Operations Management Systems and Processes
Managing the Day-to-day activities to create and deliver value to customers
Operations Management
The term operations management encompasses planning, implementing, and supervising the production of goods or services. Operations managers have responsibilities in both strategy and day-to-day production, in either manufacturing or services. Operations management is responsible for all aspects of creating goods and services. It manages resources such as materials, machines, technology, and people, and makes products and services that the marketplace wants. The whole chain of events must be well managed for a business to be competitive.
The foundational elements to consider in operations management include:
Operations management serves as the engine room of the organization, planning and driving manufacturing or services. To compete in an ever-changing market, operations managers must maximize efficiency, productivity, and profit, which have always been vital to a company’s survival.
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Operations Management is the management of processes involved in production activities, including planning, organizing, staffing, coordinating, and controlling all the resources - both transformation and transformed - needed to produce an organization's goods and services offered to customers. Operations management involves the administration of business practices and transformation processes 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.
Key Functions Within Operations Management
Operations management is comprised of the following function:
Finance
Finance is a crucial component within operations management. It is essential to make sure that all finances have been utilized to their fullest extent and are being properly carried out to ensure for optimized creation of goods and services. Proper utilization of finances will allow for a product or service to be created that will satisfy overall consumer needs.
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.
Operations
This function of operations management is concerned with planning, organizing, directing, and overall control of all activities within the organization. This is the primary function of operations management and will effectively aid in converting raw materials and human efforts into a durable good and service that consumers will be able to utilize.
Product Design
With new technology becoming available, the selling of a product become much more simple. One of the main duties of operations management is to ensure that a product is designed properly and caters to market trends and needs of consumers. Modern-day consumers are concerned about quality instead of quantity, which is why it is so crucial to develop a durable and top-notch quality product.
Forecasting
In operations management, forecasting can take an estimate of consumer demand, which correlates with production through creating an accurate amount of product needed within a given time. Overall, forecasting plays a crucial role within the production process.
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The term operations management encompasses planning, implementing, and supervising the production of goods or services. Operations managers have responsibilities in both strategy and day-to-day production, in either manufacturing or services. Operations management is responsible for all aspects of creating goods and services. It manages resources such as materials, machines, technology, and people, and makes products and services that the marketplace wants. The whole chain of events must be well managed for a business to be competitive.
The foundational elements to consider in operations management include:
- Planning - Operations managers must constantly forecast, plan, and adjust to optimize processes based on conditions.
- Process - Production of goods or services requires having strong, repeatable processes.
- Efficiency - Managers must troubleshoot bottlenecks, inadequate resources, and downtimes to create optimal efficiency.
- Cost Control - Production is typically a major part of a company’s cost structure, and you must manage it wisely.
- Quality - Good quality control is necessary to maintain customer satisfaction and the company’s reputation. Companies can greatly suffer without it.
- Continuous Improvement - To remain competitive, companies need to have processes in place to consistently seek better ways of doing things.
- Technology - Underlying all of these foundations is technology. Well-used technology keeps a company ahead of the curve.
- Profitability - Executed properly, all of the above foundations lead to a strong bottom line.
Operations management serves as the engine room of the organization, planning and driving manufacturing or services. To compete in an ever-changing market, operations managers must maximize efficiency, productivity, and profit, which have always been vital to a company’s survival.
[TBD]
Operations Management is the management of processes involved in production activities, including planning, organizing, staffing, coordinating, and controlling all the resources - both transformation and transformed - needed to produce an organization's goods and services offered to customers. Operations management involves the administration of business practices and transformation processes 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.
Key Functions Within Operations Management
Operations management is comprised of the following function:
Finance
Finance is a crucial component within operations management. It is essential to make sure that all finances have been utilized to their fullest extent and are being properly carried out to ensure for optimized creation of goods and services. Proper utilization of finances will allow for a product or service to be created that will satisfy overall consumer needs.
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.
Operations
This function of operations management is concerned with planning, organizing, directing, and overall control of all activities within the organization. This is the primary function of operations management and will effectively aid in converting raw materials and human efforts into a durable good and service that consumers will be able to utilize.
Product Design
With new technology becoming available, the selling of a product become much more simple. One of the main duties of operations management is to ensure that a product is designed properly and caters to market trends and needs of consumers. Modern-day consumers are concerned about quality instead of quantity, which is why it is so crucial to develop a durable and top-notch quality product.
Forecasting
In operations management, forecasting can take an estimate of consumer demand, which correlates with production through creating an accurate amount of product needed within a given time. Overall, forecasting plays a crucial role within the production process.
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Goods Production
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Service Production
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Management Areas
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Transformation Process
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Manufacturing Management
Manufacturing 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
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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:
Manufacturing 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:
- 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.
- 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.
- 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.
- Improvements and Innovation Decisions - These are decisions on characterizing the processes and incentives to improve and innovate products and processes.
Service 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:
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 Consumer Services or Producer Services.
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:
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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:
- 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 Consumer Services or Producer Services.
- 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.
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Operations Management Functions
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 has both strategic and tactical roles in the organization. Strategically operations management is concerned with determining operations approaches and capabilities needed to achieve the desired competitive position of the organization as a whole, and operational goals. Tactically, Operations management is concerned with managing the daily tasks and activities that transform materials or actions into products(goods and or services). 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 functions are comprised of the following tasks:
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 has both strategic and tactical roles in the organization. Strategically operations management is concerned with determining operations approaches and capabilities needed to achieve the desired competitive position of the organization as a whole, and operational goals. Tactically, Operations management is concerned with managing the daily tasks and activities that transform materials or actions into products(goods and or services). 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 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 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.
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:
Transformed Resources
There are three (3) types of transformed resources, such as:
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.
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.
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Operations strategy is the tool that helps define the methods (means) of producing goods and services companies/organizations offer to customers.
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.
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.
[TBD]
Operations strategy is the tool that helps define the methods (means) of producing goods and services companies/organizations offer to customers.
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