Report Guide:

A. Production
The production/operations function of a business consists of all those activities that transform
inputs into goods and services (David, 2007).
- A manufacturing operation transforms or converts inputs such as raw materials,
labor, capital, machines, and facilities into finished goods and services.

B. Production Management
a) Production management means planning, organizing, directing and controlling of
production activities.
- Production/operations management (POM) is the core function in the business firm.

- The major decisions in the production/operations strategy are concern the technical
core, quality, facilities, technology, and production planning and control.
- POM operating strategies must be coordinated with marketing strategy if the firm is
to succeed. Careful integration with financial strategy components and the
personnel function are also necessary.
b) The main objective of production management is to produce goods and services of the
right quality, right quantity, at the right time and at minimum cost.

C. Implication of Strategies
D. Production Management and Strategy Implementation
A major part of the strategy-implementation process takes place at the production site
Here are the examples of adjustments in production systems that could be required to
implement various strategies:

E. Just-in-time (JIT) Production

a) A Japanese management philosophy applied in manufacturing which involves having the
right items of the right quantity and quality at the right place and at the right time
(Cheng, 1993)
- JIT significantly reduces the costs of implementing strategies.
- Produce only what you need, when you need it
- With JIT, parts and materials are delivered to a production site just as they are
needed, rather than being stockpiled as ahedge against later deliveries.
- JIT allows companies to filter out waste in the production process, improve upon
quality and satisfy consumer demands in an efficient and reliable manner.
F. Practical Application

a) The Toyota production strategy is highlighted by the fact that raw materials are not
brought to the production floor until an order is received and this product is ready to be
built. No parts are allowed at a node unless they are required for the next node, or they
are part of an assembly for the next node.
- Toyota is considered by many to be the poster child for JIT success.
- This philosophy has allowed Toyota to keep a minimum amount of inventory which
means lower costs. This also means that Toyota can adapt quickly to changes in
demand without having to worry about disposing of expensive inventory.

G. Operations Management: The L’Oréal Way

Quality at the Heart of our Products
L’Oréal is a subsidiary of L’Oréal S.A. (International), the world’s leading cosmetics group.
The Company manufactures, imports, exports and markets leading cosmetics brands.
a) Challenge:
L’Oreal wanted to create a unified system that would improve planning and efficiency –
and strengthen the traceability of raw materials used in production.
b) Strategy:
L’Oréal re-designed supply chain capabilities and implemented Global Manufacturing
Execution System (MES)
 L’Oréal manufactures 85.9% of its products in its own plants
 For L’Oréal being responsible means controlling the manufacture of its products.
By choosing a largely integrated industrial model, the group does not only
guarantee the overall quality of its products; it can also be certain that its
ethical, environmental and corporate principles are complied with.
 L’Oréal re-designed supply chain capabilities and implemented Global
Manufacturing Execution System a world-class integrated information system
that provided collaborative compilation of volume forecasts across sales,
marketing, supply chain, and finance teams, which were then shared worldwide
with their factory and distribution centers.
 The system ensures that errors are prevented, not only by supplying real time
information – but by actually controlling production by requiring the approval of
every batch of raw materials before it enters the production line
 Intended to improve order precision and responsiveness across the supply chain
-
c) Results:
o improved sales forecast accuracy rate of 60% to 71%
o logistics costs decreased
o shipments increased 40%+ (over five years from 2009 to 2014)
o more efficient stock managemen
o improved customer service levels by more than 2%
d) All operational objectives naturally derive from this philosophy:
o Ensuring the safety of people and protection of the environment
o Guaranteeing perfect product quality
o Being innovative in processes and packaging
o Guaranteeing an excellent level of service and shorter time-to-market
o Minimizing production and logistical costs and investments
e) All operational objectives naturally derive from this philosophy:
o Ensuring the safety of people and protection of the environment
o Guaranteeing perfect product quality
o Being innovative in processes and packaging
o Guaranteeing an excellent level of service and shorter time-to-market
o Minimizing production and logistical costs and investments
f) Solution Benefits:
o Improved security for clients and personnel
 o Rigor in production and quality procedures
o Real-time, on-line traceability
o Comfort and satisfaction for the operators
o Products of irreproachable quality
- Exactly responds to the companies objectives

Production / Operations Strategies

Production/operations management (POM) is the core function in the business firm. Somehow,
someplace, the goods and services that a company sells must be obtained. Basically, this involves a
process of converting labor, materials, etc., into the particular combination of qualities that a selected
group of customers wants.

The major decisions in the production/operations strategy are concern the technical core, quality,
facilities, technology, and production planning and control. POM operating strategies must be
coordinated with marketing strategy if the firm is to succeed. Careful integration with financial strategy
components and the personnel function are also necessary.

Production

 A major part of the strategy-implementation process takes place at the production site
 Here are the examples of adjustments in production systems that could be required to
implement
various strategies:
  Just-in-time (JIT) production approaches have withstood the test of time. JIT significantly

reduces the costs of implementing strategies. With JIT, parts and materials are

delivered to a production site just as they are needed, rather than being stockpiled as a

hedge against later deliveries.

Operations Management: The L’Oréal Way

Intro:

Quality at the Heart of our Products

L’Oréal is a subsidiary of L’Oréal S.A. (International), the world’s leading cosmetics group. The Company
manufactures, imports, exports and markets leading cosmetics brands

Challenge
L’Oreal wanted to create a unified system that would improve planning and efficiency – and strengthen
the traceability of raw materials used in production.
- The company needed to know exactly which raw materials were in each pallet that contained
500-1000 small bottles, and to manage the entire process, so that their system would not only
enable access to information, but actually control production.
Strategy
- L’Oréal re-designed supply chain capabilities and implemented Global Manufacturing Execution
System a world-class integrated information system that provided collaborative compilation of
volume forecasts across sales, marketing, supply chain, and finance teams, which were then
shared worldwide with their factory and distribution centers.

- The system ensures that errors are prevented, not only by supplying real time information – but
by actually controlling production by requiring the approval of every batch of raw materials
before it enters the production line

- Intended to improve order precision and responsiveness across the supply chain

Results
  improved sales forecast accuracy rate of 60% to 71%
 logistics costs decreased
 shipments increased 40%+ (over five years from 2009 to 2014)
 more efficient stock managemen
 improved customer service levels by more than 2%

Additional Info:

 integrated operations management solution across all its factories worldwide

 integrated operations management implementation
o MES (Manufacturing Execution System) to Create Unified System, Improve Efficiency,
and Strengthen Traceability of Raw Materials
o All the data regarding products, bills of material, etc., now goes through a specially
modified system that does stock management directly
 All operational objectives naturally derive from this philosophy:
• Ensuring the safety of people and protection of the environment

• Guaranteeing perfect product quality

• Being innovative in processes and packaging

• Guaranteeing an excellent level of service and shorter time-to-market

• Minimizing production and logistical costs and investments

 Solution Benefits:
o Improved security for clients and personnel
o Rigor in production and quality procedures
o Real-time, on-line traceability
o Comfort and satisfaction for the operators
o Products of irreproachable quality
- Exactly responds to the companies objectives