GUIDELINE ON OPERATIONS MANAGEMENT

PURPOSE

operations-management1This guideline is intended to assist the co-operative society enhance productivity through better management of the process of transforming inputs into outputs. The transformation process varies depending on the activities of a particular co-operative society and therefore each co-operative should formulate detailed operational policies that are specific to its circumstances.

SCOPE

This guideline explains how the co-operative can enhance its operations productivity and competitiveness.

RESPONSIBILITY

The board of directors, CEO, management and other staff members of each co-operative society shall be responsible for the design of efficient system that best meets the co-operative requirements.

PRODUCTIVITY

The co-operative should develop an operations system that ensures high productivity. Productivity is a measure of how well an operation system functions and an indicator of efficiency and competitiveness. The co-operative management could improve its productivity through:-

Production System Design 

The board of directors should ensure that the co-operative society has a production system that is appropriate for its activities. Production system design involves making decision about:

  • The product/service to be produced and at what level;
  • How and where to produce the goods/services; and
  • Who to produce the goods/services

The co-operative management and the system designers should simplify designs and come up with flexible, easy and reliable systems. The co-operative should be able to establish ways of making quick changes in the rate of production as the demand for the product/services changes. This can be achieved by training staff to be multi-skilled and adopting flexible work rules.

Job Design

The jobs within a co-operative operations system should be appropriately designed. In carrying out job design the management will have to decide on the person to carry out the various tasks and how the work is to be accomplished. Job design should entail developing clear work related policies on employee skills, employee safety at work place and workplace collaboration.

Operations Plans and Control 

The management of a co-operative society should develop comprehensive operational plans and control decisions on major expense items. Inventory comprising of raw materials, work progress and finished goods is one such item. The co-operative head of operations should maintain inventories at optimum levels by application of inventory management techniques. Where applicable, the co-operative could also strive for just-in-time inventory if possible which minimizes the expense of storing inactive inventories.

COMPETITIVENESS

The co-operative societies exist primarily to produce quality products and services that consumer’s want at reasonable prices. The factors that determine the competitiveness of a co-operative’s products/services include; quality level; quality reliability; and flexibility. These are explained briefly.

  1. Pricing- One of the factors that determine the price of a product or service is the costs of production. The head of operations should keep the costs low to be able to offer competitive prices.
  2. Quality- The co-operative should set quality standards for its products/services in terms of performance, superior features, tolerance and greater durability. The head of operations should ensure that the standards are met. A record of repeat jobs should be kept and used in performance evaluation.
  3. Quality reliability- A co-operative society attains quality reliability through consistent and timely provision of quality product/services. The co-operative management should set quality reliability standards and measure the frequency with which the standard is met.

MEASUREMENTS

The co-operative management should maintain records of the co-operative activities for use in evaluating its productivity. In deciding on the records to utilise, the management should pay attention to the following:

  • Process flow documentation that would help identify the strategic control points, or junctures in the operations process at which major change occurs. Since these points represent potential sources of confusion and inefficiency as work is passed from one set of work to another the management should establish clear forms, records and other documents to be kept at every stage.
  • Efficiency standards should be set to ensure that the co-operative resources are not wasted and to allow for meaningfully interpretation of the productivity measurements. Efficiency goals could be set to include among others: levels of scrap or waste materials; units that have t be reworked; length of time to perform an operation; downtime; time spent retooling  a production line; and time spent waiting for supplies.

FEEDBACK

The board should evaluate the information captured in performance measurement and communicate the results to those involved in the operations process. This is a key control function and involves taking corrective action, changing goals and rewarding high achievers among other actions.

Source: Co-operative society management and prudential guidelines manual developed by VAS Consultants Ltd.

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