Operations Management - Essay Example

? The essence of Operations Management is the need to make rational decisions in difficult circumstances with limited, imperfect information Introduction Operations management is part of a distinct function in a production or service company. It is a significant issue particularly in the success of a project. If you are the ‘boss’ in the area of production, you have to consider yourself a mere employee or a worker. The scenario is this: a boss sits in a swivel chair, uses his phone and any means of communication to demand action from subordinates. But an operations manager does not take anything for granted. He works all day long, does not sit, sweats a lot and takes orders from the real boss, the owner of the company or the project that is being undertaken. An operations manager is an action officer and operations management is one of the most demanding jobs in a company or organisation. He/she needs all the information necessary and provides an immediate, rational decision, but information is not as readily available anytime because of one reason or another. Operations management deals with decision making related to production processes to ensure that the results are produced according to specifications. Information about materials, labor and resources are used to obtain goods or services using one or more conversion and transformation processes. This adds value to the product. (Shim and Siegel, 1999, p. 2) Operations management begins with a step-by-step process and plans which are based on careful analysis and decisions of a product or service. Operating plans are made according to long-term and short-term strategy and are translated into schedules to be followed by production processes. Production planning and material control have to be coordinated with manufacturing in the execution of the plan. Main Points Operations management is basically concerned with the production of goods. But it is now linked to almost all areas of business activity. Operations management is concerned with the ‘design, operation and improvement of the systems’ that focuses on the creation and delivery of the company’s product or service (Lowson, 2002, p. 4). Since this definition emphasizes on the systems of the organization, it also emphasizes the internal and external systems that include resources and technologies for the creation and development of the company’s product or service. Operations management started as a concept and planning method during the early 1900s of rapid industrialization and the demands of munitions production in World War I. Management scientists Elton Mayo and Frederic Taylor studied people and productivity in factory. There were many firsts during this time as these social scientists provided theories and applications in their studies. Henry Gantt developed his now-famous Gantt chart which is used in project management. Operations management needs vast amount of information in order to be successful. Computers were then non-existent and with the emergence of mainframe digital computers in the 1950s and 1960s, processing and updating of critical path networks became faster and easier. Du Pont, an old-time defence industry organisation exploited this to produce powerful planning and scheduling tool. Globalisation and information revolution influenced the way operations are run in organisations. The Internet and Information Technology have made the life of the operations manager quite easier. This began in the 1970s when the rapid growth of information technology saw the emergence of automation in industries and manufacturing. Vast amounts of information from databases are now available to planners and operations managers. The emergence of IT brought another different kind of project manager on the scene; they are the IT project managers who possessed technical and mental skills needed to lead teams developing IT projects. (Lock, 2007, p. 3) Operations management can be subdivided into sections to make planning and operations easier: 1. Decision making tools and methods 2. Demand forecasting 3. Planning systems 4. Designing systems 5. Operating and controlling systems These sections have to pass through a rigorous process of information inputs. Important information about a certain project is needed. It may come from databases or raw information from the field. Information should include data about material, parts, paperwork forms, customers, and all other aspects of production or construction. The output of production may include completed parts, products, chemical, service to customers, and in the case of construction, a completed project such as a building or structure. Information systems are important in linking the different aspects of production or construction. Therefore, data are vital. Software is also important. The company should provide a computer software that will link the network and allow for a smooth flow of communication among the various departments in the operation. Continuous flow production systems link the different departments, facilities and routings. These parts with their respective functions are standardized and fed into the IT infrastructure. Continuous systems are represented in practice by production and assembly lines and standard procedure. Intermittent production systems refer to systems with facilities that must be flexible enough to handle a wide variety of products and sizes. Transportation facilities between operations have to be flexible to accommodate a wide variety of input characteristics as well as routes through the system. There is an intermittent flow of production in an intermittent system. (Shim and Siegel, 1999, p. 4) The