services that effectively

fulfill customer needs.

HfOPMGTQM PRELIMS Strategic vs Tactical
- Operations is one of the
Operations Decisions
LESSON 1 three strategic functions
Operations Management of any organization. Strategic Operations
- Management of - Operations decisions Decisions
processes that transform include decisions that are - facility location decisions
inputs into goods and strategic in nature, - the type of technologies
services that add value meaning that they have that the organization will
for the customer. long term consequences use
and often involve a great - determining how labor
Tactic
deal of expense and and equipment are
- A maneuver or action
resource commitments. organized how much
calculated to achieve
long-term capacity the
some end. Goal of Operations
organization will provide
Management
Tactics is the specific actions to meet customer
The goal of operations
you take to achieve your demand
management is to maximize
short-term or long-term efficiency while producing Operations decisions include
goals. They will most likely be goods and services that decisions that are strategic in
informed by your strategic effectively fulfill customer nature, meaning that they have
goals and approach, but they needs. long-term consequences and
are far more specific. often involve a great deal of
If the organization makes expense and resource
Strategy good operations decisions, it commitments.
- A plan of action intended
will be able to produce
to accomplish a specific Tactical Operations
affordable, functional, and
goal. Decisions
attractive furniture that - workforce scheduling
Strategy is a set of decisions customers will purchase at a - establishing quality
that get you to a specific price that will earn profits for assurance procedures
destination. It’s the the company. - contracting with vendors
overarching approach you managing inventory
Operations is one of the
adopt to achieve the set of
three strategic functions of Total Quality Management
long-term goals you've
any organization. This means Total Quality Management
chosen. Depending on the
that it is a vital part of (TQM) is an integrative
level of strategy being
accomplishing the philosophy of management
developed, it can be
organization’s strategy and for continuously improving
relatively high-level or more
ensuring its long-term the quality of products and
detailed.
survival. The other two areas processes.
KEY POINTS of strategic importance to
- The goal of operations the organization are A strategic approach to
management is to marketing and finance. The management aimed at
maximize efficiency while operations strategy should embedding awareness of
producing goods and support the overall quality in all organizational
organization strategy. processes.
Quality management is a LESSON 2 domestic markets (early
primary concern in Global Operations Strategy market entry advantage).
operations departments. - Includes designing, 5. Joint ventures with
Though all employees and producing, and foreign companies
managers should be marketing products that enable the firms to learn
concerned with maintaining meet global needs. the latest technology,
quality, most firms host a culture and business
Potential Advantages of
team dedicated to ensuring practices of successful
Expanding Businesses
the quality of production. Abroad companies in
Quality management can 1. Firms have the international markets.
come in any number of opportunity to gain new 6. Operating in foreign
different forms. Quality customers in foreign countries provide many
control usually involves the markets for their benefits to the firms
random sampling of products products. (lower taxes, lower
coming off the line (with the 2. Excess capacity in the tariffs, etc.).
goal of ensuring that all domestic market can be Taxes are charges levied by a
products are up to standard). channeled to government on various
This may be for compliance international market, activities, income, profits,
thus reducing unit cost property, and goods and
reasons (such as in meat
and spreading business services within its own borders.
production) or for quality
risks to a wider number They are primarily designed to
service (such as checking the generate revenue to fund public
seams in the leather of a of markets. The goal is to
services and government
Rolls Royce car). Other optimize resources,
operations.
quality managers are reduce unit costs
(Implies that by utilizing Tariffs are taxes or duties
concerned with the quality of
excess capacity for specifically imposed on goods
the production process itself:
international expansion, and services that are imported
are all employees being or exported across international
productive? Is there a the company can
borders. They are part of trade
bottleneck in the production distribute fixed costs
policy and customs regulations.
process? These focuses on over a larger volume of
production), and Applicability: Tariffs are applied
efficiency are especially
diversify business risks at the point of entry or exit,
important for products with
(By diversifying into usually on imported goods. They
low margins. In this unit, you are designed to regulate
will learn about a few of the multiple markets, the
international trade, protect
pioneers in total quality company reduces its
domestic industries, and
management as well as the dependence on a single generate revenue for the
processes used to control market). government.
