Operations management comprises those areas of management that are concerned with the productivity, quality, and cost in the operations function as well as strategic planning for the organization. This discipline covers not only manufacturing processes, but support processes that add value to the product or service as well as the management of the entire supply chain. There are a number of ways that organizations can streamline their operations to meet the demands of today's marketplace. However, for these to have any significant or lasting effect, they must be done within a coordinated strategy for both short and long-term organizational effectiveness. There are a number of tools and techniques that can be used by managers to improve the effectiveness and efficiency of business operations. These include lean manufacturing, total quality management, and business process reengineering strives to improve the effectiveness and efficiency of the various processes within an organization.
Keywords Business Process Reengineering (BPR); Just-in-Time Manufacturing (JIT); Lean Manufacturing; Operations Management; Six Sigma (6s); Stakeholder; Strategic Planning; Total Quality Management (TQM)
Management: Operations Management
Business organizations exist to provide something of value to their stakeholders. For stockholders, this may mean profitability and return on investment. For employees, this may mean job security and a wage that is at or above industry standards. For distributors and suppliers, this may mean sufficient commerce to keep their own operations going. To meet these disparate objectives, organizations need to be able to offer a product or service of value to the customer, whether it is light-weight running shoes, steel rivets, or consulting services. Operations management comprises those areas of management that are concerned with productivity, quality, and cost in the operations function (i.e., activities necessary to transform inputs such as business transactions and information into outputs such as completed transactions) as well as strategic planning for the organization. Business operations include any processes that transform any inputs such as labor, capital, materials, and energy into products and services that are of value in the marketplace. Operations management draws from multiple disciplines in order to optimize the effectiveness of operations within the organization.
Operations management is more than an emphasis on manufacturing processes. There are many activities within an organization that add value to the end product or service but that do not directly provide goods or services to the customer. For example, the accounting department adds value to the organization's activities by making sure that the employees, distributors, and suppliers are all paid promptly and accurately. Human resources also supports business operations by developing and implementing policies and procedures that ensure that employees are treated fairly and are motivated to use their skills and talents in helping the business become a high performing organization. In addition, operations management is not only concerned with the operations within the single organizational entity, but also of the smooth and efficient operations of the entire supply chain. This is the network of organizations involved in the production, delivery, and sale of a product. The supply chain may include suppliers, manufacturers, storage facilities, transporters, and retailers. The supply chain includes the flow of tangible goods and materials, funds, and information between the organizations in the network, all of which adds value to the product or service being offered to the customer.
Historically, operations management focused on providing the highest possible quality for the lowest possible price. Increasingly, however, customers are also demanding greater product variety, short life cycles, and other qualities that require organizations to more closely examine their operations for ways to better meet the needs of the marketplace. In addition, globalization has brought with it increased competition from overseas operations that are able to provide products or services at lower cost. This results not only in greater competition but also in the need to put even more emphasis on optimizing the effectiveness and efficiency of operations in order to stay viable in the marketplace.
There are a number of ways that organizations can streamline their operations to meet the demands of today's marketplace. However, for these methods to have any significant or lasting effect, they must be done as part of a coordinated strategy designed to improve both short and long-term organizational effectiveness. A strategy is a plan of action to help the organization reach its goals and objectives, including organizational effectiveness and marketplace viability. A good business strategy should be based on the rigorous analysis of empirical data, including market needs and trends, competitor capabilities and offerings, and the organization's resources and abilities. The strategic planning process helps the organization determine what goals to set and how to reach them. This process also allows the organization to determine and articulate its long-term goals and to develop a plan to use the company's resources — including materials, equipment and technology, and personnel — in reaching these goals.
Because of its concern with organizational performance and effectiveness, one of the tasks of operations management is to set the strategy — including goals and objectives — of the organization. Strategic planning is the process of determining the best way to accomplish the goals of the organization. Goals and objectives define in practical terms what the organization would like to be within a specific period of time. Determining the organization's business goals requires an examination of all the organization's operations and processes to determine which add value to the organization's products or services and which do not.
There are a number of tools and techniques that can be used by managers to improve the effectiveness and efficiency of business operations. These include lean manufacturing, total quality management, and business process reengineering. Lean manufacturing strives to eliminate waste and continually improve productivity. Total quality management strives to improve customer satisfaction by improving quality. Business process reengineering strives to improve the effectiveness and efficiency of the various processes within an organization.
Lean manufacturing is manufacturing philosophy that attempts to eliminate all waste from production processes. The objectives of lean manufacturing are to lower production costs, increase output, and shorten lead times. To do this, lean manufacturing efforts attempt to do several things. First, lean manufacturing efforts attempt to reduce defects and unnecessary physical waste during the production process. This includes reducing the excess or unnecessary use of raw materials or other inputs, reducing the number of defects and their associated costs, and reducing or eliminating product features that are not of value to the customer. Lean manufacturing efforts also attempt to reduce manufacturing lead times and production cycle times in the manufacturing process. This can result in less cost associated with storage of materials and products and the ability to get products to the customer in a more timely manner. Similarly, lean manufacturing attempts to minimize inventory throughout the production process. This practice helps reduce the amount of working capital needed to sustain operations. Just-in-time manufacturing is a manufacturing philosophy that strives to eliminate waste and continually improve productivity. The primary characteristics of just-in-time manufacturing include having the required inventory only when it is needed for manufacturing and reducing lead times and set up times. In addition, lean manufacturing attempts to optimize the use of equipment and space to reduce or eliminate bottlenecks in manufacturing processes and optimize...
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