Introduction to Operations Management

What is Operations Management?

Let's start with some basics.

 

The application of operations management to our everyday activities are illustrated in the following quotation:

 

'Operations management is about the way organizations produce goods and services. Everything you wear, eat, sit on, use, read or knock about on the sports field comes to you courtesy of the operations managers who organized its production. Every book you borrow from the library, every treatment you receive at the hospital, every service you expect in the shops and every lecture you attend at university - all have been produced.

This definition reflects the essential nature of Operations Management: it is a central activity in organizing things. Another way of looking at an operation is to consider it as a transformation process.

Operations are a transformation process: they convert a set of resources (INPUTS) into services and goods (OUTPUTS). These resources may be raw materials, information, or the customer itself. These resources are transformed into the final goods or services by way of other 'transforming' resources - the facilities and staff of the operation.

• Raw-Materials.
  An obvious example is a cabinet maker, who takes some wood, cuts and planes it, and then polishes it until a piece of furniture is produced.
• Information
  A tourist office gathers and provides information to holiday makers, and assists in advising on places to stay or visit.
• Customers
  At an airport, you are one of the many resources being processed. The operation you are involved in is about processing your ticket and baggage, moving from the ticket desk through the customs and duty-free areas, to deliver you to the awaiting plane. The next time you stand on a moving walkway, think of yourself as a tin of baked beans moving along a factory conveyor!

extending the process ...

If we add a few more parts to the transformation process, we can see the key elements that operations managers need to consider. Operations are about:

1.   designing services, products, and delivery systems;

2.   managing and controlling the operations system; and

3.   finding ways to improve operations.

 

Operations Management (or Production and Operations Management as it is sometimes referred to) involves a lot of different disciplines. The operations function may be located in any department. In university, for example, it may be located within a Business School or Engineering School. In Industry, operations may be seen as the domain of logistics, production planning, or process control.

Hence, operations interfaces with many different disciplines and many themes are developing which require the support of Operations Management. The following diagram provides a few examples and is adapted from an article by Voss.