Operations Management and Operational decisions
Increase Organization Efficiency, 3 ways to optimize Operations System
Operations Management Decisions
Operations Management is an area of management which is concerned with the management of the operations function of the organization. Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. The basic role of operations management in a company is its role in managing the process of converting raw inputs such as raw materials into finished goods and services. In its transformation role operations management is directly responsible for many decisions and actions that give rise to design and delivery problems/issues of strategic and operational relevance. Operations management is concerned with maintaining a steady workflow, whether for producing your products or administration.
The term operations management encompasses planning, implementing/(organizing and leading) and supervising/controlling the production of goods and services. Operations management has responsibility in both strategic and day-to-day production, in either goods or services. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. From a P-L-O-C model viewpoint operations managed can be described in terms of the management functions as follows:
Operations management handles various strategic issues including determining the size of manufacturing plants, and project management methods, and implementing the structure of of the organization and information networks. As well as operational issues such as management of inventory levels, including work-in-process levels, raw material acquisition, quality control, materials handling and maintenance policies.
Operations Management Functions
Operationally, operations management involves managing processes, resources such as materials, machines, technology, and people to produce products - goods and services - that the marketplace wants. Operations management involves utilizing operations system to develop and deliver goods and services to customers efficiently. The primary functions/activities of operations management include:
The direct responsibilities of operations management include managing both the operations process, embracing design, planning, control, performance improvement of all processes in an efficient way to transform resources into quality goods or services; and managing development of operations strategy. The indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations, such as marketing, human resources, finance, etc. The whole chain of events must be well managed for a business to be competitive and profitable. For example, operational procedures for making your product cover ordering materials and supplies, scheduling labor and maintaining your equipment.
Operations Function
The term operations embraces all the activities required to create and deliver an organization's products (goods and services) to its customers or clients. Operations function is the term used to describe how the core operation of the organization design and functions. Operations functions refer to the departments in an organization that keep the day-to-day activities that keep the business on track. The operations function focuses on maintaining the efficiency of the value creation processes and helps the different functions involved in the value chain make smart decisions. Every organization has an operations function, whether or not it is called operations or not, and it is mainly responsible for producing goods and services. It however, needs support and input from other areas of the organization such as: product management, supply chain, inventory, forecasting (production/sales), scheduling, quality management, and facilities planning and management.
Operations Management Decisions
Operations management involve decisions that may be long-term (strategic), intermediate-term (Tactical), or short-term (day-to-day operational). The goal of operations management is to maximize efficiency while producing goods and services that effectively fulfill customer needs.
Operations Management is an area of management which is concerned with the management of the operations function of the organization. Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. The basic role of operations management in a company is its role in managing the process of converting raw inputs such as raw materials into finished goods and services. In its transformation role operations management is directly responsible for many decisions and actions that give rise to design and delivery problems/issues of strategic and operational relevance. Operations management is concerned with maintaining a steady workflow, whether for producing your products or administration.
The term operations management encompasses planning, implementing/(organizing and leading) and supervising/controlling the production of goods and services. Operations management has responsibility in both strategic and day-to-day production, in either goods or services. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. From a P-L-O-C model viewpoint operations managed can be described in terms of the management functions as follows:
- Planning - Planning activities includes operations planning, production planning and scheduling, and sales planning. and capacity planning. For example, production planning establishes the basic objectives for work in each of the major functions. It is based on the best trade-offs for the firm as a whole, weighing sales and marketing objectives, manufacturing costs, scheduling and inventory objectives, and the firm's financial objectives. All these must be integrated with the strategic view of where the company wants to go. Scheduling ensures work will be finished on time. It involves setting beginning and end times for each step in the production process, checking the use of resources such as labor, material and machinery so that production moves smoothly.
- Organizing - This encompasses the activities that establish structure of tasks, roles and responsibilities, authority, and the flow of information within the operations function. Operations managers determine the activities required to achieve the goals and assign authority and responsibility for carrying them out.
