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Operations refers to the production of goods and services, the set of value added activities that transform inputs into many outputs.
Operations Management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. It is also the management of resources, the distribution of goods and services to customers, and the analysis of queue systems
Operations Management is the maintenance, control, and improvement of organizational activities that are required to produce goods or services for consumers. Its efficiency and effectiveness may be monitored by the application of ISO 9001 quality systems, or total quality management techniques
The Association for Operations Management defines operations management as “the field of study that focuses on the effective planning , scheduling , use , and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting and other functions as they affect the organization”.
The importance of operations management has increased dramatically in recent years.
Significant foreign competition , shorter product and service life-cycles , better educated and
quality conscious consumers , and the capabilities of new technology have placed increasing
pressure on the operations function to improve productivity while providing high quality services.
Importance of Operations Management can be explained with the help of following points:-
Improves Productivity :- It refers to an effective control of the conversion process of inputs into outputs (e.g. fewer defect output, less wastage of material inputs, effective allocation of staff will lead to more output per unit time)
Improves our ability to meet customer needs :- It enables us to provide service to our target customers better than our competitors. After all, meeting customer needs is crucial to the long term survival of the firm.
High Goodwill :- Operations Management plays a key role in building the brand name / reputation of the company, as a competitive weapon.
The operations function comprises a significant percentage of the employees and physical assets in
most organizations. Operations managers are concerned with each step in providing a service or
product. Managers are also responsible for critical activities such as quality management and control,
capacity planning, materials management, and scheduling. Managers in operations management play
a strategic, as well as a tactical role in satisfying customer needs.
Control by creating and maintaining a positive flow of work by utilizing what resources and facilities are available
Lead by developing and cascading the organizations strategy/mission statement to all staff
Organize resources such as facilities and employees so as to ensure effective production of goods and services
Plan by prioritizing customer, employee and organizational requirements
Maintaining and monitoring staffing, levels, Knowledge-Skill-Attitude (KSA), expectations and motivation to fulfill organizational requirements
Performance Measures for the measurement of performance and consideration of efficiency versus effectiveness
Operations Management Planning Criteria
Operations Management Priorities
Operations Management strategies and objectives must support business strategies and
objectives. It must meet customer requirements / competitive priorities, which are as
QUICKER RESPONSE TIME
ADAPTABILITY / FLEXIBILITY
RELIABILITY OF SERVICES OFFERED i.e. LOWER VARIABILITY IN PRODUCT SPECIFICATIONS
HIGH SERVICE LEVELS
Operational-Based Competitive Advantage
Competitive Advantage – A company is said to have a competitive advantage over its
rivals when its profitability is greater than the average profitability of all other companies
competing for the same set of customers.
Operations Management objectives must aim at an “operational-based competitive
advantage”, by emphasizing specific areas of operations that can enable it to meet
Adaptability Advantage i.e. quicker adaptability to change
Reliability Advantage i.e. doing things right every time and offer error-free products or services to customer EVERY time
Service Delivery Advantage i.e. doing things better. All aspects of business are important in delivering quality service to the customer which is nothing but the Total Quality Management (TQM)
Operations Management Model
The Transformation Model
Operations Management is a central activity in organizing things. Another way of looking at an operation, is to consider it as a transformation process.
Operations Management focuses on carefully managing the processes to produce and distribute products and services. Operations management is in regard to all operations within the organization. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization.