Strategies to improve both the efficiency and effectiveness of operations related to materials

Question 1

Materials Manager

Answer 1

The planning, organising and controlling of a business’s
supplies. The main aim is to ensure that the business has the right type of materials (stock/inventory), in the right quantities and at the right time.

Question 2

Operations Manager

Answer 2

needs to plan to ensure enough materials are on hand to operate/continue production (raw materials), ensure good quality inventory, ensure they are stored correctly (finished goods), ensure they are where they need to be during production and evaluate the system for efficiency and effectiveness.

Question 3

Materials Management Strategies

Answer 3

1. Forecasting
2. Master production schedules (MPS)
3. Materials requirement plans (MRP)
4. Just-In-Time (JIT)

Question 4

1. Forecasting

Answer 4

Forecasting involves predicting what materials will be required and in what quantities. The operations manager would need to look at the historical data (what has happened previously) to try and predict demand for a product. For example, they may try to predict how many sales the business will have at Christmas.

Question 5

Advantages of Forecasting:

Answer 5

> A business can give suppliers prior warning of orders so orders can be made in advance, depending on the lead time of the supplier.
The operations system can be prepared to meet, for example, a higher demand over Christmas. For a service business this could include ensuring enough staff are rostered on to work.
Having enough materials on hand ensures that there is efficient use of resources (no waste whilst waiting for goods raw materials).
Forecasting prevents the business from overstocking.

Question 6

Disadvantages of Forecasting:

Answer 6

> It is not always accurate as it relies on historical data, forecasting incorrectly can lead to too many or not enough products.
Eg – overbooking plane seats, shops running out of fidget spinners. This could mean products go to waste if over-ordering OR customers are unhappy if under-ordering.

Question 7

Master Production Schedule (MPS)

Answer 7

Shows exactly what will be produced, in what quantities, over a set time frame. This means it gives the operations manager an idea of what materials will need to be ordered to meet the schedule. It outlines delivery dates and allows a manager to analyse production capacity requirements ahead of time.
REMEMBER: it allows an operations manager to know what it needs to produce, in what quantities and by when!

Question 8

Advantages of MPS:

Answer 8

> It allows the ops manager to get a picture of what needs to be achieved and can therefore ensure it has enough supplies on hand to meet the demand of the production.
It is good because every staff member is clear on what needs to be achieved and by when – this can help to improve efficiency and effectiveness-increased motivation….

Question 9

Disadvantages of MPS:

Answer 9

> It is time-consuming and expensive to track and Record
It is not very flexible as it specifies clear targets for each day. It may not always be accurate.

Question 10

Materials Requirement Planning (MRP):

Answer 10

an inventory management system designed to assist the operations manager with scheduling and placing orders. It uses the MPS to determine the exact materials required to meet the MPS.
>It will show the specific TYPES of materials needed, the EXACT quantities of materials and the TIMES they will be delivered.
> It is the ITEMISED LIST OF THE MATERIALS NEEDED. This includes raw materials, staff, machinery etc.
A good way to remember the difference between the MPS and MRP is that the MPS is the big picture, what needs to be done, the MRP is all the things you need to
achieve the it.

Question 11

Advantages of MRP:

Answer 11

> It ensures sufficient inputs are ordered to meet production requirements, which can help to meet demand.
It minimises inventory costs and storage as there is little excess stock.
It reduces waste (eg no wasted time waiting for deliveries).

Question 12

Disadvantages of MRP:

Answer 12

> It is initially time consuming to set up
It is initially expensive to use a system to accurately track materials.
It may also not always be accurate. If the business uses forecasting to create the MPS, this makes the MRP system vulnerable to fluctuations in demand.

Question 13

Just-In-Time System (JIT)

Answer 13

> Where materials are delivered just as they are needed for the production process. This reduces the need for storage costs as materials are moved quickly into production. I
It avoids holding any stock.
Inventory (raw materials, unfinished production, finished goods) take up storage space and this can be very costly.
JIT relies on having good relationships with suppliers. If the stock doesn’t arrive on time, production will slow down or even stop.

Question 14

Advantages of JIT:

Answer 14

> The right amount of products are available at every step in the production process, which reduces waste.
No storage is required which can therefore reduce costs from theft, damage, and huge storage costs.

All of these reasons can help to reduce unit costs and therefore help a business improve productivity and gain a competitive edge.

Question 15

Disadvantages of JIT:

Answer 15

> It depends on reliable and frequent deliveries of materials. Inputs must be received as needed so if suppliers are not on time, the entire production could break down. Therefore really strong relationships with suppliers is required.
JIT allows less time for quality checks on materials as they arrive.
Business will have no control over issues at the supplier such as wage disputes which could end up with strike action.

Question 16

Comparing MPS and MRP:

Answer 16

> Similar as they are both planning tools that are used to make the materials planning process more efficient and effective.
Different as MPS focuses on determining what the business intends to produce whereas MRP focuses on the materials a business intends to order.