Operations Management is responsible for creating value in the form of goods and services. The objective of operations management is to balance supply with demand. Operations Management works in conjunction with both finance and marketing. An operation is the act of converting inputs into outputs. It is concerned with value-added, which is the difference between the cost of inputs and the value or the price of outputs.
The Scope of Operations Management
Operations management is used in producing goods or services. Systems design deals with the layout of facilities. An example is what equipment is necessary to produce a certain capacity. Purchasing involves buying the materials or equipment, managers need evaluate the quality of materials and equipment. Overlooking poor quality of materials can delay project completion and add costs, due to reworking and overtime pay. Industrial engineering handles variances. The methods used to make the products and the product should be uniform and up to standards. Operations managers need to make sure distribution of goods are sent out to their final locations in a timely manner. Maintenance is responsible for keeping the facility running. This may include disposing of scrap, lubing up machines, or keeping security on premises to reduce theft. Operations management can have any number of responsibilities, ranging from product and service design, to making sure machines are operating correctly. Operations management is also responsible for forecasting, capacity planning, scheduling , managing inventories, assuring quality, motivating employees, deciding where to locate facilities and many more issues to help run the organization efficiently and effectively.
Process Management
Process management is essential to operations management, and is the central role of all management roles. Process management transforms inputs into outputs . In addition, a business process is composed of three categories: Upper-management processes, Operational processes, and Supporting processes. A major business process may consist of any sub-processes, and each one of them have their own goals that contribute to the overall process. Business processes form a sequence of suppliers and customers. Managers establish the amount of capacity of a process needed to meet demand.
Supply Chains
A supply chain is a sequence of activities and organizations having some role in providing a product to a customer. Supply chains typically link many different facilities and activities as raw materials are secured, work-in-process is finished, and final output is distributed. Supply chain management integrates the activities of these differing operations, addressing issues such as forecasting, purchasing and logistics. A simple product supply chain consists of suppliers, direct suppliers, producers, distributors, and final customers. Supply chain management also can include partners outside the firm when goods and services are outsourced. Outsourcing has many risks and benefits that must be explored before a company decides to outsource part of its operations. Valued-added is the difference between the cost of inputs and the value or price of outputs. Therefore, a higher value-added is beneficial for a company.
Current Issues
Managers must contend with ever changing globalization, quality and process improvement, the management of technology, and agility. Three issues that have a major impact are supply chain management, e-commerce, and the Internet.
The Scope of Operations Management
Operations management is used in producing goods or services. Systems design deals with the layout of facilities. An example is what equipment is necessary to produce a certain capacity. Purchasing involves buying the materials or equipment, managers need evaluate the quality of materials and equipment. Overlooking poor quality of materials can delay project completion and add costs, due to reworking and overtime pay. Industrial engineering handles variances. The methods used to make the products and the product should be uniform and up to standards. Operations managers need to make sure distribution of goods are sent out to their final locations in a timely manner. Maintenance is responsible for keeping the facility running. This may include disposing of scrap, lubing up machines, or keeping security on premises to reduce theft. Operations management can have any number of responsibilities, ranging from product and service design, to making sure machines are operating correctly. Operations management is also responsible for forecasting, capacity planning, scheduling , managing inventories, assuring quality, motivating employees, deciding where to locate facilities and many more issues to help run the organization efficiently and effectively.
Process Management
Process management is essential to operations management, and is the central role of all management roles. Process management transforms inputs into outputs . In addition, a business process is composed of three categories: Upper-management processes, Operational processes, and Supporting processes. A major business process may consist of any sub-processes, and each one of them have their own goals that contribute to the overall process. Business processes form a sequence of suppliers and customers. Managers establish the amount of capacity of a process needed to meet demand.
Supply Chains
A supply chain is a sequence of activities and organizations having some role in providing a product to a customer. Supply chains typically link many different facilities and activities as raw materials are secured, work-in-process is finished, and final output is distributed. Supply chain management integrates the activities of these differing operations, addressing issues such as forecasting, purchasing and logistics. A simple product supply chain consists of suppliers, direct suppliers, producers, distributors, and final customers. Supply chain management also can include partners outside the firm when goods and services are outsourced. Outsourcing has many risks and benefits that must be explored before a company decides to outsource part of its operations. Valued-added is the difference between the cost of inputs and the value or price of outputs. Therefore, a higher value-added is beneficial for a company.
Current Issues
Managers must contend with ever changing globalization, quality and process improvement, the management of technology, and agility. Three issues that have a major impact are supply chain management, e-commerce, and the Internet.
Key Trends and Issues in Business
The environment constantly changes so organizations need to adapt and change as their environment does. Globalization and new technologies have stimulated changes in organizations. This varies from how they communicate with other organizations to the manner in which they penetrate other country's markets. The Internet is a great tool that many choose to use as an advantage. E-business is the use of the Internet for business transactions, and e-commerce is consumer-to-business transactions. Three technologies that can have major impacts on costs, productivity and competitiveness are: 1) product and service technology, 2) process technology, and 3) information technology. Information Technology is very important because it is the manner in which businesses store, process, and send information.
