The task has been complicated with operations spanning the globe, and consequent logistic, cultural and other issues that need new kinds of solutions. Supply chain management and inventory management, for example, become issues of a global scale. Intensive use of information technology and internationalization of manufacturing operations are typical solutions adopted by modern global corporations for management of operations.
What is Operations Management?
Though in one sense operational management can be viewed as the task of managing the entire operations of a business, the term has come to stand for managing the activities concerned with production of goods and services. Tasks such as purchasing, inventory management, production and maintenance scheduling, quality control and material handling are examples of activities that come under it in a manufacturing setup. For businesses that provide service, the term generally stands for the mainly backroom operations involved in rendering the service.
The above operations of management have an emphasis that is different from, say marketing, financial, or human resources management. However, issues concerned with the latter are quite relevant during production operations also. For example, a key goal of operations management is meeting customer requirements, which involves working closely with the marketing people.
R&D and new product development also come under operations management. The influence of marketing considerations is particularly important in these functions. In an earlier age, when producers could operate in a sellers' market, they could decide on product features and define quality standards. In the current buyers' market conditions, it is those organizations that understand and meet customer requirements more precisely that have a realistic potential for success.
Operations and Management in a Globalizing Environment
Globalization complicates the task of operations management. Goods and services will now have to be delivered at distant locations. Economic considerations might warrant manufacturing near the market, instead of shipping goods all the way from home base. International manufacturing is thus a characteristic of globalized operations.
Supply chain management is another area that has got transformed with global operations. The most economic sources of inputs might be countries across the globe. However, ensuring the quality and timely availability of these inputs become a very different management task in such cases. Language and cultural factors become significant issues of management.
Specialized supply chain management software and dedicated service providers rendering logistic and other services have appeared in the market in response to the increasing complexity.
Operations Management Dimensions
Meeting customer requirements is the basic management issue in today's competitive market conditions. It requires a clear understanding about customer value in the forms of that person's needs and preferences, and designing the product or service in a way that maximizes customer value.
The second key dimension of operations management is concerned with resources and costs. Profitability demands that resource utilization and costs are minimized. Here again, it is at the design stage that the best solutions can be provided.
Another way to look at operations management is to look at the strategic, tactical and operational dimensions. For example, deciding on the technology to be used and the scale of operations is a strategic issue. Selecting the equipment for the plant and their layout illustrates a tactical decision. Day-to-day issues of production and maintenance scheduling, and quality control are operational issue examples.
Operations are moving from traditional mass production models to customized on-demand production approaches. Management techniques are also changing with such innovations as lean manufacturing, just-in-time procurement and six-sigma process improvement approaches. Continuous review and improvement of processes is a must to meet the goals of customer satisfaction and acceptable production costs.
Operations management is concerned with meeting customer requirements at acceptable costs. The process starts right from the design stage through strategic and tactical decisions on technology and plant selection to operational issues of supply chain management, maintenance scheduling and quality control. Globalization is transforming the scale and nature of operations and management in a major way.
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