3.

Motivational prowess in the form of strong leadership

Opera ons Management 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
Operations management is a field of management that focuses
managers also must analyze processes to identify
on the design, execution, and control of business operations and
challenges and o er solutions in the event that negative
processes to ensure e icient utilization of resources in order to
situations develop.
achieve the goals and objectives of an organization.
5. Decision-making proficiency, especially under stress
when there is very little time to assess all factors.
Operations management (OM) is the administration of business
6. Ability to maintain quality standards, including as they
practices to create the highest level of e iciency possible within
relate to raw materials, machinery, manufacturing
an organization. It is concerned with converting materials and
procedures, packaging, delivery processes, and the
labor into goods and services as e iciently as possible to
finished product.
maximize the profit of an organization.

Operations management is concerned with converting

materials and labor into goods and services as e iciently as
Why is operations management important in all types of
possible.
organization?

1. Operations management uses the organization’s

Why is operations management important?
resources to create outputs that fulfil defined market
- Operations are the foundation of how a business works
requirements. This is the fundamental activity of any
(in terms of supply chain and logistics) and profits rely
type of enterprise.
on lean, e icient operations. Poor business operations
can threaten a business’s survival, so processes must
2. Operations management is increasingly important
be optimized, the right sta need to be employed, and
because today’s business environment requires new
physical locations must be strategic, ethical, and safe.
thinking from operations managers.

Responsibili es of opera ons managers What is the input–transformation–output process?

Operations management teams attempt to balance costs with
revenue to achieve the highest net operating profit possible. - All operations can be modelled as input–
transformation–output processes. They all have inputs
Operations managers are involved in coordinating and of transforming resources, which are usually divided
developing new processes while reevaluating current structures. into ‘facilities’ and ‘sta ’, and transformed resources,
which are some mixture of materials, information and
Organization and productivity are two key drivers of being an customers.
operations manager, and the work often requires versatility and
innovation. - Most operations create and deliver a combination of
services and products, rather than being a ‘pure’
Duties vary according to the nature of the company and the service or ‘product’ operation.
specific role, but in general, someone working in business
operations is responsible for:
What is the process hierarchy?
1. Evaluating, designing, and implementing business
processes - All operations are part of a larger supply network which,
2. Managing logistical processes and supply chain through the individual contribu tions of each operation,
3. Overseeing production, distribution, and quality satisfi es end customer requirements.
assurance
4. Managing and analyzing financial budgets - All operations are made up of processes that form a
5. Making strategic decisions and engaging with other network of internal customer–supplier relationships
senior sta members on business strategy within the operation.
6. Supervising employees
7. Supporting HR with recruitment initiatives - End-to-end business processes that satisfy customer
8. Building relationships with stakeholders and suppliers needs often cut across functionally based processes.

Key aspects of operations management include:

Must-Have Skills of Opera ons It involves overseeing the production of goods and services,
managing supply chains, and optimizing various processes
Manager within an organization to enhance productivity, quality, and
customer satisfaction while minimizing costs.
1. Technical expertise in areas such as production
automation, data entry, budget tracking, and design. 1. Process Design and Improvement: This involves
2. Organizational ability and attention to detail to include designing and improving the processes that convert
keeping track of project files, employee reports, inputs (such as raw materials, labor, and capital) into
budgets, schedules, and other details related to outputs (goods or services). The goal is to streamline
company processes. processes to eliminate ine iciencies and reduce waste.
 2. Capacity Planning: Operations managers must
determine the optimal level of production capacity to
Some opera ons described in terms of
meet customer demand while avoiding overproduction their processes
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. Opera ons Performance
4. Inventory Management: Balancing inventory levels to Key Questions :
ensure that there's enough stock to meet customer 1. Why is operations performance vital in any
demands without holding excessive inventory that ties organization?
up capital. 2. Why is quality important?
3. Why is speed important?
5. Quality Control: Monitoring and ensuring the quality of 4. Why is dependability important?
products or services through processes such as quality 5. Why is flexibility important?
inspections, quality assurance, and continuous 6. Why is cost important?
improvement initiatives. 7. How do operations performance objectives trade o
against each other?
6. Scheduling and Timeliness: Managing the timing and
scheduling of production processes, deliveries, and
services to ensure timely fulfillment of customer
orders.
Sa sfying Customers and Contribute to
Compe veness
7. Forecasting and Demand Planning: Predicting future - Operations performance objectives can be grouped
demand for products or services to allocate resources together as
e ectively and plan for production and inventory levels. o quality,
o speed,
8. Lean and Six Sigma Practices: Implementing o dependability,
methodologies like Lean and Six Sigma to identify and o flexibility and
eliminate waste, defects, and variability in processes. o cost.

