3.
Motivational prowess in the form of strong leadership
Opera ons Management
Operations management is a field of management that focuses
on the design, execution, and control of business operations and
processes to ensure e icient utilization of resources in order to
achieve the goals and objectives of an organization.
Operations management (OM) is the administration of business
practices to create the highest level of e iciency possible within
an organization. It is concerned with converting materials and
labor into goods and services as e iciently as possible to
maximize the profit of an organization.
Operations management is concerned with converting
materials and labor into goods and services as e iciently as
possible.
Why is operations management important?
- Operations are the foundation of how a business works
(in terms of supply chain and logistics) and profits rely
on lean, e icient operations. Poor business operations
can threaten a business’s survival, so processes must
be optimized, the right sta need to be employed, and
physical locations must be strategic, ethical, and safe.
Responsibili es of opera ons managers
Operations management teams attempt to balance costs with
revenue to achieve the highest net operating profit possible.
Operations managers are involved in coordinating and
developing new processes while reevaluating current structures.
Organization and productivity are two key drivers of being an
operations manager, and the work often requires versatility and
innovation.
Duties vary according to the nature of the company and the
specific role, but in general, someone working in business
operations is responsible for:
1. Evaluating, designing, and implementing business
processes
2. Managing logistical processes and supply chain
3. Overseeing production, distribution, and quality
assurance
4. Managing and analyzing financial budgets
5. Making strategic decisions and engaging with other
senior sta members on business strategy
6. Supervising employees
7. Supporting HR with recruitment initiatives
8. Building relationships with stakeholders and suppliers
Must-Have Skills of Opera ons
Manager
1. Technical expertise in areas such as production
automation, data entry, budget tracking, and design.
2. Organizational ability and attention to detail to include
keeping track of project files, employee reports,
budgets, schedules, and other details related to
company processes.
skills that provide the expertise to motivate others,
inspire ideas, and foster a supportive and diverse team.
4. Analytical aptitude, including skill in risk analysis and
mitigation when initiating new projects. Operations
managers also must analyze processes to identify
challenges and o er solutions in the event that negative
situations develop.
5. Decision-making proficiency, especially under stress
when there is very little time to assess all factors.
6. Ability to maintain quality standards, including as they
relate to raw materials, machinery, manufacturing
procedures, packaging, delivery processes, and the
finished product.
Why is operations management important in all types of
organization?
1. Operations management uses the organization’s
resources to create outputs that fulfil defined market
requirements. This is the fundamental activity of any
type of enterprise.
2. Operations management is increasingly important
because today’s business environment requires new
thinking from operations managers.
What is the input–transformation–output process?
- All operations can be modelled as input–
transformation–output processes. They all have inputs
of transforming resources, which are usually divided
into ‘facilities’ and ‘sta ’, and transformed resources,
which are some mixture of materials, information and
customers.
- Most operations create and deliver a combination of
services and products, rather than being a ‘pure’
service or ‘product’ operation.
What is the process hierarchy?
- All operations are part of a larger supply network which,
through the individual contribu tions of each operation,
satisfi es end customer requirements.
- All operations are made up of processes that form a
network of internal customer–supplier relationships
within the operation.
- End-to-end business processes that satisfy customer
needs often cut across functionally based processes.
Key aspects of operations management include:
It involves overseeing the production of goods and services,
managing supply chains, and optimizing various processes
within an organization to enhance productivity, quality, and
customer satisfaction while minimizing costs.
1. Process Design and Improvement: This involves
designing and improving the processes that convert
inputs (such as raw materials, labor, and capital) into
outputs (goods or services). The goal is to streamline
processes to eliminate ine iciencies and reduce waste.
 2. Capacity Planning: Operations managers must
determine the optimal level of production capacity to
meet customer demand while avoiding overproduction
or underutilization of resources.
3. Supply Chain Management: This involves managing
the flow of goods and services from suppliers to
customers, ensuring that materials are sourced,
produced, and distributed e ectively to meet demand
while minimizing inventory costs.
o This process is known as operations and
supply chain management (OSCM). To be an
e ective operations management
professional, one must be able to understand
the processes that are essential to what a
company does and get them to flow and work
together seamlessly. The coordination
involved in setting up business processes in
an e icient way requires a solid
understanding of logistics.
4. Inventory Management: Balancing inventory levels to
ensure that there's enough stock to meet customer
demands without holding excessive inventory that ties
up capital.
5. Quality Control: Monitoring and ensuring the quality of
products or services through processes such as quality
inspections, quality assurance, and continuous
improvement initiatives.
