Operations Management - Essay Example

?Operations Management Introduction In large organizations, there are several managerial functions, encompassing financial, marketing, human resources development, and of course operations. Traditionally, operations/productions management has a well-defined role in large organizations. In small and medium scale companies, the role of operations manager is more disperse and less defined, approximating more the function of a general manager (Virginia State, 2012). In whatever context the role is performed, however, the twin duties of planning and control comprise a central concern of this function, although these duties may assume different guises. These variations in the scope and applications of operations management will be discussed herein. Defining operations management Operations management is “the conversion of inputs into outputs, using physical resources, so as to provide the desired utility/utilities of form, place, possession or state of a combination thereof to the customer, while meeting the other organizational objectives of effectiveness, efficiency and adaptability” (Roy, 2007, p.2). Production and operations management is also described as providing physical goods or services (p. 3). Production and operations are often taken interchangeably; in fact all productive activities are classifiable as operations. Operations management mainly “consists of activities which are concerned with the acquisition of raw materials, their conversion into finished product, and the supply of that finished product to the customer (Galloway, 1993, p. 2). In the offshore oil exploration industry, Woll (2011) noted that the term “operations management” is used in different ways at all levels of the organization, citing enterprise operations management, offsite (tank farm) operations management, and remote operations management. While they differ in scope, they all have a common purpose, which is “to coordinate a predefined set of resources to achieve predefined results” (p. 32). Scope of responsibilities of an operations manager Specific responsibilities of the operations manager include strategic operation planning, policy setting, budgeting, management of other managers or of the operations department staff, and the control of the operations function (Schroeder, 1993). The core responsibilities of operations managers are circumscribed within the activities, tasks and decisions they are required to make (Slack, et al., 2010). A figure useful for envisioning the production functions in terms of levels of responsibilities of operations management is provided by Roy (2007) in the following diagram: The Production Function: specific responsibilities of the operation manager Source: Roy, 2007, p. 7 In the pre-planning stage, the bulk of the conceptualization concerning the product, the process, the quantity to be produced and the particulars of the productions facilities, is accomplished. The planning of the specifics in terms of the logistics, personnel, equipment, and techniques or methods follows, after which the actualization takes place. The execution of the plans requires the control of the processes to assure that the parameters set during the planning process are abided by, or adjusted if warranted. Finally, feedback generated from the control stage provides input to the pre-planning stage for the next cycle, and the series of activities begins anew. Traditionally, production and operations management referred solely to manufacturing concerns, thus the emphasis on physical resources in many definitions. However, in time the conventional definition had taken cognizance of the fact that many service industries employ the same techniques and activities used in production management in manufacturing of tangible goods. Thus, the term had gradually taken on a broader and more comprehensive meaning, being equally applied to the manufacture of goods as well as the delivery of services. Other than the general responsibilities of operations management, there have recently come to fore some specialized roles which operations managers are expected to discharge in response to specialized circumstances. In Valencia, Spain, a study seeks to discover how operations managers can better integrate people with disabilities into employment (Miralles, et al., 2010). Ethical considerations in operations management are seen to contribute to the promotion of a peaceful social order (Bartolucci & Gallo, 2009). Finally, operations management has naturally become a principal vehicle for the promotion of environmental sustainability through the discovery and use of more efficient devices and techniques (Kleindorfer, et al., 2005). Operations management reconstructed The brief survey conducted into the meaning and scope of operations management has brought to light the fact that the scope and specific functions of operations management depends upon the size of the organization and the type of the business. For smaller firms, the operations manager assumes a more general role and a greater number of functions. Furthermore, operations management has evolved into a more comprehensive