Operations Management

Summary

Operations management comprises the business activities and administration decisions that promote the highest efficiency level of production and product delivery to maximize the profit of an organization. A major portion of operations management focuses on efficiency and effectiveness of the processes. Therefore, internal processes are consistently analyzed and measured through means of forecasting and internal control. Operations managers are responsible for managing the resources which make up the basic functions and decision making within operations management. Defined below are ten (10) key areas of basic function and decision making and an example of what can happen among four of the key functions if changes in the operational process occurred. Also discussed are the seven (7) steps used by operations management in a forecasting system, as well as a discussion related to information contained in example datasets.

Ten (10) Key Areas of Basic Function and Decision Making:

1. Design of Goods and Services

Operations managers translate market knowledge of customers into the design and managing of goods, services and processes. The objective is to develop a product strategy that meets the demands of the marketplace and assume a competitive advantage. Product design provides the means to determine the lower limits of cost production, the upper limits of product quality, the major implications of sustainability, and the human resources needed. Operations managers need to ask questions such as, what are we producing and why? How do we produce it and how much will it cost to produce? Can customers afford the product? In what geographical location should the production facility be located? What channels should be used to market the product? Can the company provide adequate support of the product?

1. Managing Quality

The objective of operations managers is to build a total quality management system that identifies and satisfies the customer’s needs. The ability to manage quality helps build successful strategies of differentiation, low cost, and response. In order to manage quality, operations managers need to ask how does the company define quality and who is responsible for ensuring that the operation is producing at the level of quality expected?

1. Process Strategy

The primary objective of a process strategy is to build a production process that meets the customer requirements and product specifications within cost and other managerial constraints.  Process strategy determines how a good or service is produced and commits management to specific technology, quality, human resources and capital investments that determine much of the firm’s  cost structure. Operations managers must ensure that resources (labor, equipment, and materials) and operations are coordinated. In order to design a workable process strategy, operations managers need to get answers to questions such as, what process does the company use? What capacity, equipment, and technology will be required?