Exam 14: Operations-Producing Goods and Services

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As product comes off the assembly line, the handoff from production operations to logistics begins. Packaging plays important roles in the smooth transfer of finished goods from the plant to the distribution center and customer locations. Package design issues can affect labor and facility efficiency. Well-designed packaging facilitates efficient handling and shipping of the products, keeping landed costs in check.
Package design impacts an organization's ability to use space and equipment. The design must promote effective space utilization in the production facility and distribution centers. The physical dimensions of products and packaging must fall within the capabilities of existing materials-handling equipment at the factory, distribution centers, and customer locations. A major packaging concern is the ease of handling in relation to materials handling and transportation. Handling ease is quite important to the production manager, whose labor must be used to place the goods in the packages. Another primary concern is protecting the goods in the package.
With customer service playing an ever-increasing role in the supply chain, companies need to integrate their packages with customers' materials-handling equipment. Also, packaging plays a key role in providing information about the package contents. Properly identified packages and reusable containers make it easier for production personnel to locate goods needed by the workcenter or assembly line. Barcodes, RFID tags, and other auto-ID tools can be attached to or built into the packaging to make product information more readily accessible.
The sustainability mantra of reduce, reuse, recycle is not lost on other manufacturers who are embracing these new packaging technologies. In fact, the global market for sustainable packaging is projected to reach $142.42 billion by 2015. (Pages 604-605)

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Operations managers face numerous challenges and tradeoffs that must be managed successfully if the organization and supply chain are to achieve their performance goals. These challenges were highlighted by Ferrari and Parker in a Supply Chain Management Review article: "Intensified competition, more demanding customers, and relentless pressure for efficiency and well as adaptability are driving significant changes across many manufacturing industry settings. According to the authors, long-term profitable growth is dependent on manufacturing and supply chain organizations' abilities to address these challenges through process innovation.
Competitive pressures are a major challenge for many established manufacturers and service providers. As the global reach of supply chains makes it possible to source product from nearly anywhere in the world, companies need to continually update their production capabilities and develop innovative responses to upstart competitors.
Customers' demand for choice and rapidly changing tastes make life difficult for product makers.
The expectation today of customized products that meet the specifications of individual buyers requires far different production processes than the assembly methods needed for standardized goods. The shrinking life cycle of products today also renders long production runs of these common goods obsolete. In response, companies like Dell and Nike have developed responsive capabilities by building supply chains around assemble-to-order production capabilities. Today, you can design your own Nike shoes at Nikei.com.
While the use of responsive, small quantity production processes is growing, company executives still demand productivity and efficiency. Leanness and adaptability are requirements for success, though many organizations struggle to make the transition from traditional production methods and strategies to more contemporary ones that can better balance product quality, process flexibility, fulfillment speed, and execution costs.
Operations managers face many other operations challenges. Labor availability and productivity issues, synchronization of activities with the supply chain, and capital costs are just a few of the additional obstacles that must be overcome. (Pages 589-590)