Before starting Operations Management topic let us focus on the 2 words that are operations and the management.
Now in operations, if we say this is not a new word.
We are conducting operations maybe for the last 250-300 years.
The raw material are being converted into the final product by means of transformation processes.
Transformation can be a physical transformation, chemical transformation of thermal transformation.
So using any transformation process; we convert raw material into the final product.
That is the basic fundamental definition of an operation i.e:
In which we convert raw material into the final product using any transformation process.
This is related to tangible outputs in terms of products.
In today’s scenario, we have operations in terms of the hospital industry, the aviation industry or banking industry also.
Which we term as the service operations.
We can have mechanical operations, service operations and other types of operations also.
Basically, the first and foremost function that we need to understand is an operation in which the inputs are converted into outputs.
In our first definition, the place we talked about the physical transformation of the raw material.
The raw material can be any physical thing.
You take would you cut the wood, chisel the wood and then you can make an axe.
So you have a handle of the axe made up of wood and then you have a metallic piece which is used for the cutting action.
You have two inputs there, you do some transformation and you finally get a product.
So those are the tangible products in which you convert the raw material into the final product.
In services also, you have humans as input, you have structures as input and then these people work on the systems to supply you an output.
In hospital you go there without ailment the people, the doctor, the nurse is the paramedical staff with, the help of instruments and tools will work on you and will send you to your home hale and hearty or with pleased faces.
Basically the in case of any operations we use inputs and we finally get the outputs.
Now first and foremost we must be able to understand the word operations.
Management means that we have to take care of these operations in the most effective and efficient manner.
We must be able to utilize our resources.
We must be able to convert our inputs into the outputs in the most efficient and effective manner.
Now how to ensure that efficiency and effectiveness we will use.
We can use certain management principles which can help us to optimize the use of our resources.
And that will help us to get profit for the organization into the competition with the existing organizations.
So management will help direct guide coordinate you can use a number of objectives to help the organization.
That is in order to convert the raw materials into the final product in the best possible manner.
In operations management focus will primarily be to use the concepts of management in order to manage our operations.
In order to do our operations in the best possible manner in order to conduct our operations in the best and most effective and efficient manner.
We can have different types of management of different functions in which the management can be applied.
Sometimes we talk about Industrial Management.
There we talk of management in terms of the industrial aspect.
So we talk of behavioural aspects also the morale of the employees.
And different aspects are taken into account in wages and incentives that we pay to our employees.
So everything comes under Industrial Management.
We can have a topic of time management, in which our focus will be on time only;
Applying the principles of management for better management of our time.
Then we can have other forms of management also.
Sometimes we read a book called change management.
Suppose you want to change from one particular situation to another particular situation.
Or you want to change from one particular segment for to another particular segment.
Then you need to do the change management you need to change from one place to another place change management comes handy.
So, there we apply the principles of management for managing the change.
Principles of management may have a particular skeleton or those we have to adapt and try to apply.
These guiding principles, rules, regulations procedures into a particular function.
In operations management that important function is the operations.
Operations will help us to convert our inputs into the tangible outputs.
These management principles will be the guiding forces which will help us to better manage our operations.
To effectively efficiently transform our inputs into the outputs.
- If we try to understand what can be the major objectives of operations management:
- Just to have a rough idea that why do we need to do operations management?
If you are running a company and you are producing a product.
What you will keep in your mind while doing this transformation in your factory.
You are converting the raw material into the final product.
- What will be the focus?
The focus will primarily be on the quality of the product that you are producing.
The focus will be on the quantity that you have promised to your customers.
The focus will be on the timely delivery of this consignment that you have agreed upon with your customer.
Then, you have to ensure that your prices are competitive.
Your cost is competitive with that of the competitor’s cost.
There are four important points that highlighted here i.e.
- Time and
- The cost.
These four things are the guiding principles in case of operations management.
So when we are managing our operations when we are doing our business.
We have to always keep in mind that our business should be such that we are able to meet these four objectives.
We must be able to produce good quality, we must be able to satisfy the customer quantity-wise that if he wants a particular amount of our product.
We must be able to deliver that in a timely manner as well as in a cost-effective manner.
So though these four words are very important.
And therefore, we need to apply the principles of management for managing our operations, or for conducting our operation.
So that we remain in business we are competitive and the company further improves on the path of growth and progress.