- Leading - Leading is stimulating high performance by members of the organization. Leading involves is getting members of the organization on board with your plan. Normally, this means connecting with direct reports or teammates on a personal level.
- Controlling - This refers to the activities that assure the actual performance is in accordance with planned performance with respect to cost, quality, and efficiency. Operations managers exercise control by measuring actual outputs and comparing them to planned operational output. Operational Control involves control over intermediate-term operations and processes but not business strategies. Operational control systems ensure that activities are consistent with established plans. Mid-level management uses operational controls for intermediate-term decisions.
Operations management handles various strategic issues including determining the size of manufacturing plants, and project management methods, and implementing the structure of of the organization and information networks. As well as operational issues such as management of inventory levels, including work-in-process levels, raw material acquisition, quality control, materials handling and maintenance policies.
Operations Management Functions
Operationally, operations management involves managing processes, resources such as materials, machines, technology, and people to produce products - goods and services - that the marketplace wants. Operations management involves utilizing operations system to develop and deliver goods and services to customers efficiently. The primary functions/activities of operations management include:
- Planning - Operational planning is the foundational element of operations management. This is the process of turning your strategic plan into detailed map that outlines exactly what actions your team will take on a weekly basis or sometimes on a daily basis. The management objectives of production planning is to develop an integrated game plan where the operations portion is the production plan. The production plan then links the firm's strategic goals to operations (production functions) as well as coordinating operations with sales objectives, resource availability, and financial budgets.
- Finance - This refers to the aspects of finance relevant to production such as: creating budgets to meet production goals; finding investment opportunities; allocating budgets and managing resources;
- Product Design - This refers to the aspects of product design relevant to customer needs and marketing trends. The tasks performed include: consolidating market research into digestible results; communicating results to product design; offering design direction to help designers devise a product.
- Quality Control - The quality control function is responsible for testing the product to guarantee there are no defects before releasing it to the public. Quality control goes hand in hand with product design. After the production team create a product, operations will ensure it meets quality standards. The quality control tasks include: performing risk analysis to identify potential problems; inspecting products to make sure they meet quality standards; creating tests to control product quality; documenting any defects or deficiencies of the product.
- Forecasting - Operations management uses forecasting to predict the demand for a product. Forecasting involves trying to answer hypothetical questions such as: what will the demand for the product be in the future? what marketing and promotions should be plan for this product? what sales initiatives should we plan for this product? can we estimate the storage costs we will need for inventory? can we determine the cost of sourcing and raw materials. The goal of strategic management is to make sure
- Strategy - This is a broad function of operations management that can involve operations planning, monitoring and analysis. The goal of strategic management is to make sure production decisions align with business goals. A company's business objectives may include: prioritizing customer satisfaction; controlling costs; improving production systems. The operations managers job is to find ways (strategies) to meet these objectives.
- Supply Chain Management - This refers to supply chain issues internal to a company. The supply chain is cyclical and involves: sourcing raw materials, supplier, production/manufacturer, distributor, retailer, and consumer.
The direct responsibilities of operations management include managing both the operations process, embracing design, planning, control, performance improvement of all processes in an efficient way to transform resources into quality goods or services; and managing development of operations strategy. The indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations, such as marketing, human resources, finance, etc. The whole chain of events must be well managed for a business to be competitive and profitable. For example, operational procedures for making your product cover ordering materials and supplies, scheduling labor and maintaining your equipment.
Operations Function
The term operations embraces all the activities required to create and deliver an organization's products (goods and services) to its customers or clients. Operations function is the term used to describe how the core operation of the organization design and functions. Operations functions refer to the departments in an organization that keep the day-to-day activities that keep the business on track. The operations function focuses on maintaining the efficiency of the value creation processes and helps the different functions involved in the value chain make smart decisions. Every organization has an operations function, whether or not it is called operations or not, and it is mainly responsible for producing goods and services. It however, needs support and input from other areas of the organization such as: product management, supply chain, inventory, forecasting (production/sales), scheduling, quality management, and facilities planning and management.
