Executive Summary – Operations Management Assignment
Operations Management Assignment will be conducted on Treva Bike. Treva Bike is the most popular bike in Europe and it has started its business in 1954. It has started its business with the introduction of the Bicycle which is in the format of regular model. The success history of the mountain model that it has captured the market of UK extensively and it was selling at £149 which is huge. It has helped the Treva Bike to be market leader for 40 years. At present in the current market philosophy, the Treva Bike is able to sale for its three types of Bicycles as 106,000 units per year. The plant layout of Treva Bike has several work centers with the combination of tube cutting department, identical tube cutting machines. Operations Management Assignment will cover the following contents given in the table and this Operations Management Assignment will be conducted on Treva Bike.
|An overview of Treva Bike’s operations|
|Describe the planning and control system adopted by the company|
|Current and possibly future operations management challenges faced by the Treva Bike|
|Recommendation to gain competitive advantage|
|Evaluation of Duncan’s proposal to use pull system|
|Evaluation of the options of introducing new product and advise|
|Formulation of your own plan to address the issue(s) faced by the Treva Bike|
Introduction – Operations Management Assignment
The report investigates the whole overview of the Treva Bike Operation from the product aspect to manufacturing process. There are some challenges those are faced by the company and according to this problems some recommendations are provided. There is also an introduction of new strategy named pull strategy, the pros and cons of the strategy are described to prove its divisibility. Moreover, Treva Bike is globally renowned brand and its execution of different strategy to introduce new product is acceptable.
An overview of Treva Bike’s operations
Treva Bike is the most popular bike in Europe and it has started its business in 1954. It has started its business with the introduction of the Bicycle which is in the format of regular model though Treva Bike is still producing the regular model. With the aspect of the up gradation of the model Treva Bike introduced a new model named City Model in terms of design, style, shape, size, appearance and material by keeping the existence of same gestures. The City Model came into the market in the period of 1975. In the comparison of selling perspective, the sales volume of city model was too high than the regular model. The price of city model was almost double in comparison to the both model. After the success of city model, Treva Bike introduced another new model which is called mountain model. This model is popular for its heavy duty. The mountain model of the mountain bikes is associated to handle the consideration of unpaved environments. After the use of this model, is found some obstacles. The obstacles that are found in it like There was obstacle in the logs, there was obstacle in the vertical drop offs, and there was obstacle in the smaller boulders. The success history of the mountain model that it has captured the market of UK extensively and it was selling at £149 which is huge. It has helped the Treva Bike to be market leader for 40 years. At present in the current market philosophy, the Treva Bike is able to sale for its three types of Bicycles as 106,000 units per year. With the huge extensive sales in a year, it has figured a great value in the profit account that is 25% of sales. In Europe, Treva Bike is so popular. It is the highest selling product in. In the production aspects, it has the activity to be one of the active companies. In the production and sales of Bicycles in Europe, it has a great field to capture the market. The innovation of the product is globally appreciated that’s why it is recognized as well as known for its innovative designs. It has a very distribution channel system which is the most important factor to the sale of the product. For the distribution of the Bicycles as well as for the selling purpose of the Bicycle, it has too many major retailers. Along with the major retailer there are many active independent bicycle dealers who are contribution more for the distribution of the Bicycle. More importantly, it has sales outlets and other stores to access the tangibility of the Bicycle as buyer can buy it by observing and testing it. More or less it has almost 200 sites in the UK those are contributing more to distribute the company’s products as per the company’s goal and objectives.
For the consideration of operation of Treva Bike, it needs to identify the factor of production. The production and operation of Treva Bike consists of 25 to 35 different parts that included the parts in different from in different name. The diamond shaped frame is the most important part of a bicycle production and operation management. The diamond shaped frame is worked as the connector to create the links with the other components together to create the dimension in the proper geometric shape. The diamond shaped frame has two triangles those are called the front and the rear. The front is used to make the tube as shape of a four-sided of four tubes, those tubes are called in different name like the top, down, seat, and head tubes. The rear triangle has the different stays like seat stays, chain stays. There is another part of the rear which is called rear wheel dropouts. At the front of the frame, if the head tubes are attached then it has the fork tubes. The assembling of the tubes are not too easy, if there had any misapplication in the whole processing of tube attachment, then the product may be defect. To, solve the problem of misapplication it is used the hand-brazing or welding by machine to assemble the tube.
