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RANJANA KEJARIWAL SEM III SEC C
One may generally consider that there are three distinct areas inherent in any business: marketing, finance, and operations; all other business disciplines fit somewhere under one or more of these areas. For example, finance could include investing, real estate, insurance or banking. While management is considered an academic discipline unto itself it is actually a part of all three areas: financial management, marketing management, and operations management. Operations management is the area concerned with the efficiency and effectiveness of the operation in support and development of the firm's strategic goals. Other areas of concern to operations management include the design and operations of systems to provide goods and services. To put it succinctly, operations management is the planning, scheduling, and control of the activities that transform inputs (raw materials and labour) into outputs (finished goods and services). A set of recognized and welldeveloped concepts, tools, and techniques belong within the framework considered operations management. While the term operations management conjures up views of manufacturing environments, many of these concepts have been applied in service settings, with some of them actually developed specifically for service organizations. Operations management is also an academic field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service firm and their operations. The field is a synthesis of concepts derived from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions. The field of operations management has been gaining increased recognition over the last two decades. One major reason for this is public awareness of the success of Japanese manufacturers and the perception that the quality of many Japanese products is superior to that of American manufacturers. As a result, many businesses have come to realize that the operations function is just as important to their firm as finance and marketing. In concert with this, firms now realize that in order to effectively compete in a global
market they must have an operations strategy to support the mission of the firm and its overall corporate strategy. Another reason for greater awareness of operations management is the increased application of operations management concepts and techniques to service operations. Finally, operations management concepts are being applied to other functional areas such as marketing and human resources. The term marketing/operations interface is often used.
HISTORY OF OPERATIONS MANAGEMENT
Until the end of the 18th century, agriculture was the predominant industry in every country. The advent of the steam engine and Eli Whitney's concept of standardized parts paved the way for the Industrial Revolution with its large manufacturing facilities powered by steam or water. A number of countries (the United States included) evolved from an agricultural economy to an industrial economy. But for a time, manufacturing was more of an art than a science. This changed with the introduction of Frederick W. Taylor's systematic approach to scientific management at the beginning of the twentieth century. The introduction of Taylor's method of scientific management and Henry Ford's moving assembly line brought the world into an age where management was predominantly cantered around the production of goods. In the late 1950s and early 1960s scholars moved from writing about industrial engineering and operations research into writing about production management. Production management had itself become a professional field as well as an academic discipline. As the U.S. economy evolved into a service economy and operations techniques began to be incorporated into services the term production/operations management came into use. Today, services are such a pervasive part of our life that the term operations management is used almost exclusively.
WHAT DO OPERATIONS MANAGERS DO?
At the strategic level (long term), operations managers are responsible for or associated with making decisions about product development (what shall we make?), process and layout decisions (how shall we make it?), site location (where will we make it?), and capacity (how much do we need?). At the tactical level (intermediate term), operations management addresses the issues relevant to efficiently scheduling material and labour within the constraints of the firm's strategy and making aggregate planning decisions. Operations managers have a hand in deciding employee levels (how many workers do we need and when do we need them?), inventory levels (when should we have materials delivered and should we use a chase strategy or a level strategy?), and capacity (how many shifts do we need? Do we need to work overtime or subcontract some work?). At the operational level, operations management is concerned with lower-level (daily/weekly/monthly) planning and control. Operations managers and their subordinates must make decisions regarding scheduling (what should we process and when should we process it?), sequencing (in what order should we process the orders?), loading (what order to we put on what machine?), and work assignments (to whom do we assign individual machines or processes?). Today's operations manager must have knowledge of advanced operations technology and technical knowledge relevant to his/her industry, as well as interpersonal skills and knowledge of other functional areas within the firm. Operations managers must also have the ability to communicate effectively, to motivate other people, manage projects, and work on multidisciplinary teams. Sunil Chopra, William Lovejoy, and Candace Yano describe the scope of operations management as encompassing these multi-disciplinary areas:
Supply Chains—management of all aspects of providing goods to a Operations Management/Marketing Interface—determining what
consumer from extraction of raw materials to end-of-life disposal.
customers' value prior to product development.
