Increasing of the Organization Efficiency

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Table of Contents

Globalization
Increase Efficiency
Supply Chain Management
One Step Ahead of the Competition
Conclusion
References

The goal of every manager is to increase productivity. This concept is easily understood as managers analyze the difference between inputs and outputs as well as cost of production and manufactured products. If the organization can lower the cost while increase number of goods produced then a high-rate of productivity is achieved.

But in the Age of Globalization it is not enough to simply increase productivity; it is also important to establish quality management systems. Improvements can be achieved if managers and corporate leaders focus on efficiency, globalization, solving supply-chain related problems and make it their primary goal to be one step ahead of the competition.

Globalization

The radical breakthroughs in technology transformed the way people live – in communication, transportation and supply of goods and services all over the planet. As a consequence, mankind experienced globalization in a manner never before seen. In the past it will require a major multinational company to utilize resources in a Third World country and manufacture products from that region and then ship it to highly industrialized countries for further processing.

But today products and services can be manufactured in small-scale operations from China to India and transported to the United States and Europe at a fraction of the cost. The ability to transact in a global scale has transformed the way companies and individuals interact as consumers and manufacturer of goods.

Success and survival seems to go hand in hand in a highly competitive world of the 21^st century. The goal of every manager is not only to increase outputs but to lower the cost of production. Every raw material and every unit of resources must be utilized correctly in order to hit a particular target. The key to success has been made more complicated by the expectation of lower cost and high-quality.

Increase Efficiency

It is therefore important to master the art of reducing waste within the business process. The ability to pinpoint inefficient use of resources can be translated to reduction in production cost and thus can be translated to lower prices and increase the competitive advantage of the company. This can immediately result in a competitive gain, especially in a time when there is no longer brand loyalty among consumers, as cheap products are flooding the market via factories located overseas.

Lean Management Systems (LMS) is a strategic tool and one of the many methods that can be sued to initiate change in a company. LMS enables corporate leaders to increase profitability without sacrificing quality.

It can be argued that this management strategy can help enhance the value of the product while at the same time allow for the quick delivery of goods thereby increasing customer satisfaction. LMS can also be utilized to remove constraint – obstacles that prevent an organization to increase efficiency and productivity. While it is important to increase efficiency, business leaders must also consider total quality management.

Supply Chain Management

Total quality management forces leaders not only to focus on the product but the efficiency and effectiveness of the overall supply chain. The goal is not only to reduce cost and increase customer satisfaction but to develop a system that is sustainable because it aims to please all stakeholders including the employees that are essential in producing that particular product. Thus, quality management systems are not implemented or utilized for the sake of having QMS within the organization.

The addition of any system or process must directly affect the bottom line. According to practitioners of total quality management, “a fully functional QMS leads to increased customer satisfaction and continuous improvement of business results” (Sousa-Poza, Altinkilinc, & Searcy, 2009, p.226). Satisfied workers produce quality products and satisfied customers continue to patronize the products of the company.

There must be a balance between efficient supply chain and responsive supply chain; in other words lean versus agile supply chain (Elsevier, 2010). It is of primary importance not only to consider productivity but service quality (Johnston, 2005).

This assertion is supported by the argument: “that mechanistic structures – which rely on standardization, centralization, and hierarchy – support efficiency, whereas organic structures – with their high levels of decentralization and autonomy – support flexibility” (Elsevier, 2010, p.80).

A compromise can be reached with the realization that “organizations require both structures: organic to create innovations and mechanistic to implement and deploy them” (Raisch & Birkinshaw, 2008, p.380). An organization must seek to innovate but at the same time establish sustainable systems that results in the efficient utilization of resources.

One Step Ahead of the Competition

It is easy to detect problems and develop solutions but the most difficult thing to do is to implement the necessary changes in order to transform the organization – from one that is inefficient to one that is a model of efficiency. The challenge is to understand how subordinates view hurdles to change.

Change can be perceived as “unanticipated delays, costs, and instabilities into the process of a strategic change” (Chew, Cheng, & Petrovic-Lazarevic, 2006, p.59). The company must be ready for change so that it can remain competitive. One way to initiate change is the use of technology to improve supply chain management.

Technology is a game-changer and managers and corporate leaders that fail to harness the power of technology find themselves leading a company that has become obsolete. Consider the manufacturer of typewriters, black and white TV sets, beepers, and other outmoded devices.

Two of the best examples are the “Radio Frequency Identification (RFID) and Electronic Product Codes (EPC) in supply chain management that promises significant improvement in the effectiveness and efficiency in solving supply chain-related problems” (Sabbaghi & Vaidyanathan, 2008, p.72).

Combining these technologies would result in the RFID/EPC and results in the following change “the complete visibility of accurate inventory data throughout the supply chain from manufacturer’s shop floor to warehouses to retail stores bring opportunities for improvement and transformation in various processes of the supply chain” (Sabbaghi & Vaidyanathan, 2008, p.72). Corporate leaders must encourage forward-thinking in order to prevent obsolescence and develop a competitive advantage over others.

Conclusion

In a highly competitive environment it is imperative that leaders continue to develop ways to increase the efficiency of their organization. Leaders must be open to new strategies such as those that enable them to reduce waste and increase the production levels of their company.

But there are those who are afraid to implement change. The reluctance to embrace change is due to the fact that it is costly and unpredictable. However, corporate leaders must quickly realize that in the Age of Globalization those who are not willing to change are left behind and never again able to compete.

References

Chew, M.M., J.S., Cheng, & S. Petrovic-Lazarevic. (2006). Manager’s role in implementing organizational change: case of the restaurant industry in Melbourne. Journal of Global Business and Technology, 2(1), 58-67.

Elsevier, B.V. (2010). Operations management, entrepreneurship, and value creation: emerging opportunities in a cross-disciplinary context. Journal of Operations Management, 29(2011), 78-85.

Johnston, R. (2005). Service operations management from the roots up. International Journal of Operations & Production Management, 25(12), 1298-1308.

Raisch, S. & J. Birkinshaw. (2008). Organizational ambidexterity: antecedents, outcomes, and moderators. Journal of Management, 34(3), 375-409.

Sabbaghi, A. & G. Vaidyanathan. (2008). Effectiveness and efficiency of RFID technology in supply chain management: strategic values and challenges. Journal of Theoretical and Applied Electronic Commerce Research, 3(2), 71-81.

Sousa-Poza, A., M. Altinkilinc, & C. Searcy. (2009). Implementing a functional ISO 9001 quality management system in small and medium-sized enterprises. International Journal of Engineering, 3(3), 220-227.

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