6. Scheduling and Timeliness: Managing the timing and
scheduling of production processes, deliveries, and
services to ensure timely fulfillment of customer
orders.
7. Forecasting and Demand Planning: Predicting future
demand for products or services to allocate resources
e ectively and plan for production and inventory levels.
8. Lean and Six Sigma Practices: Implementing
methodologies like Lean and Six Sigma to identify and
eliminate waste, defects, and variability in processes.
9. Risk Management: Identifying potential risks and
disruptions that could impact operations and
developing strategies to mitigate them.
10. Technology and Automation: Incorporating technology
and automation to enhance e iciency, accuracy, and
speed in various operational processes.
11. Supplier Relationship Management: Building and
maintaining strong relationships with suppliers to
ensure a reliable supply of materials and components.
12. Employee and Resource Management: Managing
human resources, equipment, and facilities to optimize
their utilization and productivity.
Operations management plays a critical role in achieving an
organization's strategic goals by aligning its operational
processes with its overall business strategy. E ective operations
management can lead to improved customer satisfaction,
increased competitiveness, reduced costs, and enhanced
profitability.
Some opera ons described in terms of
their processes
Opera ons Performance
Key Questions :
1. Why is operations performance vital in any
organization?
2. Why is quality important?
3. Why is speed important?
4. Why is dependability important?
5. Why is flexibility important?
6. Why is cost important?
7. How do operations performance objectives trade o
against each other?
Sa sfying Customers and Contribute to
Compe veness
- Operations performance objectives can be grouped
together as
o quality,
o speed,
o dependability,
o flexibility and
o cost.
● You would want to do things right; that is, you would not want
to make mistakes, and would want to satisfy your customers by
providing error-free goods and services which are ‘fit for their
purpose’. This is giving a quality advantage.
● You would want to do things fast, minimizing the time between
a customer asking for goods or services and the customer
receiving them in full, thus increasing the availability of your
goods and services and giving a speed advantage.
● You would want to do things on time, so as to keep the delivery
promises you have made. If the operation can do this, it is giving
a dependability advantage.
● You would want to be able to change what you do; that is, being
able to vary or adapt the operation’s activities to cope with
unexpected circumstances or to give customers individual
treatment. Being able to change far enough and fast enough to
meet customer requirements gives a flexibility advantage.
● You would want to do things cheaply; that is, produce goods
and services at a cost which enables them to be priced
appropriately for the market while still allowing for a return to the
organization; or, in a not-for-profit organization, give good value
to the taxpayers or whoever is funding the operation. When the
organization is managing to do this, it is giving a cost advantage.
Why is operations performance vital in any organization?
Operations management can either ‘make or break’ any
business. In most businesses it rep resents the bulk of its assets.
● The triple bottom line (TBL, or 3BL), includes the social bottom
line, the environmental bot tom line and the economic bottom
line.
● The social bottom line incorporates the idea that businesses
should accept that they bear some responsibility for the impact
they have on society and balance the external ‘societal’
consequences of their actions with the more direct internal
consequences, such as profit.
● The environmental bottom line incorporates the idea that
operations should accept that they bear some responsibility for
the impact they have on the natural environment.
● The economic bottom line incorporates the conventional
financial measures of performance derived from using the
operation’s resources e ectively.
● In particular, operations can a ect economic performance in
five ways:
● It can reduce the costs.
● It can achieve customer satisfaction through service.
● It can reduce the risk of operational failure.
● It can reduce the amount of investment that is necessary.
● It can provide the basis for future innovation.
Why is Quality Important?
- Because it is clearly a major influence on customer
satisfaction or dissatisfaction.
- A customer perception of high-quality products and
services means customer satisfaction and therefore
the likelihood that the customer will return.
Quality means different things in
different opera ons
Quality inside the opera on
- Quality reduces costs The fewer mistakes made by
each process in the operation, the less time will be
needed to correct the mistakes and the less confusion
and irritation will be spread. For example, if a
supermarket’s regional warehouse sends the wrong
goods to the supermarket, it will mean sta time – and
therefore cost – being used to sort out the problem.
- Quality increases dependability Increased costs are not
the only consequence of poor qual ity. At the
supermarket it could also mean that goods run out on
the supermarket shelves with a resulting loss of
revenue to the operation and irritation to the external
customers. Sorting the problem out could also distract
the supermarket management from giving attention to
the other parts of the supermarket operation. This in
turn could result in further mistakes being made. So,
quality (like the other performance objectives, as we
shall see) has both an external impact which influences
customer satisfaction, and an internal impact which
leads to stable and e icient processes.
Why is quality important?
● By ‘doing things right’, operations seek to influence the quality
of the company’s goods and services.
● Externally, quality is an important aspect of customer
