Subject : OPERATIONS MANAGEMENT

Lesson No. : 1
Topic : Introduction to Operations Management

Introduction:
This course is an introduction to the field of operations management. Operations Management is an
essential element of any business, whether it provides a product or services to its customers.
The objective of this course is to explore the nature, scope, role, and importance of management of
production and operations in the business world.

Questions:

• Why learn about Operations Management?

• Why should I study Operations Management?
• Why Operations Management is so important?

Operations is of course an essential part of running any business, and it’s worth noting that obtaining
skills in this area can make you a better manager.
1. All businesses need operations management in order to function.

Operations management is the function that turns an organization’s resources (materials, labor)
into products and services. That’s why it is “the main reason for existence for any organization”.

Understanding operations is important if you work in manufacturing since this is the part of the
business where most of the money is made or lost. In the service industry, understanding
operations is important in order to differentiate or to determine what makes a company unique
from others. In the case of banks and logistics companies, the value proposition their consumers
receive is often determined by the functions provided by the operations department.

2. Operations knowledge can help you reach the top of the corporate ladder.

Businesses look for executives who have a holistic understanding of the business, including
operations.

3. Having a good understanding of operations will help you to be an effective manager.

Understanding the other parts of a business helps you become a good manager. An
understanding of operations is vital to running a business, so a working knowledge of it will help
you perform your job more effectively.

4. Operations management skills can be applied across all industries.

Operations management skills are essential, necessary, and vital to banking and financing
industry, especially when it comes to moving large sums of money and closing financial deals. In
healthcare, Operations can drastically improve performance of that simple operations
procedures can reduce mortality rates. Innovative operations have also led to big developments
throughout industries that might not seem to be as relevant to operations.

5. Operations helps contribute to sustainability initiatives

The goal of operations is to provide the most benefit to society without creating waste. An
environmentally conscious individual who works in operations can contribute to sustainability
initiatives by reducing waste in order to run an environmentally responsible company.
What is Operations Management (OM)?
Operations management is a field of business concerned with the administration of business practices to
maximize efficiency within an organization. It involves planning, organizing, and overseeing the
organization’s processes to balance revenues and costs and achieve the highest possible operating
profit. An operations manager is tasked with ensuring that the organization successfully converts inputs
such as materials, labor, and technology into outputs in an efficient manner.

The Responsibilities (Role) of Operations Management

Operations management is a field of business that involves managing the operations of a business to
ensure efficiency in the execution of projects. It means that the person responsible for the department
is expected to perform various strategic functions. Here are some of those functions:

1. Product Design

Product design involves creating a product that will be sold to the end consumer. In this process,
new ideas are generated, or existing ideas are expanded on in order to produce new products.
Operation managers ensure that products sold to consumers meet their needs, as well as align
with trends in the marketplace.

Consumers are more concerned with the quality of the product than the quantity, so
organizations must create systems to ensure the products produced meet consumer needs.

2. Forecasting

Forecasting involves making predictions of events that will occur in the future based on past
data. The operations manager is required to predict consumer demand for the company's
products.

To better predict future trends, the manager uses past and present consumption data for the
company's products. The forecasts help the company determine what amount of product is
required to meet the market demand.

3. Supply Chain Management

Supply chain management involves managing the production process from raw materials to the
finished product. It controls everything from production, shipping, distribution, to delivery of
products.

The operations manager manages the supply chain process by maintaining control of inventory
management, the production process, distribution, sales, and sourcing of suppliers to supply
required goods at reasonable prices. A properly managed supply chain process will result in an
efficient production process, low overhead costs, and timely delivery of products to consumers.

4. Delivery Management

The operations manager oversees delivery management. The manager ensures that the goods
are delivered to the consumer in a timely manner. Customers must be followed up with to make
sure that the goods they ordered have been delivered and they are functional.

If the customer is unsatisfied with the product or is complaining about certain features of the
product, the operations manager receives the feedback and forwards it to the relevant
departments.
A company that applies operation management successfully should be able to achieve these
objectives:

1. Fulfill Quality Standards

Operations management plays an important role for any business because it ensures that they
provide the best quality products or services for customers.

This means that a certain standard of quality must define operations management in order to
keep the business going.

For sustainability, one cannot disappoint customers. As such, sourcing for the best materials,
ensuring efficiency and more are the benchmarks of why operations management is important.

2. Attract More Customers

When your products or services are at their best, word about your brand will spread.

The importance of operations management also includes building up brand awareness and
letting your products or services speak to the customers as a form of customer-driven marketing
strategy.

Positive feedback towards your business is always a plus point that will contribute to your
marketing efforts. In fact, people will trust reviews by other customers much more than they
trust content coming from your organization.

The best way to generate positive reviews for your business is to make sure your supply chain
management or logistics is carried out well to ensure all available resources are put into
production or output.