The plant layout of Treva Bike has several work centers with the combination of tube cutting department, identical tube cutting machines. The work center of Treva Bike has identical tube cutting machines in the number of 6. Then the process is demonstrated when the tubes are cut. When the cut of tubes is accomplished or completed, then it is placed in tube debarring. Along the placement of tube debarring it also performed to the placement of mitering work centers. It is to be noted that, tubes are sent to tube bending work center those tubes are required the special shapes. If there is any special case of using the bending department to bent the tubes by the two presses, then it is sent to the bending department. If there is remaining any form of frame then it is sent to the storage. Afterwards, frames are welded in welding work center. In addition to it is required to frame washing, then sent to the department of frame washing. Moreover, it required to frame painting, and then sent to the department of painting work centers. After the completion of washing and painting, then the frames are sent to the storage to store it in the consideration of final assembly to use. Afterwards, the final assembly has one assembly line. This one assembly is used all over. The three types of bicycles which are introduced by Treva Bike have to go through the function of one assembly line of final assembly. But the important note is that, this one assembly of final assembly is changed or varied over the model to model of the Treva Bike. Therefore, to shape the final product, it is required to process the all parts from the inventory to adjust with the final assemble as it may produce the required batch unit in which the final assembly will produce the product from the inventory of other parts in the shape of finished products. In addition to, if it is required to get the support of the assembly schedule, then material in supply of material in house support plays a vital role when the material is needed. Finally, it is required to consider the current plant capacity to the volume of production as it may not create burden or wastage or limit the delivery order or limit the market demand. (Lariviere, 2014)
Describe the planning and control system adopted by the company
Treva Bike is currently using the following planning and control system:
Material Requirement Planning (MRP)
Material Requirement Planning is the plan of establishing the whole process according to the material requirement. The planning will be from the very beginning where the raw materials will be imported to minimize the cost. The Factors that could be focused to the Material Requirement Planning are given below:
- The collection of raw material should be cost effective.
- The quality of the raw material should be high class of standard.
- The import of raw material should be done from the country which is offering lower price along the quality measure.
- The time gap between the order of the raw material and the delivery of the raw material should be minimum.
- All the relevant documents should be good for the clearance of the raw material from the port.
- Material Requirement Planning should support the planning of the material as per the batch unit.
- As Treva Bike is producing three types of bikes, then it is required three different format of raw material, the differential should not be combines in Material Requirement Planning. (Hill, 2011)
Master production schedule (MPS)
The Master production schedule is the schedule of production that is the supportive mechanism in the aspect of Material requirement planning. The Master production schedule is prepared as well as developed for weekly basis. The basis of week is into the eight weeks. The future consideration is combined in the Master production schedule. The master schedule has the tendency to frozen the schedule for four weeks. The frozen of the Master production schedule allows time to manufacture the parts. To manufacture the parts according to the Master production schedule, it is required to consider the suppliers from Material requirement planning. The New orders are considered in the master schedule as per the Material requirement planning. The fosters to be considered in Master production schedule are:
- It is required to design the Master production schedule on lot for lot basis.
- It is required to consider the functions like Tube cutting throughout the set up plan on the final assembly because of lot for lot basis planning.
- It is required to consider the functions like Tube bending throughout the set up plan on the final assembly because of lot for lot basis planning.
- It is required to consider the functions like frame wielding throughout the set up plan on the final assembly because of lot for lot basis planning.
- It is required to consider the functions like cost change over throughout the set up plan on the final assembly because of lot for lot basis planning.
- It is required to consider the functions like production equipment affected by the calculation of lot for lot basis throughout the set up plan on the final assembly because of lot for lot basis planning.
Set up time is the consideration of operation management during the production process in response to the Material Requirement Planning and Master Production schedule. Moreover, it includes machine changeover. It has the combination of transporting new materials. It has the mechanism of removing the old equipment. All the factors of set up time is worked to ensure proper setups in the whole production process. The factors that are considered in the set up time are given below:
- It is required to consider the factor of major changing set up time from one rider bike model which is different in batch unit to another rider dike model.
- It is required to consider the factor of minor changing set up time from one rider bike model which is different in batch unit to another rider dike model.
- The major changing set up time should be considered when producing the different parts or components of the same bicycle.
- The minor changing set up time should be considered when producing the different parts or components of the same bicycle.
Current and possibly future operations management challenges faced by the Treva Bike
By studying the whole case it is found that the Treva Bike are facing the following challenges or problems:
- High inventories
The inventory cost of the three ware houses is too high. Due to the high inventory cost the profit of the company dropped three times over the past three years. It has become the more concerning issue for the growth of the company. Though, it is a successful global brand but it has negative impact on the market due to the drops down of the profit of the company.
- Poor customer service
It is found that there are so many outlets those are not providing satisfactory customer service to the customer. It may become the issue about the warranty and guarantee. But it should not be come to the research that the big firm like Treva Bike has poor customer service. This is horrible for the business. After sales service is the mandatory issue. There should have to excise to increase the customer service by means to satisfy the current and potential customer.
