Operations and Information Management - Essay Example

Executive Summary

The process of lean management is a critical component of operation control and administration in the corporate sector. The nature of the industry plays a crucial role in determining the mechanisms and approaches to be used to enhance performance. In the automobile sector, production management determines the profitability of each form of investment. This report outlines the use of lean management in enhancing organizational performance focusing on General Motors Inc. as a case study. The report shows that General Motors Inc. has used lean management to reduce cost, enhance customer satisfaction, control waste, and improve the quality of products. However, a critical assessment of the strategy indicates there is need to improve areas such as production management, market price stability, quality control, and mitigation of the implications of competition externalities.

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Introduction

Organizations have been keen in advancing their quest for profitability and competitiveness. The shifts in the market have generated new dimensions regarding the process of services and goods delivery to the targeted customers. One of the major concern of the management teams has been how to advance growth and remain at the helm of the market as well as attract more consumers (Slack, Chambers, and Johnston, 2007; Nightingale, 2005). On the other hand, the need to attain high customer satisfaction has added to the complexity of the managerial approach calling for the strategic implementation of production or service delivery associated with the company. In the corporate sector, research and development have been central to providing the best operation management insights and practices that ensure firms have employed the best techniques for performance improvement (Slack, Chambers, and Johnston, 2007). The process of balancing the growth needs, the desire to increase revenue, and improving customer satisfaction can be attained through lean management. Different organizations in the corporate sector have employed lean management to enhance their competitiveness and sustainability. This paper presents the proposed lean management methodology for the General Motors Inc. by firm reviewing the scholarly and theoretical concepts, assessing the current situation of the organization, and finally presenting the proposed methodology.

Review of Lean Management and Service Delivery

Lean management is a strategic approach to the administration of organizational activities and effective implementation of the plans with the objective of value creation at minimum cost to guarantee both profitability and customer satisfaction (Kaiser, 2012). Based on this definition, lean management can be viewed from the dimension of five major principles that define the process of strategic control and development of the operations of an organization. A critical analysis of the principles hints how such the methodology to value addition is central in automobile investment.

Lean management focuses on the centrality of customer satisfaction for organizational stability. The implementation of the customer-based changes should, therefore, incorporate a comprehensive understanding of the needs and values of the customers (Maskell, 2014). Quality management implementations are focused on product development, process effectiveness, and service delivery with the objective of improving customer satisfaction. The need to understand the expectations of the market in lean management implementations include the identification and measurement of the client's value (Slack, Chambers, and Johnston, 2007; Nightingale, 2005). Once a culture that favors the clients has been established, monitoring and evaluation systems will be essential for the sustainability purposes.

Working in and with value streams is another component of lean management that cannot be segregated from the desire to grow in the corporate sector. The principle involves the making, management, measuring, and improvement of the processes of the business through the existing value streams. In such a case more focus is given to the end-to-end activities facilitated through the automated systems or human resource interventions (Maskell, 2014). Several activities fall under this principle and level of management such as the scheduling process, purchase, production, shipping and transfers, and cash collection and after-sale services.

Moreover, another critical stage of lean management is the maximization of the flow and pull. At this level, the management should focus on the eliminating the existing obstacles and risks to flow within the production system. Areas of concern include the time associated with waiting, motion, inventory, transportation and defects identification. The objective is to ensure that the time spends at each stage is in line with the customer expectation and timing. Therefore, such measures guarantee that the flows only happen based on the client's pull (Slack, Chambers, and Johnston, 2007). The nature of the movement of the products in term of the processing rate based on the pull of customers determines the magnitude of the direct and indirect costs.

Furthermore, the empowerment of personnel in the organization also forms part of the core thinking dimensions associated with lean management. In such a case, the value stream managers play a central role in orienting the focus of the workers to align to the performance targets and quality standards (Maskell, 2014). The role of employee empowerment in production relates to the standardization of processes, short decision-making procedures, and effective problem-solving. Therefore, focusing on improving the competence and knowledge of workers is central to the setting of each role to the customer value and expectations, which will ensure that the company is prospering.

