Functions of SCM
Buy: As illustrated in the twenty-eighth chapter, the manufacturing plant was forced to bargain with suppliers to increase the scale of orders. This move would benefit both the organization and the suppliers. Alex hoped that this move would bear fruit (pp. 234-236).
Make: Al had trouble with making plans about production activities. In chapter twenty-one, the manufacturer found a solution to the problem that would prioritize production tasks. (Goldratt, 2004, p.184)
Move: Chapter 2 features Al’s shipping issues that had economic implications on the plant. For the plant to improve its efficiency, shipping schedules had to be aligned with production plans. This would ensure a timely execution of tasks that would advance organizational goals (pp. 16-26).
Store: As the book’s plot progresses, Al expresses his displeasure concerning the storing capabilities of the manufacturer. The plant was in possession of a lot of unutilized merchandize that filled up storage space. In Chapter 9, Lou claims that this challenged the aspect of profit generation by escalating the manufacturer’s holding costs (pp. 77-78.
Sell: In the fourth chapter, Jonah and Alex discuss the goals of the company. Alex believes that the goal of the organization is to gain market share through sales (p. 39).
Slack
Inventory: In the eleventh chapter, Al’s shortcomings become evident through his confrontation by Jonah. The production line was manufacturing products that surpassed the demand of the market. This led to excesses in the plant’s inventory.
Labor: labor slack is seen during the manufacturing process. In the chapter twenty-three, some workers appear to be idle while others are watching over the furnace. This observation bothers Al.
Capacity: Capacity slack is seen when Bob admits that the production robot was operating well under its capability. This is proved by his conversation with Al.
Space: the fact that the manufacturer’s warehouse was full of inventory shows that the organization did not have a problem with space slack.
Drivers of slack
Quantity uncertainty: In the seventeenth chapter, Bob lost the bet with Al concerning the robot’s production capability. This highlights the fact that he was unsure about the output of the machine.
Economies of scale: The manufacturing plant attempted to employ the concept of economies of scale in production. However, this made them to have an imbalance between inventory and sales, a factor that jeopardized profit generation.\
Time delays: In chapter twenty-three, Nakamura’s confusion about the time taken for materials to be processed by the furnace meant that people waited in vain. This lead to the labor slack that was observable in the same chapter.
This concept can be illustrated using three processes that occur in a stepwise fashion. If the second step to a process fails to work effectively, the significance of the first and third steps become obsolete. In this case, the whole system fails.
However, if the second step is energy intensive, this aspect can be considered right from the start. More emphasis would be placed on this step at the expense of the rest. This would give an assurance that the whole system would work efficiently.
For a system to work, all the components must operate in harmony. This demands uniformity and a critical evaluation of all processes.
A bottleneck operation is an occurrence in which a point of production experiences a form of blockage, which predisposes to inefficiencies such as a queue. An example of a bottleneck can be that of a banking process. When only one teller serves a large number of customers, the cashier would be pressurized by the workload and a long queue would be inevitable.
The identification of bottlenecks can be done through people’s feedback. When many individuals complain about long waiting hours in a process, a bottleneck becomes evident. Additionally, the presence of slack along a production system shows that a point in the line is experiencing bottlenecks.
Peach is concerned about his fate in the company. He hopes to work in the organization for the years to come. His future would depend on his contributions to the company and the ability to follow guidelines placed by the management. However, he is hesitant about freeing the plan because he thinks that this move would warrant his dismissal. He has a lot of faith in the company and knows that the plant’s cost would grow overtime. This can be regarded as Peach’s cost accounting method. Nevertheless, the focus on cost cutting is a pitfall. Instead of concentrating on the cost, the manager should shift his energies towards revenue creation. In essence, sales account for a company’s overall growth and success into the future. Peach has blinded himself with an obsession for the cost incurred by the company at the expense of the revenue that would be created in the end.
Yes, I am in agreement with the idea. The production inefficiency at the plant is attributable by the imbalance that exists between production and sales. This creates a backlog of activities that promote malpractices that affect organizational function. Cutting batch sizes in half will go a long way in correcting the situation. First, it will create a chain of activities that would normalize operations at the plant. Half of the company’s inventory will be reduced. This will have a direct positive implication on holding operations. Space will be freed and the cost of storage will be cut considerable. Additionally, the pressure exerted on the production units will be lessened. This will promote efficiency and will help the company to unravel other mysteries that affect revenue generation. This is true in the context of production goals.
In chapter 29, the cost measurement system of the plant is explained. In this particular context, it covers the aspect on labor costs. It is specifically associated with the cost of direct labor that sustains production operations. This means that adjustments to the batch size would affect the cost of labor in the company. When batch sizes are halved, the non-bottleneck operations will be improved. The marginal time values concerning the setting up of operations will have an impact on labor: labor costs would escalate. This would then have a significant influence on production costs. Hence, the cost per part will be raised considerably. Additionally, the increase in labor costs will have an impact on the production pressure.
The point behind this action was to mitigate the adverse effects associated with the bottleneck. The system created to solve the problem was based on the prioritization of tasks. Resources with red tags would be given first consideration. The origin of the problem lay with the production decisions that were made. Concerning this, the non-bottleneck production machines were allowed to proceed with operations after they had hit demand goals. The outcomes of this aggravated the production imbalance that existed in the plant. Regarding this, non-bottleneck operations occurred at faster rates compared to those of bottleneck operations. Efforts to sustain operations were marked by the need to maintain non-bottleneck operations. This meant that the situation in bottleneck operations became worsened and led to an excess of inventory. Ultimately, the production system was characterized by a persistent state of inefficiency that would undermine the fundamental goals of production. Concerning the concept depicted in chapter nine the production schedule employed was solely based on priority.
Concerning this text, various other lessons were intriguing. Organizational success is not solely based on the need to produce in masses. When a company concentrates on production goals, they may fail in other aspects. The profitability of a business plan can be attributed to various other factors that may include the aspects of human resource development. Additionally, the rate of production can blind the focus of managers. People would be obsessed by the need to increase inventory at the expense of other factors such as customer satisfaction. A successful company is able to balance all the functions that sustain the company. In the book, the discussions occurring between various members of the company show a spirit of social coherence across all hierarchical levels.
References
Goldratt, E. M., Cox, J., & Whitford, D. (2004). The goal: A process of ongoing improvement. Great Barrington, Mass: North River Press.