undertaking, expanding beyond the structured manufacturing of tangible goods, to the services industry that deals with intangibles, and even beyond that to accomplish goals set in the broader social context. In light of these developments, one may say that the core definition of operations management that this study has arrived at is that: Operations management is the process of planning, executing, and controlling the creation of a good, service, or other desired outcome, in a manner that is efficient, sustainable, and that advances the interests of society, at the least cost. Planning and Control Techniques The management function involves four fundamental activities, namely planning, organizing, leading and controlling. Two of these – planning and controlling – are capable of structured techniques and procedures which are largely within the proper sphere of operations management. Planning and control activities within the coverage of operations management include such activities as capacity planning and control, inventory management, scheduling, quality control, and plant maintenance (Slack, et al., 2010). Scope of planning and control There are a variety of tools which are used for planning and control in both manufacturing and services, which include information planning and control, just-in-time inventory, outsourcing, operations research, value engineering, work simplification, quality checks, total quality management, lean manufacturing, and several computer-aided applications (Koontz & Weihrich, 2006). The planning and control function in operations management of manufacturing concerns follows the organizational hierarchy, with the different levels specified by Harrison and Petty (2002) are: (1) Corporate planning, dealing with the overall strategy as defined by senior management, with plans spanning years, and its implications upon operations and/or production strategy; (2) Aggregate planning, or tactical planning spanning months to years; (3) Master planning, which is a time-phased plan in the manufacture of high-level assemblies, with a timescale of weeks; (4) Intermediate planning, which includes the items to be manufactured or procured, with timescales in weeks or days; (5) Low-level planning, which is a detailed plan defining actual activities in their time context, with timescale in days or less; and (6) Process control, concerned with the actual control of processes in real time (Harrison & Petty, 2002, p. 8) Planning and control in a manufacturing concern Manufacturing strategy is concerned with producing products as efficiently as possible (Harrison & Petty, 2002). One of the best-known examples of planning and control in a manufacturing context is international car manufacturer Toyota’s global production strategy, the cornerstone of which is the Toyota Production System, or TPS (Koontz & Weihrich, 2006). The TPS is renowned for its successful combination of high-quality craftsmanship with large-scale mass production, two usually inconsistent directions. Mass production is usually undertaken at the cost of craftsmanship, while the latter is usually assured only at the cost of volume and speed of production. In the TPS, production possesses both a high-volume assembly-line set-up, and an assurance of top value and attention to detail, thereby producing high-quality cars at low cost. One of the main features of the TPS that bears upon planning and control is its “just-in-time” inventory system whereby supplies are ordered and delivered only at the time they are needed at the production line. The wisdom behind this is to avoid the high inventory costs that comes with the conventional system which is sometimes referred to as the “just-in-case” inventory system; the latter is so named because it involves the ordering and storage of additional parts in stock, just in case a part turns out defective or extra parts are needed due to unforeseen circumstances. While the general concept appears to be simple – that is, to have just the needed supplies delivered when they are needed – the implications involve quite complicated details. For the exact amount and quality to be delivered at the exact time, the firm must be “aided by close relationships with its suppliers and by continuous improvement teamwork, decentralized decision-making, and by a motivated workforce” (Koontz & Weihrich, 2006, p. 445). To this list we add the necessary attributes of trust on the part of the firm, reliability on the part of the supplier, and a flawless system of communication between the two. Needless to say, the just-in-time inventory system requires a highly evolved planning and control protocol that makes use of the most advanced technology for real-time information reporting, inventory level monitoring, and mobile tracking of deliveries in transit. 