Researchers refer to operations management as the art of managing the workforce, processes, and systems in a way that will lead to delivery of quality goods and services to potential customers.Operation management has become the modern trend for many organizations today. This has been mainly due to the success story that has been witnessed from many organizations that are practicing it. A good example is found in Asia where Japanese manufacturers have successfully incorporated the art of operation management, and this has had a positive effect on their profit margins and productivity. As a result, many organizations have come to the realization that managing operations have a direct impact on the productivity and growth of their organization.
Objectives of Operations Management
The objectives of operations management in any organization can be categorized into to broad categories. These are the customer service objective and resource utilization objective. An organization can utilize its operation systems to channel resources towards the satisfaction of customer’s needs. As results, this makes customer service a vital objective for the organization. This, in turn, will guide the organization in providing the customer with the much-needed service promptly thus achieving the primary objective
On the other hand, an organization can utilize its operating systems in satisfying customers demand while at the same time effectively saving on the resources at its disposal. This means the business will always operate with the aim of minimizing any loss while at the same maximizing the profit. Operations management will, therefore, focus on the utilization of the resources available.
Frame Work of Managing Operations in Organizations
Operation managers are usually concerned with the operational functions of controlling, organizing, and planning activities which will have a direct effect on the human behavior within that organization.
- Planning- This is an activity that involves the establishment of a course of action and a path for future decision making within an organization. Operation managers, therefore, will be required to define objective as set by the organization top team and cascade this to the other business functions. This may include policies and procedures that will help in achieving organization’s objectives. The planning stage usually entails clarifying where the business and operation will be focusing on and the input that will be required to achieve this.
- Organizing- This refers to the activities that will establish a model of tasks that will be undertaken by the business and the authority under which they will be implemented. During this stage operations, managers come up with a defined model of roles and the flow of plans and information within the operation communication structure. Organizing simply entails determining the activities that will lead to the achievement of set goals. It also involves delegating authority and responsibility to personnel who will undertake the roles that have been assigned by the operation manager (Bradley,2008.).
- Controlling- This refers to the activities that monitor the performance of the undersigned roles by laid down procedures. To ensure that the plans that had been laid down by the operations manager are accomplished, control measures have to be exercised at various levels. This is done through measuring actual results and comparing them with what had been planned earlier. Some of the tenets that are usually controlled at this stage include, costs, schedules, and quality.
The Importance of Operations Management
Firms have come to the realization that having an operation strategy will go a long way in helping them compete effectively in the ever-changing global market. A lot of responsibility lies with the operations managers as they have the sole responsibility of transforming inputs into outputs. This means they have to bring together all the core functions of the business to work together in order to achieve a common goal. While doing all this, they must exercise control over issues such as quality, costs, and inventory at all times. This means the operation manager will need to handle all issues revolving in a business entity.
Below are some of the reasons why operation management has become a vital function in many organizations.
Business Efficiency and Effectiveness
Managing operations of any business are all about making things work right and smoothly. This means managers will be required to integrate all organizational processes and resources to ensure that the products are in the right place and at the right time to achieve the set objectives. Also an organization may decide to adapt the use of innovation to achieve these many scholars have noted that innovation will only give a company a competitive advantage for a while. As a result, the success of having an efficient and productive organization lies in the strategy of managing processes within that organization. These processes include the processes of adopting and using new technology; the processes of using resources efficiently and to generate new ones and most importantly the processes of creating value from the inputs.
This can only be achieved through operation management. Managing operations in an organization create an opportunity for the concept of differentiation from manufacturing to distribution. For instance, Toyota Motor Corporation, a renowned global company is an example of an n organization which has adopted the concept of operation management to improve efficiency and effectiveness in its organization. The growth of Toyota Company is characterized by continuous improvement in the quality of its manufactured products. Right from its domicile company, Kiichiro there has been a lot of emphasis on operations management it all of its manufacturing plants across the globe.
A pillar for Other Organization’s Activities
Operation management is also seen as an interconnector to all the other activities carried out by an organization. For instance, the product development team will focus on developing a product that will match the demand of the market and also has the potential to meet the needs of potential customers. The finance team will focus on the cost of development of the new product and make financial projections, forecast, and variable costs. The human resource team will be concerned with the task of hiring the right people who will have the required skills, knowledge and abilities to undertake the project that will lead to the creation of value thus achieving the set organizational objectives.
However for these teams to work together harmoniously, it is the operations department that is going to synchronize all these functions to work together as one. In this way, the organization will be able to make a product according to a proposed specification and timeline while at the same time operating under a fixed budget utilizing the best workforce and machinery to produce a product that has a value attached to it. Once the product is ready, the marketing team can now take the product to the intended market and thus meet the consumer need in that market segment. All these departments work towards achieving one particular goal through the help of operations team.
Reduces Cost of Doing Business
Researchers have noted that if a company focuses on reducing the cost of operation rather than increasing sales chances are very high that such the company will have a higher profit margin than as compared to the latter. This is true because operations cover a wide area within an organization. For instance, in any given business operation will cover marketing, finance, and human resource department. This means an organization cannot work without operations department
Research has further shown that nearly half of the workers in various organizations all over the world have their jobs in the operations department. A report released by Forbes Magazine in 2011 indicated that nearly 75% of all CEOs of global companies came from an operations background. This, therefore, means that if an n organization manages the cost of operation, then it will always record a higher profit margin since operations cuts across the entire organization.
When a business is unable to manage its operational cost, this can be disastrous to the company, since this function is responsible for handling a big portion of the assets found in most organizations. Another major role played by the operation function is that it affects the company’s ability to compete. A business with an operation that is well managed will always have a positive growth in its profit margin and thus giving the company a competitive edge against its competitors. A company with poor operational strategy will end up making losses due to a weak mechanism to retain customers thus being edged out from the market in which it operates in.
The techniques and concepts used in operation management can also be used in improving and managing other business functions. For instance, marketing and finance are vital departments in any business entity. Having a poor strategy in marketing will eventually affect the functions of business including operations. However, if a business decides to adopt the same operational management strategy into other business functions such as marketing and finance, chances are high that the techniques used to improve the operations will have similar effects on this other functions and hence improve operations in this area of business.
Operational management is changing how businesses are being operated and managed. Irrespective of their sizes all organizations will always strive to add value to their products and deliver them in an efficient and effective way to prospective customers. In many cases, decision making usually becomes difficult for managers especially when individual roles seem to overlap. For instance, an organization may find itself in a situation whereby both the finance and operation department end up performing the same function thus having different budgets and estimates for different projects within the business. However, with the adoption of operational management, these problems can be avoided since the concept and techniques behind this process cater for such eventualities.
Also, a lot of responsibility lies with the operations managers as they have the sole responsibility of transforming inputs into outputs. This means they have to bring together all the core functions of the business to work holistically to achieve a common goal. While doing all this, they must exercise control over issues such as quality, costs, and inventory at all times.
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