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Question: Discuss about the Operation Management of Toys Ltd. Answer: Introduction Operation Management can be defined as designing and monitoring the procedure of production and business activities in the creation of goods and services. It is accountable to make sure that fewer resources are utilized in the business with maximum returns in terms of profitability and customer satisfaction. It is related with the entire process which transforms input into output. Operation and Quality Management is concerned with the creation of goods and services, managing the quality and ensuring that the business uses fewer resources to produce maximum returns resulting in satisfied customers and higher profitability (Majukwa Haddud, 2016). In the given case, Toys (Cyprus) Ltd. is facing with the problems relating to decrease in its profitability and higher cost of production. Also, it has been confronted with the issues concerning to the higher sales returns resulting in loss of goodwill and reputation of the firm .In this essay, problems faced by the company in its inventory management techniques and procedures adopted by it to face sales returns shall be discussed. Also, suggestions related to the improve its operational concepts to mitigate the losses would be mentioned in this essay. Strategic Frameworks of Operations and Quality Management within a Global Business Environment Operations Management is concerned with converting inputs into outputs. It manages the assets of the company to create and deliver products and services to its customers. Operations and Quality Management is an important component of the organization as it transforms input into output and monitors the quality of the goods and services delivered to the clientele of the company. It exists in the core procedures of the organization as it regulates the system of operations. Also, it manages the creation , management and improvement of the production and sales procedures of the company ,so that it can fulfill its motive of maximizing profits with utilizing fewer resources with the aim of satisfying customers thereby increasing the goodwill of the company (Ganapavarapu Prathigadap, 2015). The Operations and Quality Managers have the responsibility to be accustomed with the objectives of the firm and work accordingly to monitor aspects such as enhancing the quality of the products, speed of production, flexibity in its processes for creating customized goods and services on the demand of its customers and lowering the cost of production to maximize the profits of the company. In the given case of TOYS (Cyprus) Ltd, the company is facing the reduction in the profits especially in its education segment of business and higher sales return due to defective products. The role of Operations and Quality Management plays an important role in improving its procedures. In this context, Total Quality Management plays an important role in delivering quality products to the customers speedily. In implementing this procedure, all the members of the organization participate in the improvement of the processes, products and services and the work culture in which they work (Stevenson, 2015). The Total Quality Management (TQM) can be described as the management strategy which involves all the work force in the development of the organization. It utilizes the information, and strategies of the company to improve its processes for mitigating the losses and working towards profitability. It is in continuous dialogue with the stakeholders of the company to assimilate the quality discipline into the work culture and the activities of the company. There are various techniques used in Total Quality Control (TQM) such as Statistical Quality Control, Acceptance Sampling plans and Off-Line Quality Control (ESSEC Business School, 2015). The objectives of Operations and Quality Management are to increase the companys profitability by making the goods which are accepted by the consumers and to minimize the companys cost by reducing the losses incurred by selling defected goods. Methods Related to Designing and Managing Operations and Supply Chains in Toys (Cyprus) Ltd. As Toys (Cyprus) Ltd. is facing with the problems of lower profitability and higher sales returns, thereby affecting the reputation and goodwill of the firm. It is also facing the problem of blockage of funds in its working capital leading to higher cost of production thereby decreasing its profitability. The following is the process of its operations management and supply chains of Toys (Cyprus) Ltd: The process starts with procurement of material from the suppliers. The company purchases its raw materials from the suppliers at a higher price than its competitors. It leads to higher cost of raw materials to the company. Then the next step is followed by manufacturing the products and retaining the semi-finished goods in the warehouse. It leads to blockage of funds and higher working capital requirements for the company. The third step is transferring the finished goods to the Sales and Quality Control Department. The Sales Manager should appoint the workforce to check and implement the quality controls to evaluate whether the products are suitable for sale or not. Due to lack of proper quality control mechanisms, the company is facing higher sales return thereby decreasing the profitability of the firm. Also, it is facing higher cost of production due to blockage of funds in the working capital. It thereby keeps the sale price of its products higher, resulting in lower retention of its customers. Also, outdated machinery is a major component contributing in producing fewer goods at a higher rate thereby decreasing its profitability and lower retention of its customers (Bromiley Rau, 2016). Suggestions regarding the application of Operational Improvement Concepts To minimize the problems of low profitability, higher cost of production and blockage of funds, the firm can choose the strategies proposed by the companys accountants which are as follows: Buying cheaper components and materials: The purchase department can buy the raw materials from a wholesale supplier in bulk. It will help the company in buying raw materials at a lower cost. Working to industry norms on defectives and acceptance levels: As suggested by the companys marketing manager, the faulty goods can be replaced with the new toys. Also, the defective toys can be sent back for repairs and sold at a discount. This would increase the sales of the company without appointing extra staff. Furthermore, Toys (Cyprus) Ltd. can work upon its Sales and Quality Control department by appointing personnel for quality checks of the finished products. If they dont meet the specified benchmarks, they should be sent back to the warehouse for repairing and resale. Denying the liability and resisting