satisfaction or dissatisfaction.
● Internally, quality operations both reduce costs and increase
dependability.
Why is Speed Important?
Speed means the elapsed time between customers requesting
products or services and them receiving them.
- The main benefit to the operation’s (external)
customers of speedy delivery of goods and services is
that the faster they can have the product or service, the
more likely they are to buy it, or the more they will pay
for it, or the greater the benefit they receive.
Speed means different things in
different opera ons
Speed inside the operation
- Inside the operation, speed is also important. Fast response to
external customers is greatly helped by speedy decision making
and speedy movement of materials and information inside the
operation. And there are other benefits.
- Speed can give the potential for faster delivery of services and
products and save costs.
Why is speed important?
● By ‘doing things fast’, operations seek to influence the speed
with which goods and services are delivered.
● Externally, speed is an important aspect of customer service.
● Internally, speed both reduces inventories by decreasing
internal throughput time and reduces risks by delaying the
commitment of resources
WHY IS DEPENDABILITY IMPORTANT?
- Dependability means doing things in time for customers to
receive their goods or services exactly when they are needed, or
at least when they were promised.
Customers might only judge the dependability of an operation
after the product or service has been delivered. Initially this may
not a ect the likelihood that customers will select the service –
they have already ‘consumed’ it.
Over time, however, dependability can override all other criteria.
No matter how cheap or fast a bus service is, if the service is
always late (or unpredictably early) or the buses are always full,
then potential passengers will be better o calling a taxi.
Dependability means different things in
different opera ons
Dependability can give the potential for more reliable delivery of
services and products and save costs.
WHY IS FLEXIBILITY IMPORTANT?
Flexibility means being able to change the operation in some
way.
This may mean changing what the operation does, how it is doing
it, or when it is doing it. Specifically, customers will need the
operation to change so that it can provide four types of
requirement:
● product/service flexibility – the operation’s ability to introduce
new or modified prod ucts and services;
● mix flexibility – the operation’s ability to produce a wide range
or mix of products and services;
● volume flexibility – the operation’s ability to change its level of
output or activity to pro duce di erent quantities or volumes of
products and services over time;
● delivery flexibility – the operation’s ability to change the timing
of the delivery of its ser vices or products.
Why is dependability important?
● By ‘doing things on time’, operations seek to influence the
dependability of the delivery of goods and services.
● Externally, dependability is an important aspect of customer
service.
● Internally, dependability within operations increases
operational reliability, thus saving the time and money that would
otherwise be taken up in solving reliability problems and also
giving stability to the operation.
Flexibility means different things in
different opera ons
Flexibility inside the operation
Flexibility speeds up response Fast service often depends on the
operation being flexible.
For example, if the hospital has to cope with a sudden influx of
patients from a road accident, it clearly needs to deal with
injuries quickly. Under such circumstances a flexible hospital
which can speedily transfer extra skilled sta and equipment to
the Accident and Emergency department will provide the fast
service which the patients need.
Flexibility saves time
- In many parts of the hospital, sta have to treat a wide
variety of complaints. Fractures, cuts or drug overdoses
do not come in batches. Each patient is an individual
with individual needs. The hospital sta cannot take time to ‘get
into the routine’ of treating a particular complaint; they must
have the flexibility to adapt quickly. They must also have
su iciently flexible facilities and equipment so that time is not
wasted waiting for equipment to be brought to the patient. The
time of the hospital’s resources is being saved because they are
flexible in ‘changing over’ from one task to the next.
Flexibility maintains dependability Internal flexibility can also
help to keep the operation on schedule when unexpected events
disrupt
the operation’s plans. For example, if the sudden influx of
patients to
the hospital requires emergency surgical procedures, routine
operations will be disrupted. This is likely to cause distress and
considerable.
Flexibility can give the potential to create new services and
products, in a wider variety and with di ering volumes and with
di ering delivery dates, as well as save costs.
Why is flexibility important? Why is cost important?
● By ‘changing what they do’, operations seek to influence the ● By ‘doing things cheaply’, operations seek to influence the cost
flexibility with which the company produces goods and services. of the company’s goods and services.
● Externally, flexibility can: ● Externally, low costs allow organizations to reduce their price
● produce new products and services (product/service in order to gain higher volumes or, alternatively, increase their
flexibility); profitability on existing volume levels.
● produce a wide range or mix of products and services ● Internally, cost performance is helped by good performance in
(mix flexibility); the other performance objectives
● produce di erent quantities or volumes of products
and services (volume flexibility);
● produce products and services at di erent times
(delivery flexibility).
● Internally, flexibility can help speed up response
times, save time wasted in changeovers, and maintain
dependability.

