OPERATION MANAGEMENT

 Operations management involves planning, organizing, and supervising

processes, and make necessary improvements for higher profitability. The
adjustments in the everyday operations have to support the company’s
strategic goals, so they are preceded by deep analysis and measurement of the
current processes.
 Is an area of management concerned with designing and controlling the
process of production and redesigning business operations in the production
of goods or services. It involves the responsibility of ensuring that business
operations are efficient in terms of using as few resources as needed
and effective in terms of meeting customer requirements. It is concerned with
managing an entire production system which is the process that converts
inputs (in the forms of raw materials, labor, and energy) into outputs (in the
form of goods and/or services), as an asset or delivers a product or
services, Operations produce products, manage quality and creates service.
Operation management covers sectors like banking systems, hospitals,
companies, working with suppliers, customers, and using technology.
Operations is one of the major functions in an organization along with supply
chains, marketing, finance and human resources. The operations function
requires management of both the strategic and day-to-day production of goods
and services.

IMPORTANCE OF OPERATION MANAGEMENT

 Operations management was important only in the manufacturing

industry.
o The belief was supported with the fact that the manufacturing industry had to
take care of more number of processes and operations starting from obtaining
the raw materials till the goods are sold and also in many cases after sales
assistance was also was considered hence creating the belief that the
operations management is important to manufacturing industry (Chase &
Zhang, 1998).
o So any operations management involves similar management tasks
irrespective of what industry or business one operates. It involves Planning,
Staffing, Controlling, Directing, Motivating and Organizing. Irrespective of
 business, the operations management ranges across the organization as part of
strategic and tactical operations (Voss et al., 2002).
o Designate a process champion: The manager is the best person because he
has the knowledge about all the process and will be capable of handling those
processes effectively.

o Know the process: It is important that not just the manager but every
employee within the operations knows the details regarding the processes.
o Understand the linkages: Every process will be interconnected and hence it is
important to understand the linkages between the processes.
o Work on the trade-offs: If the process is being created from a cross-functional
background it is useful to discuss functional versus process trade-offs. This will
allow you to make clearer decisions about what is the best balance.
o Teach others about the process: Teach others who may need to supply inputs
or receive outputs about the process. Moving to management by business
process is a learning opportunity for your organization. Process owners and
teams should be expected to have a responsibility for spreading their learning.
Some organizations would see this as part of the general communications
process which facilitates understanding and allows issues to be raised and
answered from any part of the organization.
o Train within the process: Cross-functional customer-facing processes require
new roles, tasks, skills and expertise, often organized around teams. There are
a number of things to consider. Training and development of new skills for
individuals and of the team will bring with it a change in the culture of your
organization.
o Measure the process: Measure for control, improvement and benchmarking,
using a range of financial and non-financial measures. Measurement is
important for managing the interfaces between sub-processes and also
between processes at the same level.
o Manage careers: Careers needs management in the new process-oriented,
possibly flatter organization. Align expectations and aspirations with a different
kind of progression emphasizing cross-skill training and the importance of
gaining wider business experience both within the process and in other
processes.
o Build specialist expertise: In the context of the new organization, take account
of any weakening in this role where the traditional functions in the
organization are made weaker. The process teams will probably need a mix of
specialist skills as well as more general skills.
o Improve the process: This must be done continuously. The world will not
stand still; nor should any members of the team.
OBJECTIVES OF OPERATION MANAGEMENTS

a) CUSTOMER SERVICE
 The customer service is the main objective any company because at the
end of the day irrespective of all the strategy, marketing and operations
management if the customer is not happy with the product or the
service then the purpose of the entire enterprise is fallen.
b) RESOURCE UTILISATION
 The resources are not used carefully then there are chances that the
production cost increasing and hence the overall profit margin will
reduce and the enterprise objective has failed.

HISTORICAL BACKGROUND

o Operations management was previously called production management,

clearly showing its origins in manufacturing. Historically, it all began with the
division of production, starting as early as the times of ancient craftsmen, but
spreading more widely only by adding the concept of interchangeability of
parts in the eighteenth century, ultimately sparking the industrial revolution.
o Still, it was not until Henry Ford took a twist on manufacturing with his
famous assembly line concept, otherwise known as “bring work to men,” that
the management of production for improving productivity became a hot topic.
From the 1950’s and 1960’s, it formed a separate discipline, besides bringing
other concepts, such as Taylorism, production planning, or inventory control,
to life.
o As the economies in the developed world were gradually shifting to be service-
based, all the corporate functions, including product management, started to
integrate them. The service side also began its approach by applying product
management principles to the planning and organizing of processes, to the
point where it made more sense to call it operations management.
CHARACTERISTICS OF OPERATION MANAGEMENT

a. Flexibility
b. The quality
c. Coordination
d. Effectiveness
e. Profitability
 f. Measurable
g. The watching
h. Evaluating
i. Concentration
j. Analysis
k. The speed of execution
l. Rapid reaction capacity
m. Structural organizational flexibility