problems that occur in production systems require major types of decisions; these are those that relate to the design and the operation and control of the systems. These require long-run and short-run decisions. Operations Strategy This is concerned with setting broad policies and plans for using the production resources of the firm to best support the firm’s long-term competitive strategy. (Waters, 1999, p. 11) A vast amount of information is required for operations strategy. With IT, this may not cause a lot of problems. But feeds and data coming from the different databases, from raw information and other communication tools, should be put together to form a good strategy. Operations strategy issues need data about capacity requirements (amount, timing and type); facilities (size, location, and specialization); technology (equipment, automation, and linkages); extent of use of suppliers and distributors; work force (skill level, wage policies, employment security); quality (defects, monitoring, intervention); product planning and materials control (sourcing policies, centralization, rules); organization (structure, reward systems, role of staff, motivation of employees), and so on. (Waters, 1999, p. 11) An operations strategy involves a mixture of analysis, reasoning, experience and intuition. Some steps are hereby provided: Analyse the business strategy. Understand the market in which the operations strategy must work. Find ways and information that will lead to success. Describe the general features of the process. Design the best organizational structure, controls and functions. Define measures to compare actual performance of the company and that of competitors. Monitor and improve actual performance. (Waters, 1999, p. 20) Discussion The purpose for which this essay was designed is to present the challenges faced in operations management, particularly the need to provide rational decisions in the face of little or imperfect information. First, we have presented the objectives and function of operations management in the midst of the existing forces of globalisation. Organisations today have also to cope with the information revolution, and whether this is beneficial for the organisation or not, the information revolution allows access to the vast amount of information and data that technology can offer. This includes the benefits of databases and the vast repositories of information which can be available through knowledge sharing between organisations. Information Technology offers many benefits for operations management. In fact, operations management cannot normally function without the aid of IT infrastructure. And this is one area where more functions are taken in operations management with less manpower needed. Knowledge management is another area where operations managers have to be well-equipped. Knowledge includes the experience and skill that the organisation with its human resource has accumulated over the years. This is not common to all organisations but each organisation has its own distinct organisational knowledge. This adds value to the organisation and the workforce. It cannot be taken away from the organisation and it has become a part of the organisation. In the age of globalisation, knowledge is both a product and a resource. Operations managers have to focus on knowledge-based management and should be concerned with the knowledge people possess, or what is termed as ‘people-embodied knowhow’. Supply chain is another concern of operations management. This is crucial to customer satisfaction while customer satisfaction is critical to customer loyalty, and loyalty critical to profitability. Supply chain learning should be a part of operations strategy to address these issues. Companies attain competitive edge through constant innovation, and innovation should be a part of operations management. Supply chains can help in having a good relationship with customers, but supply chains have two attributes which are cost and service. Service it itself responsiveness to the customer’s demand, but demand can also increase cost. Putting a lot of innovations on the products means adding cost on production. Customer focus is vital to the supply chain. The customer wants to be understood and the firm (operations manager) can interpret this by answering what the customer wants of the product. The information can be inputted back to the customer for enhancement of the product. It if is service-oriented, the customer has to modify the service. Conclusion We have proven our hypothesis that the essence of operations management is to make rational decisions in difficult circumstances with limited, imperfection information. Difficult circumstances in a project refer to situations that are not part of the plans and have not been part of the normal course of events. These situations need outright decisions from the operations manager and from the people in the field, or those who are in direct contact with customers. Difficult circumstances also include breakdown of machineries, unavailability or shortage of resources, or lack of manpower or experienced staff to handle situations which have unexpectedly come up. These situations need expert knowledge from trusted personnel of the organisation. References Lock, D, 2007. Project management (ninth edition). England: Gower Publishing Limited. Lowson, R., 2002. Strategic operations management: the new competitive advantage. USA and Canada: Routledge. Shim, J. and Siegel, J., 1999. Operations management: a streamlined course for students and business people. New York: Barron’s Educational Series, Inc. Waters, D., 1999. Operations management. London: Kogan Page Limited. Read More