Operations Management Introduction Notes

Operations Management

WHAT IS OPERATIONS MANAGEMENT?

• Operations management is the activity of managing the resources which produce and deliver products and services.

• The operations function is the part of the organisation that is responsible for this activity.

• Every organisation as an operations function because every organisation produces some type of product or service.

• Operations managers are the people who have particular responsibility for managing some or all of the resources which compose the operations function.

Operations in the Organisation

• There are three core functions in an organisation:

  • Marketing function – responsible for communication the organisations products and services to markets in order to generate customer requests.

  • Product/Service function – responsible for creating new and modified products and services in order to generate future customer requests.

  • Operations function – responsible for fulfilling customer requests for service through the production and delivery of products and services.

• There are support functions which enable the core functions to operate effectively:

  • Accounting and finance function – provides the information to help economic decision making and manages the financial resources of the organisation.

  • Human resource function – recruits and develops the organisations staff as well as looking after their welfare.

• View the operations function as comprising all the activities necessary for the day to day fulfilment of customer requests. This includes sourcing products and services from suppliers and transporting products and services to customers.

• Working effectively with the other parts of the organisation is one of the most important responsibilities of operations management. It is fundamental of modern management that functional boundaries should not hinder efficient internal processes.

OPERATIONS MANAGEMENT IS IMPORTANT IN ALL TYPES OF ORGANISATION

• Any business that produces something, whether tangible or not, must use resources to do so, and so must have an operations activity.

• Operations management uses resources to appropriately create outputs that fulfil defined market requirements.

Operations management in the smaller organisation

• Irrespective of size all companies need to produce and deliver their products effectively and efficiently.

• In practice managing operations in a small or medium sized organisation has its own set of problems.

• Large companies may have the resources to dedicate individuals to specialised tasks, but smaller companies often cannot so people may have to different jobs as the need arises.

• Such an informal structure can allow the company to respond quickly as opportunities or problems present themselves. But decision making can also become confused as individuals roles overlap.

• Small companies may have exactly the same operations management issues as large ones but they can be more difficult to separate from the mass of other issues in the organisation.

Operations Management in Not for Profit Organisations

• The strategic objectives for not for profit organisations may involve a mixture of political, economic, social and environmental objectives.

• Due to this there may be a greater chance of operations decisions being made under conditions of conflicting objectives.

The New Operations Agenda

• Parts of this agenda are trends which have always existed but have accelerated, such as globalisation and increased cost pressures. Part of the agenda involves seeking ways to exploit new technologies, most notably the internet.

• When businesses have to cope with a more challenging environment they look to their operations function to help them respond.

THE INPUT – TRANSFORMATION – OUTPUT PROCESS

• All operations produce products by changing inputs into outputs using an input – transformation – output process.

Inputs to the Process

• One set of inputs to any operations processes are transformed resources. These are the resources that are treated, transformed or converted in the process:

  • Materials – operations which process materials could do so to transform their physical properties. Other operations process materials to change their location. Some operations process materials to change the possession of the materials. Finally some operations store materials.

  • Information – operations which process information could do so to transform their informational properties. Some change the possession of the information, some store the information, and finally some change the location of the information.

  • Customers – Operations which process customers might change their physical properties, others transform the location. Some are concerned with transforming psychological state, and others physiological state.

• Often one of these is dominant in an operation.

• The other set of inputs to any operation process are transforming resources. These are the resources which act upon the transformed resources:

  • Facilities – the buildings, equipment, plant and process technology of the operation.

  • Staff – the people who operate, maintain, plan and manage the operation.

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