Operations Management Decisions
Operations management involve decisions that may be long-term (strategic), intermediate-term (Tactical), or short-term (day-to-day operational). The goal of operations management is to maximize efficiency while producing goods and services that effectively fulfill customer needs.
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OM Strategic Decisions
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OM Operational Decisions
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OM Administrative Decisions
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Operations Management Strategic Decisions
Operations management decisions of strategic relevance are concerned with shaping the long-term capabilities of any type of operations and their contribution to the organization's overall strategy. Operations management decisions of strategic relevance can be guided by the following operations' strategic decision areas:
These strategic decisions in operations management can be applied to organizations of any size to guide decisions within important areas related to operations to achieve the general operations strategies.
Operations management decisions of strategic relevance are concerned with shaping the long-term capabilities of any type of operations and their contribution to the organization's overall strategy. Operations management decisions of strategic relevance can be guided by the following operations' strategic decision areas:
- Location - A company's objective in this strategic decision area is the selection of a location to allow for example, optimum transportation of its products to distribution channels; optimum transportation of material an parts to manufacturing facilities, etc. , Operations management decision makers must give due consideration to the supply chain and how the facility location will receive supplies, the movement of goods and services to customers, and the role of marketing and public relations in the location choice. These decisions involve huge investments, made by the firm, in acquiring building(s), arranging and installing plant and machinery, etc.
- Layout Design and Strategy - This decision area of operations management is concerned with the company's design of its workflows and facilities. Decision makers must give due consideration to, for example, the placement of desks, workstations, and how materials are delivered and used.
- Process and Capacity Design - This decision area in operations management is concerned with design strategies which support production goals including technology nd resources. Decision makers must give due consideration to strategies to flexibly increase capacity if the organization has to scale production to match increase in demand. Process technology decisions on how to structure the conversion processes and methods used in execution. A company's main objective in this area is on how to maintain optimum production process.
- Design of Goods and services - This decision area of operations management is applied based on market research, trends and forecasting. The company's objective in this strategic decision as it relates to Operations Management is to support the strategic positioning of the company's products - goods and services. This includes looking for ways to implement consistency in costs, quality, and resources across business divisions or brands.
- Quality Management - Quality management is the systematic control process of keeping an intended level of quality in the goods and services, in which the organization deals. It attempts to prevent defects and make corrective actions (if they find any defects during the quality control process), to ensure that the desired quality is maintained, at reasonable prices. The objective in this area is to maintain Operations Management practices towards the course of maximizing quality of output and matching the company's brand image with the expectation of consumers. This decision area in Operations management at organizations is applied through quality assurance and control programs. This is the process controlling, measuring and improving the quality of an organization's processes, goods and services.
- Human Resources and Job Design -This decision area of operations management is concerned with recruiting good talent and continuous improvement programs and training and institute employee satisfaction programs to achieve success.
- Supply Chain Management - This decision area in operations management is concerned with determining the best strategies to streamline be cost effective and to develop trusted partners.
- Inventory Management - This decision area of operations management is concerned with planning and strategies for effective inventory control subject to influences of weather, supply shortages, and labor on how an organization maintains its inventory.
- Scheduling - This decision area in operations management is concerned with scheduling resources for production and other company activities to ensure efficient and effective achievement of operations goals.
- Maintenance - This strategic operations area guides operations management decisions concerned with maintaining people, machines, processes needed to create and deliver value to customers. These decisions relate to what the organization needs to do to maintain quality and keep resources reliable and stable. Machinery, tools and equipment play a crucial role in the process of production. So, if they are not available at the time of need, due to any reason like downtime or breakage etc. then the entire process will suffer.Hence, it is the responsibility of the operations manager to keep the plant in good condition, as well as keeping the machines and other equipment in the right state, so that the firm can use them in their optimal capacity.
