Increase Organization Efficiency, 3 ways to optimize Operations System

Operations Management - Operational Decisions
​Operation management refers to the direction and control of the process that transforms inputs into products and services. Broadly interpreted, operation management underlies all functional areas, because, processes are found in all business activities. The goal of operations management is to maximize efficiency while producing goods and services that effectively fulfill customer needs. The purpose of the operations process is to keep the current value chain activities that drive the delivery of products and services in the organization moving and functioning at peak levels. Operations management is the profession is the profession that encompasses planning, implementation, and supervising that production. Operations involve the daily tasks and tactics that transform materials and other input resources into a product - goods or services.  Operations management is responsible for managing the resources and processes needed to produce the company's goods and services. 

Operations Management Decision Areas
Operations decisions include decisions that are strategic in nature, meaning that they have long-term consequences and often involve a great deal of expense and resource commitments. The most common type of repeatable decision is the operational decision. These involve the daily business decisions that are done in high-volume by every business. When a customer contacts your business, places an order, or does any form of interaction, it involves operational decisions. This type of decision is essential to every organization, no matter what size, because of how often they are made. Operations decisions (Operational Decisions) involve the daily business decisions that are done in high-volume by every business. When a customer contacts your business, places an order, or does any form of interaction, it involves operational decisions.

• Product Management
• Supply Chain
• Inventory
• Scheduling
• Quality
• Facilities planning and management

This type of decision is essential to every organization, no matter what size, because of how often they are made. 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. Thanks to the Internet of Things, more and more physical objects are wired to the Internet, expanding both the amount of data and the number of operational decisions that can be managed and improved to increase business value.

Some Example of Operations Decisions are:

• ​Which customer orders to schedule for production
• Which components and raw materials to buy from suppliers
• Scheduling production equipment for use
• Deciding the nature of a marketing campaign
• Deciding where to invest excess funds
• Determining how much inventory to keep on hand.

​
When taken individually, their value isn’t as high as the other decisions because it usually involves a single transaction or customer. But when gathered, this data becomes extremely valuable. When you consider a decision that’s been made thousands of times a year, its value increases and often exceeds that of the other types of decisions.

​​Business Operations Functions
​Operations in a company refers to the activities that create and deliver value such as goods or services to customers both external and internal. Internal customers can exist in any of the functional areas relevant in executing the organization's strategy. Operations tactically, refers to the activities that businesses engage in on a daily basis to increase the value of the enterprise and earn a profit. The activities can be optimized to generate sufficient revenues to cover expenses and earn a profit for the owners of the business. ​Business Operations Functions may include finance, human resources, product design, forecasting, and sales. Business operations evolve as the business grows management must be ready to handle challenges such as legal issues, regulatory issues, customer relationship issues, etc. Not every organization will have a functional department called 'operations'; but they will all undertake operations activities, because every organization produces goods and/or delivers services. 
​
[TBD]
 ​
Operations management has both strategic and tactical roles in the organization. Strategically operations management is concerned with operations strategy design and implementation. And tactically, it is concerned with managing the daily tasks and activities that transform materials or actions into products using the Operations System. ​Operations management with effective operations strategy can optimize the use of resources, people, processes, and technology.​​ The primary function of operations management is concerned with planning, organizing, directing, and overall control of all activities within the organization. This effectively aid in converting raw materials and human efforts into a durable good and service that consumers will be able to utilize. 
[TBD]

Operations management utilizes the Operations System in managing the efficient creation and delivery of value to customers. 

​Operations management involves the administration of business functions processes and practices to create the highest level of efficiency possible within an organization in converting materials and labor into goods, or efficiently delivering services to customers/clients in order to maximize the profit of an organization. 

[TBD]


Strategy - When utilizing strategy within operations management, this refers to planning tactics that can aid through optimized resources and development of a competitive edge over other businesses. Many business strategies include supply chain configuration, sales, capacity to hold money, and optimum utilization of human resources.


