Operations management refers to running the day-to-day operations of a given business. It can differ dramatically depending on the type of business being run and the operations undertaken. Such management can also be performed by in-house employees or can be outsourced, depending on the circumstances.
Generally, the most complex
types of operations management exist in the manufacturing industry. When goods
are manufactured, a lot of different steps go into the operation of the plant
or company doing the manufacturing. For example, parts must be ordered and
purchased and delivered to employees; employees must be hired, trained and
supervised; and goods must be packaged and shipped or distributed to resellers
or end users.
Within manufacturing, operations management involves taking care of all of these individual steps. The manager of operations may also take measures to institute cost control procedures or to improve system efficiency using systems analysis. Techniques such as total quality management, which involve focusing on ensuring quality at each step of the production process, are used in order to successfully manage such large and complex processes.
In other environments,
operations management takes on a very different meaning. In a law office, for
example, management may primarily relate to hiring and overseeing support
personnel for attorneys. An office manager may be hired to ensure that
paralegals, legal secretaries and clerks and other support staff are available.
Other duties of an operations manager may include ordering office supplies
and/or contracting with telephone service providers, Internet service
providers, technicians for copy machines and other personnel and services
necessary to keep an office running smoothly.
In still other cases, this process may be contracted out. For example, many surgeons run their own medical practices. These doctors may be busy caring for patients and unable or uninterested in dealing with the logistics of managing an office and hiring support staff. Yet, they may not want to hire an operations manager since the management role within the office is not extensive enough to employ a full-time operations manager.
Consulting services allow
professionals to outsource operations management. Some services, referred to as
turnkey services, will provide integrated operations management. This means the
consulting group will take care of all logistical aspects of running the
business, leaving the surgeon or other professional to work with clients and
perform his professional role without worrying about the technical details of
making the business run well.
There are strong parallels
between the skills required for effective operations management and those
needed in both logistics and supply chain management. Excellent organizational
ability is crucial in successfully enhancing efficiency and driving
productivity as an operations manager.
One must be able to understand
the series of processes within a company to get them to flow seamlessly, and in
this sense the role is directly related to supply chain management. Meanwhile,
the coordination involved in setting up these processes in practice represents
logistics; the combination of understanding and coordinating the work of a
company are central to becoming a successful operations manager.
An MBA in operations management
can give someone a global perspective on industry trends and an awareness of
any financial regulations and political uncertainties that can affect an
organization. It also gives someone a solid grasp of the inherent complexities
and the tools needed to respond well to change.
Operations management is the
business function that responsible to planning, organizing, coordinating and
controlling the resources needed to produce a company’s products and services.
The operations function can be connected to other functional operations within
organization such as marketing, finance, human resource and etc. so it can be
described that all functional areas undertake operations activities because
they all produce the services and goods. The operations manager is the person
who supervised the production, make decision on operations processes and
regarding to connecting into other functional areas. Thus, today every company
realized that operations management is important and also agreed that is the
main core function to organize their organization. The key elements of
Operations Management are;
- Product
selection and design: The right kind of
products and good designs of the products are crucial for the success
of an organization. A wrong selection of the product and/or poor
design of the products can render the company’s operation ineffective and
non-competitive. Products/services, therefore, must be chosen after
detailed evaluation of the product/services alternatives in conformity
with the organization’s objectives. Techniques like value
engineering may be employed in creating alternate designs, which are
free from unnecessary features and meet the intended functions at the
lowest cost.
- Process
selection and planning: Selection
of the optimal “conversion system” is as important as choice of
products/services and their design. Process selection decisions
include decisions concerning choice of technology, equipment,
machines, material handling systems, mechanization and automation.
Process planning involves detailing of processes if resource
conversion required and their sequence.
- Facilities (Plant) location: Plant location decisions are strategic decisions and once plant is set up at a location, it is comparatively immobile and can be shifted later only at a considerable cost and interruption of production. Although problem of location choice does not fall within preview the production function and it occurs infrequently, yet it is of crucial importance because of its major effect on the performance of every department including production. Therefore, it is important to choose the right location, which will minimize total “delivered customer” cost (Production and distribution cost). Locational decisions involve evaluation of locational alternatives against multiplicity of relevant factors considering their relative importance to the organization and selecting those, which are operationally advantageous to the organization.