Worth pointing out is that once a system that is cost-effective and customer-oriented is in place, the pursuit of perfection becomes an essential part of the final stage of lean management. At this level, the management is confined to maintaining a competitive system of production for the goods or service to enhance sustainable profit levels (Maskell, 2014). The principle of the pursuit of perfection is founded on the theoretical evidence ascertaining the long-term characteristic of lean management. Therefore, companies focusing only on cost reduction are bound to fail in the long run since the approach to quality management, effective performance, sustainable revenue, and customer satisfaction is multifaceted and comprehensive. Evidence guarantee that the implementation of a change process meant to enhance performance and quality should be undertaken a step at a time to ensure that a stable internal and external environment is established (Slack, Chambers, and Johnston, 2007). The PLAN-DO-CHECK-ACT approach is a process that depends on previous outcomes to set the baseline for the next indicators and metrics (Maskell, 2014). The application of the five principles above in the corporate sector depends on the nature of the organization and the industry of operation.

Industry and Organizational Overview

The global automobile sector is one of the most multifaceted areas of investment based on the technical nature of the products ushered into the market. The industry is capital intensive and requires a significant market segmentation (Seibert, 2015). The high competition calls for regular market improvement based on the needs of the customers, which constantly change because of the varying tastes and preferences. The need for a larger customer base also generates the need to expand the market to international segments. Such considerations have been associated with financial risks and escalated the cost of management. However, strategic approach to expansion has also resulted in significant growth for different firms in the automobile sector. On the other hand, avoiding great and potential opportunities for investment because of the associated challenges is a hurdle for investors in this industry (Seibert, 2015). In fact, managerial techniques seeking to maximize the profitability of the firm by reducing the rate of vulnerability has proved a successful approach for many companies dealing with the production and assembly of the motor vehicle.

The case for General Motors Inc. is no exception based on the authentic assessment of the establishment and growth of the organization. The headquarters of the General Motors Inc. is located in Michigan USA and offers their products across the globe. The company is boasting of a diverse and competent human resource team of over 200,000 employees (General Motors, 2016). The organization is targeting a growing market with the competition from other firms such as Toyota, Tesla, and Mitsubishi among other investors specializing in assembly and spare parts production. The range of products associated with the organization has created a large market base and risk exposure; however, it has been a potential for growth. The firm produced electric cars to full-size trucks in collaboration with the subsidiary brands such as Chevrolet, GMC, Vauxhall, Wuling, and Jiefang. The average cumulative product delivery assessment revealed that by 2016 the company had sold over 10 million vehicles across the globe (General Motors, 2016). Therefore, based on the internal and external environment associated with General Motors Inc., it is necessary to implement a lean management strategy that will ensure sustainability and profitability for effective performance, customer satisfaction, cost control, environmental conservation, and product management.

Strategic Lean Management Implementation: General Motors Case Study

Current Approach

The implementation of lean management in General Motors Inc. dates back to 1994 when the firm established a joint venture under the umbrella of the New United Motor Manufacturing Inc. (NUMMI) to improve the performance of the company regarding cost management, waste elimination, customer service, and market competitiveness. The metrics that were being targeted included the reduction of the assembly hour per car, the number of defects per 100 vehicles, and the cost of production. Therefore, the organization undertook several lean initiatives that were undertaken of step-by-step basis. The 1990s period was associated with a strategic change in the company with the focus to enhance the output and adhere to the pull effect of the market (EPA, 2010). At this time, the competition in the automobile sector was stiff and transforming the operation management approaches was an essential move.

General Motors Inc., operating as NUMMI, initiated the Saturn Kanban Implementation. The project involved waste elimination strategies where the main subsidiary that was targeted as the Saturns Spring Hill in Tennessee. The plant resorted to parts packaging in reusable containers, which served as Kanban. The move saw the plant receive ov...