Operations Management and Operational decisions
Increase Organization Efficiency, 3 ways to optimize Operations System
Operations Management
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 resulting from Operations Strategy design.
Operations Management - Operational Perspective
"Operations management is the administration of business practices to create the highest level of efficiency possible within an organization", (Tang, 2018). Operations management involves managing all activities done to transform raw materials into products - goods and services - with the aim of generating profitability for the organization. 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 managers are responsible for managing activities that are part of the production of goods and services. Their direct responsibilities include managing both the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations. Such areas include marketing, finance, accounting, personnel and engineering. Broadly interpreted, operation management underlies all functional areas, because, processes are found in all business activities.
Operation Management Decisions
Operations management decisions are the day-to-day decisions in the organization made by managers about customers, suppliers, employees, and products. Operational decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization, and may include:
Operating decisions are made within the larger context of long-term strategic decisions.
[TBD]
Order Qualifiers and Winners - Understanding Markets
In a competitive environment, offering a variety of products to meet customer demand is not enough for a manufacturer to achieve a high level of financial performance. In addition, the same time, the products manufactured must be competitive on the basis of price, quality and product functionality. An organization must also maintain high performance levels in the management of the flow of materials through an organization from the point of origin to the point of consumption and from raw materials to in-process inventory to finished goods. Achieving these latter goals requires that a manufacturer define appropriate logistics performance objectives or goals pertaining to procurement, production and distribution processes.
Production strategy is a broad long-term action plan made for achieving the main objectives of an organization. Production strategies tell us what the production function/department must do to achieve the top aim of the organization. Production strategy deals with decisions/choices about how and where the products or services will be manufactured or delivered, technology to be used, management of resources, plus purchasing and relationships with suppliers.
[TBD]
Transformation Processes
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. Where the inputs are raw materials, it is relatively easy to identify the transformation involved, as when milk is transformed into cheese and butter. Where the inputs are information or people, the nature of the transformation may be less obvious. For example, a hospital transforms ill patients (the input) into healthy patients (the output).
Transformation processes include:
One useful way of categorizing different types of transformation is into:
For example, the macro operation in a brewery is making beer include include:
[TBD]
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.
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 resulting from Operations Strategy design.
Operations Management - Operational Perspective
"Operations management is the administration of business practices to create the highest level of efficiency possible within an organization", (Tang, 2018). Operations management involves managing all activities done to transform raw materials into products - goods and services - with the aim of generating profitability for the organization. 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 managers are responsible for managing activities that are part of the production of goods and services. Their direct responsibilities include managing both the operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations. Such areas include marketing, finance, accounting, personnel and engineering. Broadly interpreted, operation management underlies all functional areas, because, processes are found in all business activities.
Operation Management Decisions
Operations management decisions are the day-to-day decisions in the organization made by managers about customers, suppliers, employees, and products. Operational decisions are determinations made in regard to the routine, ongoing activities in the functional areas of an organization, and may include:
- Which customer orders to schedule for production - [Production]
- Which components and raw materials to buy from suppliers, - [Purchasing]
- Scheduling production equipment for use, [Production Scheduling]
- Deciding the nature of a marketing campaign - [Marketing]
- Deciding where to invest excess funds - [Finance]
- Determining how much inventory to keep on hand.
Operating decisions are made within the larger context of long-term strategic decisions.
[TBD]
Order Qualifiers and Winners - Understanding Markets
In a competitive environment, offering a variety of products to meet customer demand is not enough for a manufacturer to achieve a high level of financial performance. In addition, the same time, the products manufactured must be competitive on the basis of price, quality and product functionality. An organization must also maintain high performance levels in the management of the flow of materials through an organization from the point of origin to the point of consumption and from raw materials to in-process inventory to finished goods. Achieving these latter goals requires that a manufacturer define appropriate logistics performance objectives or goals pertaining to procurement, production and distribution processes.
Production strategy is a broad long-term action plan made for achieving the main objectives of an organization. Production strategies tell us what the production function/department must do to achieve the top aim of the organization. Production strategy deals with decisions/choices about how and where the products or services will be manufactured or delivered, technology to be used, management of resources, plus purchasing and relationships with suppliers.
