Operations management (OM) is the administration of business procedures inside an organization to achieve the best degree of efficiency achievable. Material and labor are converted into products and services as effectively as feasible to maximize an organization’s profit. BYD is adopted to examine the impact of operational activities on creating value for the firm and its clients. Proposals for optimizing OM based on theories and methodologies are made for improving operations, especially in informing computer-dependent production processes. The suggested recommendations mainly focus on technical advancements from an information technology standpoint. OM is vital to project management in most organizations since it provides leadership and direction. The leadership empowers team members to do their best job as a critical component in research and development.
Case Study Background: BYD
BYD, which stands for “Build Your Dreams,” has been one of the leading battery technology companies with ventures in the electric vehicle space. The organization was formed in 1995 as a maker of mobile telephony batteries with 20 workers and an upfront investment of approximately $300,000 (Shang & Choi, 2020, p.137). Within five years, the company had become the leading producer of lithium-ion batteries for mobile phones, supplying Nokia and other major mobile phone manufacturers. Being the world’s largest producer of rechargeable batteries has allowed BYD to build EVs that can go longer and are more cost-effective due to the company’s vertical integration than most of its competitor EV makers.
Theories and Techniques Applicable at BYD Operations Management
Application of Gross-to-Net Calculations in MRP at BYD
To guarantee the efficacy of research and the development of battery technology in the electric vehicle space, BYD’s OM demands the adoption of material requirements planning (MRP) methods. MRP provides the organization with a plan for estimating the materials, kind of service, and components required for client delivery. MRP in OM comprises three basic steps: inventorying the type of service demanded and the existing resources, determining whether extra resources are needed, and finally, scheduling their production or acquisition. Standard MRP requires processing to establish gross material needs based on gross-to-net calculations, then removing inventory on hand and adding safety stock to get net material requirements.
Influence of Operations Functions on Generating Value
Successful MRP would influence of operations functions on generating value for BYD and its customers is evident in the advanced control mechanism and serves as the organization’s core, overseeing the business’s different activities. OM integrates all aspects of a firm, from human resources to project management, to improve organizational performance, finance, and customer experience. The optimal functioning of BYD operations functions depends significantly on the inputs in company’s OM.
Input Files for BYD Operations Management
The input files for BYD ‘s OM processes demand the creation of a service structure, a gross requirement plan, and a net requirement plan. In OM, MRP must satisfy the needs of the master scheduler and the production facility’s capabilities while reducing inventory investment. This allows BYD and its counterpart to adjust their timetables in reaction to market fluctuations, a quicker response to client orders, and lower inventory levels. Demand for essential services such as innovation in lithium-ion technology should be projected based on the nature of the service and its connected components. This needs a master production schedule, material requirements, inventory availability, purchase orders outstanding, and manufacturing lead time.
Application of Material Requirements Planning
Gross to net calculations is performed for MRP based on net needs equaling gross requirements minus on-hand inventory. Even while time restrictions limit re-planning in OM, this paradigm enables practical change analysis. MRP is conducted using the Just In Time method. Inputs are part of a planning system that does not include extensive scheduling but does need defined lead times that vary depending on the batch size of the product. The inputs consist of the master production schedule, which specifies when each product should be made, the bill of service, which provides a list of the components necessary to produce each product, and the service cycle. For future planning reasons, BYD ‘s OM includes supplier lead times for computer resources, customer focus, and leadership models.
Application of MRP in Improving Operations at BYD
Taking Inventory of Resources Available
To efficiently establish MRP processes and schedules, inventorying human and material resources is required. BYD ‘s operations rely on computer technology, including the hardware and software products that enable the firm’s activities. Effective computer inventory management may facilitate the tracking, monitoring, and logging of system modifications to verify compliance with common industry standards and norms. Using software platforms such as SolarWinds Patch Manager, BYD can build a more comprehensive view of missing or completed patch upgrades across the whole inventory. The organization might consider SolarWinds Patch Manager’s rom central access point solutions for inventory monitoring integration capabilities. Patch Manager updates and tracks the progress of the patching process for on-premises or remote endpoints, which are controlled from a single dashboard.
The OM should account for the fact that the future of work in technology, including employment, workforce, and workplace, is through a revolution while managing human resources. Strategic business imperatives, trends, and emerging disruptors are causing a seismic change in how IT company’s function. Managing the equipment and supply demands of operations management is a fundamental competence sought by finance and accounting professionals. Per the company’s corporate responsibility and environmental regulations, the OM models should investigate the use of computer technology in service delivery. The inventory should demonstrate thorough readiness for data management tasks and strong ethical standards of professional conduct.
Recognizing the Dynamic Cyber Threat Landscape
The inventory should demonstrate the organization’s capability, which necessitates an examination of the security of the systems for any weak areas. For online-based businesses such as BYD, the cyber threat continues to grow in scope and complexity at an astounding pace. The most sophisticated cyber-attack weapons in most online businesses have grown increasingly dangerous. With the emergence of highly-skilled threat actors, the technology environment has developed to exacerbate the difficulty of protection. Due to BYD ‘s reliance on databases for research consulting, financial advising, battery technology risk advisory, and tax-related services, the organization is vulnerable to a data breach that might halt operations.
