Operation Management Fundamentals

Operations Management

• Operations management is a set of activities that creates value by transforming inputs into goods and services.
• It involves designing, operating, and improving productive systems to get work done.

Transformation Process

• The transformation process can be physical (manufacturing), locational (transportation, warehousing), exchange (retail), physiological (healthcare), psychological (entertainment), or informational (communication).

Primary Functions of an Organization

• Marketing generates demand and takes orders for products or services.
• Production/Operations creates, produces, and delivers products.
• Finance/Accounting tracks organizational performance, pays bills, and collects money.

Supply Chain

• A supply chain is a global network of organizations and activities that supply a firm with goods and services.
• It encompasses everything from sourcing materials to delivering to the end user.

Importance of Operations Management

• Operations management helps understand how people organize themselves for productive enterprise.
• It explains how goods and services are produced.
• It reveals what operations managers do.
• It is a costly part of an organization, making it crucial to manage efficiently.

Operations Management Functions

• Planning: establishes a course of action and guides future decision-making.
• Operations Strategies: forecasting, product and process choices, operations capacity, facility location planning, layout planning, and scheduling.
• Organizing: establishes a structure of tasks and authority.
• Controlling: assures actual performance accordance with planned performance.

Operations Management Activities

• Job design and production/operations standards.
• Work measurement and project management.
• Inventory control and material requirement planning.
• Managing for quality and quality analysis and control.

Operations Management and Human Behavior

• Operations managers are concerned with how their efforts affect human behavior.
• They want to know how subordinate behavior affects management's planning, organizing, and controlling actions.

Decision-Making Models

• Aggregate planning models, break-even analysis, linear programming, and computer simulation.
• These models simplify operations managers' difficulties in decision-making.

Objectives of Operations Management

• Solve problems, reengineer processes, innovate, and integrate.
• Ensure the transformation process is performed efficiently and output is of greater value than the sum of the inputs.
• Create value by transforming inputs into goods and services.