[TBD]
Transformation Processes
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. Where the inputs are raw materials, it is relatively easy to identify the transformation involved, as when milk is transformed into cheese and butter. Where the inputs are information or people, the nature of the transformation may be less obvious. For example, a hospital transforms ill patients (the input) into healthy patients (the output).
Transformation processes include:
- changes in the physical characteristics of materials or customers
- changes in the location of materials, information or customers
- changes in the ownership of materials or information
- storage or accommodation of materials, information or customers
- changes in the purpose or form of information
- changes in the physiological or psychological state of customers.
One useful way of categorizing different types of transformation is into:
- manufacture – the physical creation of products (for example cars)
- transport – the movement of materials or customers (for example a taxi service)
- supply – change in ownership of goods (for example in retailing)
- service – the treatment of customers or the storage of materials (for example hospital wards, warehouses).
For example, the macro operation in a brewery is making beer include include:
- milling the malted barley into grist
- mixing the grist with hot water to form wort
- cooling the wort and transferring it to the fermentation vessel
- adding yeast to the wort and fermenting the liquid into beer
- filtering the beer to remove the spent yeast
- decanting the beer into casks or bottles.
[TBD]
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.
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Goods Production System
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Service Production System
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Operations System
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Functional Areas
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Manufacturing - Goods Production System
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.
[TBD]
Competitive Advantage
A manufacturer can achieve competitive advantage, which is an advantage over other companies that operate in the same industry, by achieving operational performance objectives for its production and storage processes. Such objectives can be categorized as:
However, each performance goal in these categories, as well as the logistics performance objectives category, is defined for an individual business process. As Jan Olhage writes in “Advances in Production Systems,” a manufacturer can define specific objectives for the procurement, production and distribution logistics processes in particular.
Production Goals
Suitable production objectives for a manufacturer include: attaining a high level of operational performance through high delivery reliability and short throughput times, which may be achieved by such activities as capacity planning and production scheduling. In turn, the manufacture may set a logistics and process costs control objective in the form of high utilization, which may be achieved by maintaining short and reliable lead times as a result of supplier relationships, internal controls and process improvements. The manufacturer may also focus on cost control by maintaining low work-in-process levels.
Distribution Goals
Olhage maintains a manufacturer’s valid distribution goals include maintaining a high service level, which may be achieved through a just-in-time inventory system that enables the manufacturer to minimize inventory levels and carrying costs, and low delivery delay, which is achieved through vendor relationships and supply chain controls. In addition, the manufacturer may set logistics process costs and inventory costs objectives, including a low storage costs goal, which may be achieved in part by low inventory levels.
[TBD]
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.
[TBD]
Competitive Advantage
A manufacturer can achieve competitive advantage, which is an advantage over other companies that operate in the same industry, by achieving operational performance objectives for its production and storage processes. Such objectives can be categorized as:
- Functional Performance Objectives - functional performance can be gauged according to the total dollars spent for such items as warehousing of materials, transportation and order processing as well as the number of complete orders delivered to the customer and the average number of days between order receipt and product delivery.
- Customer Accommodation Performance Objectives - customer accommodation performance criteria include the number of perfect orders and the level of customer satisfaction achieved by logistics processes.
- Logistics Performance Objectives - [].
However, each performance goal in these categories, as well as the logistics performance objectives category, is defined for an individual business process. As Jan Olhage writes in “Advances in Production Systems,” a manufacturer can define specific objectives for the procurement, production and distribution logistics processes in particular.
Production Goals
Suitable production objectives for a manufacturer include: attaining a high level of operational performance through high delivery reliability and short throughput times, which may be achieved by such activities as capacity planning and production scheduling. In turn, the manufacture may set a logistics and process costs control objective in the form of high utilization, which may be achieved by maintaining short and reliable lead times as a result of supplier relationships, internal controls and process improvements. The manufacturer may also focus on cost control by maintaining low work-in-process levels.