Identifying Additional Resources Needed
Most of BYD ‘s business is in the IT, automobile, and energy industries, which is seeing considerable competition from advanced computer technology. The rise of automated manufacturing and machine learning-based risk advisory models demands that the organization investigate new resources that would optimize OM. For instance, big data, cloud computing, and highly dispersed organizations radically alter the threat environment and vastly expand an enterprise’s potential attack surface (Guha & Kumar, 2018). In BYD ’s case, the expansion of big data applications and capabilities significantly alters the possible dangerous environment.
Identify System Security Demand
The MRP should account for the escalating insider threat that might impede the company’s operations. During the planning phase, protocols should be implemented to identify potential dangers posed by a disgruntled employee, hostile agent, or activist (Guha & Kumar, 2018). The OM leadership should be more vigilant about the insider threat, which is one of the most challenging risks to detect before harm. For a large organization like BYD, privileged accounts with extensive access make it considerably challenging to detect criminal behavior. The ever-expanding threat environment necessitates businesses to modify the game’s rules and successfully adopt a new strategy to fight against cyber attackers.
Scheduling Operations
Consequently, to optimize OM, the MRP OM teams at BYD need to use scheduling tools that keep the organization on schedule to complete crucial projects. At the absolute least, a daily review of a to-do list reminds employees of approaching deadlines. Scheduling solutions that prioritize the company’s initiatives assist departments in completing the most critical tasks first. The advantages of proper scheduling include decreased financial penalties, improved supply chain management, and enhanced financial planning. The practice of scheduling is implemented primarily as a short-term execution plan of a production planning model. The actions conducted in a manufacturing business to manage and regulate the execution of a production process constitute production scheduling.
Optimization Opportunities for BYD
To increase efficiency, operations managers at BYD should recognize the need to optimize the work environment and reduce dependencies on service delivery. Today, technology has a tremendous impact on the operations of organizations. In OM optimization, BYD management teams must investigate four critical trends altering technology’s role in businesses. Primarily, the changes consist of the introduction of business co-creators, the move from service delivery to value delivery, the creation of revenue engines, and the need to exercise prudence concerning cyber security risk and resilience. These interventions will enhance the quality and dependability of operational activities required to provide services and produce customer value.
Based on their respective capabilities, BYD should explore combining the program evaluation and review technique description (PERT) and critical path method (CPM) models for scheduling optimization. PERT is useful for assessing and displaying the tasks required to complete a project (Ba’Its et al., 2020). BYD can leverage software like Lucidchart, which helps to describe and standardize procedures. Linking data to processes and adding conditional formatting enables the platform to identify bottlenecks and monitor progress at a glance.
Operational Procedures Favoring PERT over CPM
The IT, automobile, and energy projects at BYD are a good match for the PERT methodology since they need the coordination of many teams from various departments. The PERT may increase cooperation since the chart depicts a project as a network diagram with numbered nodes connected by labeled vectors. The orientation of the arrows on the lines shows the order of tasks that enhances the coordination of the whole.
Operational Procedures Favoring PERT over CPM
The battery technology research services sector at BYD may be suitable for the CPM methodology since the process needs to articulate the record flow based on coordinating departmental financial flows. The five most common auditing processes are observation, inquiry, analytical review, inspection, and recalculation (Ba’Its et al., 2020). The audit is seen as a crucial stage that fosters much-required market confidence. CPM Scheduling enables the clear and transparent management of a project’s essential activities to minimize delays that would diminish the company’s dependability in its vital operations.
Job Sequencing at BYD
Effective operations at BYD would also demand a strategy for job sequencing that adapts to the operational dynamics of the organization. The first-in, first-out rule is advised for auditing, consulting, financial advising, risk advisory, and tax-related services in IT, automobile, and battery technology. First In, First Out (FIFO) is recommended as a method of customer management and valuation in which the first produced or acquired assets are first handled to the customer’s satisfaction. For IT support, FIFO assumes that the assets with the oldest costs are included in the price of goods sold section of the income statement. The remaining inventory assets match the most recently acquired or manufactured assets.
The FIFO technique most applies to BYD ‘s primary activities for cost flow assumption reasons in automobile production and supply. As products advance to subsequent development phases and final inventory items are sold, the accompanying costs must be recorded as an expenditure in auditing. The monetary worth of total inventory diminishes due to the removal of merchandise from the company’s possession. There are various methods for calculating the expenses associated with the stock, including the FIFO technique.
In the context of BYD, one of the benefits of FIFO is that it is the most extensively utilized technique for valuing inventory worldwide. In research efforts within the company, FIFO emerges as the most reliable approach for matching the predicted cost flow with the actual flow of products. The technique provides the enterprise with a more realistic picture of inventory costs. However, FIFO accounting has two significant drawbacks. For example, the technique exaggerates gross margin, especially during stable inflation, resulting in deceptive financial statements. Despite difficulties in financial tasks and overall scheduling, the FIFO method makes it challenging to manipulate income reported in financial statements.