 

[TBD]



​
Operations Decision Engine
Businesses typically have a mix of production of goods and services that collectively define the value proposition offered to customers. Decisions about the product-mix are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and the dynamic stochastic nature of real-world production and service delivery systems often lead to goods and service production and delivery systems effective capacity levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually requires enhancing system parameters and/or reconfiguration of the operations systems.  ​

Business operations constitute many processes including materials acquisition and inventory management, manufacturing/production, product delivery, service delivery, etc. Operations engine enacts the operations system model. The Operations system is a joint configuration of processes and resources and resulting competencies that are aligned with the organization's desired competitive position, as defined by the Operations strategy. The Operations system is utilized by operations management to provide the best match of supply capacity with customer demand. It aligns organizational distinctive competencies with performance objectives - cost, quality, flexibility, dependability, and speed - to achieve sustainable competitive advantage at the operational level, and profitable organization growth.  Operations engine model integrates operations processes from the relevant functional areas, as defined by the strategic engine, ensuring sustainable competitive advantage and profitable organizational growth. ​Each of these functional area, department, division, etc., will have its own set of needs; and the company must determine how to address specific concerns such as resource allocation, operating expense efficiencies, and product improvement. The Operations Engine supports operations management in efficiently managing the day-to-day activities of the organization across functional areas to achieve performance efficiency in creating value at reasonable costs. 

​Transformation Process
A transformation process is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients. The main type of resources used in transformation processes include transformation resources such as  facilities and buildings, equipment, process technology, and people, and transformed resources such as material, information, and possibly the customer in some types of services processes. ​The process view focuses on how work is done, while the resource view focuses on who or what performs the work. Both are necessary to understand operations well. ​The resources involved with these processes can be categorized into Transformation Resources and Transformed Resources.

Transformation Resources
There are two (2) types of transformation resources, such as:

• Facilities - These include buildings, equipment, and process technology.
• Staff - All the people involved in the operations process; in services the customer may well be involved as a transforming resource. 

Transformed Resources
There are three (3) types of transformed resources, such as:

• Materials - These can be transformed either physically (e.g., manufacturing), by location (e.g., transportation), by ownership (e.g., retail), or by storage (e.g., warehousing).
• Information - This can be transformed by property (e.g., accountants), by possession (e.g., market research), by storage (e.g., libraries), or by location (e.g., telecommunication).
• Customers - They can be transformed either physically (e.g., hairdresser), by storage (e.g., hotels), by location (e.g., airlines), by physiological state (e.g., hospitals), or by psychological state (e.g., entertainment).

The transforming resource (i.e., facility, human resource, and equipment) and process technology (that define the production and service delivery systems) views are complementary to the competency view​.

• Manufacturing System
• Service Production System
• Management Decisions 
• Work System

<

>

Manufacturing Management
Manufacturing (Goods Production) systems are production systems that transform material (including parts and products) into finished goods/products delivered to customers. The capacity of these systems is defined in terms of the output of products/parts per some specified interval. Production work centers are augmented with work-in-process (WIP) inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system. 

​The production activities may be goods production (manufacturing) or service production. Production involves transformation of inputs, into the organization, into finished goods and/or services using processes that are actually present in the organization.

Management Functions

[TBD]


Manufacturing Production Process 
Manufacturing production systems comprise processes that are structured, recurrent activities that transform inputs into outputs (products). A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. Manufacturing processes create and deliver products and/or parts consumed in the production og goods delivered to customers. The capacity of these processes is defined in terms of the output of products/parts per some specified interval.

The service delivery system processes define a network of service centers connected and coordinated by the processes. Manufacturing work centers are augmented with Waiting areas/rooms that act as buffers to bottleneck resources and work centers that constrain the flow of patients (customers) through the system. These service delivery systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
​
​Manufacturing Production Systems
Production systems transform material (including parts and semi-finished products) into finished goods/products delivered to customers. The capacity of these systems is defined in terms of the output of products/parts per some specified interval. Production work centers are augmented with work-in-process (WIP) inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system. Manufacturing production systems comprise processes that are structured, recurrent activities that transform inputs into outputs (products). A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. Manufacturing processes create and deliver products and/or parts consumed in the production og goods delivered to customers.

The capacity of these processes is defined in terms of the output of products/parts per some specified interval. The manufacturing and/or service delivery system processes define a network of manufacturing and/or service centers connected and coordinated by the processes. Manufacturing work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.

The manufacturing system capacity can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.