quality in manufacturing and 3. Firms have the
opportunity to set up an 7. International business
service organizations.
operations facility with exposes the firms to
lower costs in a foreign potential customers,
country. suppliers, creditors and
4. Competition in foreign distributors, who are in a
markets is sometimes foreign country.
less intense compared to
8. Economies of scale can Roles of Operations Relationship Between
be achieved from Managers Operations and Other
operating in a global 1. Planning - Involves Functions in an Organization
market. Large-scale setting goals and
productions and high determining ways to
efficiency can also achieve the goals. The
increase sales and operations manager
reduce costs per unit. must set the goals
9. Companies with related to production
excellent reputations in and decide on the best
the domestic market will ways of achieving those
be able to enhance their goals.
products further by 2. Organizing - The
competing globally. operations manager has
to determine the tasks to
Potential Disadvantages of be done, how to get
having International them done and who
Operations
is/are supposed to get
1. Foreign operations can -Operations is responsible for
them done. Proper
be seized by nationalistic the conversion of inputs into
organizing leads to a
factions. outputs. Understanding the
well-structured
2. Firms will face different conversion process is
organization.
social, cultural, important in producing
3. Staffing - Involves
demographic, higher value outputs. The
recruiting qualified
environmental, political, operations department
employees to perform
governmental, legal, needs financial assistance
production jobs and
technological, economic from Finance to perform
training these employees
and competitive forces their operations.
to be skillful.
while doing business
4. Leading - This function -Value is more than profit.
internationally.
entails communicating When thinking about value it
3. It is difficult to accurately
with and motivating is easy to assume it is the
identify the strengths
employees in performing same as profit or revenue.
and weaknesses of
their job. The operations However, a firm’s value goes
competitors in a foreign
manager must use the beyond its financial
land, due to lack of
right approach in leading performance and includes
information.
the employees. social impact and strategic
4. Foreign countries have
5. Controlling - This is a importance to the regional
different languages,
monitoring function and national economy. Each
cultures, and value
performed by the type of value will be
systems.
operations manager, considered important in
5. Firms are exposed to
who needs to ensure varying degrees by
greater risks from
that activities performed companies, individuals, and
dealing with two or more
are in accordance with countries.
financial systems.
plan.
Relationship Between services. The demands materials to finished
Operations and Other for goods and services goods and the
Functions in an Organization have to be created by maintenance of
the marketing function. It machinery for this
Operations or Production
is responsible for purpose. This function
- Operations include all
assessing customers’ also involves product
activities that are directly
needs and wants, as well design and production
related to the production
as communicating the planning.
and delivery of goods
information gathered to ● Operations management
and services. They are
the operations function. deals with both
the core activities of any
production of goods and
organization and exist in
● The marketing other activities like the
both manufacturing and
department needs the provision of services to
service-oriented
operations department customers. The job also
organizations.
to produce products, so concerns the usage of
Finance that Marketing can resources and ensuring
- Finance makes the promote and sell them to the execution of daily
money available to buy the customers. In sum, activities.
raw materials, machines, these departments or
and equipment, to make functions are 2. Functions
salary payments and to interrelated in that they ● The production manager
meet many other costs. rely on each other to has to ensure the timely
This function prepares a perform their own production of goods as
specific budget to be activities. per the requirement of
spent within a certain ● Since these functions are the market. The person
period of time. It also interrelated, any change must also plan the
comprises activities that or problem caused by production in such a way
are related to securing either one of these that there is never a
resources, such as raising functions will definitely shortage or excess of
funds for the affect the others. goods. Stringent quality
organization and control is also the job of
Note:
arranging for short-term the production manager.
