Operations management

Operations management is an area of the business concerned, with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient in terms of using as little resource as needed, and effective in terms of meeting customer requirements. Learn how Premiercallcentre.co.uk’s mission is to provide a professional, consistent, positive experience for all our customers who utilize our services, we are concerned with the production of your services, see how we can help.

Operations management is concerned with managing the process that converts inputs (in the forms of materials, labor and energy) into outputs (in the form of goods and services).

Operations traditionally refer to the production of goods and services separately, although the distinction between these two main types of operations is increasingly difficult to make as manufacturers tend to merge product and service offerings. More generally, Operations Management aims to increase the content of value-added activities in any given process. Fundamentally, these value-adding creative activities should be aligned with market opportunity for optimal enterprise performance.

Its focuses

Operations management focuses on carefully managing the processes to produce and distribute products and services. Usually, small businesses don't talk about "operations management", but they carry out the activities that management schools typically associate with the phrase "operations management." Major, overall activities often include product creation, development, production and distribution. (These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product -- that is, a product line. Operations management is in regard to all operations within the organization.) Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.

Understanding operations management

Consider the ingredients of your breakfast this morning. Unless you live on a farm and produced them yourself, they passed through a number of different processing steps between the farmer and your table and were handled by several different organizations. Similarly, your morning newspaper was created and delivered to you through the interactions of a number of different organizations.

Every day, you use a multitude of physical objects and a variety of services. Most of the physical objects have been manufactured and most of the services have been provided by people in organizations. Just as fish are said to be unaware of the water that surrounds them, most of us give little thought to the organizational processes that produce these goods and services for our use. The study of operations deals with how the goods and services that you buy and consume every day are produced.

Operations, operations management and operations managers

Every organization has an operations function, whether or not it is called ‘operations’. The goal or purpose of most organizations involves the production of goods and/or services. To do this, they have to procure resources, convert them into outputs and distribute them to their intended users. The term operations embraces all the activities required to create and deliver an organization’s goods or services to its customers or clients.

Within large and complex organizations operations is usually a major functional area, with people specifically designated to take responsibility for managing all or part of the organization’s operations processes. It is an important functional area because it plays a crucial role in determining how well an organization satisfies its customers. In the case of private-sector companies, the mission of the operations function is usually expressed in terms of profits, growth and competitiveness; in public and voluntary organizations, it is often expressed in terms of providing value for money.

Operations management is concerned with the design, management, and improvement of the systems that create the organization’s goods or services. The majority of most organizations’ financial and human resources are invested in the activities involved in making products or delivering services. Operations management is therefore critical to organizational success.

Its Origins

The origins of operations management can be traced back through cultural changes of the 18th, 19th, and 20th centuries, including the Industrial Revolution, the development of interchangeable manufacture, the Waltham-Lowell system, the American system of manufacturing, scientific management, the development of assembly line practice and mass production. Combined, these ideas allowed for the standardization and continuous improvement of production processes. Key features of these early production systems were the departure from skilled craftsmen to a more thorough division of labor and the transfer of knowledge from within the minds of skilled, experienced workers into the equipment, documentation, and systems.

There are scores of people who can be viewed as thought leaders whose life's work laid the foundations for operations management (only some of which have name recognition among the general population). A very cursory list would include (in approximate chronological order) Adam Smith, Jean-Baptiste Vaquette de Gribeauval, Louis de Tousard, Honoré Blanc, Eli Whitney, John H. Hall, Simeon North, Frederick Winslow Taylor, Henry Gantt, Henry Ford, Sakichi Toyoda, Alfred Sloan, Frank and Lillian Gilbreth, Tex Thornton and his Whiz Kids team, and W. Edwards Deming and the developers of the Toyota Production System (Taiichi Ohno, Shigeo Shingo, Eiji Toyoda, Kiichiro Toyoda, and others).

Whereas some influences place primary importance on the equipment and too often viewed people as recalcitrant impediments to systems (e.g., Taylor and Ford), over time the need to view production operations as social technical systems, duly considering both humans and machines, was increasingly appreciated and addressed.

Operations research as a sub-discipline gained prominence during World War II, when mathematicians applied analytical tools to optimize operational questions, initially with a military context, and later also within general operations.

Historically, the body of knowledge stemming from industrial engineering formed the basis of the first MBA programs, and is central to operations management as used across diverse business sectors, industry, consulting and non-profit organizations.

The modern period

Mass production worked well as long as high volumes of mass-produced goods could be produced and sold in predictable and slowly changing markets. However, during the 1970s, markets became highly fragmented; product life cycles reduced dramatically and consumers had far greater choice than ever before.

An unforeseen challenge to Western manufacturers emerged from Japan. New Japanese production techniques, such as Total Quality Management (TQM), just-in-time (JIT) and employee involvement were emulated elsewhere in the developed world, with mixed results.

More recently, the mass production paradigm has been replaced, but there is as yet no single approach to managing operations that has become similarly dominant. The different approaches for managing operations that are currently popular include:

• Flexible specialization (Piore and Sabel, 1984) in which firms (especially small firms) focus on separate parts of the value-adding process and collaborate within networks to produce whole products. Such an approach requires highly developed networks, effective processes for collaboration and the development of long-term relationships between firms.
• Lean production (Womack et al., 1990) which developed from the highly successful Toyota Production System. It focuses on the elimination of all forms of waste from a production system. A focus on driving inventory levels down also exposes inefficiencies reduces costs and cuts lead times.
• Mass customization (Pine et al., 1993) which seeks to combine high volume, as in mass production, with adapting products to meet the requirements of individual customers. Mass customization is becoming increasingly feasible with the advent of new technology and automated processes.
• Agile manufacturing (Kidd, 1994) which emphasizes the need for an organization to be able to switch frequently from one market-driven objective to another. Again, agile manufacturing has only become feasible on a large scale with the advent of enabling technology.

In various ways, these approaches all seek to combine the high volume and low cost associated with mass production with the product customization, high levels of innovation and high levels of quality associated with craft production.

Once you’ve decided that Operations management is the right move for your organization, ask premiercallcentre.co.uk UK's national business leader to walk you through our check list for the criteria.