Operation management helps ensure all business activities are done to meet customer needs.

3. Maximize Profit

When operations management is optimized, you’ll be able to maximize production and even
increase it to meet demand. This will inevitably lead to an increase in profits for your
organization too.

It is also the goal of operations management to cut down production costs and come up with
products and services that are cost-effective.

Products and services that are cost-effective will also be more affordable for the consumer.
Hence, a supply chain and quality management should reach its goals to produce quality
products without the need to overspend.

Advantages or Benefits of Applying Operation Management to the Business

The main importance of operations management is to increase your company’s efficiency in production,
apart from just focusing on a revenue increase.
When practiced well, operations management can have many benefits for your business:

1. Increasing Competitiveness within the Industry

When your organization has operating management in control, you have a better competitive
advantage with both internal and external factors influencing your particular industry.
 This means you can fine-tune proper operations management details so that you perform better
than your competitors providing the same products or services.

When you know what the role operations management ensures in industry standards, it will be
easier to improve them to excel in terms of product quality and added value.

You will also be able to infuse in your own unique features as an operations manager to make
your products and services stand out.

2. Managing Costs and Profitability

One of the key components in operation management is the ability to convert input like
materials, resources, and tech into the final product.

With proper operations management, you will be able to bring down the costs of the resources
you put in. The best way is to ensure that you do not compromise on the quality of these
resources whilst ensuring you don’t overspend.

3. Making Use of Technology in Production

Operations management involves using tech to make the production process smoother, faster,
and more efficient overall. As an operation manager, you will be exposed to the latest
developments that can help your organization.

Among the technologies available would include planning and tracking software, the internet of
things, artificial intelligence, big data reporting systems and much more.

Choosing the most suitable technology for your operations can bring it to another level of
productivity. Operations management helps make tech one of the key benefits of producing
goods.

4. Waste Reduction

In any discussion about the importance of operations management, we must consider that all
inputs and resources used by the production process are precious.

One thing that operation management can achieve is to allow you to identify where resources
are being wasted. This can be through inventory checks, lean manufacturing strategies, and
inventory management.

Overall, you can cut manufacturing costs and maximize the usage of resources. You’ll also be
able to find valuable ways to recycle waste or re-purpose them in a value-added manner.

5. Enhancing Employee Motivation

Employee experience is part of the importance of management. This includes being able to
motivate your employees to reach their full potential. An organization with unmotivated
personnel will face all sorts of productivity issues.

Operations management will allow you to effectively find ways to make your employees love
their jobs. This includes enhancing communication, increasing access to support, optimum
utilization of mentoring systems and providing an effective plan to reward hard work and
achievements.

Scheduling personnel is an example of operations management, whereby you have to

determine schedules that don’t overwork any employee.

This can be a daunting task for an operation manager, but if done well, it can enhance your
team’s motivation to continue working with your organization.
How Operations Management Functions with Other Departments?
Operations management is basically a department within a business organization, one of several
departments that are needed for the organization to function.
The other departments usually found in a business include finance, marketing/sales, human resource,
operations etc.
The size and number of staff working in operations depend on the size of the company itself.
As such, the operations department doesn’t function alone, and it must constantly communicate with
other departments in order for production goals to be accomplished within the organization.
The operations department is highly crucial as it is responsible for delivering quality goods and services.

Strategies in Operations Management

These days, operations management definition also includes the ability to meet customer demand with
effective operations management that covers the supply chain.
Here are some of the effective operations management strategies you can employ for the long term:
1. Managing Resources

As an operation manager, it should come in nature to have a quality management process for all
resources including human resources, raw materials, equipment, and technology. Raw materials
should always be part of your strategy for better operation management.

2. Research and Development (R&D)

Managing processes means prioritizing inventory, quantity, quality controlling, and overseeing
the efficiency of manufacturing processes. There should always be R&D efforts to increase
output efficiency, durability, reliability and explore waste reduction.

3. Departmental Collaborations

Effective operations management cannot function on its own so you will need to speak to the
operations managers from other departments in order to ensure that production planning is
done on the same page.

4. Communicating with Customers

Revenue growth depends highly on customers, and therefore their feedback should be taken
into consideration to ensure consumer satisfaction. To achieve and maintain a good reputation,
the customer needs should factor into your process design flawlessly.

5. Using Data Wisely

Data is crucial to your business because it gives you knowledge about more than just operations.
Be sure to gather data in relation to the different departments and operations to ensure the
knowledge, and your skills are not interpreted in a silo (unwillingness to share information).

6. Make Your Process Visible

Whenever you make improvements to your process as an operations manager, make sure to
promote it and let your consumers know. Customers like to know how things are made or
developed in your organizations to have higher customer satisfaction.