Other functions that are
and long-term financing. ● Operations managers
equally important in an
The finance department must look after
organization are human
needs the marketing production apart from
resources management and
department to promote various other jobs. They
suppliers.
and sell products to must ensure that the
generate money for the Difference Between manpower required for
organization’s survival. Production and Operation producing the items is
Management available. They are also
responsible for
1. Definition forecasting demand and
Marketing
● Production Management making the necessary
- One of the marketing
is concerned with the materials available for
function’s main purposes
conversion of raw production. Inventory
is to sell goods and
 management, logistics you appreciate the capabilities an operations manager,
and waste management of those handling the jobs. Both the focus is on ensuring
also come under have their challenges, and the materials and
attending a course in the
operations management. processes used in
subject from a well-known
production, as well as the
institution will help you perform
3. Existence the tasks efficiently.
outputs produced, are
● Production management ecologically sustainable.
can be found only in Challenges in Operations (Recyclable,
companies that Management Biodegradable, and
manufacture products. environmental-friendly)
Global Focus
● Operations managers
- Economic growth and Rapid Product Development
exist in all companies,
industrial development - Rapid environmental
even those that don’t
have both contributed to changes, such as
manufacture anything.
the rapid growth of the information technology
These officials are
global atmosphere. The and lifestyle, are
necessary for the
operations manager is affecting the life of
functioning of all
constantly faced with the products. The operations
organizations to ensure
challenge of innovation manager must be very
the optimum use of the
in generating and responsive to these
available resources.
producing ideas, developments by
equipment, and goods. designing more efficient
4. Objectives
management, being
● The objective of the Supply Chain Partnering
equipped with better
production management - Products have changed
technology and forming
team is to provide a dramatically due to the
alliances with industry
product of high quality rapid growth of
leaders, so that the
and low prices in the technology, which leads
company can compete
right quantity and at the to shorter product life
globally.
right time. cycles. Additionally,
● The operations consumers are also Mass Customization
management team aims becoming more - Dealing with various
to make optimum use of demanding, technology demands from different
the company’s resources is continuously evolving, types of customers, the
to ensure smooth and processes are operations managers
running, reduced costs, becoming more flexible. have to be creative and
customer satisfaction As such, operations innovative in designing
and increased profits. managers need to new products for a target
establish a good long- market with a diverse
The responsibilities of
term relationship with cultural background.
operations and production
critical players in the
management may look similar, Just-in-time Performance
but there certainly are different supply chain.
- Any change in the market
functions for both.
Sustainability will affect inventory.
Understanding the difference
- Customers prefer Operations managers
between production and
products that are must thus identify the
operations management helps
environmentally safe. As sections that require
 reduction and inventory physically move products ● Operations is concerned
control. This control and the warehousing and with what happens inside
measure is essential to storage processes that the company.
ensure that inputs are position products for
This means the supply chain
not wasted. quick delivery to the
manager spends time
customer.
Empowering Employees negotiating contracts and
- Supply chain in this
- Skilled workers and evaluating suppliers, whereas
context refers to
technical capabilities in the operations manager
providing products and
the workplace are crucial often planning and
service to plants and
in increasing production overseeing the daily
warehouses at the input
capacity. Empowering operations and processes.
end and the supply of
employees can make Supply chain management
products and service to
them feel more valued activities are generally the
the customer at the
and freer to make same across industries;
output end of the supply
decisions in an effort to however, operations
chain.
increase productivity. management roles and
This leads to an efficient Why is Supply Chain responsibilities can vary
and productive work Management Important in widely depending on the
environment. Operations Management product or service the
- Both are expected to add business produces.
Supply Chain Management value to the business,
- Includes the collection of supporting more efficient
materials, the processes and ultimately
manufacture of products, driving better revenue
and delivery to the for the company. Many
consumer. Supply chain industries require both
managers coordinate supply chain and
with the key players in operations management,
the supply chain: whether the business is
suppliers, customers, moving services,
logistics team, often products, raw materials,
working globally and data, or money into the
overseeing suppliers, hands of its customers.
purchasing orders,
warehouses, and Difference between Supply
forecasting. Chain Management and
Operations Management
Supply Chain Process ● Supply Chain is
- Refers to processes that concerned is what
move information and happens outside the
material to and from the company - obtaining
manufacturing and materials and delivering
service processes of the products.
firm.
- These include the
logistics processes that