Introduction to Operations Management
In this lesson, you’re expected to learn:
– the importance of operations as a core function in an organization
– the main components of operations management
– the scope of operations and its interaction with other functions
What is Operations Management?
Operations management is the group of activities for managing the resources which are devoted to the production and delivery of products and services.
It involves the coordinating, directing, planning, and controlling of the day-to-day activities that make a business run including purchasing, production, distribution, customer service, and human resources.
Within the field of operations management, we can highlight the operations function and the role of operations managers:
• The part of an organization that works towards the production and delivery of products and services. Every organization has this function, but it does not necessarily need to be called ”operations”.• Sometimes it is referred to as ”production”, ”supply chain”, ”manufacturing”, or ”project management”.
• These are the people who are responsible for managing the resources (or part of the resources) related to the operations function.
• Many job titles meet this requirement, e.g. ”store manager”, ”fleet manager”, ”project manager” etc.
History of Operations Management
The history of operations management is based on the origin of general management itself.
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Why Study Operations Management?
Operations is one of the three core functions of any organization.
The core functions of an organization are the ones that are directly related to the production and delivery of their products and services – which are the reasons for the organization to exist.
The three core functions of any organization are:
1) Product / Service Development: responsible for creating the products and services offered by the organization.
2) Marketing and Sales: responsible for generating customer requests for the products / services offered by the organization.
3) Operations: responsible for fulfilling the customer requests generated by marketing and sales, related to the products / services offered by the organization.
Almost every organization will have these three core functions because they have a fundamental need to sell their products and/or services, satisfy their customers and create the means to satisfy customers.
Support functions: the other functions in a company are usually considered support functions, because they enable the three core functions to operate. Examples of support functions are finance and human resources.
• Most of an organization’s people are usually dedicated to its operations.
• Most of an organization’s cost are usually associated with its operations.
• Operations decisions are expensive and have long term implications (e.g. think about building a new plant or acquiring a new aircraft).
• Also, it is important to be aware of how products and services are produced.
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For example, for an internet service provider, operations is related to running the technology needed to provide network services.
On the other hand, the operations function for a manufacturing company is related to the activities needed to make the products offered by the firm.
* The representation depicted below is non-exhaustive.
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• The operations function informs the human resources function about the human resources needed to conduct its activities and, thus, the human resources function provides the resources needed (recruitment, development, and training).
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• Several business problems lie at the overlapping boundaries between functions.
• We can consider as part of the scope of operations management some activities related to product/service development, engineering/technical activities, information systems activities, and some of the human resource, marketing, and accounting & finance activities.
• We can also consider as the core operations function all the activities necessary for the fulfilment of customer requests, including sourcing products and services from suppliers and transporting products and services to customers.
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