OPERATIONS MANAGEMENT 4
Leanconcepts were devised and developed to meet the needs of themanufacturing industry. They are concepts that seek to reduce wastageand defects in the supply and manufacturing processes. The concepthas hardly been applied in the service industry due to the fact thatthe processes in the industry are immeasurable and intangible.However, the concepts can be applied in the service industry such asin banks, online markets and healthcare provision to reduce timewastage and improve performance. For example, service industries canuse Lean management to reduce to the bureaucratic system ofmanagement where decisions can only be made from the top echelon(Shim&Siegel,2014). Giving the line supervisors authority to make decisionswithout consulting the top management can reduce time wastage andcost. The organizational structure can easily be redesigned to ensurethat productivity is enhanced. The service industry has establishedprocesses and defects in the processes. The Lean concept can be usedto eliminate such defects and streamline the processes. For example,flight delays may result in rescheduling, which leads to extra costs.
In-processinventory is an accounting concept that is widely applied and whichis extremely important in the manufacturing industry. It is a termthat is used to denote the goods or work in a manufacturing plantthat is awaiting completion for their eventual sale (Shim&Siegel,2014). Notably, the term can also be used to mean the value of suchgoods.
Inthe supply and demand process, it is common to have uncertaintiesthat can lead to shortage of stock. Therefore, it is essential tohave extra stock that is maintained to ensure that such risks aremitigated (Shim&Siegel,2014). The term safety stock inventory or the buffer stock is used torefer to this extra stock that is kept to mitigate such unexpectedrisks of shortage in stock (Shim&Siegel,2014). It is important to note that this term is widely used in thelogistics department of an organization.
Moreoften than not, there are instances of erratic, irregular orinconsistent production of goods. This leads to shortages in supplyhence affecting sales. Organizations maintain a seasonal inventorythat is aimed at meeting the season shortfalls and fluctuations indemand. This form of inventory is also called the anticipationinventory for the very reason that it meets any anticipatedshortfalls in demand.
Inventoryis divided into two major categories namely the independent anddependent demands. These are essential aspects and understandingtheir differences is important since the entire inventory of anyproduct is based on them. Independent demand has been defined as theform of demand, which leads to the sale of already processed,manufactured and finished good. For example, the demand for a car ora laptop computer is considered as independent demand. On the otherhand, dependent demand is the one that involves the sale of parts ofthe finished products (Shim&Siegel,2014). For instance, the sale of wheels, braking systems and memorychips for laptop computers fall under dependent demand. It isessential to note that the production of goods or products under theindependent demand is informed by the units of the finished productproduces. In other words, the number of braking systems produced in acompany will rely on the number of cars produced. Similarly, thenumber of memory chips produced by a computer company will depend onthe number of computers that such an organization produced.
Shim,J. K., & Siegel, J. G. (2014). Operationsmanagement.Hauppauge, NY: Barron`s EducationalSeries.