Analyzing Production Systems
​​These production systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. ​Simulation enables users to explore the impact of maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc. Analysis informs operations management decisions in the following areas:
​

1. Supply or Sourcing Decisions - These decisions specify which activities are performed internally, and which activities are outsourced, and how to manage suppliers. Decisions involve defining the process boundaries and interfaces. It includes strategic sourcing decisions, vertical integration, and supply network configuration.
2. Technology Decisions - These decisions characterize how to process inputs into outputs. It includes the methods and systems employed, as well as the know-how and intellectual property. The technology decisions can be grouped into the following key categories: a) coordination and information technology decisions such as assignment of responsibility, incentives, measurement, and control; b) product technology decisions in product philosophy, product architecture, and product capabilities; c) process technology decisions on how to structure the conversion processes and methods used in execution; and d) transportation technology decisions on how goods are exchanged among different activities in the network.
3. Demand Forecast Decisions - These decisions specify how to match demand to available supply. These decisions characterize the interfaces and relationships with customers and include demand planning and forecasting, as well as tactical capacity allocation and order management. Demand management is an important driver in inflexible supply processes that cannot quickly adapt to changes in demand such as the core processes in airlines, hotels, hospital wards, and car rental companies, It also relates to service and customer relationship management.
4. Improvements and Innovation Decisions - These are decisions on characterizing the processes and incentives to improve and innovate products and processes.

Service Production Management 
Service management is the management of processes involved in service activities, including planning, organizing, staffing and controlling tasks. A service is intangible, yet provides satisfaction to the customer. It is performed by people, or machines; and may or may not be tied to tangible goods. A Service is a set of activities, benefits, or satisfaction offered for sale, or provided in connection with the sale of goods.

Basic Concepts
A service is designed based on answers to the following questions:

1. What is the 'service package', or 'service packages'?
2. Who are the customers for the 'service package'?
3. What are the standards for 'service package'?
4. How can the 'service package' be given to customers?

​
The answers to these questions set up the foundation for four elements that are critical to the design of a service:

1. Service Package - whether a mix of the physical items and service intangible or pure service and other features)
2. Service Package Standards - [TBD]
3. Service Producing Unit - [TBD]
4. ​Customer Participation - the degree to which customer needs to be involved in the production activity

 A service is an intangible, yet provides satisfaction to the customer. It is performed by people, or machines but not manufactured by machines, and may or may not be tied to tangible goods ​

Types of Service
Services may be categorized as follows:

• Consumer Services - Consumer services are intangible products or actions that are typically produced and consumed simultaneously. Some common examples are haircuts, auto repairs, and landscaping.  
• Producer Services - Producer services involve the production and delivery of goods and services, and constitute firms providing services such as consulting advise, legal advise, IT support, transportation and maintenance facilities.
• Retail Services - Retail/Supply Service involve transformation of goods involving transfer of ownership from the supplier (service provider) to the customer.

​Distinctive Features of Service Producing Unit
Although many of the principles of good management in a manufacturing/production environment also apply in organizations that provide services, service businesses such as banking, professional firms of accountants, etc. Services do have a number of distinctive features which have implications on how they are managed, these include:

1. Standardization - Services are less easily standardized than products and so service quality tends to be more variable. This makes human resource management and motivation more critical.
2. Tangibility - Services are often intangible and multi-dimensional; this can make attracting customers more difficult as it often depends on promoting an intangible item.
3. Simultaneity - Services are produced and consumed simultaneously; this means the service provider and customer will interact during the service delivery process. The amount of interaction is termed the degree of customer contact.
4. Storage - Unlike manufactured products, services cannot be stored, but must be consumed as they are produced or they are wasted. This creates additional problems matching productive capacity with customer demand. This is reflected in for example, the marginal cost to fill empty seats - a plane flying empty to New York is a service provided but wasted. 
5. Service Costs - Ascertaining the cost of individual services is often also problematic, as the cost structure of many services business is such that costs are often shared among different services. This makes pricing and analysis of profitability of different services more difficult.

[TBD]

Operations Management Decisions
​Operations management is concerned with operational decisions and encompasses management functions such as planning (manpower planning, capacity planning, production planning), production implementation and execution, and supervision of the production of goods and services. 

