Trend in Operation Management

In operation management, there is trend of increasingly focuses on the core business activities. Corporation need to evaluate themselves and find the strength and weakness of each business units. As the competition in the market is getting tougher and lowering of barrier to entry causing corporations to focus only on their core competencies. Company may want to diversify by vertical or horizontal integration strategy but sometimes expanding to wide may spell disastrous if it is not manage effectively. Thus slim down and focus on core competencies where the companies is historical good at or have better capability is a safe bet to compete in the market. Few examples is the divest of Agilent semiconductor units to Avago to focus on traditional strong filed in testing and scientific equipment which is the best for the business compare to volatile semiconductor business.

There is also trend of modernization in factory setting and information technology. As technology’s cycle moves fast, there are a lot of modernization in factory equipment, machinery and a lot of automation that improves productivity and cycle time. This trend is obvious is newly industrialized country as being a technology follower they are able to adapt and implement latest technology improvement more rapidly than in the developed countries as they do not have large old scale industrial base. Telecommunication and internet technology improves the communication between markets and business in split seconds and low cost. There is no more barrier in business as location far away can be connected by this advance networks and thus improve the business operations. Software technology also progress and a lot of automation and software is used in factories and business outlets to manage the operation more effectively, better response to the customers and ability to do complex transaction in matter of seconds or minutes. Software are used in design, managing shop floor activities, managing inventories, managing workforce, calculate compensation, manage machines and productivity, office productivity, making decisions, managing transportation, testing products and etc.

Subcontractor or independent semiconductor factories also mushrooming in many industrialized countries as part of trend for corporation to focus on core activities. Company such as Advance Semiconductor Engineering are helping large semiconductor OEM to assemble and testing semiconductors without the needs of having their own facilities. Zarlink (formerly Legerity ©) is the example of fabless corporation that rely on ASE to assemble, test and ship its product to end customers. In other words, Zarlik only focus on high value activities such as engineering, research, design and marketing of their own product without hard to manage operational activities. Outsourcing becomes a trend and generates a new business especially in electronics and semiconductor market. In electronics market whether we realized or not, EMS companies such as Flextronics, Jabil and Fox Conn actually produce a lot of high end branded products from their customers such as Nokia’s handset, Sony’s Play station 3, Phillips LCD television, Microsoft Xbox, Apple’s iPod etc. Outsourcing become a trend as electronics become more complex as OEM cannot make all the parts on their own on time with effective cost management, cost saving for not having to invest in plants and equipments or labor in a volatile business and able to serve the market on time and reduce when needed.

Market trend also change rapidly as customer becomes better equip with knowledge and more demanding than before. Customers are concern with the image of the products, value for money as there are more budget conscious consumers, demand for more quality products and on time delivery. This is true for monopolistic market where there are a lot of competitors and substitutable products such as shampoo. Many competitors such as P&G, Kao and Head& Shoulder are trying hard to convince consumer by aggressive pricing and advertising activities. On distinctive value can create something special to the consumers and stay strong in the market. As consumers are more well verse with legal action, company also should be careful in producing and selling quality and safety product to the consumers. On time delivery is important in highly competitive market as customer may switch brand if they cannot get their needs fulfill on time when they need it.

Changing workforce is also a variable or trend that may affect the operation of the business in the highly competitive market. Workforce is changing with many knowledge workers in the market as increasing of education standard in many countries. Sometimes generation of graduates is much faster than they market can create jobs opportunity thus creating employment problem. With more skillful workers in market, there is a lot of changing in business, as we will have more high technology intensive industry and information technology business. The government want to enable creation of industry-needed workforce is emphasizing on education standard. Another change is more and more women are entering labor market, not in lower skills jobs but in high profile profession such as management and engineering. The changing scope of diversity in workplace is a thing that an operation manager should view and adapt to. As globalization take place, the mobility of labor from one location to one location or one country to another country will become easier than ever. Foreign workers are used in lower skills jobs because of lower cost and shortage of local resources.

Shorter life cycle of product means there is a lot of research and development has to be done. Customers’ needs, industry trends and technology cycle that change so fast means we have to be preparing to change or else we will be left behind compare to competitors. Electronics gadgets such as mobile phones change so fast from the color screen resolution, memory, camera resolution, and other special functions. If the producer continues to produce the same mobile phone like 3 years ago, no consumer will ever buy its products if the pricing is not low. Consumers who are fashioned and technology inclined will move towards changes and technology and market follower will soon influence the producer to produce the latest improved products in the market.