Operations Management

What is “Operations Management”?

Operations management is the administration of business
practices to create the highest level of efficiency possible
within an organization. It is concerned with converting
materials and labor into goods and services as efficiently as
possible to maximize the profit of an organization. Operations
management teams attempt to balance costs with revenue to
achieve the highest net operating profit possible.
Factors Influencing Operations
Management
• Resources / Raw Materials / Inputs

• Tools

• Techniques

• Expertise / Competitive Advantage

INPUTS OUTPUT

WATER

SUGAR
Process /
Operation
TEA

MILK
Defined Constraints;

1- Ratio of raw materials/inputs

2-Temperature
“OPERATIONS” is one of the
three basic functions that
every organization performs.
Organizing to Produce Goods & Services

Organization

Operations Finance / Accounts Marketing & Sales

Logistics Audit After Sales Services

Operations of an Airline
Operations
• Ground Support Equipment
• Maintenance
• Ground Facilities
• Catering
• Flight Operations
• Crew Scheduling
• Flying
• Communications
• Dispacthing
Finance/
Accounts Marketing
• Traffic administration
• Accounts Payable • Reservations
• Accounts Receivable • Schedules
• General ledger
• Tariffs
• Cash Control
• Sales
• International exchange
• Advertising
Supply Chain Management
Supply chain management (SCM) is the broad
range of activities required to plan, control and
execute a product's flow, from acquiring raw
materials and production through distribution to
the final customer, in the most streamlined and
cost-effective way possible.
Backward integration
Backward integration refers to the process in which a
company purchases or internally produces segments of
its supply chain. In other words, it is the acquisition of
controlled subsidiaries aimed at the creation or
production of certain inputs that could be utilized in
the production.
Forward Integration
Forward integration is a strategy in which
companies expand their activities to control the
direct distribution of their products. This might be
required, if companies would potentially benefit
from handling e.g. the shipping of own products
directly to customers, or the retail selling of own
brands in brand stores.