operations Management. PHI

Learning Pvt. Ltd
Plenert, J.G.,2002. International Operations Management. Copenhagen

Business School Press DK.
Render., 2009. Operations Management. Pearson Education India.
Tantoush, T., 2005. Operations Management: A Strategic Approach. SAGE.
Online
FIRA, 2010. The UK furniture manufacturing Industry. [Pdf]. Available

through <http://www.fira.co.uk/document/fira-competitiveness-report-
2010.pdf>. [Accessed on: 31th July 2014].
Fulham furniture, nt.d. Introduction about the company. [Online].
Available through
<http://www.bplans.co.uk/uk_furniture_manufacturer_business_plan/strat
egy_and_implementation_summary_fc.cfm>. [Accessed on: 31th July
2014].
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Operations Management in

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Benefits of operation management for the firm are described as below:

Financial and Human resource management: When companies

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Relationship management: The Company is following strategic

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Economy: The UK designers and innovators are amongst the best in

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Cost: This is an important factor which influences the performance of

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Latest Finish Task duration

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Latest Time: Activity G must be completed by 36 hours. To calculate LFT

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Boer, H., 2003. Guest editorial: New challenges in operations

Johnston, R., 2005. Service operations management: return to roots.

Meneghetti,A.2002. Perspectives on facilities management for industrial

Pitt, M.,2001. Barriers to the operation of the facilities management:

Sheu, C., 2005. The importance of national culture in operations

Bakliwal, L.V., 2011. Production and Operation Management. Pinnacle

Brown, S. and Lamming, R., 2013. Strategic Operations Management.

Greasley, A., 2007. Operations Management. SAGE.

Heizer and et.al., 2009. Operations Management. Pearson Education India

Jones and Robinson, 2012. Operations Management. Oxford University

Leseure, M., 2010. Key Concepts in Operations Management. SAGE.

Loch, C., 2007. Behavioral Operations Management. Now Publishers Inc.

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Michael L. and Nigel S., 2003. Operations Management: Critical

Murthy,R.P.,2005. Production And Operations Management. New age

Panneerselvam, R., 2012. Production and Operations Management. PHI

Plenert, J.G.,2002. International Operations Management. Copenhagen

Render., 2009. Operations Management. Pearson Education India.

Tantoush, T., 2005. Operations Management: A Strategic Approach. SAGE.

FIRA, 2010. The UK furniture manufacturing Industry. [Pdf]. Available

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Download Our App & Get Extra 5% Off on Every

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