Operations Management/Finance Interface—Capital equipment and Service Operations—coping with inherent service characteristics such as Operations Strategy—Consistent and aligned with firm's other functional Process Design and Improvements—managing the innovation process.
inventories comprise a sizable portion of many firms' assets.
simultaneous delivery/consumption, performance measurements, etc.
Mark Davis, Nicolas Aquila no and Richard Chase (1999) has suggested that the major issues for operations management today are:
Reducing the development and manufacturing time for new goods and Achieving and sustaining high quality while controlling cost Integrating new technologies and control systems into existing processes Obtaining, training, and keeping qualified workers and managers Working effectively with other functions of the business to accomplish Integrating production and service activities at multiple sites in Working effectively with suppliers at being user-friendly for customers Working effectively with new partners formed by strategic alliances
the goals of the firm
As one can see, all these are critical issues to any firm. No longer is operations management considered subservient to marketing and finance; rather, it is a legitimate functional area within most organizations. Also, operations management can no longer focus on isolated tasks and processes but must be one of the architects of the firm's overall business model.
ACTIVITY 2 1. These
are a few metrics by which a customer would decide on the quality
of a supermarket: Are the prices considered low compared to the competition? Are the staffs friendly and knowledgeable about the store layout and product? Can you get good customer service? Does the supermarket stock the products that customers want? Are there good "specials" on? Is the supermarket hygienic and well presented? Is the supermarket marketing as a quality brand? Is the floor stock in good condition and before its use by date? Does the store have a good refunds policy?
It is a well-known fact that no business can exist without customers.
Hats why customers satisfaction is always preferred in business. Customer Satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. There are many ways of meeting customer satisfaction Sometimes they are hard to achieve. If we think about the customers who purchase products from superstores, than we will see that most of the time they seek high quality products from superstores, than we will see that most of the time they seek high quality products, low price, best offerings, well behave from the sells man, fast service, information about the products and services. From this we can assume that customer always seek the best from the supermarket. As they are the people who are paying they have the right to demand such things. To operate the supermarket in a fine way it is required that the organization meet the customer satisfaction. To achieve these things it is required to follow some strategy or steps like always be friendly and approachable to
customers to understand their problems and demands. There should be clearly defined customer service policy and clearly defined customer service policy and clearly focusing on the offerings of products and services.
Forecasting means assuming what is going to happen in future in the
focused segment. It’s a very important thing for a successful operation of a supermarket. By forecasting we can understand what might be needed in product line or how much space we need or how our operation will be continued. Forecasting is also used to assume the consumer behaviour in near future so that it will be easy for the operational manager to make the changes. These changes are sometimes so necessary. So if the forecasting is perfect it will be easy to take these steps which will help me to compete with other competitors. Forecasting also includes the assumption of sales, production, competitors, manufacturing capability. It should be forecasted that how many customer can be served how many working boy/girl is needed, how the product will be launched, about the competitors. By knowing these operation of a supermarket could be easily done. As a result forecasting is a very important factor to the successful operation of a supermarket.
Capacity Planning is the process of determining the production capacity
needed by an organization to meet changing demands for its products. For a supermarket it is required that how much space they need to operate the business smoothly. So that means how much space is required and how many workers are needed here to serve the expected customer in an hourly basis. A discrepancy between the capacity of an organization and the demands of its customers results in inefficiency, either in under-utilized resources or unfulfilled customers. The goal of capacity planning is to minimize this discrepancy. Demand for an organizations capacity varies based on changes in production output, such as increasing or decreasing the production quantity of an existing product, or producing new products. If we think about the supermarket then we can clearly see that sometimes there are lacking of products and sometimes there are surprises of products. So to meet the exact demand and utilizing the resources in a planned way it is required to follow capacity planning. For a supermarket it is required to follow capacity
planning. For a supermarket it is required to make a capacity planning, to increase the capacity operational manager should bring new techniques, equipment and material, increasing the number of workers or machines.
is a very important factor for a successful operation of a
supermarket. The reason is very simple. If the supermarket located in a good place it will be easy for the customers and suppliers to visit the shop and it will be easy for them to communicate with us also. If the location is in a good place than we will be able to get our desired products from supplier in our expected time. So we will be able to provide the product and service in right time.