Application of the Five Steps of the Theory of Constraints at BYD
The proposed job sequence in BYD ‘s approaches may require a Current Reality Tree (CRT) system for optimal performance. CRT in Theory of Constraints (TOC) is a method for identifying the most significant limiting factor impeding the achievement of a goal and then systematically improving that constraint until it is no longer a limiting factor. The condition in service delivery is frequently referred to as a bottleneck. The CRT provides BYD with robust tools for achieving this objective in financial services. There are five areas of focus that OM at BYD should consider in effecting CRT.
Applicable Processes for BYD in Theory of Constraints Implementation
Identifying the Constraint
The restriction requires BYD to identify three fundamental limitations, including time, scope, and budget. These factors define the project management triangle in OM optimization (Ba’Its et al., 2020). The limitation dictates the system’s capacity to create target units based on the company’s characteristics. To further boost the system’s capacity, the CRT process must identify appropriate interventions for new constraints depending on the case or service request type. Determining the present limitation may require a search for the process component that restricts the pace at which the objective is reached.
Exploiting the Constrains
Exploiting the constraints should then be developed to increase the constraint’s throughput by utilizing current resources quickly. The OM team should have identified the primary project limitations at this point (Yassine et al., 2019). The suggested technique is dissecting the restriction to discover any actions that might enhance the performance outlook. The main objective should be to identify management-level decisions to alleviate the specified constraint’s negative impacts.
Subordinating and Synchronizing Constraints
The subordinate and synchronized phase in TOC ensures that the non-constraint process elements are aligned with the constraint and provide support. BYD should consider using the Drum-Buffer-Rope (DBR) planning approach. Implementing DBR would increase the efficiency of processes with internal limitations or a resource with limited capacity. In OM, DBR specifies a project timeline for the constraint providing a release mechanism to guarantee that work is released into the system at the appropriate moment. This methodical technique safeguards the production system’s weakest link against process volatility and reliance, maximizing the system’s overall efficacy.
Elevating Performance of the Constraint
In the CRT’s fourth step, the performance enhancement limitation is addressed. The objective of the elevation phase is to enhance the capacity of the identified bottleneck. BYD should implement this phase by providing the extra resources required to meet the restrictions. Such resources may include more personnel, funds, or equipment. The allocation of resources should assist the last phase of the TOC, which focuses on the long-term monitoring of preventive actions.
Repeating the Process
Finally, avoiding inertia in implementing continuous evaluation of the performance of mitigating measures requires repeating the procedure. The OM teams have to recognize that the idea of constraints is predicated on continuous process improvement. The strategy implies that as soon as the management resolves one limitation, the teams will discover a new one. To detect the subsequent limitation and prevent inertia, the OM platform should allow for a restart of the OM process. Instead of designing the theory of constraints using a waterfall approach, the process should be iterative.
Advantages of Employing the Five TOC Steps in CRT
The benefit of developing a CRT from BYD ‘s viewpoint is that it directly identifies the relationships and linkages between the works and the leading causes of core issues. If fundamental problems are discovered, prioritized, and addressed effectively in CRT, various negative system impacts will vanish. BYD ‘s OM leaders may concentrate on tackling the few fundamental issues that would result in the most beneficial systemic improvements. The primary objective of CRT would be to outline the organizational changes required to achieve breakthrough performance improvement. By identifying the fundamental causes shared by the majority or all of the issues, a CRT may significantly facilitate the targeted modification of the system.
Recommended Steps for Develop a Forecasting System at BYD
The CRT would demand dependable operating models for BYD, mandating the implementation of forecasting technologies. Utilize the forecasting models to anticipate the need for future best practices based on the previous process accomplishments. A forecasting system would allow BYD to analyze current market trends and sales swiftly, enabling the company to make well-informed operational choices. The procedures involve establishing the purpose of the forecast, choosing the forecast items, and determining the time horizon.
Conclusion
Effective OM boosts the company’s competitive advantage, increases employee engagement, and clarifies organizational roles and responsibilities. A strategic operations management strategy will guarantee that the workflow of personnel and the company’s output are unaffected regardless of the obstacles an organization encounters. Therefore, BYD should implement the suggestions and invest more in cyber reconnaissance geared to level the playing field in the cyber environment from the opponent’s viewpoint. Cyber Reconnaissance systems would be advantageous because instead of investigating every aspect of an agency’s internal operation, the corporation shifts its viewpoint by boosting the amount of data and using sophisticated analytics. In the digital age, the competitive edge of the IT and energy industry will be driven by innovation and entrepreneurial dynamism.
References
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Guha, S., & Kumar, S. (2018). Emergence of big data research in operations management, information systems, and healthcare: Past contributions and future roadmap. Production and Operations Management, 27(9), 1724-1735.
Shang, X. F., & Choi, M. C. (2020). A study on the corporate culture of BYD. International Journal of Advanced Culture Technology, 8(1), 135-140.
Yassine, A., Singh, S., Hossain, M. S., & Muhammad, G. (2019). IoT big data analytics for smart homes with fog and cloud computing. Future Generation Computer Systems, 91(1), 563-573.