RELATED TOPICS OF OPERATION MANAGEMENT

a. PRODUCTION SYSTEM
 A production system comprises both the technological elements
(machines and tools) and organizational behavior (division of
labor and information flow). An individual production system is
usually analyzed in the literature referring to a single business,
therefore it's usually improper to include in a given production
system the operations necessary to process goods that are
obtained by purchasing or the operations carried by
the customer on the sold products, the reason being simply that
since businesses need to design their own production systems
this then becomes the focus of analysis, modeling and decision
making (also called "configuring" a production system.
b. METRIC EFFECIENCY AND EFFECTIVENESS
Operations strategy concerns policies and plans of use of
the firm productive resources with the aim of supporting long
term competitive strategy. Metrics in operations management can
be broadly classified into efficiency metrics and effectiveness
metrics. Effectiveness metrics involve:

 Price (actually fixed by marketing, but lower bounded by

production cost): purchase price, use costs, maintenance costs,
upgrade costs, disposal costs
 Quality: specification and compliance
 Time: productive lead time, information lead time, punctuality
 Flexibility: mix, volume, gamma
 Stock availability
 Ecological Soundness: biological and environmental impacts of
the system under study.
CONFIGURATION AND MANAGEMENT
o Designing the configuration of production systems involves
both technological and organizational variables. Choices in production
technology involve: dimensioning capacity, fractioning capacity, capacity
location, outsourcing processes, process technology, automation of
operations, trade-off between volume and variety (see Hayes-Wheelwright
matrix). Choices in the organizational area involve: defining
worker skills and responsibilities, team coordination, worker incentives and
information flow.
Regarding production planning, there is a basic distinction between
the push approach and the pull approach, with the later including the singular
approach of just in time. Pull means that the production system authorizes
production based on inventory level; push means that production occurs based on
demand (forecasted or present, that is purchase orders). An individual production
system can be both push and pull; for example activities before the CODP may
work under a pull system, while activities after the CODP may work under a push
system.

Classic EOQ model: trade-off between ordering cost (blue) and holding cost (red).
Total cost (green) admits a global optimum.
Regarding the traditional pull approach to inventory control, a number of
techniques have been developed based on the work of Ford W. Harris (1913),
which came to be known as the economic order quantity (EOQ) model. This model
marks the beginning of inventory theory, which includes the Wagner-Within
procedure, the newsvendor model, base stock model and the Fixed Time
Period model. These models usually involve the calculation of cycle
stocks and buffer stocks, the latter usually modeled as a function of demand
variability. The economic production quantity. (EPQ) differs from the EOQ model
only in that it assumes a constant fill rate for the part being produced, instead of the
instantaneous refilling of the EOQ model.
SERVICE OPERATION
o Service industries are a major part of economic activity and employment in all
industrialized countries comprising 80 percent of employment and GDP in
the U.S. Operations management of these services, as distinct from
manufacturing, has been developing since the 1970s through publication of
unique practices and academic research. Please note that this section does not
particularly include "Professional Services Firms" and the professional services
practiced from this expertise (specialized training and education within).

According to Fitzsimmons, Fitzsimmons and Bordoloi (2014) differences

between manufactured goods and services are as follows:

o Simultaneous production and consumption.

High contact services (e.g. health care) must be produced in the

presence of the customer, since they are consumed as produced. As a result,
services cannot be produced in one location and transported to another, like
goods. Service operations are therefore highly dispersed geographically close
to the customers. Furthermore, simultaneous production and consumption
allows the possibility of self-service involving the customer at the point of
consumption (e.g. gas stations). Only low-contact services produced in the
"backroom" (e.g., check clearing) can be provided away from the customer.

o Perishable.

Since services are perishable, they cannot be stored for later use. In
manufacturing companies, inventory can be used to buffer supply and
demand. Since buffering is not possible in services, highly variable demand
must be met by operations or demand modified to meet supply.

o Ownership.

In manufacturing, ownership is transferred to the customer. Ownership

is not transferred for service. As a result, services cannot be owned or resold.
 o Tangibility.

A service is intangible making it difficult for a customer to evaluate the

service in advance. In the case of a manufactured good, customers can see it
and evaluate it. Assurance of quality service is often done by licensing,
government regulation, and branding to assure customers they will receive a
quality service.

