OPREATIONS MANAGEMENT

What is Operations Management

Meaning of “Operations” The term “operations” refers to a function or system that
transforms inputs into outputs of greater value. Operations are often defined as a
transformation or conversion process wherein inputs such as materials, machines,
labour and capital are transformed into outputs (goods and services). In a productive
system, if the outputs are strictly tangible goods, such a system is referred to as a
“production system” and the transformation process is referred to as “production”.
Nowadays, the service system in which the output is predominantly a service or even a
pure service, is also treated as a productive system and often referred to as an
“operating system” instead of a “production system
Meaning of "Production" Production implies the creation of goods and services to satisfy
human needs. It involves conversion of inputs (resources) into outputs (products). It is
a process by which, raw materials and other inputs are converted into finished
products. Earlier the word "manufacturing" was used synonymously with the word
"production", but nowadays, we use the term "manufacturing" to refer to the process
of producing only tangible goods whereas the word "production" (or operation) is used
to refer to the process of creating both goods (which are tangibles) as well as services
(which are intangibles). Any process which involves the conversion of raw materials and
bought-out components into finished products for sale is known as production. Such
conversion of inputs adds to the value or utility of the products produced by the
conversion or transformation process. The utility or added value is the difference
between the value of outputs and the value of inputs. The value addition to inputs is
brought about by alteration, transportation, storage or preservation and quality
assurance.
What is Operations Management
 What is Operations Management
Operations management is an administrative function that seeks to ensure high levels of business and
organizational efficiency. This operations management definition confirms that the focus of this
executive function is the efficient utilization of labor and materials to maximize profitability.
The general purpose of operations management is to:
 Handle strategic issues
 Enhance operational efficiency
 Balance costs with revenue
 Generate high net profits
Operations management is a key component of production and operations management. Production and
operations management combines and transforms organizational resources into value-added goods
and services. Effective operations management ensures this process is executed in a controlled
manner in line with company policies.
Essentially, operations management denotes the key activities that typify the production of goods and
services. As such, operations managers are concerned with planning, supervising, and organizing the
production process.

The Three Main Elements Of Operations Management Are:

 Marketing — Involves raising the demand for the company's products to increase sales and boost
profitability.
 Finance — Effective operations management is characterized by minimum production costs. As
already stated, one primary goal of operations management is to balance costs and revenue to
maximize net profits.
 Operations — This element involves critical functions such as maintenance and replacement, job
design, quality control, capacity planning, product selection, and process planning.
 What is Operations Management
Operations management (OM) is the administration of business practices
to create the highest level of efficiency possible within an organization.
It is concerned with converting materials and labor into goods and
services as efficiently as possible to maximize the profit of an
organization.
Understanding Operations Management (OM)
Operations management involves utilizing resources from staff, materials,
equipment, and technology. Operations managers acquire, develop,
and deliver goods to clients based on client needs and the abilities of
the company.
Operations management handles various strategic issues, including
determining the size of manufacturing plants and project management
methods and implementing the structure of information technology
networks. Other operational issues include the management of
inventory levels, including work-in-process levels and raw
materials acquisition, quality control, materials handling, and
maintenance policies.
https://www.investopedia.com/terms/o/operations-management.asp
 Nature of Operations Management
1. Transformational Process
2. Offers Value Addition
3. System Itself( Sequence of Operation)
4. Exists for Certain Objectives
5. Carried out in Part of Organization
6. Interrelation among the system
7. Stratum / Hierarchy Formulation
8. Specialization of Functions
9. Increase in Entropy ( Measure of a Disorder in a system)
10.Increase in Productivity
 Objectives of Operations Management
1. Ultimate Objectives: The Main function of manufacturing activities is
to produce goods and services with the below qualities.
 Right Quality
 Right Quantity
 Right Time
 Pre Established Cost