9. Risk Management: Identifying potential risks and ● You would want to do things right; that is, you would not want
disruptions that could impact operations and to make mistakes, and would want to satisfy your customers by
developing strategies to mitigate them. providing error-free goods and services which are ‘fit for their
purpose’. This is giving a quality advantage.
10. Technology and Automation: Incorporating technology
and automation to enhance e iciency, accuracy, and ● You would want to do things fast, minimizing the time between
speed in various operational processes. a customer asking for goods or services and the customer
receiving them in full, thus increasing the availability of your
11. Supplier Relationship Management: Building and goods and services and giving a speed advantage.
maintaining strong relationships with suppliers to
ensure a reliable supply of materials and components. ● 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
12. Employee and Resource Management: Managing a dependability advantage.
human resources, equipment, and facilities to optimize
their utilization and productivity. ● 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
Operations management plays a critical role in achieving an unexpected circumstances or to give customers individual
organization's strategic goals by aligning its operational treatment. Being able to change far enough and fast enough to
processes with its overall business strategy. E ective operations meet customer requirements gives a flexibility advantage.
management can lead to improved customer satisfaction,
increased competitiveness, reduced costs, and enhanced ● You would want to do things cheaply; that is, produce goods
profitability. 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 goods to the supermarket, it will mean sta time – and
organization is managing to do this, it is giving a cost advantage. therefore cost – being used to sort out the problem.

Why is operations performance vital in any organization?

Operations management can either ‘make or break’ any - Quality increases dependability Increased costs are not
business. In most businesses it rep resents the bulk of its assets. 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
● The triple bottom line (TBL, or 3BL), includes the social bottom revenue to the operation and irritation to the external
line, the environmental bot tom line and the economic bottom customers. Sorting the problem out could also distract
line. the supermarket management from giving attention to
the other parts of the supermarket operation. This in
● The social bottom line incorporates the idea that businesses turn could result in further mistakes being made. So,
should accept that they bear some responsibility for the impact quality (like the other performance objectives, as we
they have on society and balance the external ‘societal’ shall see) has both an external impact which influences
consequences of their actions with the more direct internal customer satisfaction, and an internal impact which
consequences, such as profit. leads to stable and e icient processes.

● The environmental bottom line incorporates the idea that

operations should accept that they bear some responsibility for Why is quality important?
the impact they have on the natural environment. ● By ‘doing things right’, operations seek to influence the quality
of the company’s goods and services.
● The economic bottom line incorporates the conventional ● Externally, quality is an important aspect of customer
financial measures of performance derived from using the satisfaction or dissatisfaction.
operation’s resources e ectively. ● Internally, quality operations both reduce costs and increase
dependability.
● In particular, operations can a ect economic performance in
five ways:
● It can reduce the costs.
● It can achieve customer satisfaction through service.
Why is Speed Important?
● It can reduce the risk of operational failure.
Speed means the elapsed time between customers requesting
● It can reduce the amount of investment that is necessary.
products or services and them receiving them.
● It can provide the basis for future innovation.

- The main benefit to the operation’s (external)

customers of speedy delivery of goods and services is
Why is Quality Important? that the faster they can have the product or service, the
- Because it is clearly a major influence on customer more likely they are to buy it, or the more they will pay
satisfaction or dissatisfaction. for it, or the greater the benefit they receive.

- A customer perception of high-quality products and

services means customer satisfaction and therefore Speed means different things in
the likelihood that the customer will return.
different opera ons
Quality 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.
Quality inside the opera on
- Speed can give the potential for faster delivery of services and
- Quality reduces costs The fewer mistakes made by
products and save costs.
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
Why is speed important? Why is dependability important?
● By ‘doing things on time’, operations seek to influence the
● By ‘doing things fast’, operations seek to influence the speed dependability of the delivery of goods and services.
with which goods and services are delivered. ● Externally, dependability is an important aspect of customer
● Externally, speed is an important aspect of customer service. service.
● Internally, speed both reduces inventories by decreasing ● Internally, dependability within operations increases
internal throughput time and reduces risks by delaying the operational reliability, thus saving the time and money that would
commitment of resources otherwise be taken up in solving reliability problems and also
giving stability to the operation.

WHY IS DEPENDABILITY IMPORTANT?

- Dependability means doing things in time for customers to
receive their goods or services exactly when they are needed, or Flexibility means different things in
at least when they were promised.
different opera ons
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

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

Dependability can give the potential for more reliable delivery of - In many parts of the hospital, sta have to treat a wide
services and products and save costs. 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
WHY IS FLEXIBILITY IMPORTANT? into the routine’ of treating a particular complaint; they must
Flexibility means being able to change the operation in some have the flexibility to adapt quickly. They must also have
way. su iciently flexible facilities and equipment so that time is not
wasted waiting for equipment to be brought to the patient. The
This may mean changing what the operation does, how it is doing time of the hospital’s resources is being saved because they are
it, or when it is doing it. Specifically, customers will need the flexible in ‘changing over’ from one task to the next.
operation to change so that it can provide four types of
requirement: Flexibility maintains dependability Internal flexibility can also
help to keep the operation on schedule when unexpected events
● product/service flexibility – the operation’s ability to introduce disrupt
new or modified prod ucts and services;
the operation’s plans. For example, if the sudden influx of
● mix flexibility – the operation’s ability to produce a wide range patients to
or mix of products and services; the hospital requires emergency surgical procedures, routine
operations will be disrupted. This is likely to cause distress and
● volume flexibility – the operation’s ability to change its level of considerable.
output or activity to pro duce di erent quantities or volumes of
products and services over time; Flexibility can give the potential to create new services and
products, in a wider variety and with di ering volumes and with
● delivery flexibility – the operation’s ability to change the timing di ering delivery dates, as well as save costs.
of the delivery of its ser vices or products.
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.