Basic Functional Areas
Business organizations typically have three basic functional areas: finance, marketing, and operations. Finance is responsible for securing financial resources at favorable prices and allocating those resources throughout the organization; this includes budgeting, analyzing investment proposals, and providing funds for operations. Marketing and operations are the primary or "line" functions. Marketing is responsible for assessing consumer wants and needs, and selling/promoting the organization's goods or services. Operations is responsible for producing the goods or providing the services offered by the organization.
Goods and Services
Goods are referred to as physical (tangible) products, such as computers or bicycles because you can touch them. Services are abstract and they are actions that are provided by people, like healthcare and education. More interaction with customers is required by the service side. There are more variables involved in services than there are in goods. Goods are usually manufactured under specific conditions, and services have a wide range of possibilities. Services, such as, haircuts, gym training, and product troubleshooting are always different depending on the customer, which makes it harder to tend to the customers' needs. Operations run smoother while manufacturing goods, as opposed to services. Because of this, it is harder to measure how productive employees are in the service department. The value of a good is not realized as fast as a service is. There is a time gap between the production aReferencend the sale of a good, where as the value of a service is usually realized soon after. Various companies patent certain goods so that competitors cannot replicate their product. Unfortunately, services cannot be patented, which cause other companies to imitate companies with the best services.
Other Important Trends
Companies have switched from ignoring operations strategy to recognizing the importance of incorporating strategies into their business decisions. Companies have reduced the number of workers and have made their companies operate more efficiently by placing an emphasis on cost control and productivity improvement. Companies use revenue management to manipulate prices and influence demand to maximize revenues. Hotels, theme parks and airliners are key examples of companies using revenue management to their benefit. Six sigma is a process of reducing costs, improving quality, and increasing customer satisfaction. Lean production was first incorporated into businesses in the 1990's in an effort to make production more efficient. It uses a highly skilled workforce and flexible equipment to accomplish an increasing level of quality with less resources compared to mass production which uses space, inventory, and workers to produce a comparable amount of output. These workers have higher expectations than in traditional systems. This also leads to more anxiety and stress among workers in the organization.
Reference : http://ids355.wikispaces.com/
The environment constantly changes so organizations need to adapt and change as their environment does. Globalization and new technologies have stimulated changes in organizations. This varies from how they communicate with other organizations to the manner in which they penetrate other country's markets. The Internet is a great tool that many choose to use as an advantage. E-business is the use of the Internet for business transactions, and e-commerce is consumer-to-business transactions. Three technologies that can have major impacts on costs, productivity and competitiveness are: 1) product and service technology, 2) process technology, and 3) information technology. Information Technology is very important because it is the manner in which businesses store, process, and send information.
Basic Functional Areas
Business organizations typically have three basic functional areas: finance, marketing, and operations. Finance is responsible for securing financial resources at favorable prices and allocating those resources throughout the organization; this includes budgeting, analyzing investment proposals, and providing funds for operations. Marketing and operations are the primary or "line" functions. Marketing is responsible for assessing consumer wants and needs, and selling/promoting the organization's goods or services. Operations is responsible for producing the goods or providing the services offered by the organization.
Goods and Services
Goods are referred to as physical (tangible) products, such as computers or bicycles because you can touch them. Services are abstract and they are actions that are provided by people, like healthcare and education. More interaction with customers is required by the service side. There are more variables involved in services than there are in goods. Goods are usually manufactured under specific conditions, and services have a wide range of possibilities. Services, such as, haircuts, gym training, and product troubleshooting are always different depending on the customer, which makes it harder to tend to the customers' needs. Operations run smoother while manufacturing goods, as opposed to services. Because of this, it is harder to measure how productive employees are in the service department. The value of a good is not realized as fast as a service is. There is a time gap between the production aReferencend the sale of a good, where as the value of a service is usually realized soon after. Various companies patent certain goods so that competitors cannot replicate their product. Unfortunately, services cannot be patented, which cause other companies to imitate companies with the best services.
Other Important Trends
Companies have switched from ignoring operations strategy to recognizing the importance of incorporating strategies into their business decisions. Companies have reduced the number of workers and have made their companies operate more efficiently by placing an emphasis on cost control and productivity improvement. Companies use revenue management to manipulate prices and influence demand to maximize revenues. Hotels, theme parks and airliners are key examples of companies using revenue management to their benefit. Six sigma is a process of reducing costs, improving quality, and increasing customer satisfaction. Lean production was first incorporated into businesses in the 1990's in an effort to make production more efficient. It uses a highly skilled workforce and flexible equipment to accomplish an increasing level of quality with less resources compared to mass production which uses space, inventory, and workers to produce a comparable amount of output. These workers have higher expectations than in traditional systems. This also leads to more anxiety and stress among workers in the organization.
Reference : http://ids355.wikispaces.com/
