INTRODUCTION TO OPERATIONS MANAGEMENT

In this lesson, you will learn:

Identify key principles of operations management, including the importance of focusing on

problems rather than techniques.
Explain the core activities of operations management, such as design, organization, and
improvement of processes.
Describe recent trends in operations management, including Business Process Reengineering
and Lean Manufacturing.
Recognize the focus dimensions in operations management, including finance, customers,
internal processes, and innovation.

Operations Management involves planning, organizing, and supervising processes, and

making necessary improvements for higher profitability.

The Ten Principles of Operations Management by Randall Schaeffer

Reality: Operations management should focus on the problem, instead of the techniques,
because no tool in itself would present a universal solution.
Organization: Processes in manufacturing are interconnected. All elements have to be
predictable and consistent, in order to achieve a similar outcome in profits.
Fundamentals: The Pareto rule is also applicable to operations: 80% of success comes from
strict adherence to precisely maintaining records and disciplines, and only 20% comes from
applying new techniques to the processes.
Accountability: Managers are expected to set the rules and the metrics, and define the
responsibilities of their subordinates, as well as regularly check if the goals are met. Only this
way would the workers put in the necessary efforts.
Variance: The variance of processes has to be encouraged because if managed well, they can
be sources of creativity.
Casualty: Problems are symptoms: effects of underlying causes. Unless the causes are
attacked, the same problems will appear again.

© 2024 Athena Global Education. All Rights Reserved

 Managed Passion: The passion of employees can be a major driver of company growth, and it
can be instilled by the managers if not coming naturally.
Humility: Instead of a costly trial and error process, managers should acknowledge their
limitations, “get help, and move on.”
Success: What is considered success will change over time but always consider the interest of
the customer. In order to keep them, all the other principles have to be revised occasionally.
Change: There will always be new theories and solutions, so you should not stick to one or the
other, but embrace the change, and manage for stability in the long term.

The Activities Of Operation Management

Design

Before planning processes or designing products, operations management should be busy

analyzing the market to test the demands. If it delivers promising results, e.g. a niche to target
or a new product or service to develop, you can start planning.

In most cases, planning involves designing a new product, from the initial concept to the actual
launch, with several testing phases involved. During planning, you will have to consider both technical
and business requirements.

Management/Organization

This is a solid starting base for maximizing the efficiency of your operations. Still, you will need
constant and competent management to correct accidental mistakes in planning, adjust production to
changing costs or regulations, and keep them efficient on many levels.

The operations manager selects and schedules the processes for an optimal result and
does the same with materials for ideal quality and capacity. Organizing the maintenance of
the equipment is also part of the quality management activities.

Improve

© 2024 Athena Global Education. All Rights Reserved

There is always room to improve when it comes to the processes used, the quality and
capacity achieved, or as far as the level of inventory and human resources are concerned.
A better way to forecast demand gets you closer to an improvement of processes, as savings on costs
and delivery times occur.

The quality of a product will be higher if you have Total Quality Control established and assess the
operational risks correctly. With Just-In-Time manufacturing, capacity issues can be solved.

Recent Trends In Operation Management

Business Process Reengineering (BPR)

It’s a radical approach to designing core processes: take everything that you used before,
discard it, and then start again from scratch. With Business Process Re-engineering, you can
foster innovation and improve any selected measures dramatically. If you want to do it well, focus on
how you can add more value to the customer.

Lean and Agile Manufacturing

Established by the Toyota Corporation, the term Lean Manufacturing has become a
mainstream trend in the industry, and it is used interchangeably with Just-In-Time production. The
concept behind this is a constant improvement of processes in order to reduce waste and
inventory and maximize the output of high-quality, low-cost products and services.

A new twist on this concept is agile otherwise known as “the new lean.” The reason it came
to life was the growing complexity of processes, and it is characterized by product development done
in small increments and super-fast decision-making.

Six Sigma

Improving processes using a data-driven approach is an innovation of Motorola from mid-1980. It is a

quality-improvement and cost-reducing method that focuses on customer satisfaction.

When presented with a problem, the Six Sigma approach uses a five-step method called
DMAIC, an acronym for define, measure, analyze, improve and control.

Reconfigurable Manufacturing System (RMS)

Another possible method for reacting to quick changes in the market is RMS, a production system
that can be used with different functionalities within a product family. With an RMS, you can
make adjustments in production cost-effectively.

Employee Involvement

Listening to the opinions of the workers often brings up fresh ideas, a different perspective on what
problems should be solved and how to make the operations more effective.

Sustainability

Due to the ever-constraining environmental regulations, businesses must operate under pressure to
reduce their harmful impact while still being able to grow. The issues, since affecting all levels of
operations, need the insights of operations management on what are the options to meet these new

© 2024 Athena Global Education. All Rights Reserved

expectations.

Many times, principles applied for efficiency coincide with sustainable operations management
principles, like organizing resources or cut times and waste.

Behavioral Operations Management

This trending research area studies the impact of human behavior, especially non-rational decision-
making, on the discipline. Because of its complexity, operations management is a field prone to
frequent deviances in problem-solving.

Types of Focus Dimensions Used in Operations Management :

Finance

The heart of the financial dimension for most businesses is profit, though short-term
financial goals might entail sacrificing current profits to increase future capacity.

For Example, a company might decide to reinvest all its profits into new and better machinery to
increase production capacity and efficiency, but the ultimate goal remains greater profit. Managers
must control the flow of money through the organization to ensure short-term goals align with long-
term goals.

Customers

Customers are the foundation of your business. Managers aim to maximize the flow of customer
money, but that doesn’t always mean securing as many customers as possible.

For Example A boutique hotel might focus on serving relatively few high-paying customers, while a
chain hotel focuses on the wide swath of people who are unwilling to pay high prices. Though each
business targets customers who have different needs, meeting those needs is equally vital to their
profitability.

Internal Processes

Optimization of internal processes leads to greater profitability and customer satisfaction.

For Example, a manager might focus on developing efficient communications within an organization
to ensure orders travel quickly from the customer service department to the production line. The
manager further expedites the order by ensuring the production department syncs with the shipping
department to get the order to the customer quickly.

Learning and Innovation

Technology progresses and so must businesses. An invention that improves a manufacturing process,
For Example, might be a game-changer that forces factories to upgrade their processes or lag
behind competitors. A good manager stays abreast of technological shifts; a great manager
anticipates and initiates change by encouraging her organization to focus on learning and innovation.

© 2024 Athena Global Education. All Rights Reserved