The Role of Operation Management

The role of Operation Management

910 Words

This essay aims to clarify what is the role of operation management in today’s business. According to the Willey Encyclopedia of Management Operation Management is “about doing in the organization the management of the people machine based and information processes needed in the transformation of inputs into outputs” (Cooper, 2014).        Before operation management was considerate as machine and manufacturing organization with few responsibilities. Study in years 1960 spotlight companies’ needs in terms of strategies and therefore the need to link operation management to other organizations sectors. Today, Operation management cover activities such as supply chain management, staff-line, service control, organizing people …                                                               Indeed, Operation management has several roles such as: Master Scheduling, Process and layout Planning, Total Quality Management. However, there is only one goal to those roles; productivity.

First Master Scheduling “is the process of determine when and how many products will be needed” (Michel A Hitt, 1986) this concept may be related to a more modern term Inventory. It is the role of operation management to make sure have enough stock to satisfied customers demands. 30% of the cost of manufactured good is tied up with inventory coast. (Siobhan Tiernan, 2006). An example of good inventory management is Ikea. The most successful furniture retailer ever. With 276 stores in 36 countries, it has managed to develop its own special way of selling furniture. Beside the layouts of stores and warehouse system, Ikea never has sold out products. Operation managers at Ikea’s can anticipate customers’ demands and act in consequence. They know well Ikea’s target market and are aware of the external environment. Trend in this sector is to calculate the stock nearly exactly to reduce it cost. But in the service sector it is impossible to have stock but “instead must try to match capacity as closely as possible to customers’ demands” (Siobhan Tiernan, 2006). For example, a hotel needs to anticipate season key moments to establish a price policy.

In complement of Inventory, Process and layout planning are another role of operation management. First a process is “the means by which chosen inputs are transformed into outputs” (Siobhan Tiernan, 2006). Process is about the effectiveness of production. Companies defines them strategies following different steps:

• Capital intensity: how much capital and labor are required
• Process flexibility: how resources can be changed in response to market changes
• Customer involvement: how important is the customer in the production process.

It is the role of an operation manager to define those strategies and made them work.

Advantages of Layouts are: The cost of general equipment (that are more adaptable to market changes) are sometimes less costly and more resistant than specialized equipment. Another advantage is that employees are more motivated to perform because they feel the change and the evolution in the company. Moreover, they don’t do repetitive tasks like an assembly line for example, but they are trained to be able to work on every work station. And finally, system protection because there is more machine available equipment failure is less an issue than with few specialized and complicated machine.