Recently several developments that affect operations management practices have taken place in the market place. These changes have been due to economic policies at the national and international levels, advent of new sectors of industry and new technologies. The following represent a brief projected perspective on what operation managers should look at when they think of future. These are the emerging trends and future challenges which will have a profound impact for operation strategy.
• Dismantling of Trade Barriers: One of the recent developments which could potentially affect the operation management practices in the country is the opening up the Indian market to foreign competition. Beginning 1991, the Union Government brought new reforms for easy import of foreign goods in India. In addition to cost pressures from overseas players Indian manufacturing firms had to face large scale dumping of goods. Therefore the new market scenario sets new priorities for operation management and manufacturing firms need to face up to the new challenge.
Besides this new challenge, Indian manufacturing firms have greater chances for market expansion, on account of liberalized economy, for two important reasons. The first is the overall attractiveness of Indian firms due to factor cost advantage, because of relatively low cost of labor. The second advantage for India is the large installed base of technical manpower, manufacturing know-how and experience in manufacturing and operation management .These developments are likely to affect operation management practices in the country.
• Shift in Economic Activity: In the beginning of the 21’st century the global economy shows significant structural changes with a swing of service sector. Reserve Bank of India Annual Report for the year 1998-99 notes that the services have emerged as the fastest growing sector. From 41.3%share in 1990-91 of services the real gross domestic product has increased to 51.2% in 1998-99. Increasing economic activity in service sector that employment pattern will shift from manufacturing sector to service sector.
• Out sourcing as a major wave: India is the direct beneficiary of the phenomenon of dismantling of trade barriers. Based on the successful experience of outsourcing software jobs in India, firms in developed countries are increasing variety of other jobs, thus creating an ‘outsourcing wave’.
Business process outsourcing (BPO) is an arrangement by which some of the business processes are done by a third party on behalf of the organization. The key motivation for a firm to outsource some of its processes stems from three factors: (i) Cost (ii) - Capacity (iii) Competency.
Excellence in operations is a prerequisite for being successful in the BPO sector. Since the primary consideration for a BPO is cost operation strategy thus a BPO firm must emphasize cost leadership, otherwise the BPO activities may be shifted to competitor. Another critical performance measure is quality. Since an organization often outsourcers the entire operations pertaining to business process to third party, quality considerations are followed as per stringent norms. Therefore, developing strategic planning for high level of quality is another important implication for BPO organizations. In several other cases, in addition to cost and quality requirements, stringent delivery requirements may also have to be met as the processes may be in the intermediate stages of value creating process.
• Collaborative Commerce through the Internet: One of the most recent developments is the advent of Internet in commerce and trade. Using the huge IT infrastructure, consisting of network connectivity, client-service architecture and several computers, it is possible to connect remote trading partners. Collaborative commerce opens up new areas for consideration in the operations management. Many of traditional methods of operation management can either be replaced or supplemented by new procedures using the electronic methods. Two important areas of significant interest are (i) procurement and supply management practices using electronic means (ii) design and new product development by means of CAD.
• Technological Change: There is a tremendous growth in the use of robots in automatic machine loading. The robot is used to load position and then unload and transfer work pieces. Welding processes use robots extensively. Project management techniques of PERT/CPM are very effective tools of planning and control of various projects. Computer simulation, computer-aided design and manufacturing (CAD/CAM), group technology (GT) and cellular manufacturing systems (CMS) are being introduced in future. Lean Manufacturing concept conceived by Toyota Corporation in Japan is widely adopted. Lean redefines the organization’s means, methods and mission. In lean philosophy non-value added activities (NVA’s) are excluded.
• The Environment: Technologies, to make products more earth friendly will be developed. Stringent legislations and their compliance will be mandatory. Recycling and reuse of waste will be adopted in many industries. New technologies will be developed to provide benefits to the organizations.
In an organization production manager has to administer a great variety of activities. He assembles appropriate resources and direct the use of resources, be they people, machines, processing etc. in transforming material and time of people into products and services. Managers also have to respond to others forces from the external environment such as government regulation, labor organization as well as local, regional, national and international economic conditions Thus managers have to pay more attention to not only what their customers might buy but also to increasing government regulations and behavior of consumers and environment protection groups.
• Production manager should concern himself with production planning.
• Production Control.
• Production manager should concern himself with Quality Control.
• Method of Analysis.
• Plant layout and material handling.
• Proper Inventory Control.
• Work Study.
• The cost of production varies with different methods of production.