These strategic decisions in operations management can be applied to organizations of any size to guide decisions within important areas related to operations to achieve the general operations strategies.
Operational Decisions
Operational management decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization. These involve the daily business decisions that are done in high-volume by every business. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic is being consistent at following defined rules or guidelines. Another characteristic is that these decisions should often be made as quickly as possible and sometimes they are made while clients are waiting. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Operational decisions are made within the context of longer-term strategic decisions, so that an organization’s strategy is always supported by its operating decisions. Operational decisions are taken in accordance with strategic and administrative decisions; and are related to the efficient production of goods and services. For example, to reduce cost is a strategic goal which is achieved through operational decision of reducing the number of employees; and how we carry out these reductions will be administrative decision. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Some examples of these decisions include:
In operational decision making, the decision makers have to consider factors such as volume, latency, variability, managing risk, self service and personalized. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic, is being consistent at following defined rules or guidelines. Another characteristic is that these decisions is, they should often be made as quickly as possible and sometimes they are made while clients are waiting. Good operational decisions help eliminate wasteful activities and costly reports. They reduce fraud and prevent fines. They help people in your organization be more productive, and spend their time where it really matters.
Operational management decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization. These involve the daily business decisions that are done in high-volume by every business. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic is being consistent at following defined rules or guidelines. Another characteristic is that these decisions should often be made as quickly as possible and sometimes they are made while clients are waiting. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Operational decisions are made within the context of longer-term strategic decisions, so that an organization’s strategy is always supported by its operating decisions. Operational decisions are taken in accordance with strategic and administrative decisions; and are related to the efficient production of goods and services. For example, to reduce cost is a strategic goal which is achieved through operational decision of reducing the number of employees; and how we carry out these reductions will be administrative decision. While these decisions are often made about customers, they can also involve suppliers, employees and products.
Some examples of these decisions include:
- Which customer orders/jobs to schedule for production - [Production]
- Which components and raw materials to buy from suppliers, - [Purchasing]
- Which production equipment to schedule for use, [Production Scheduling]
- The nature of a marketing campaign - [Marketing]
- Where to invest excess funds - [Finance]
- Determining how much inventory to keep on hand. [Operations]
In operational decision making, the decision makers have to consider factors such as volume, latency, variability, managing risk, self service and personalized. It’s in the nature of operational decisions to be easily repeatable, because one of its primary characteristic, is being consistent at following defined rules or guidelines. Another characteristic is that these decisions is, they should often be made as quickly as possible and sometimes they are made while clients are waiting. Good operational decisions help eliminate wasteful activities and costly reports. They reduce fraud and prevent fines. They help people in your organization be more productive, and spend their time where it really matters.
Administrative Decisions
Administrative decisions are taken in accordance with strategic and operational decisions; and are related to workings of employees in the organization. Administrative decisions and thinking fleshes out top-level strategic plans and breaks them up actionable chunks for operational decision makers. Administrative decision making is contextual both in terms of the type of decisions a position holder must make as well as how they should be made (style). The type of administrative decision is a function of administrative level, and the style is a function of organizational culture. Administrative decisions are routine decisions which help or facilitate strategic decisions or operational decisions.Administrative decisions may be as mundane as refilling the water cooler, to as stressful as fulfilling a customers order within minutes.
Administrative decisions are taken in accordance with strategic and operational decisions; and are related to workings of employees in the organization. Administrative decisions and thinking fleshes out top-level strategic plans and breaks them up actionable chunks for operational decision makers. Administrative decision making is contextual both in terms of the type of decisions a position holder must make as well as how they should be made (style). The type of administrative decision is a function of administrative level, and the style is a function of organizational culture. Administrative decisions are routine decisions which help or facilitate strategic decisions or operational decisions.Administrative decisions may be as mundane as refilling the water cooler, to as stressful as fulfilling a customers order within minutes.
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