Understanding operations management (2024)

Table of Contents
Activity 5 Discussion FAQs

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.

Often all three types of input – materials, information and customers – are transformed by the same organisation. For example, withdrawing money from a bank account involves information about the customer's account, materials such as cheques and currency, and the customer. Treating a patient in hospital involves not only the ‘customer's’ state of health, but also any materials used in treatment and information about the patient.

One useful way of categorising different types of transformation is into:

Several different transformations are usually required to produce a good or service. The overall transformation can be described as the macro operation, and the more detailed transformations within this macro operation as micro operations. For example, the macro operation in a brewery is making beer (Figure 2). The micro operations 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.

Understanding operations management (1)

Figure 2 Macro and micro operations

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This mapping diagram builds on the one shown in Figure 1. There are two rows of objects. The first row begins with a large white box, in which is written Malt, Water, Hops, Yeast. The ‘Inputs’ arrow points from this to the ‘Transformation Process’ box, which now also has the label ‘Macro operation’ written beneath it. The ‘Outputs’ arrow leads from this box to another large white box in which is written Beer. There is a narrow black dotted line above the arrows, linking them. It leads from ‘Outputs’, with an arrow head pointing to ‘Inputs’. This dotted line is labelled ‘Feedback’. Bold white lines lead from the bottom left and right edges of the ‘Transformation Process’ box to the mid bottom left and right sides of the diagram. Below this, is another row of objects. The heading for this states ‘Can be broken into’. The row consists of three identical rectangular white boxes. Inside each of the three boxes is a miniature representation of the arrow, rectangular box, arrow mapping presented in Figure 1, the difference being that each of the objects contains no writing or labelling. Beneath the first rectangular box is the label ‘ Micro operation 1’. Beneath the second is the label ‘Micro operation 2’. Beneath the third is the label ‘Micro operation 3’.

Figure 2 Macro and micro operations

Activity 5

Identify the principal resources (inputs), the type of transformation process and the principal outputs (goods or services) in each of the following operations.

InputsType of transformationOutputs
Refining steel
Assembling cars
Delivering cars to dealers
Repairing cars
Designing cars

Discussion

You may have identified various inputs such as materials, energy, machines, equipment, buildings and people. For example, the inputs used by a car assembly plant include components, equipment, buildings, labour and energy. You may also have included less tangible inputs to the transformation process, such as information and skills.

You might have noticed that, midway down the list, the activities changed from primarily the production of goods to the provision of services. In the case of car designing, the principal inputs are ideas and the outputs are materials used to communicate the finished idea, such as blueprints or computer models.

Understanding operations management (2024)

FAQs

How do you understand operations management? ›

Operations management is the administration of business structure, practices, and processes to enhance efficiency and maximize profit. It refers to the management of functions that a business needs to run effectively day-to-day, including: Overseeing multiple departments and providing goals.

Why is it important to understand operations management? ›

Operations management helps improve the reputation of an organization and thus has a positive influence on its capability to achieve growth and stability goals. Operations management ensures that products meet the quality standards and customers' expectations.

What are 3 important things from operations management? ›

  • Operational planning. Operational planning is the foundational function of operations management. ...
  • Finance. Finance is an essential—and universal—function of operations management because every company strives to reduce costs and increase profits. ...
  • Product design. ...
  • Quality control. ...
  • Forecasting. ...
  • Strategy. ...
  • Supply chain management.
Oct 17, 2022

What concepts are important to understand to succeed in operations management? ›

Strategic planning and critical thinking are two important aspects of your operational management skills you need on the job. Operations managers must be able to anticipate issues that can affect successful outcomes and approach challenges with creative solutions that help teams meet objectives.

What are the four key of operation management? ›

Eminence and ability consist of four operational processes: volume, variety, variation and visibility. Organisations survive and flourish when operations management lies in the hands of able managers to manage core activities that transform key resources into deliverable products or services.

What are the 4 types of operations management? ›

What are the types of operations management? Types of operations management include operations and production efficiency, quality management, and inventory and supply chain management. Operational efficiency measures the profitability of a company based on its operations.

What is the most important in operation management? ›

Waste Reduction - Waste reduction is one of the most important components of operations management. Various techniques can be used to identify and eliminate waste within manufacturing operations, such as lean manufacturing strategies and JIT scheduling to manage inventory costs.

What is an example of operations management? ›

Examples of managing business operations

Here are a few examples: Healthcare – An operations manager of a healthcare facility is generally responsible for ensuring efficiency in delivery of high-quality care. That can include overseeing administrative costs, managing claims and billing, and legal compliance.

How do I become a successful operations manager? ›

How To Be a Good Operations Manager?
  1. They prioritise team members' safety before proceeding to meet customer needs and safety.
  2. Humility and teamwork.
  3. Constantly developing team members (senior, peers, and subordinates).
  4. Action-oriented problem-solving.
  5. Setting and maintaining organisational standards.
  6. Well-organised.

What are the five key concepts of operations management? ›

This management concept follows the following basic elements that are teamwork, personal discipline, improved morale, quality improvement, zero defects, productivity improvement which lead to important objectives such as less waste, reduction in cost, improved and best quality of products, identification and then ...

What are the five basic operation of management? ›

At the most fundamental level, management is a discipline that consists of a set of five general functions: planning, organizing, staffing, leading and controlling.

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