WHY IS COST IMPORTANT?

- For companies that focus on o ering lower prices to
customers, their main goal in operations is to reduce
costs.
- By producing goods and services at a lower cost, they
can o er lower prices to customers. Even companies
that don't compete on price still want to keep their
costs low. Cutting costs means adding more profit for
every dollar or euro earned. It's no surprise that aiming
for low costs is something all companies find attractive.

Keeping operations costs down

All operations have an interest in keeping their costs as low as is
compatible with the levels of quality, speed, dependability, and
flexibility that their customers require. The measure that is most
frequently used to indicate how successful an operation is at
doing this is productivity. Productivity is the ratio of what is
produced by an operation to what is required to produce it.

Productivity is the ratio of what is produced by an operation to

what is required to produce it.

Productivity = Output from the operation / Input to the operation

Improving productivity
One obvious way of improving an operation’s productivity is to
reduce the cost of its inputs while maintaining the level of its
outputs. This means reducing the costs of some or all of its
transformed and transforming resource inputs. For example, a
bank may choose to relocate its call centres to places where its
facility-related costs (for example rent) are cheaper.

A software developer may relocate its entire operation to India or

China where skilled labour is available at rates significantly less
than in European countries. A computer manufacturer may
change the design of its products to allow the use of cheaper
materials.

Productivity can also be improved by making better use of the

inputs to the operation.

For example, garment manufacturers attempt to cut

out the various pieces of material that make up the garment by
positioning each part on the strip of cloth so that material
wastage is minimized. All operations are increasingly concerned
with cutting out waste, whether it is waste of materials, waste of
sta time, or waste through the under-utilization of facilities.