Consider the ingredients of your breakfast this morning. Unless you live on a farm and produced them yourself, they passed through a number of different processing steps between the farmer and your table and were handled by several different organisations.
In order to obtain and then to hold a competitive edge or advantage over competitors, organisations must produce goods or services that are competitive in their respective markets.First, the marketing and sales department must draw up their specific strategies, then the operations management strategy can be drawn up to support both the organisation's overall strategic direction and that of the marketing/sales strategy.
Fundamentals of operations management
Fundamentals of Operations
By: Raquel Graham
Elements in Business
There are 5 main elements that are involved in a business
whether manufacturing or service:
What is Operations Management?
Operations Management is concerned with the design,
management, and improvement of the systems that create the
organisation's goods or services.
OM concerns itself with the processes involved in converting
and transforming inputs into outputs in the form of goods or
services that add value to the organisation.
Components of an Operating System
inputs and resources (natural or material resources, human
resources, technological resources and entrepreneurial
resources) which are purchased by the organisation
processes which involve the conversion or transformation of
these resources into products or services (e.g. using project,
batch or continuous processes)
output and then feedback to the organisation from its
Why is it Important?
Too often, attention is paid to
finance, technology and
marketing, and not the actual
functions of the business.
E.g. Marketing a new product and
it does not meet quality
expectations, poor supply to
E.g. Finance is not paying
suppliers or not receiving
payments from customers on time
Another View of Operations
Consider the human body –
Marketing – Style of dress, personal hygiene
Finance – Blood, oxygen
Administration – taking care of health, exercising, lifestyle
Training – Education, work experience
Operations – the entire process of keeping all organs healthy,
interacting day to day, moving around i.e. everything you do!
If you don’t take care of one element, the entire body can suffer
Decisions involved in Operations
1. Operations Strategy
2. Make vs. Buy Decisions
5. Processes and Facilities to be used
1. Workforce Management
2. Inventory Management
3. Quality Management
5. Plant Maintenance
Manufacturing vs. Service
Operations Management is a crucial function of both
manufacturing and service organisations.
Manufacturing companies produces tangible products
that can be listed as inventory
Service organisations produce a non-physical output and
involves the customer in the production process
Most oganisations do both. There are few pure
manufacturing or pure service organisations.
Manufacturing vs. Service
Both types of organisations face similar operational
both must obtain suitable and sufficient materials to be
used in the production process
both must determine suitable scheduling tasks
both should be concerned with both the quality of their
end products and with their productivity levels
What Drives Operations?
Every organisation attempts to be successful in the market
place by obtaining an acceptable market share through
The competitive advantage adopted by the management will
be determined by the organisation's overall strategic plan and
by its strategic objectives.
Success is dependent on the organisation adopting efficient
and effective operations with respect to the manufacturing of
their products or the provision of their services
Some of the most commonly
overlooked elements of Operations
Customer Relationship Management
Supplier Relationship Management
Operations management is often overlooked in favour of
marketing and finance
There are many ways to improve the efficiency of a
business by pay attention to how the business is run
The business structure should match closely the level of
competition in the market place
Operational audits are just as important or more so than
It is all about the customer and the added value