Basically, our focus has to be on conducting the operations in such a way that we are competitive and we are successful.
So that you become a good operations manager.
Now important topics can be starting from the conceptualization of the product.
You need to find out new and new products which are required in the market.
And for that you need to do need analysis, work on product design and development, you need to conceptualize a product.
You need to think about various aspects during the designing of the product.
So the first thing is,
- What the company must produce?
- How it has to be produced?
- In what volume it has to be produced?
- How to check whether we are going with our plan or not or we are digressing from the path that we have identified during the planning stage?
To have an idea about various tools and techniques that can be adopted for managing the operation.
So the overall objective thinks tried to highlight in this brief discussion.
We can see in operations management there are lots of things that intermingle with each other most of the topics are interrelated to each other.
So the input is converted into the output so you have input-output relation.
Then there are resources.
So resources can be inputs that you convert into the output.
The sources can be we can have raw material resources sometimes our transformational resources will be there.
We have a specific set of machines equipment that,
We can use for that we can use for converting our raw material into the final product.
Then, there are requirements based on the demand we know ‘how much we must produce’.
Then there is a control.
We have to see that we have planned that we will be producing 500 cars per week.
So we have to check whether in the last week we have produced 500 cars or not.
Suppose we have produced 480 motors only that capability that we are lacking by 20 car.
We have to expedite we have to pull up overstocks.
We have to speed up in the next week and we must ensure that in the next week we produce 520.
So that we are able to take the backlog of 20 into account. That is what is related to control.
We have planned something 500 cars per week but in a particular week.
If we are lacking next week we have to make it up.
Then supervision overseeing that is also important
Planning, cost all these are the catchwords give words that are very very important in the context of operations management.
But here it is showing the inter-relationship that each parameter has to be taken into account in.
And you can say the objective of managing our operations in our target of managing our operation.
So each and every aspect we have to take into account and each one of these are interrelated to each other.
But it is easier when we have a structured discussion on the various topics.
Although each and every topic is interrelated to one another.
But then once we focus on each topic individually we will be able to appreciate their relationships amongst themselves.
Suppose we are able to study sales forecasting,
We will be able to use that number in sales forecasting what do we use various techniques.
There can be qualitative techniques, quantitative techniques of forecasting.
And then we forecast a number that in the next year this is the sales forecast.
Now how that forecast number it will be used for aggregate production planning.
It will be used for planning of our resources it can be used for materials management.
It can be used for materials requirement planning.
So it is related to the other aspects of operations management also.
So sales forecasting, we will have a structured discussion that what are the various methods of sales forecasting.
The output of sales forecasting will be used at the next level of planning in which we will see that how have we how we have to use our resources.
So, all these aspects are interrelated.
If we have a solution to one important topic or one important problem it will help us to solve many other problems in the downstream or in the downline.
Operations management that is to ensure the good quality products are produced in the right quantity at the right time and at a competitive cost.
The aspect of a business organization that is responsible for producing goods and services.
What are Operations?
This is operations are those aspects of business organization that is responsible for producing goods or services.
A feature or a system that transforms inputs into outputs of greater value.
You have a wooden block or you have a wooden piece which has very less value.
But when you transform it you plane it you machine it you remove the wood you give it a particular shape.
And then it can be used as a handle for an axe, you are adding value to that log of wood.
So now that wooden log has been converted into a handle of an axe by transforming it by removing certain material from the log of wood.
This is a function or operations, is a function a system that transforms inputs that is a log of wood into, the output that is a handle of an axe which is of greater value.
Now operation management offers with the design and management of products, processes, services and furnish chains.
We can see that different types of aspects are related to operations management.
- We have to look at the products.
- We have to look at processes.
- We have to look at services that we are rendering or our operations are rendering to the customer.
- We have to look at the overall supply chains starting from the raw material to the final delivery of the product to the customer at his doorstep.
So that complete supply chain is also an aspect that can be covered in operations management.
Here the focus will be on design and management of all these four important aspects starting from products to the final supply chain.
The focus will be on product design and development, aggregate production planning, or capacity planning.
So we will be focusing on this aspect by learning the various tools and techniques which can help us to manage
these four aspects of operations management.
- About operations management:
Just a very fundamental definition:
“The business function which is responsible for planning, coordinating and controlling the resources needed to produce products and services for a company.”