MATHEMATICAL MODELING
o There are also fields of mathematical theory which have found applications in
the field of operations management such as operations research:
mainly mathematical optimization problems and queue theory. Queue theory
is employed in modeling queue and processing times in production systems
while mathematical optimization draws heavily from multivariate
calculus and linear algebra. Queue theory is based on Markov
Chains and stochastic processes. It also worth noticing that computations
of safety stocks are usually based on modeling demand as a normal
distribution and MRP and some inventory problems can be formulated
using optimal control.
o When analytical models are not enough, managers may resort to
using simulation. Simulation has been traditionally done thought the discrete
event simulation paradigm, where the simulation model possesses a state
which can only change when a discrete event happens, which consists of a
clock and list of events. The more recent transaction-level modeling paradigm
consists of a set of resources and a set of transactions: transactions move
through a network of resources (nodes) according to a code, called process.
 A control chart: process output variable is modeled by a probability density
function and for each statistic of the sample an upper control line and lower control
line are fixed, when the statistic moves out of bounds, an alarm is given and possible
causes are investigated. In this drawing the statistic of choice is the mean and red
points represent alarm points.
Since real production processes are always affected by disturbances in both
inputs and outputs, many companies implement some form of Quality
management or quality control. The Seven Basic Tools of Quality designation
provides a summary of commonly used tools:

 Check sheets
 Pareto charts
 Ishikawa diagrams (Cause-and-effect diagram)
 Control charts
 Histogram
 Scatter diagram
 Stratification
These are used in approaches like Total quality management and Six Sigma.
Keeping quality under control is relevant to both increasing customer satisfaction
and reducing processing waste.
Operations management textbooks usually cover demand forecasting, even
though it is not strictly speaking an operations problem, because demand is related
to some production systems variables. For example, a classic approach in
dimensioning safety stocks requires calculating standard deviation of forecast errors.
Demand forecasting is also a critical part of push systems, since order releases have
to be planned ahead of actual clients orders. Also any serious discussion of capacity
planning involves adjusting company outputs with market demands.

SAFETY, RISK AND MAINTENANCE

o Other important management problems involve maintenance policies (see

also reliability engineering and maintenance philosophy), safety management
systems (see also safety engineering and Risk management), facility
management and supply chain integration.

PURPOSE OF OPERATION MANAGEMENT

o Operations management handles various strategic issues including

determining the size of manufacturing plants and project
 management methods, and implementing the structure of information
technology networks.
o Other operational issues include the management of inventory levels,
including work-in-process levels and raw materials acquisition; quality control;
materials handling; and maintenance policies.
o Operations management entails studying the use of raw materials and
ensuring minimal waste occurs. Managers utilize numerous formulas such as
the economic order quantity formula to determine when and how large of an
inventory order to process and how much inventory to hold on hand.

ADVANTAGE OF OPERATION MANAGEMENT

o Operations management can help an organization implement strategic
objectives, strategies, processes, planning and controlling.
o One of the primary focuses of operations management is to effectively
manage the resources of an organization so that the organization can
maximize the potential of the products or services produced or offered by the
company.
o Operations management can include managing human resources, materials,
information, production, inventory, transportation, logistics, purchasing and
procurement.
DISADVANTAGE OF OPERATION MANAGEMENT
o Operations management depends on many different components within the
organization working together to achieve success. Even if operations
management implements an effective plan, if operations management does
not carry out the plan properly, the plan will most likely fail. Within an
organization, mistakes often occur during the chain of events from
manufacturing to sale. Therefore, operations management requires the
coordination of operation functions, marketing, finance, accounting,
engineering, information systems and human resources to have success within
the organization. This poses the primary disadvantage of operations
management because if an organization's individual components do not work
 well together, operations management will have limited success within the
organization.
CONCLUSION
Therefore an operations manager must needs to take into account
many factors when producing a product. They must make a decision to
balance the cost and quality of their product or service when deciding whether
to outsource, be innovative with technology or have inventory. Also to choose
to use globalization as a strategy for the business. The manager needs to abide
by all legal policies and choose to have or to not have a business that is
corporate socially responsible. The management of these key factors will
contribute to the success or failure of the business so the manager’s choices
impact enormous amounts on how their business functions.
INTELLECTUAL PROPERTY

 refers to creations of the mind, such as inventions; literary and artistic works;
designs; and symbols, names and images used in commerce.
 is a category of property that includes intangible creations of the human
intellect, and primarily encompasses copyrights, patents, and trademarks. It
also includes other types of rights, such as trade secrets, publicity rights, moral
rights, and rights against unfair competition. Artistic works like music and
literature, as well as some discoveries, inventions, words, phrases, symbols,
and designs can all be protected as intellectual property.

IMPORTANCE OF INTELLECTUAL PROPERTY

 It contributes enormously to our national and state economies. Dozens of industries
across our economy rely on the adequate enforcement of their patents, trademarks,
and copyrights, while consumers use IP to ensure they are purchasing safe,
guaranteed products. We believe IP rights are worth protecting, both domestically
and abroad.

 Intellectual Property Creates and Supports High-Paying Jobs

 Intellectual Property Drives Economic Growth and Competitiveness
 Strong and Enforced Intellectual Property Rights Protect Consumers
and Families
 Intellectual Property Helps Generate Breakthrough Solutions to Global
Challenges
 Intellectual Property Rights Encourage Innovation and Reward
Entrepreneurs
