Operations Management - Operational Decisions (2024)

​Operations Management
Operations Managementis an area of management which is concerned with the management of theoperationsfunctionof the organization. Operations management focuses on how best to use the organization's production resources, capabilities, and competencies to efficiently, create and deliver value to customers.

Operations managementis the administration of business practices aimed at creating the highest level of efficiency within an organization. It involves converting materials and labor into goods and services as efficiently as possible. Operations managers handle various strategic issues, including determining manufacturing plant sizes, project management methods, and information technology network structures. Additionally, they manage inventory levels, quality control, materials handling, and maintenance policies. The goal is to minimize waste and ensure optimal resource utilization. An effective operations manager understands logistics, local and global trends, customer demand, and available production resources.In essence, operations management ensures timely, cost-effective delivery of customer expectations.

Operations managementaligns with the key management functions ofplanning, organizing, directing, and controlling:

• Planning:
  1. Strategic Planning: Operations management begins with strategic planning. This involves defining the organization’s overall goals, mission, and vision. Within operations, it means setting objectives related to production, quality, efficiency, and resource allocation.
  2. Tactical Planning: Operations managers create detailed plans for achieving these objectives. They consider factors like production schedules, inventory levels, and workforce requirements. These plans guide day-to-day operations.
• Organizing:
  1. Resource Allocation: Operations managers organize resources—such as labor, materials, machinery, and facilities—to optimize production. They allocate tasks, responsibilities, and roles within the production process.
  2. Structuring Processes: Organizing involves designing efficient processes. Operations managers determine workflows, production sequences, and layouts to ensure smooth operations.
• Directing:
  1. Leadership and Supervision: Operations managers lead and supervise teams. They motivate employees, provide guidance, and ensure adherence to processes. Effective communication is crucial.
  2. Problem Solving: During operations, unexpected issues arise. Operations managers direct problem-solving efforts, making real-time decisions to maintain productivity and quality.
• Controlling:
  1. Performance Measurement: Operations management relies on performance metrics. Managers track production output, quality, costs, and efficiency. Deviations from targets trigger corrective actions.
  2. Quality Control: Controlling includes quality assurance. Operations managers monitor product quality, implement quality control processes, and address defects promptly.
  3. Feedback Loops: Regular feedback loops allow adjustments. Operations managers use data to fine-tune processes, optimize resource utilization, and improve overall performance.

Operations management integrates seamlessly with these management functions, ensuring efficient resource utilization, smooth processes, and alignment with organizational goals. It’s a dynamic cycle that drives continuous improvement and operational excellence.

Operations managementplays a crucial role in ensuring efficient production and delivery of goods and services within an organization. It involves making decisions across various dimensions to optimize processes and achieve strategic goals. The categories of operations management decisions, include:

1. Goods and Services: This decision category focuses on what the organization produces. It includes determining the types of products or services offered, their features, quality standards, and any customization options. For instance, a car manufacturer decides whether to produce electric vehicles, hybrid cars, or traditional gasoline-powered cars.
2. Quality Management: Quality decisions involve maintaining consistent product quality. Organizations must define quality standards, implement quality control processes, and continuously improve product quality. Quality management ensures that products meet customer expectations and comply with industry standards.
3. Process and Capacity Design: This category deals with designing production processes and determining the capacity needed to meet demand. Process decisions include selecting the most efficient production methods, layout design, and workflow optimization. Capacity decisions involve assessing production capacity, scalability, and resource allocation.
4. Location: Choosing the right location for production facilities, warehouses, and distribution centers is critical. Factors such as proximity to suppliers, transportation infrastructure, labor availability, and market access influence location decisions. For example, an e-commerce company selects warehouse locations strategically to minimize shipping costs and delivery times.
5. Layout Design and Strategy: Layout decisions involve arranging physical resources within production facilities. The layout affects efficiency, workflow, and communication. Organizations choose between functional, cellular, or product-based layouts based on their specific needs and production processes.
6. Human Resources and Job Design: Managing human resources is essential for smooth operations. Decisions in this category include workforce planning, job design, training, and performance evaluation. Operations managers ensure that employees have the necessary skills, work in safe conditions, and contribute effectively to production.
7. Supply Chain Management: Supply chain decisions encompass sourcing raw materials, managing suppliers, inventory control, and distribution. Organizations must balance cost, lead time, and quality when making supply chain decisions. Efficient supply chain management ensures timely availability of materials and minimizes disruptions.

​These decisions are interconnected and impact each other. For example, a decision to increase production volume (volume) may require adjustments in capacity, layout, and workforce planning. Effective operations management integrates these categories to achieve overall organizational success. Remember that strategic operations decisions focus on long-term goals, while tactical decisions address short-term adjustments based on real-time information

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Operations management has both strategic and operational aspects.

• Theoperational aspects of operations managementis concerned withis the practice of handling day-to-day business functions in a manner that is efficient and maximizes profitability. It is focused on the efficiency and effectiveness of organization's operational processes. Operationally, operations management focuses on the control of the means - processes and resources - by which organizations create and deliver value to customers. It involvesoperations managers overseeing the process of acquiring, developing, and delivering goods and services to customers based on the needs of a target market, and the abilities of the organization.​Operations management is concerned with maintaining a steady workflow, whether for producing your products or administration of operations function. Operations management involves managing processes, resources (such as materials, machines, technology, and funds), and people to produce products (goods and services) that the marketplace wants.It involves structured decision-making concerned with how efficiently and effectively resources are utilized, and how well operations units are performing.

• Strategically,operations management is concerned with determining operations approaches (operations strategies) and operational capabilitiesneeded to achieve the desiredcompetitive positionof the company as a whole, and while meeting operational goals. ​The strategic aspects of operations management involves determining thesystems, tasks and technologyneeded to fulfill the strategic objectives, deciding how to acquire the resources and design the facilities these tasks require, and measuring service delivery to gauge the ability of the operations to reach intended targets.The strategic aspects of operations management is concerned withshaping the long-term capabilities of any type of operations and its contribution to the organization's overall strategy.

Operations managementis concerned with how efficiently and effectively resources are utilized, and how well operations is performing. Operations control decisions are determinations of which organizational units/departments will carryout the tasks, and establishing criteria for task completion, resource utilization and evaluating outputs/results. Operations management is all about creating a uniqueproduction strategythat satisfies the needs of an organization, and fulfills manufacturing and service delivery expectations.Operations management involves the implementation of business practices to maximize the efficiency of an organization.

Operations Function
The term, (business)operations,embraces all the value chain activities and tasks that organizations use (or required) to produce - create and deliver - an organization'sproducts(goods and services) to its customers or clients.A company's business operations are the core activities that businesses engage in, on a daily basis, to increase the value of the enterprise and earn a profit. Business operations is comprised of a number of functional areas including:strategy, marketing, finance, human resources, technology and equipment,andoperations.The whole chain of events must be well managed for a business to becompetitiveandprofitable​in efficiently producing goods and services.

Operations functionis the term used to describe how the core operation of the organization design and functions.​Operations functions refer to the departments in an organization that keep the day-to-day activities that keep the business on track. The operations function focuses on maintaining the efficiency of thevalue creation processesand helps the different functions involved in the value chain make smart decisions.​Companies have operations departments to keep everyday functions on track. The operations department focuses on maintaining the efficiency f the production processes and helps teams make smart decisions. Every organization has anoperations function, whether or not it is called operations or not, and it is mainly responsible for producing goods and services. It however, needs support and input from other areas of the organization such as:product management,supply chain,inventory,forecasting (production/sales),scheduling,quality management, andfacilities planning and management.​

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