Operations management is needed to direct systematically and evaluate whole range of processes which convert inputs into finished products or services. Operations management is vital to any firm to make efficient and effectiveness to processes that maximize profit and increasing the level of customer satisfaction. It’s important to incorporate innovation in processes to achieve competitive advantage. It helps a firm to minimize costs and technologically develop the process for long period which helps the organization’s sustainability.
As described in the above diagram the operation manager’s duty is to manage these whole item to maximize the profit of the firm. He / she has to plan, organize, lead, communicate and motivating staff in order to manage operations of a firm. The roles and responsibilities of an operations manager might vary according to output, whether goods or services produced. There are 10 key differences among goods producing firms and a services firm. They are:
- In service organization, customer contact is very high compared to a goods manufacturing organization.
- In service organizations the outputs are not equal or same as one another. It depends on the person who is delivering the service. But for example if we take a soft drink manufacturing company almost all the bottles will taste the same.
- In service organizations the inputs will also vary to each other. But in a goods manufacturing company the uniformity of inputs are high. For example if we take a biscuit manufacturing company same amount of ingredients will be added to each unit.
- In goods manufacturing company, outputs are tangible and in a service company the output is intangible.
- Labor content is high in service organizations compared with goods manufacturing organizations.
- Measuring the productivity in a service organization is relatively very hard compared to goods manufacturing companies.
- In service organization it is very hard to correct errors because most of the time services are delivered on time. But in goods manufacturing organizations it’s easy to correct errors before making delivery.
- Service organizations needs a little inventory compared to goods manufacturing companies.
- In service organizations it’s difficult to evaluate the work but in goods manufacturing organizations relatively easier to evaluate the work.
- In services companies patentable is not usual. Competitors can easily copy the new innovations. But in goods manufacturing companies it’s usually patentable.
I have taken Munchee biscuit manufacturing company and Peoples Bank for service organization to do the first task. I select the 10 critical decision areas in operations management to show the differences among the duties and responsibilities of an operations manager in a service company and a manufacturing company.
In munchee biscuits company the operation manager has the role of product design process. Product design is the most important role because the consumers are demanding greater variety in biscuits and can switch more easily because of low switching cost. They do mass production by producing in a large scale at low cost. The biscuits are more standardized so measuring the productivity is easy in Munchee Biscuits.
In Peoples Bank the banking services are more customized according to the customer needs. Bank accounts are customized according to the age difference. Loans and advances can be customized according to the borrowers need. (For example in accounts children savings A/C, senior citizen accounts, youngster’s A/C, women accounts etc. and in advances medium term loans, short term loans, long term loans, temporary overdrafts, permanent overdrafts, pawning etc. So the operations manager has a difficult role in product design process.
In Munchee almost all the output will be of same quality. For example all the cream crackers will taste the same. The operations manager can check the color, temperature, odour, size and taste a sample to check the quality. If the above items are checked they can decide whether the biscuits are over baked. If the biscuits are not baked enough it can be corrected by baking it after.But in Peoples Bank the service given is just in time. Quality may be varied according to the staff who is delivering the service. The time taken to finish a transaction of a teller may be differed to another teller. Once service is delivered it cannot be corrected easily. So the operations manager’s role in quality management is very difficult.
Process designing and capacity managementIn munchee biscuits the operation manager must organize process design to make the production efficiently. He can forecast the demand and produce according to the demand. Has the facility to produce store that in inventory and can send to retailers or export to Bangladesh. But in peoples bank the operations managers’ role is difficult. Processes should be customer oriented. Can’t store their services. Services should be delivered on time. They must consider many variables when estimating the demand and the capacity
- How many average customers per day
- What are the peak hours and days? (Salary days and lunch hours)
- The duration taken to serve every customer
- How the external factors like holidays affect the demand in banking services
Selecting the suitable locationIn biscuit company the operation manager plan a suitable location for make the production process easy. He might choose a place where he can easily get resources like human resource and material. No need to select a location where customers are attracted. But in Peoples Bank planning the location plays an important role. The location must be easily accessible to the customers.
Munchee biscuits do business out of plants which is rarely visited by their customers. The operations manager can organize size and layout of their facilities purely based on production need.But in the bank the operations manager must design the branch layout design keeping customer in their mind. The layout should be designed to make convenience to the customer.
Importance of capacity Planning & control
The very common meaning of capacity is the available space in building or the volume which a container can be filled. Some times this meaning is used by operations managers in firms. According to Slack Et al (2010), capacity of an operation is defined as maximum level of value added action in a time period that a process can be achieved under usual working condition. Many firms operate less than their full process capacity without utilizing the available resources at a maximum. Planning & controlling capacity is very important in operations management. This means how the operation will react to the fluctuations in the demand. How much we can deliver is depended on the capacity and demand.
- Cost – If capacity level is more than demand then there might be a large unit cost because of not utilizing capacity in full.
- Income / revenue – this might get affected by balance in capacity and demand in the other way. If capacity level is larger or equal to the demand in a point ensure that demand is fully satisfied and no loss in revenue.
- It effects the working capital – if the firm decides to make finished items before demand arise then the firm must allocate finance for inventory till products are sold.
- Quality of goods and services might get affected from a capacity plan that has larger fluctuation in capacity level. For example if temporary employees are hired then more possibility of mistakes & it will disturb daily operation.
- It gives quicker responses to customers by building up of inventory or with considered provision of excess capacity to minimize queuing.
- It gives flexibility especially in volume. If capacity & the demand is in balance, operations might not be able to react to unexpected fluctuations in demand.
- Dependency in supply might get effected by how close is demand level is to capacity level. Capacity decisions effect all ten decisions of operation management and also the other functions like marketing, human resources and finance. Capacity decisions must be integrated to the firm’s mission and strategy.
The operation manager needs to forecast the demand. To do this they should have some ideas to meet demand fluctuation. Before taking decisions they will need quantitative data on both capacity and demand. In service industries hotels has a time series of demand.