Increased operations strengths through establishment of flawless execution control, helps drive competitive advantages. It is essential to be familiar with how continual improved operations strengths can lower costs, and strengthen the underlying foundations to drive profitability. Moreover, building operations strengths increases directly and indirectly flexibility, service strengths, sales and profits and execution controls resulting in generation of competitive advantages – beyond what the competitors can offer.
Enormous opportunities lie in exploring the operations function. Principally, sales and operations planning leverages production, procurement, transporting and warehousing business units to make a point of difference in creating competitive advantages. The purpose is to drive optimal long-term business performance of a company aligned with the company vision, mission and values.
The fundamental role of a warehouse is to sustain product values and product quality whilst stored and handled in the warehouse. The trend of a warehouse operation is that companies do not want to operate with more number of warehouses than those absolutely required. Cross-docks, swap-body’s and fast flow systems have taken over the typical role of smaller warehouses. This trend is due to the fact that operating warehouses and keeping inventory is considered destroying of values. On the other hand, operating a warehouse is a trade-off between cost and value added.
Capacity utilization in production is the key cost driver and the objective must at all times be to maximize the actual production efficiencies – by reaching the targeted maximum theoretical efficiency standard. The theoretical production efficiency standard is the optimum reachable efficiency standard through the total time when production should be running – creating values. OEE stands for “Overall Equipment Effectiveness” and measures how effectively and efficiently operation utilizes its assets and recourses compared against theoretical outcome standard. The variance between the theoretical outcome and actual outcome are losses which are considered opportunities for improvements.