​Operations Management functions are comprised of the following tasks:

• Human Resource Management - Human resource is a prime contributor to the success of any service operation. It is also a major cost element due to the labor-intensive nature of service operations. In a service operation, in addition to managing the workforce, there is also the task of managing the customers. Customers are managed as a labor resource, or resource, which flows through the system, thus they have to be trained to behave appropriately. for example, in a super market customers select and carry goods to the checkout, while in a hospital, patients have to go through different departments. The behavior of staff/operators and customers varies dramatically, thus it creates a great challenge in defining standards and ensuring consistency of quality. The tasks in human resource management include: manpower and customer planning, design of job, recruitment, selection and termination, training and development, promotion, motivation, payment and benefits, health and safety, and employee relations.
• Capacity Management - The purpose of capacity management is to match the level of operations with the level of demand so as to find the balance between cost and service levels. This involves two (2) main tasks: (1) considering the factors related to/from medium to long-term demand; (2) developing strategies for the use of resources in order to accommodate changes for short-term demands. There are two main strategies: (1) vary capacity - the capacity is changed to follow changes in demand; (2) manage demand - influence demand to minimize the need to make changes in capacity. The role of demand patterns forecast is very important; the more accurate it is, the better the planning and arrangement of resources of the operation to meet the demand.
• Operations Control - Operations control involves activities concerned with ensuring that the service package is delivered to the customer at the right time and in the right right place. There are two (2) main areas: the receptionist/dispatcher role; and the production control role. The receptionist role associated with contacting and allocating customers, scheduling, and dispatching the service delivery system to customers. Production control role is responsible for activities at the interface between "front office" and the "back office/room". This is the main link between those having high contact with customers in"front office", to those in the "back room" who have little or no contact with customers. This area is very important in ensuring the service-producing unit delivers service packages to the customer as and when they are required or promised.
• Quality Management - Quality management is concerned with quality assurance of total service package. This involves activities and functions including designing,specification,and quality control in order to deliver the service package in a way that meets the customers' expectations. 
• Queuing Systems Design - []
• Materials Management - []
• Selection of Site Location - []
• Operations Strategy - []

​​

​Managing Transformation Processes
Operations Management is the management of the transformation of inputs, into the organization, into finished goods and/or services using processes that are actually present in the organization. It involves the administration of business practices to create the highest level of efficiency possible within an organization in converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. 



[TBD]
Work systems are designed to accomplish a variety of tasks such as:
​

1. Work systems that accomplish a task and then end, Special Projects .e., Conference, data collection, etc.
2. Work systems that are designed to manufacture a product for a specific time and then discontinued.
3. Work systems that link together to form a larger work system, for example Production Lines. Production Work Systems link the Supply Chain Work System (material purchases),  the Design Work System (Engineering), and the Packaging Work System (produced a purchase ready product).

All work systems are comprised of a series of elements that influence the work system. These elements are interdependent and operate together to create a whole system. 

Elements or Components of Work Systems
The elements or components that define a work system include:

1. Workers (Participants) - employees or contract workers.
2. Task - Task at hand that needs to be done, and how the task should be accomplished.
3. Organization - The Organization element is defined in terms of Organization Structure, Organization's Policies, and Leadership Practices. The Organization Structure includes the individuals, the roles in the company and how the roles relate regarding the work to be done.  The Organization's Policies include agreements, rules and statements that dictate the way the work needs to be completed. Leadership practices within the organization directs and controls the accomplishment of the work system and help maintain focus and motivation. 

[TBD]

​​[TBD]
​
The primary function of operations management is design and implementation of the operations system that will effectively aid in converting raw materials and human efforts into a durable goods and services that consumers will be able to utilize. It is comprised of transformation processes. The Operations System is the joint configuration of resources and processes such that its resulting competencies are aligned with the organization's desired competitive position. The process view focuses on how work is done, while the resource view focuses on who or what performs the work. Both are necessary to understand operations well. The specific choices, of resources and processes affect what the operations system can and cannot do well. Besides resources and processes, values are the third factor that affects what an operation - and thus the organization - can and cannot do. Values are the standards by which employees set priorities. Some priorities are embodied or programmed into a process, but many are not. Examples include judging whether an order or customer is attractive or not, whether a suggestion to improve a product or process is attractive or marginal, and whether an investment is worth making or not. The Operations System for production, merchandizing and service delivery include the following resources and processes.