3.3 Planning and control in a service business Manufacturing processes are easier to apply operations management techniques to because they deal with tangible supplies and materials and inputs, and tangible goods as outputs. The physical tracking of measurable quantities of supplies and goods may be directly reckoned by mechanical means with a high degree of certainty. However, the same cannot be said of service industries. Services are intangible because they are performances, not objects. Service as a product has four unique characteristics that bear an implication upon business operations. First is Intangibility: services are intangible, thus they may not be touched or seen, but are otherwise only experienced, which makes it harder to plan and control. Second is Heterogeneity: services vary from one transaction to the next because they are produced by people, and are thus prone to the inconsistency of human action, thus providing a challenge to quality control. Third is Perishability: services cannot be stored, saved, or inventoried, nor can unused capacity in services be reserved, making planning for future supply uncertain. Finally, Inseparability: the production and consumption of services cannot be fully effected, and while goods are first produced before they are consumed, services must first be sold, then simultaneously produced and consumed. It becomes difficult to plan ahead for services because the service cannot exist without the demand which is beyond the firm’s control (Hoffman & Bateson, 2011, p. 57). A good example of a known service firm is the UPS, or United Parcel Service, air network, the world’s largest package-delivery companies. The firm conveys packages and documents anywhere in the world pursuant to a tight delivery schedule. In order to make good on its promise of next-day delivery, UPS enlisted the assistance of Massachusetts Institute of Technology to develop an optimization-based planning system. When completed, the system enabled the planners at UPS to rapidly determine aircraft routes, fleet assignments, and package flows for the overnight delivery network for which timeliness was critical. Tight controls supported careful planning; thus with the aid of technology, the goal of prompt and efficient delivery of goods in their original condition and at minimum cost, has become the competitive advantage of UPS (Keefer, 2001). Conclusion The principal challenge to operation management is the successful realization of the firm’s strategic goal in a manner that creates benefits and value for its different stakeholders. If the firm is able to sustainably produce its goods or provide its services at a high level of quality as demanded by customers, in full compliance with the industry’s mandatory standards, and at efficient cost, then that would be an achievement largely on the part of operations management The degree to which uncertainties may be reduced is the objective of operation management, which may be addressed through planning and control. Generally, manufacturing is easier to plan and control than services since it deals with physical, tangible resources and materials, and is thus less vulnerable to uncertainties. Planning and controlling for services is not as easy, however, because services are intangible, perishable, inseparable and heterogeneous. However, advances in technology have enabled the adoption of more exact control methods such as the just-in-time system, service forecasting and queuing models, benefiting both manufacturing and service firms by minimizing uncertainties and enhancing operations at the most efficient cost possible. References Bartolucci, V & Gallo, G 2010 “Operations research/management science contributions to peace studies.” International Transactions in Operational Research, Jul 2010, Vol. 17 Issue 4, p475-483; DOI: 10.1111/j.1475-3995.2009.00725.x Beged-Dov, A G 1966 “Why Only Few Operations Researchers Manage.” Management Science, Aug 66, Vol. 12 Issue 12, pB-580-B-593 Galloway, R L 1993 Principles of operations management. Routledge, London Harrison, D K & Petty, D J 2002 Systems for Planning and Control in Manufacturing: Systems and Management for Competitive Manufacture. Newnes, an imprint of Elsevier Science, Jordan Hill, Oxford. Hoffman, K D & Bateson, J E G 2011 Services Marketing: Concepts, Strategies, & Cases. South-Western Cengage Learning, Mason, OH Keefer, D L 2001 “Practice Abstract.” INFORMS, Nov – Dec 2001, pp. 66-68 Koontz, H & Weihrich, H 2006 Essentials of Management. Tata McGraw-Hill Education Miralles, C; Marin-Garcia, J A; Ferrus, G; Costa, A M. 2010 “Operations research/management science tools for integrating people with disabilities into employment. A study on Valencia's Sheltered Work Centres for Disabled.” International Transactions in Operational Research, Jul 2010, Vol. 17 Issue 4, p457-473; DOI: 10.1111/j.1475-3995.2009.00727.x Roy, R N 2007 A Modern Approach to Operations Management. New Age International Publications, New Delhi. Schroeder, R G 1993 Operations Management: Decision Making in the Operations Function. McGraw-Hill Slack, N; Chambers, S; & Johnston, R 2010 Operations Management, 6th Edition. Financial Times Prentice Hall, an imprint of Pearson Virginia State 2012 Career Guide for General & Operations Manager. Accessed 25 January 2012 from http://jobs.virginia.gov/careerguides/GeneralOperationManager.htm Woll, D 2011 “Moving remote operations management to the next level.” Offshore, Nov 2011, Vol. 71 Issue 11, p32 Read More