Operations management can be defined as the management of the supply chain

logistics of an organisation to the contemporary measures of performance of cost,

time and quality.
Research the literature on operations management and supply chain management
and critically analyse the role of operations management, identifying the key issues,
tools and techniques employed. Take into account the differences between service
and manufacturing environments and the implications for operations management.
Consider the areas of inventory production and distribution planning and control.
Reflect on the value added impact of operations management for the
client/customer/end user of the organisation.
ro!ect" Operations #anagement$ Theory and ractice
%ntroduction
Operations management focuses on the delicate management of internal business
processes to produce and distribute products and services. Many companies, especially
those smaller in size typically dont mention "operations management", but they still
carry out activities classified as operations management. Some of these activities
hich are covered by operations management include product creation, development,
production and distribution! although, operations management is in regard to all
operations ithin a firm. Other operation management activities include managing
purchases, inventory control, "uality control, logistics and evaluations. Service sector
firms operation management activities ill of course differ, slightly or greatly, from
those of companies operating in a more traditional production based manner! yet
operations management is still very much necessary in all types of companies. # great
deal of the focus of operations management is on the efficiency and effectiveness of the
companys processes. $herefore, operations management often includes substantial
measurement and analysis of internal processes. %ltimately, the nature of ho operations
management is carried out in an organization depends very much on the nature of
products or services in the organization, for e&ample, retail, manufacturing, holesale,
etc.
Operations #anagement &Ops #gt'
#s ith all forms of management, Ops Mgt needs to be tailored to meet the specific
needs and re"uirements of a company, its customers and its overall strategy. Optimization
of resources isnt achieved by using a generic approach that can be universally applied to
all competing companies ithin an industry. 'ather, it is gained through the utilization of
thoroughly developed methods and processes, hich are created and implemented by
operations manager(s), and shared ith all members of the organisation. Many factors
need considering hen planning, implementing and continually developing operational
processes! including size and location of company, factories, offices, etc., the type of and
amount of technology to employed ithin the operations, and finally all of the logistics
involved in getting the product or service to the end client* customer* user, i.e. ac"uiring,
manufacturing, distributing etc. $his final point is hat is called the Supply +hain ithin
the firm.
Supply Chain Management
Supply +hain Management (S+M) is defined as the management of materials as ell
information flos both in and beteen lin,s in the chain! hich include vendors,
manufacturing plants, and distribution centers. $he ,ey issue for successful S+M is the
effective full-scale coordination beteen these different partners. Such relationships are
dependant on the data sharing through effective communication netor,s. .ssues such as
purchasing prices and the levels to be purchased, as ell as, storage of ra materials,
inventory, and other product components are to be overseen by the operations or supply
chain manager(s). /rom an operations viepoint, all of these various processes must be
revieed fre"uently and improved constantly in order to ensure 0smooth, efficient
operations ithin the company.
1ere are the important issues that have to be addressed in S+M2
$he configuration of the distribution netor,2 this includes the amount of and
locations of suppliers, production facilities, arehouses, centres of distribution,
and finally the customers.
$he strategy used for distribution2 this includes issues such as 0pull or 0push
strategies, centralized versus decentralized, direct shipment, cross doc,ing, third
party logistics, etc.
$he management of inventory2 the optimal amount of ra materials, or,-in-
process, and finished goods need to be managed and the best location of storage
determined.
$he management of the information flo2 systems and processes throughout the
supply chain need to be alligned and intergrated to ensure the efficient transfer of
valauble inventory, transportation, demand indicator, and forecast information.
Management of the supply chain invloves the three levels of activities ithin a firm.
$hese are the strategic level, the tactical level and the operational level. 3ood
management of the supply chain means smooth traffic of goods, starting as supplier
inputs, right through all aspects ithin the firm, up until they leave the firm as outputs
and are received by the consumer. Management of the supply chain is meant to avoid
disruptions in this flo or bottle nec, type buildups in the supply chain. $he smoother the
movement the more efficient the supply chain.
(ifferences in Ops #gt for )ervice )ector *nvironments
Operations management theory traditionally as developed for manufacturing*production
sector companies. $he theories tended to cover issues such as economic batch "uantities,
line balancing and stoc, controls, hich ere very relevant to these companies. .n the
mid 4567s hen it became clear that there as an ever increasing move toards service
sector companies, it as realized that these topics held little relation to the ,ey issues
faced by managers running service sector operations. $hese tools and techni"ues did have
some value but the real issues facing service sector firms ere issues such as customer
service, service "uality and service design. %nfortunately there ere no tools or
techni"ues available at that time to help.
Much has been done since then and it has become clear that the production and service
sector operations management must focus on different critical issues. 8hereas production
sector companies may never ma,e face-to-face contact ith their end customers, service
sector companies do ma,e have this contact ith their customers, usually on a more
intimate, and regular basis. $his means the customer interaction and satisfaction needs to
be analysed rather differently in the to differing sectors. 9uality is a very important
issue in service sector firms, including the "uality of the service processes, such as
customer ait times, efficiency of "ueues, courtesy of staff, etc. $here seems to be a bit
more difficulty analyzing the performance of intangible services as opposed to tangible
products. :et, this is precisely hat operations management must do to improve the
service being offered to end customers.
+ey ,reas of %mportance in Ops #gt
$here are ,ey or issues that are important ithin operations management! here are the
most relevant2
Purchasing Practices: $he methods of a companys procurement or purchasing
practices are of obvious importance. $hese practices can include buying various
physical materials from suppliers and vendors such as stoc,s or ra materials, or
computer systems and softare, as ell as services such as, services from
layers, insurance companies, netor, or system assistance, e&ternal consultants,
etc.