- Facilities
(Plant) layout and materials handling: Plant
layout is concerned with relative location of one department (Work
center) with another in order to facilitate material flow and
processing of a product in the most efficient manner through the shortest
possible time. A good layout reduces material
handling cost, eliminates delays and congestion, improves
co-ordination, provide good housekeeping etc. while a poor layout results
in congestion, waste, frustration, inefficiency and loss of profit.
- Capacity
Planning: Capacity planning concerns
determination and acquisition of productive resource to ensure that their
availability matches the demand. Capacity decisions have a direct influence
on performance of production system in respect of both resource
productivity and customer service (i.e. delivery performance).
Excess capacity results in low resource productivity while inadequate
capacity leads to poor customer service. Capacity planning
decisions can be short-term decisions. Long-term capacity planning
decisions concern expansion/contraction of major facilities required in
the conversion process, economics of multiple shift operation, development
of vendors for major components etc. Short-term capacity planning
decisions concern issues like overtime working, sub-contracting, shift
adjustments etc. Break-even analysis is a valuable tool for
capacity planning.
- Production
Planning and Control (PPC): Production
planning is the system for specifying the production procedure to
obtain the desired output in a given time at optimum cost in conformance
with specified standard of quality, and control is essential to ensure
that manufacturing takes place in the manner stated in the plan.
- Inventory
control: Inventory control deals
with determination of optimal inventory levels of raw materials,
components, parts, tools; finished goods, spares and supplies to ensure
their availability with minimum capital lock up. Material
requirement planning (MRP) and just in time (JIT) are the latest
techniques that can help the firm to reduce inventory.
- Quality
assurance and control: Quality is an
important aspect of production system and it must ensure that services and
products produced by the company conform to the declared quality
standards at the minimum cost. A total quality assurance system includes
such aspects as setting standards of quality, inspection of purchased and
sub-contracted parts, control of quality during manufacture and inspection of
finished product including performance testing etc.
- Work-study
and job design: Work-study, also
called time and motion study, is concerned with improvement of
productivity in the existing jobs and the maximization of
productivity in the design of new jobs. Two principal component of
work-study are: Method study and Work measurement.
- Maintenance
and replacement: Maintenance and
replacement involve selection of optimal maintenance (preventive and/or
breakdown) policy to ensure higher equipment availability at minimum
maintenance and repair cost. Preventive maintenance, which includes
preventive inspection, planned lubrication, periodic cleaning and upkeep,
planned replacement of parts, condition monitoring of the equipment and
machines, etc. is most appropriate for critical machines.
- Cost
reduction and cost control: Effective production
management must ensure minimum cost of production and in this
context cost reduction and cost control acquires significant
importance. There are large number of tools and techniques
available that can help to make a heavy dent on the production cost.
Modern operations management
revolves around four theories: business process redesign (BPR), reconfigurable
manufacturing systems, Six Sigma, and lean manufacturing. BPR is focused on
analyzing and designing workflow and business processes within a company. The
goal of BPR is to help companies dramatically restructure the organization by
designing the business process from the ground up. Reconfigurable manufacturing
systems are designed to incorporate accelerated change in structure, hardware,
and software components.
This allows systems to adjust
rapidly to the capacity to which they can continue production and how
efficiently they function in response to market or intrinsic system changes.
Six Sigma is an approach that focuses on quality. The word "six"
references the control limits, which are placed at six standard deviations from
the normal distribution mean. Tools used within the Six Sigma process include
trending charts, potential defect calculations, and other ratios. Lean
manufacturing is a systematic elimination of waste within the manufacturing
process. This theory sees resource use for any reason other than value creation
for customers as wasteful and seeks to eliminate wasteful resource expenditures
as much as possible.
Operations management is
prevalent in the healthcare sector. The current healthcare system overuses
expensive, technological, and emergency-based treatment. High costs from care
often remain uncompensated due to uninsured patients. A prevalence of services
in expensive settings creates a burden on taxpayers, health insurance holders,
and healthcare institutions themselves.
References
https://www.mbaknol.com/operations-management/operations-management-and-its-objectives/
https://www.topmba.com/mba-programs/what-operations-management
https://www.wise-geek.com/what-is-operations-management.htm
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