The reasons for keeping stock
Inventory management is primarily about specifying the size and placement of stocked goods. Inventory Management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. In a supermarket there are thousands of products. So it’s not easy to determine what products stock is finished and what products stock is not finished yet. If it is possible to develop an inventory management system than it will be easy to identify the stock of a specific product. For a supermarket there are three reasons for keeping this system and they are: 1. Time - The time lags present in the supply chain, from supplier to user
at every stage, requires that you maintain certain amounts of inventory to use in this lead time. However, in practice, inventory is to be maintained for consumption during 'variations in lead time'. Lead time itself can be addressed by ordering that many days in advance. 2. 3. Uncertainty - Inventories are maintained as buffers to meet Economies of scale - Ideal condition of "one unit at a time at a place uncertainties in demand, supply and movements of goods. where a user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory.
All these stock reasons can apply to any owner or product. Thus it is highly recommended for a supermarket to use inventory management system.
The layout of the supermarket is set out from a market perspective.
Supermarkets do substantial amounts of research into the most effective ways of setting out the each department of the supermarkets and the best positioning for particular items .they also take into consideration the psychological effect on customers shopping which they might not be aware of .what they hope to achieve by doing this is following a particular patterns of shopper and using it in their advantage to make customers spend more so they as a supermarket can maximise their profits. Supermarkets also look at the emotional confusion involved in choosing particular items. Marketers also spend extensive amounts of time on advertising product and the positioning of these advertisements to make sure they are as effect as they can be normally by targeting certain age groups. Supermarkets don’t just place items any spot extensive research goes into the planning of the layout. To make the supermarket a more inviting place supermarkets tend to place the fruit and vegetables right at the entrance of a supermarket giving the supermarket a fresh and healthy feel about it which is designed at encouraging shoppers to stay in the supermarket longer. Even though it means that fruit and vegetables are the first thing to go in the shopping trolley and might get squished the supermarkets still set it up this way to give the market feel to shopper(Browne 2010,p.5). They also tend to put specials advertisement at the beginning and end of the isle to attract customers’ attention .these advertisement are normally very colourful and contain bold writing to make the product they are trying to sell more of noticeable. This is all noticeable at local shopping centre such as Coles and Safeway’s were the majority of people go to shop. The placement of items within the shopping centre is designed to make customers to spend more. The layout in any supermarket is important if they want to maximise their profit by using simple marketing techniques.
As a supermarket it is really big to handle and many workers works and
many customers come so that it becomes hard to handle. There should be a scheduling system to manage all these things in an organized way so that
things get easy to done and that the operational manager and the other workers know what to do next as it is already in the schedule.
Production and Operations Management involves managing the transformation to create products or services. This is important as it keeps the business fresh and allows for new products and services to be created. The operations manager is responsible for ensuring that the business remains effective by creating new products and services that will meet the customers' needs. Cost, quality and delivery are all needs that the customer will be interested in. The operations manager will have some responsibility in deciding what processes should be used to produce the product. Choices they may face include technology, process flow and job design. The quality of the product or service is important and should be continuously improved. The scheduling of tasks and jobs to ensure that the needed capacity is achieved is another responsibility the operations manager will need to take on. They will also manage the inventory by deciding what to order, when to order it and how much to order. The movement of the products will also be important in this role. Product management is also important because those in question will be aware of what is needed, by whom it is needed and how to market the product. They will also know what market the items should be focused on. Workers need a plan to make them aware what is needed, and when it is needed, and this is another role of the production management team. Although a product manager must oversee the entire lifecycle of a particular product, they must also recognise that their main focus should be on driving forward new product development. Different systems are needed for efficiency such as lean production, Just in Time, Kaizen, and TQM which also increases quality of production. You will need to align your strategies with your supply chains, e.g. McDonalds now trying to become healthier and using 100% meat produce, they ensure
their suppliers now source and supply goods which relate to their new high standards, if not, their image does not follow their new positioning. Management of the supply chain is again crucial to ensuring ease of access and delivery to customers and the company itself. E.g. a Just in Time strategy requires local and quick response to delivery needs, in general offering free delivery means that small items are easy to deliver quickly and cheaply, yet larger items require special care and higher costs and special staff to handle its delivery which the company absorbs due to your free offer.
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