Quality Management: $o have effective operations management there is the need
for ;ust as effective "uality management. 9uality management ensures that
products and services continually meet the standard of "uality set forth by the
company originally. /urther ideas of "uality management, specifically $otal
9uality Management ($9M) and +ontinuous .mprovement 9uality Management
strive even further in the pursuit to improve all aspects of a firms operations,
products and services.
Product and Service Management: $his involves the activities in product
creation, development, production and distribution and sales. Specific
management units can be in charge of managing certain lines of products, a sort
of micro environment, but operations management is involved in the bigger
picture, the macro environment of managing all the products and services as a
hole.
Inventory Management: <ractical, cost effective and timely inventory
management improves operations and saves money. .t can be a very comple&
state of affairs, i.e. too much overstoc, or not enough stoc,. $he concept of 0=ust
in time (=.$) manufacturing as introduced by >eming and first implemented
e&tensively in =apan in the 45?7s ($oyota is one of its practitioners). .t calls for
stoc, coming in ;ust hen its needed so that it doesnt have to sit on a shelf. $his
allos the money necessary to buy this stoc, to be available to the firm and its
other potential investments up until the last possible moment! this has can have
significant impact on a firms bottom line. @ven if this isnt the method of
inventory chosen by a firm, it is still necessary to have good control over ones
inventory in order to stay competitive, as most companies are favoring leaner
companies as opposed to alays running to capacity. $his is a very crucial issue
for operations management.
Logistics and Transport Management: $his entails the flo of goods and
services from suppliers to the firm, throughout the firm and finally to the end
customer. $his is also falls under supply chain management as mentioned above.
Facilities Management: @ffective operations management depends a great deal
on effective management of a companys facilities, such as buildings, computer
systems, etc.
Sales and Marketing: Mar,et research and feedbac, from customers are critical
factors used by companies to create successful mar,eting programs. $hey are also
crucial in the development of ne products. Ay adopting a close or,ing
relationship ith mar,eting, operations management can help the company better
fulfill their customers needs.
Finance: Audget information is vital to all departments ithin a company.
Operations management might have the role of providing costs for each phase of
the operation in order for the accurate preparation of proper budgets and forecast
accurate profit*loss information.
Human esources: .dentification of the optimum number of employees for each
department, as ell as the overall organization of staff and reporting structures is
part of operations management.
!istri"ution Channels: +ompanies typically have a ide variety of methods
available to distribute their products and services. Most companies distribution
channels are made up of a mi&ture of methods.
4. >irect distribution methods include providing products and services
directly to the end customer. >irect methods are, for e&ample, direct mail,
retail, catalogs, or even over the .nternet.
B. .ndirect methods of distribution involve having a middleman. .ndirect
methods include, for e&ample, using holesalers and distributors, or
retailers (Cmart is a prime e&ample of this - a large chain of retail stores,
hich is a poerful middleman). $hese middlemen are the ones that get
the products or services to the end customer.
Con#iguration Management: $his involves the trac,ing and management of the
various different types or versions of a product or service being offered by the
company. .n most companies variations tend to be numerous and continually
increasing, prompting fre"uent attention.
-alue ,dded through Operations #anagement
Operations management can improve and re-engineer the processes in business with the
intent of adding value. This is done by analyzing the processes of all areas of the business.
This process flow analysis can help identify a company's current business situation, as well
as the status of departments within that business. Through the use of this process analyses
companies can add value by:
.dentifying improvements in product production processes that can be converted
into cost savings, and therefore alloing the company to pass-on these savings to
their end customers! strengthening their competitive position.
Streamlining of a companys infrastructure! ma,ing it more efficient.
Streamlining of a companys inventory and supply chain issues! ma,ing it as lean
and effective as possible.
.dentify and implement improvements in the companys administrative,
accounting, purchasing, and other departments to modify or eliminate those that
donDt add value to the company.
$here are to beneficiaries of good operations management2 shareholders of the firm and
the customers of the firm. Aoth parties en;oy the benefits of value being added through
cost saving and effective and efficient processes. $he former en;oys higher dividends and
share prices and the latter gains through loer prices and better products*services.
+ontinuous operations management of products and services ithin a firm, if successful,
should ,eep end customer*clients*users satisfied through the timely delivery of an ever
improving, cost effective product or service, hich is desirable to said
customer*client*user.
Conclusion
Operations Management is concerned ith the analysis of firms internal processes in
order to improve performance. Successful Ops Mgt involves all aspects of a company,
and includes all departments in the flo of communication. <rocesses are developed, re-
engineered or changed all together ith the intent of being cost considerate, efficient and
effective. $he firms supply chain is of particular focus in operations management, as this
covers the entire cycle of a product ithin a company, from ac"uisition of ra materials
from a supplier to the delivery of finished product or service to the end customer. $he
role of operations management is a very pivotal one ithin a company because it is
responsible for creating an overall sound, performing company, hich lin,s all of the
departments, hile utilizing their resources holly.
Reflections
%pon reflecting on this paper . as struc, ith the comple&ity of this operational
management role. .t seems to be a role hich demands a clear, precise macro-
environment vie of the organisation, yet enough of a specific micro environment vie
of the departments to understand the day to day operations in depth. .t is a very active
role ithin the company, constantly analyzing processes in search of improvement and
efficiency! very much reminiscent of $otal 9uality Management. .t is li,e the bridge
beteen e&ecutive management that form strategies for the company and the differing
department staff that try to fulfill these strategic visions. Ops Mgt is the never ceasing
entity hose function it is to ma,e sure that these to groups live harmoniously and have
the tools and processes in place to achieve success in implementing their strategy. .
believe it may be the most difficult function ithin an organisation.
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