2. Intermediate Objectives:
 Machinery & Equipments: a) Procurement of machinery & Apparatus
b) Utilization of machinery & Equipment
 Materials
 Manpower
 Manufacturing Services
 Functions Of Operations Management
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management.
 Functions Of Operations Management
Location of facilities
Location of facilities for operations is a long-term capacity decision which involves a long
term Commitment about the geographically static factors that affect a business
organization. It is an Important strategic level decision-making for an organization. It
deals with the questions such as ‘Where our main operations should be based?’ The
selection of location is a key-decision as large investment is made in building plant and
Machinery. An improper location of plant may lead to waste of all the investments
made in plant And machinery equipment’s. Hence, location of plant should be based
on the company’s expansion.
 Functions Of Operations Management
Plant Layout And Material Handling
Plant layout refers to the physical arrangement of facilities. It is the configuration of
departments, Work centers and equipment in the conversion process. The overall
objective of the plant layout Is to design a physical arrangement that meets the
required output quality and quantity most Economically.
 Functions Of Operations Management
Product design
Product design deals with conversion of ideas into reality. Every business organization have
to Design, develop and introduce new products as a survival and growth strategy.
Developing the New products and launching them in the market is the biggest
challenge faced by the organizations. The entire process of need identification to
physical manufactures of product involves three Functions: marketing, product
development, manufacturing.
Product development translates the Needs of customers given by marketing into technical
specifications and designing the various Features into the product to these
specifications. Manufacturing has the responsibility of selecting the processes by which
the product can be manufactured. Product design and development provides link
between marketing, customer needs and expectations and the activities required to
manufacture the product.
 Functions Of Operations Management
Process Design
Process design is a macroscopic decision-making of an overall process route for converting
the Raw material into finished goods. These decisions encompass the selection of a
process, choice Of technology, process flow analysis and layout of the facilities. Hence,
the important decisions In process design are to analyze the workflow for converting
raw material into finished product And to select the workstation for each included in
the workflow
 Functions Of Operations Management
PRODUCTION PLANNING AND CONTROL
Production planning and control can be defined as the process of planning the production in advance,
setting the exact route of each item, fixing the starting and finishing dates for each item, to give
production orders to shops and to follow up the progress of products according to orders. The
principle of production planning and control lies in the statement ‘First Plan Your Work And then
Work on Your Plan’. Main functions of production planning and control includes Planning, routing,
scheduling, dispatching and follow-up.
 Functions Of Operations Management
QUALITY CONTROL
Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of
Quality in a product or service’. It is a systematic control of various factors that affect
the quality Of the product. Quality control aims at prevention of defects at the source,
relies on effective Feedback system and corrective action procedure. Quality control
can also be defined as ‘that industrial management technique by means of which
Product of uniform acceptable quality is manufactured’. It is the entire collection of
activities which ensures that the operation will produce the optimum quality products
at minimum cost.
 Functions Of Operations Management
MATERIALS MANAGEMENT
Materials management is that aspect of management function which is primarily concerned with The
acquisition, control and use of materials needed and flow of goods and services connected With
the production process having some predetermined objectives in view. The main objectives of
materials management are:
 To minimize material cost.
 To purchase, receive, transport and store materials efficiently and to reduce the related cost.
 To cut down costs through simplification, standardization, value analysis, import
 substitution, etc.
 To trace new sources of supply and to develop cordial relations with them in order to Ensure
 continuous supply at reasonable rates.
 To reduce investment tied in the inventories for use in other productive purposes and to
 Develop high inventory turnover ratios
 Functions Of Operations Management
MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very important part of the total
productive Effort. Therefore, their idleness or downtime becomes are very expensive.
Hence, it is very Important that the plant machinery should be properly maintained.
The main objectives of maintenance management are:
1. To achieve minimum breakdown and to keep the plant in good working condition at
the Lowest possible cost.
2. To keep the machines and other facilities in such a condition that permits them to be
used At their optimal capacity without interruption.
3. To ensure the availability of the machines, buildings and services required by other
sections Of the factory for the performance of their functions at optimal return on
investment.
 Objectives of Operations Management
 Maximum customer satisfaction through quality, reliability, cost and
delivery time.
 Minimum scrap/rework resulting in better product quality.
 Minimum possible inventory levels (i.e., optimum inventory levels).
 Maximum utilisation of all kinds of resources needed.
 Minimum cash outflow.
 Maximum employee satisfaction.
 Maximum possible production (i.e., outputs).
 Higher operating efficiency.
 Minimum production cycle time.
 Maximum possible profit or return on investment.
 Concern for protection of environment.
 Maximum possible productivity
 Different Types of Operations
• Manufacturing
• Service
• Retail
• Hospitality
• Logistics
• Supply Chain
 Process of Operations Management
Operations management is a process that consists of three main functions:
Planning: This is the process of determining what needs to be done and when
it needs to be done. With OM, you create a plan that will guide the
operations of your business.
Scheduling: It decides when each task will be completed. In operations
management, you create a schedule to ensure all tasks are completed on
time.
Execution: It is about carrying out the plan. In operations management, you
execute the plan by ensuring that all resources are used efficiently and
effectively.
 Examples of Operations Management
Operations management ensures all business operations are working
efficiently by optimally utilising all the resources to meet customer
requirements. It is concerned with managing the processes that create
and deliver the company’s primary products and services.
Common operations management activities that dominate the process
include:
 Product and service design
 Process selection
 Capacity planning
 Quality control
 Inventory management
 Scheduling
 Supply chain management
 Project management.
 Examples of Operations Management
Operations management ensures all business operations are working
efficiently by optimally utilising all the resources to meet customer
requirements. It is concerned with managing the processes that create
and deliver the company’s primary products and services.
Common operations management activities that dominate the process
include:
 Product and service design
 Process selection
 Capacity planning
 Quality control
 Inventory management
 Scheduling
 Supply chain management
 Project management.
 Examples of Operations Management
• Healthcare – An operations manager of a healthcare facility is generally
responsible for ensuring efficiency in delivery of high-quality care. That
can include overseeing administrative costs, managing claims and billing,
and legal compliance.
• Manufacturing – A company that makes home appliances, for example,
has processes for sourcing materials, managing factories, maintenance,
overseeing inventory, and ensuring quality.
• Restaurant – An operations manager for a restaurant or chain of
restaurants is usually responsible for facility maintenance, employee
training and supervision, financial planning, inventory management,
compliance, and payroll.
• Retail – In an industry that can span multiple environments, from brick-
and-mortar to e-commerce and single stores to chains, retail operations
can encompass many functions, including sourcing, inventory, staffing,
logistics, store management, and customer service.
• Transportation – Operations management for a transportation company
includes overseeing vehicle maintenance, fuel supply, routing, staffing,
and communication, among other functions.
 The Main Characteristics Of Operations
Management
• Flexibility
• Quality
• Effectiveness
• Profitability
• Coordination
• Analysis
 The Main Characteristics Of Operations
Management
• Flexibility
• Quality
• Effectiveness
• Profitability
• Coordination
• Analysis