- What do we need to plan?
- What do we need to coordinate?
- What do we want to manage the resources?
Now we need to see, we need to plan that when we have to place an order for the raw materials.
In how much quantity we need the raw material.
Then what is what are the inspection procedures that we need to do on the raw material.
So we need to plan for the materials we need to plan for the workforce.
- How many people are required?
- when they are required?
- What are the skill sets that are required for these workers?
Then we need to plan for the money that how much money will be required to make this many numbers of products, from where that money will come.
How do we need to generate our resources in terms of money?
So that we are able to satisfy the demand of the customer.
We need to plan, we need to coordinate, we need to control the various resources.
Why it is necessary because these resources are needed to produce the products and services for the company.
We need to check that we are able to meet our objective of satisfying the demand of the customer.
Another definition of Operations Management:
“The science and art of ensuring goods and services are created and delivered successfully to the customers.”
We need to ensure that goods and services are created.
Created means they are produced they are fabricated they are processed and delivered to the customer.
And important adjectives is delivered successfully to the customers.
Now how to we can say define the word successfully, how to understand the world successfully.
Now successfully we can say that if the quality of the products and services that we have produced.
If the quantity that we have promised, if the cost is competitive if we are able to ensure the timeliness of delivering our products and services.
If we are able to focus on these four words i.e. the quality, quantity, time and cost
Only then we can say that we have successfully rendered the product or services to our customer.
And that is the basic target of operations management that we are able to satisfy our customers.
So that they become loyal to the brand of our company and they feel satisfied and confident in buying the product from our company.
The overall target of operations management is to be competitive by ensuring the satisfaction of the customers.
Now what is the transformation process:
The transformation process there are inputs.
The inputs can be:
- Information and
Then we have a transformation process that is the transformation or conversion process.
So we can take an example.
An example of an axe earlier, in which we use wood as raw material and then we convert it into a final product that is an axe.
Then the outputs can be:
- Goods or
So basically the transformation process involves any change or value-added change in the raw materials in order to get the final product.
That is the output.
But in output can be of two types of output, the output can be acceptable output or it can be non-acceptable or faulty output.
If you do not get the output as per your requirement so that we will using our control function.
So we have a specific set of inputs there is a transformation process.
And then we get our output or the output in terms of products or services or goods.
Now we already have planned, we know the specifications of our output.
So we will match these specifications we will match these characteristics that we look forward to in our product.
If characteristics are met we will say yes this is an acceptable product.
But suppose the characteristics or specifications are not met the quantity is not met, we will say no this is not satisfying the laid out criteria.
Then there is a provision of sending of feedback there is a feedback mechanism.
We will measure we will try to control the output.
If we are out of control, the as per our measurement we will send feedback.
And that controlling mechanism will help us to fine-tune to relook at our inputs as well as the transformation process.
So that we are able to come back on track, we are able to rectify the problems or the issues that have arisen.
And that has led to not meeting the target or that have led to a faulty output and that faulty output has to be corrected.
It is with the help of a controlling mechanism or the feedback mechanism.
This is the broad gambit of operations management we have to manage the inputs.
We have to manage the transformation process we have to manage the output that we are producing.
So that we are able to justify we are able to provide a good quality product to our customer.
- Why do we need to study operations management?
Operations management is an integrative body of knowledge, are needed in industries as diverse as healthcare, education, telecommunication, hospitality, food service, banking, consulting and manufacturing.
This is important not only from a manufacturing point of view.
But you can say that various service sector industry industries also require the basic aspects of operations management.
Operations management is one of the three essential features the different two being the marketing and finance.
So there are for any business organization there will be three basic functions.
One will be the marketing, then the operations management and finally the finances.
And it’s in ting it’s integrally related to the other business functions also.
So for marketing, we get:
- What needs to be produced?
- How it maybe it is going to satisfy the demand raised by the customer?
So the sales department marketing team will have their own set of criteria from or the feedback from the customers.
And operations means that we have to convert that feedback of customers into the product that is going to satisfy that demand in the market.
Operations management will help us to know how goods and services are produced in the most efficient and effective manner.
It will help us to understand what operations manager need to do in order to ensure a good quality product in the right quantity at the right time and at a competitive cost.
So operations management will answer a number of questions that maybe there with the management.
If you scientifically logically manage your operations you will be able to be successful in the industry.