Page 23 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes Twenty years later in 2004, the company sells 2.1 million vehicles in North America. Today,
NUMMI continues to flourish as a company of 5,000 team members. With Toyota’s engineering
content, Toyota’s managers transformed an antiquated NUMMI assembly plant into GM’s most
efficient factory using what is described as the “Toyota Way” – a corporate philosophy that
empowers employees.
1.5 Interface with other Functions

Well-designed manufacturing and service operations exploit a company’s distinctive
competencies – the strengths unique to that company – to meet these needs. Such strengths
might be a particularly skilled or creative workforce, strong distribution networks, or the
ability to rapidly develop new products or quickly change production-output rates. A good
operations manager will interface with other functions in order to exploit the competencies of
the organization.
We can analyze the interface requirements from another angle also—from the point of view of
Operations Management’s processes. Generally, processes involve combinations of people,
machines, tools, techniques, and materials in a systematic series of steps or actions.
The overall value chain extends from suppliers to customers. Inputs consist of the sources
related to materials like capital, equipment, personnel, information, and energy used to produce
the desired outputs. Inputs typically are selected by the operations function in association with
other functions. Outputs are the final product whether of tangible goods or intangible services.
Some of the interfaces with other functional areas in the organization are described below:
1. Operations Management-Marketing Interface: Marketing is responsible for understanding
customer needs, generating and maintaining demand for the firm’s products, ensuring
customer satisfaction, and developing new markets and product potential. The firm’s
strategic positioning and its market segmentation decisions to a large extent determine
the manufacturing and operations strategy.
In addition, marketing is the key information gatekeeper between operations and the
product markets. Marketing determines the kind of product customer’s value. This starts
prior to product development, positioning, pricing, forecasting and promotions both
before and after product launch. Interdisciplinary co-operation involving operations and
marketing decisions go back over many decades.
Conflicts between operations and marketing in most organizations result from the lack of
broad agreement on critical organizational decisions such as the width of the product line,
the amount of time taken to deliver the product, and service or quality levels. The interface
between these two functions offers wide leverage in most organizations—increased
understanding and trust between operations and marketing propels many organizations
to higher levels of effectiveness.
2. Operations Management-Finance Interface: Capital equipment, cost-control policies, price-
volume decisions and inventories constitute the interface with financial decision making.
As acquisition and management of assets is an important part of decision making, finance
and operations need to work together to understand the nature of technology used in
operations and the practice-performance gap in their organization.
Tracking performance requires that the organization develops common, objective
platforms for performance evaluation. Finance provides data on product and service costs
that help managers evaluate operational performance. Operations managers should have
knowledge of financial procedures, limits, and capabilities. The effectiveness of operational
planning and budgeting is often driven by the level of co-operation between these two
areas.

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