compensation by replacement of defective products: The policy must be adopted for shipping and transportation charges which should be borne by the customers, so that the liability of breakage or damage can be transferred to them instead to the company (Ziukov, 2015). Some of the other strategies proposed to increase the sales and effectiveness of the company are: Material Planning Systems (MRP): It is a production planning, scheduling and inventory control mechanism which is used to regulate manufacturing processes. It also helps in planning from where to procure the raw materials at a lower cost and the entire manufacturing processes and delivery schedules (Plinere Borisov, 2015). MRP System Just in Time or JIT: It is a strategy which aims at increasing the effectiveness of the business and decreasing the blockage of funds in working capital by procuring the material only when it is required in the production. So, Toys (Cyprus) Ltd. can adopt JIT to avoid blockage of funds in its working capital to lower its cost of production. Gantt chart: It was founded by Henry Gantt; it is a commonly used technique in project management to project certain tasks or activities against time. Towards the left side of the chart, there are certain activities or processes displayed and corresponding to them on the right side, their scheduled time scales are shown. In the Gantt chart, every activity is depicted in the form of a bar, the start date ,end date and duration of the activity is shown by the position and dimensions of the bar diagram. It will help the management to review the organizations planning activities, their end and start date and their duration (Barwa, 2015) Gantt chart Time Schedules: It is a method which is used to set a particular time based on continuous observations of one employee taken over a number of cycles which comprises of all the components of the job. However, it is essential for Toys (Cyprus) Ltd. to inform each employee about the time study of the job (Freestyle Solutions, 2015). Role of Operations within Different Business Models/Functions The Operations Management plays an important role in contributing to the success of the organization. It helps the company to achieve its goal of profit maximization and customer retention. There are various methods of Operation Management which assists the organization towards producing better outputs with fewer inputs. Some of them are: ABC Analysis: According to Kiyak, Timu? Karayel (2015) it is an inventory categorization methodology which bifurcates the raw materials into three categories viz A, B and C. A being the most valued item and C being the least valued one. An item account for the highest consumption value with the lowest account of the total inventory. They comprise of 10-20 % of the overall inventory. On the other hand, C items comprise of the items of lowest consumption value. They account for 15-20 % of the total consumption value with 50 % of the total inventory items. B is the mediocre items which comprise of 15-20 % of the annual consumption value with 30 % of the total inventory quantity. The annual consumption value can be calculated by (Annual demand) x (item cost per unit). Hence ABC Analysis has a crucial role in the procurement of the raw materials and its accounting (Koli?ska Cudzi?o, 2016). Enterprise Resource Planning (ERP): It is a set of tasks which assists the organization to manage its business. ERP merges all the processes of the business into one software thereby facilitating the flow of information within the company so that the decision making can be easier with the procurement of the desired data (Jinno , Abe Iizuka ,2017). So, the Operations Management integrates all the business processes and assists the organization in its smoother working regarding the accomplishment of the goals and objectives of the organization. Conclusion So, to conclude, Operations Management focuses on all the aspects of the processes of the business. It is concerned with providing goods and services to the customers of the organization. It is related to the functions of the management, i.e. planning, organizing, staffing, coordinating and controlling. All the components of Operations Management are concerned with comprehending the goods and services, their location and quantity with respect to the customers necessities and demands. Also, it is assigned with the task of selecting the best technology and product designs and procuring the best raw materials at low prices to design the products according to customers demands and to attract them by selling the products at lower prices (Li, 2014). Operations Management is also responsible for planning the necessary workforce and their hiring and training. Its focus is on adopting latest technology to improve the productivity and to decrease the cost of production and the flexibility to meet the changing demands of the customers. Its role starts from product designing which is related with the product development. It should be designed in such a way so that it meets the changing demands of the consumers at lower prices to mitigate the competition faced by the firm (Skripak, 2016). Also, systematic planning is necessary to decide how the management uses the available resources to deal with various situations. Operations Management plays an important role in planning the entire process of the product creation or delivering of the services to the consumers. It is also responsible for managing the workforce which is an important part the successful operations. Operations Management helps the management through better planning and scheduling of the work force .It helps them in better performance through proper training, leadership and work culture (World Bank, 2017). It also helps in coordinating amongst the various processes to deliver the best quality products and services to the customers of the company. So, Operations and Quality Management can assist Toys (Cyprus) Ltd. in managing its processes in a better way to maximize its profits and minimize its cost of production. References Barwa, T. M. (2015) Inventory Control as an Effective Decision-Making Model and Implementations for Companys Growth. International Journal of Economics, Finance and Management Sciences.3(5),pp. 465-472. 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Available from: https://vtechworks.lib.vt.edu/bitstream/handle/10919/70961/Chapter%209%20Operations%20Management.pdf?sequence=14isAllowed=y [Accessed 8th February, 2018]. Stevenson,W. J. (2015) Operations Management. New York: McGraw-Hill Education. World Bank (2017) Doing Business 2017 [online]. Available from: https://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB17-Report.pdf [Accessed 8th February, 2018]. Ziukov, S. (2015) A Literature Review on Models of Inventory Management Under Uncertainty. Business Systems and Economics.5(1), pp.26-35.