Distribution Goals
Olhage maintains a manufacturer’s valid distribution goals include maintaining a high service level, which may be achieved through a just-in-time inventory system that enables the manufacturer to minimize inventory levels and carrying costs, and low delivery delay, which is achieved through vendor relationships and supply chain controls. In addition, the manufacturer may set logistics process costs and inventory costs objectives, including a low storage costs goal, which may be achieved in part by low inventory levels.
[TBD]
Service Production System
Service production 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.
[TBD]
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. Service production 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.
The service delivery system processes define a network of service centers connected and coordinated by the processes. Service production units - 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.
Basic Concepts
A service is designed based on answers to the following questions:
The answers to these questions set up the foundation for four elements that are critical to the design of a service:
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:
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:
[TBD]
Service production 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.
[TBD]
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. Service production 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.
The service delivery system processes define a network of service centers connected and coordinated by the processes. Service production units - 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.
Basic Concepts
A service is designed based on answers to the following questions:
- What is the 'service package', or 'service packages'?
- Who are the customers for the 'service package'?
- What are the standards for 'service package'?
- 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:
- Service Package - whether a mix of the physical items and service intangible or pure service and other features)
- Service Package Standards - [TBD]
- Service Producing Unit - [TBD]
- 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:
- 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.
- Tangibility - Services are often intangible and multi-dimensional; this can make attracting customers more difficult as it often depends on promoting an intangible item.
- 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.
- 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.
- 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 System
The Operations System, for an organization, is the joint configuration of resources and processes such that its resulting competencies are aligned with the organization's desired competitive position. Each organization strategy requires a tailored operations system, its resources and processes configured such that its competencies best fit the customer value proposition specified by the competitive strategy. An organization's Operations System provides the best match (fit) of supply (of tangible resources) with customer demand for the mix of products and services.
Process View
A process may refer to workflow such as billing a customer, implementing an engineering change order, new product development, manufacturing process, etc. This view focuses on how the resource portfolio is utilized and allocated to activities with the intent of adding value.Adopting a process view means we deal with instances of work called flow units (e.g., consulting engagements, patients, hotel guests, barbershop/salon patrons, physical goods, or customer orders) flowing through a network of activities and buffers. The process view considers an organization as a whole (system) or any of its parts to be an activity network or a collection of processes.
Buffers store flow units that have finished one activity, but are waiting for the next activity to start. The primary workflow is typically accompanied by an information flow (to coordinate activities) and cash flow (to support and reward them). 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 that are delivered to customers.
[TBD]
Competency View
A competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of behaviors in individual employees. A competency is the ability of an individual to do a job properly. The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. The competencies determine the set of outputs, products, and services that the operation will be particularly good at providing, and influences the "product mix" decisions. The competency view of the organization focuses on the resulting abilities of the ensemble of an organization’s resources, processes and values which determine the set of outputs, products/services that the operating system will be particularly good at providing.
Measuring Competency
The competency view of the organization focuses on the resulting abilities of the ensemble of an organization’s resources, processes and values which determine the set of outputs, products/services that the operating system will be particularly good at providing. A competency is the ability of an individual to do a job properly. A competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of behaviors in individual employees. The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. Competency determine the set of outputs, products, and services that the operation will be particularly good at providing.
Competencies can be measured along multiple dimensions including:
The competency view is the most "outward looking" and begs the important question: which competencies should an operation have, nurture, or develop? This naturally connects to competitive strategy.
[TBD]
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.
The Operations System, for an organization, is the joint configuration of resources and processes such that its resulting competencies are aligned with the organization's desired competitive position. Each organization strategy requires a tailored operations system, its resources and processes configured such that its competencies best fit the customer value proposition specified by the competitive strategy. An organization's Operations System provides the best match (fit) of supply (of tangible resources) with customer demand for the mix of products and services.
Process View
A process may refer to workflow such as billing a customer, implementing an engineering change order, new product development, manufacturing process, etc. This view focuses on how the resource portfolio is utilized and allocated to activities with the intent of adding value.Adopting a process view means we deal with instances of work called flow units (e.g., consulting engagements, patients, hotel guests, barbershop/salon patrons, physical goods, or customer orders) flowing through a network of activities and buffers. The process view considers an organization as a whole (system) or any of its parts to be an activity network or a collection of processes.
