Analysis Of The Areas Of Operation Management Applicable To SmartDrive Pte Ltd

With reference to the case study, the 4 areas of OM applicable to SmartDrive Pte Ltd (thereafter referred to as ‘SmartDrive’) would be

1. managing quality,
2. location strategy,
3. layout strategy and
4. inventory, material requirements planning and JIT (just-in-time).

Managing quality

SmartDrive is developing this device called RoadWatcher (RW). This device is meant to help drivers sense and alert any potential road hazards and conditions. SmartDrive is even looking into incorporating brake system to intervene on behalf of drivers in times of need. If this device is successfully launched, it will be used by many drivers on the road. Thus, high reliability and quality is expected from this hi-tech device. If RW is not reliable or has not adhere to the quality requirements, the risk of malfunctioning would result in dire consequences when device gets launched and used by the drivers. It could cause casualties to the drivers and other road users. All components of RW should undergo strict quality control checks to ensure that they are not defective. When developing new features of RW, SmartDrive must conduct numerous quality tests, to test the performance of the device. With the use of artificial intelligence, the engineers must be prepared to debug the errors found in the computer programs. The test performance results must also be carefully analyzed to ensure that the device is of high performance and accuracy. Quality of RW is of utmost important and should never be compromised.

Location strategy

SmartDrive chose to locate their Customer Service Centre and Business Office within close proximity to its factory. Other than having the cost saving benefit, it also enhance operational effectiveness. With the different business units located within short distances to each other, it speeds up the inter-departmental support lead time. Time spent on travelling from one business unit to the other has been eliminated. The time saved on travelling could now be translated into useful operational inputs. For example, when Customer Service Centre received a call from a driver who met with a mild accident while using RW Version.0.1 device. Such calls could quickly be routed and escalated to the Business Office who would then immediately arrange for all Version.0.1 devices to be recalled. Thereafter, the Business Office could then make their way to the factory for investigation in a timely manner. Such close proximity between business units is advantageous to the business as it facilitates prompt response and actions when needed, which in turn reduces the negative impact on the business. If such incidents were not managed in a swift manner, it could cause serious injuries or even death to others, which would incur the wrath of the public and SmartDrive will face severe condemnation.

Layout strategy

Having an appropriate layout strategy soothes assembly workflow which helps achieve higher operational outputs. An efficient layout should involve minimum amount of material handling. Currently, SmartDrive operators have to make several trips between the factory floor and supplies store to move supplies around. All the supplies needed for assembly should be placed and arranged within close reach around the production line. Each RW is sold at a gross margin of 45%, if time spent on shuttling between factory floor and supplies store is used to assemble more RW, SmartDrive could have achieved better, higher sales.

Inventory, material requirements planning and JIT (just-in-time)

SmartDrive outsourced their device components from suppliers from China and Taiwan. Given the geographical distance, inventory management becomes crucial for SmartDrive. The company must always maintain a healthy inventory level in their supplies store. If the inventory level is not being monitored, their supplies from China and Taiwan would not be able to fulfill their last minute order requests. Insufficient components would cause production of RW to come to a halt. If SmartDrive has urgent customers’ orders to fulfill, failure to deliver RW per contractual obligations would mean a breach in contract, and might need to compensate customers for their financial losses. SmartDrive would lose credibility and trusts from their customers. Too much or too little inventory pose problems to companies. It is important to hold a right mix of inventory in the supplies store. SmartDrive could analyze the inventory turnover trend and derive the re-order lead time and place orders for the components accordingly.