- Increase of the Material Cost at high costs
If the cost of the raw material becomes high day by day, it creates challenges to the development and growth of the company. It is a common scenario that the price of the product will be increased if the cost of raw material like the parts of the Bike is increased. As a result, the sales volume may drastically fall which will impact on the company’s net profit. If it is impacted on the net profit, then it became the negative impact to the market.
- Problems with defective items:
In the production process some of the defective items can be occurred due to the misapplication of the system or due to the bad quality of the raw material like different parts of the Bike. As a result, it increases the cycle time which may increase the cost. Even it may increase the cost of inventory as it had to keep to the inventory for a long time. (Buflin, 2006)
Recommendation to gain competitive advantage
The inventory cost of the three ware houses should come to the point of lower. As a result it will to lower inventory cost and it will help to increase the profit of the company. Now it should be concerning issue for the growth of the company to minimize the inventory cost by applying different inventory methods. In the context of perpetual inventory, the LIFO can play a vital role to minimize the inventory cost as LIFO has the benefit to minimize the inventory cost. And it will be successful to develop them as global brand all over the world.
For providing satisfactory customer service to the customer, it should have proper monitoring system as the enquiry of the customer is being met properly or not. If it is found any lacking in this area then swift action needs to be taken to solve the problem. It may become successful for the business by the development of proper monitoring system in the area of after sales service as it is the mandatory issue. There should have to monitor to increase the customer service by means to satisfy the current and potential customer.
It has nothing option when the cost of the raw material becomes high day by day. But there are some logical techniques that help to keep the price of the product reasonable due to the increase of the different parts price. In the whole world, the price of the raw material has ups and downs. And it occurs to due to market mechanism of high market demand or low market demand. When the market demand is low, then the price of raw material becomes lower. And it would be logical techniques to purchase the raw material like different parts of Bike in lower price form the seller. Then it will help them o overcome the challenges to the development and growth of the company.
In the production process some of the defective items can be occurred and the recommendation for it that it should be sold a lower price to the other market. Because there are many third part in the market, whore are buying the defective product. If it can be practiced, it will help them to minimize the inventory cost. Though, it has some loss but not more than the cost of inventory. (Anderson, 2017)
Evaluation of Duncan’s proposal to use pull system
The consideration of Duncan is to use pull system of planning and control in lean manufacturing. Under this system, it is required to set three separate final assembly lines.
The benefit of the system that It will help the process to the context of that there should have no need to the changeovers at final assembly. There is another consideration of Duncan in the pull strategy that is mixed model assembly. But it requires more investment. Though the mixed model has same aspect bit it may create complexity due to the misapplication. In that case the function of The Master production schedule is prepared as well as developed for weekly basis. The basis of week is into the eight weeks. The future consideration is combined in the Master production schedule. The master schedule has the tendency to frozen the schedule for four weeks. The frozen of the Master production schedule allows time to manufacture the parts. To manufacture the parts according to the Master production schedule, it will help to reduce the length of time. When the length of time could be reduced, then it will significantly work to the minimization of inventory levels in the warehouse. The problems of the pull system is that it has the limitation to combine with three final assembly lines on the plant to each of the product lines. To implement the pull system, it is required to move materials. The movement of materials is mandatory from one work station to the next work station. (Kapp, 2011)
Evaluation of the options of introducing new product and advise
First of all, the keep the variation in the product line, the introduction of new product highly appreciated. Now, Treva Bike has taken the initiatives to introduce new product. It is highly advised to the Treva Bike to produce it as small volume. The production of small volume and sold them to the market at initial stage will help them to get the proper response or feedback of the company. Whatever the issue involved to earn profit or loss, that is found from the question, it is not mandatory to consider the issue. It should have the tendency to take risk. Because Treva Bike is an well-established company.
Formulation of your own plan to address the issue(s) faced by the Treva Bike
Along with the pull strategy, it should be emphasized on the quality and reliability of the design, it is required to develop relationship with the local suppliers; it is required to use the set up time techniques to reduce cycle time. Finally, the finished good are basically taken place to the retails shops, sent to the distributors. But the remaining portions are sent to the warehouses. The Treva Bike has three warehouse those are located all around the country. It requires 75 days of supply to carry from each warehouse. To reorder the product from the factory, it requires almost four weeks. It is required to maintain the safety stock for some inventory. Scheduling in warehousing should be mandatory. (Roberts, 2012)
Anderson, M.A., 2017. How to Optimize Transfer Batch Size in Operations Management. [Online]
Buflin, R., 2006. Determination of batch size at a bottleneck machine in manufacturing systems. [Online] Hill, H.&., 2011. planning and control system.
Kapp, 2011. The dangers and challenges facing bicycle. [Online]
Lariviere, M., 2014. Custom bikes and operations strategy. [Online]
Roberts, M., 2012. Top 6 Challenges in Electronics Manufacturing. [Online]
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