Buffers store flow units that have finished one activity, but are waiting for the next activity to start. The primary workflow is typically accompanied by an information flow (to coordinate activities) and cash flow (to support and reward them). 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 that are delivered to customers.
[TBD]
Competency View
A competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of behaviors in individual employees. A competency is the ability of an individual to do a job properly. The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. The competencies determine the set of outputs, products, and services that the operation will be particularly good at providing, and influences the "product mix" decisions. The competency view of the organization focuses on the resulting abilities of the ensemble of an organization’s resources, processes and values which determine the set of outputs, products/services that the operating system will be particularly good at providing.
Measuring Competency
The competency view of the organization focuses on the resulting abilities of the ensemble of an organization’s resources, processes and values which determine the set of outputs, products/services that the operating system will be particularly good at providing. A competency is the ability of an individual to do a job properly. A competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of behaviors in individual employees. The competency view characterizes the abilities of the ensemble of the organization's resources, processes, and values. Competency determine the set of outputs, products, and services that the operation will be particularly good at providing.
Competencies can be measured along multiple dimensions including:
- Cost - The marginal and total cost of operating, including variable and fixed costs are particularly important in competitive markets such as commodities and low margin businesses. Cost is a relevant factor in all activities, but this competency most naturally reflects scale economies (capacity sizing), and complexity costs (capacity types).
- Time - The total flow, response, and lead times characterize the time needed to transform inputs into outputs, to fill a customer order, to receive inputs, respectively. Flow time and lead time determine working capital requirements and forecasting accuracy; responsiveness is important in service and convenience-driven businesses, as well as in rapidly changing environments.
- Quality - Quality refers to the degree of excellence of the process, product, or service. It has design related dimensions such as performance and features, as well as process related dimensions such as durability and reliability. Quality is a key differentiator in luxury and high precision businesses, and a required competency in mature industries.
- Flexibility - Flexibility measures the ability to change inputs, activities, volumes, or outputs? Flexibility has several dimensions such as scope - scope flexibility is the selection or range of products and services offered, including the level of customization, volume flexibility, and robustness. It is also a key risk mitigation driver.
- Innovation - This is the ability of the operation to change, improve, and innovate.
The competency view is the most "outward looking" and begs the important question: which competencies should an operation have, nurture, or develop? This naturally connects to competitive strategy.
[TBD]
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.
Operations Management Decisions and Decision Areas
Operations management is concerned with operational decisions and encompasses management functions such as planning (manpower planning, capacity planning, production planning), production implementation and execution - supervision of the production of goods and services. Operations Management functions are comprised of the following tasks:
Operations Management Decisions
Operations management involve decisions that are strategic in nature, and operational. Strategic decisions 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.
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:
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.
[TBD]
[TBD]
Work systems are designed to accomplish a variety of tasks such as:
Elements or Components of Work Systems
The elements or components that define a work system include:
[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.
Operations management is concerned with operational decisions and encompasses management functions such as planning (manpower planning, capacity planning, production planning), production implementation and execution - 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 - []
Operations Management Decisions
Operations management involve decisions that are strategic in nature, and operational. Strategic decisions 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 Management - This entails the process of acquiring raw materials from the point of origin managing work-in-process inventory, and finally delivering the finished products to the customer. Supply chain management involves planning executing, controlling,and monitoring various operational activities with the view of creating value. It entails using the human resource to transform raw materials into high quality products needed by customers.
- Inventory Management - [TBD]
- Sales and Operations Panning - This concept emphasizes the need to have close coordination between the sales department and operations unit within the firm.
- Scheduling
- Quality
- Capacity planning - [TBD]
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.
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Work systems are designed to accomplish a variety of tasks such as:
- Work systems that accomplish a task and then end, Special Projects .e., Conference, data collection, etc.
- Work systems that are designed to manufacture a product for a specific time and then discontinued.
- 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).
Elements or Components of Work Systems
The elements or components that define a work system include:
- Workers (Participants) - employees or contract workers.
- Task - Task at hand that needs to be done, and how the task should be accomplished.
- 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.
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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.
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