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What Is "Operations Management"?: Structurally Altering, Transporting, Storing And/or Protecting, and Inspecting
What Is "Operations Management"?: Structurally Altering, Transporting, Storing And/or Protecting, and Inspecting
What Is "Operations Management"?: Structurally Altering, Transporting, Storing And/or Protecting, and Inspecting
A transformation that adds value by “structurally altering” may involve any of:
a) a physical alteration (as in manufacturing a car, or a T-shirt),
b) a sensual alteration (as in air conditioning a building), or
c) a psychological alteration (as in awarding a university degree).
These are not mutually exclusive alteration types. An organization that structurally alters
its inputs to create some output(s) may simultaneously be physically and/or sensually
and/or psychologically altering at least some of its inputs, all at the same time.
Storing (e.g., as in kennels for dogs) and protecting (e.g. safety boxes in banks) can also
be means of creating value.
Inspection (e.g., medical exams by doctors, or audits by accountants) can also create
value.
Operations Management (OM) studies the means of adding value by these transformation
means. OM therefore involves the management of (i.e., planning and control of) the
inputs and resources needed (e.g., planning the bed-capacity of a hospital, or planning
the monthly employment levels at a manufacturing plant), the management of the
transformation mechanisms iteself (e.g., planning which faculty member will teach which
courses at a university, or planning the production and inventory levels of different power
drills at a BOSCH plant, or determining in which sequence a set of DNA tests will be
performed at a lab), and the management of outputs produced (e.g., setting and
maintaining various quality standards for different products, or coordinating and
evaluating the performances of the wholesalers of our outputs, etc.).
The following are the primary differences between products and services:
Products Services
Tangible Intangible
Equipment-intense production Labor-intense production
Production w/ minimal customer contact Production w/ extensive customer contact
Delayed consumption Immediate consumption
Quality easily measured Quality difficult to measure
Operations Management, as the study of the transformation systems that change inputs
and resources into products, contrasts with the other fields of management (such as
marketing, finance, personnel, accounting, etc.) in that it is the field of management
that’s actually concerned with creating value added and improving the productivity of
organizations.
Topics covered range from long-term, strategic issues such as production technology
selection (e.g., the selection by banks of alternative service delivery means - such as
branches versus ATMs versus online-banking) or the determination of the location of a
new hospital, to tactical issues such as “supply chain management” (e.g., deciding on
which parts suppliers should be used by a manufacturer) or production planning (e.g.,
coordinating the monthly production targets with the uncertain and seasonal demand in
the textile industry), or to operational, daily scheduling issues (e.g., queuing of orders
received at a McDonalds, or planning and scheduling meetings between students and
academic advisors at a university).
Historically, the “scientific management” efforts of Frederick Taylor, Frank and Lillien
Gilbreth, and others in the late 19th and early 20th centuries continued during World War
II, and were amplified in the form of “Operations Research” groups, largely initiated and
funded by government and quasi-governmental organizations in USA and UK:
Right after WW II, the OR knowledge developed purely for military purposes was
imported into and applied in the industry. By 1953, so-called Management Science
(MS) groups were developing various OR applications to business, attempting to create
and design a “science of management” that lived up to the standards of good science.
Within the academic community, most of the OR research initially took place in
engineering departments. In 1960s, OR courses made their way into business curricula.
But by the 1980s, most corporate groups focused on operations research had shrunk or
disappeared. Researchers began examining operations management issues using non-
operations research perspectives, such as empirical approaches or Toyota’s holistic
system of physical and human processes. Today, you can hardly find any OR courses
offered in modern schools of management!
1) The generic term “business administration” has gradually disappeared from our
universities to be replaced with the term “management” as we have come to realize that
the knowledge created in this field does not relate to running only “businesses”, but also
non-profit local or international organizations, charities, NGOs, local and state
governments, etc.
* For example, a “marketing consulting” firm’s main function is not to market itself, but to design and offer
consulting services by somehow transforming its inputs and resources (market researchers, advertising and
promotion experts, software, databases, experience and know-how) into services useful to their customers
(market studies, forecasts, slogans, ad campaigns, etc.)
The following diagram shows the interations between Operations Management on the one
hand, and Finance, Marketing, Accounting, Human Resources, Informations Systems,
Design Engineering, and Manufacturing Engineering, on the other hand.
The fact that OM appears to be located “centrally” in the diagram below is only incidental.
You could construct a similar diagram with, say, the Accounting field located centrally, to
show the interations between the accountants and all the other fields relavant to
managing organizations.
The diagram above illustrates the interactions between OM and the different fields related
to “management”, and shows examples of the flow of information between these fields. It
is important for the student to mentally revisit this diagram throughout the semester,
every time the coverage of a new OM topic is completed, to refine the type of interation
that exists between OM and other fields specifically in the context of the topic studied.