Key Functions within Operations Management

Key functions of operations management include the following:

Finance - Finance is a crucial component within operations management. It is essential to make

sure that all finances have been utilized to their fullest extent and are being properly carried out
to ensure for optimized creation of goods and services. Proper utilization of finances will allow
for a product or service to be created that will satisfy overall consumer needs.

Strategy - When utilizing strategy within operations management, this refers to planning tactics
that can aid through optimized resources and development of a competitive edge over other
businesses. Many business strategies include supply chain configuration, sales, capacity to hold
money, and optimum utilization of human resources.

Operation - This function of operations management is concerned with planning, organizing,

directing, and overall control of all activities within the organization. This is the primary function
of operations management and will effectively aid in converting raw materials and human efforts
into a durable good and service that consumers will be able to utilize.

Product Design - With new technology becoming available, the selling of a product become
much more simple. One of the main duties of operations management is to ensure that a product
is designed properly and caters to market trends and needs of consumers. Modern-day consumers
are concerned about quality instead of quantity, which is why it is so crucial to develop a durable
and top-notch quality product.

Forecasting - Forecasting is the process in which software makes an estimate of certain events
that may occur in the future. In operations management, forecasting can take an estimate of
consumer demand, which correlates with production through creating an accurate amount of
product needed within a given time. Overall, forecasting plays a crucial role within the
production process.

Operations Manager

1. Develop Operations Strategy

▪ Developing the annual Operations Strategy

▪ Sourcing new ideas to input into the Strategy and make necessary strategic decisions

▪ Implementing the operations strategy together with the operations team and monitor progress
2. Make Operations Plan

▪ Responsible for operations planning

▪ Communicating the operations plan to the operations department and other stakeholders

▪ Regularly reviewing the plan and make the necessary strategic adjustments

▪ Implementing the operations plan and provides regular feedback to the team on progress

▪ Monitoring the adherence to operations best practices with a high focus on compliance with all
regulations and legislation

3. Budget Management

▪ Developing annual budgets based on operational and financial targets

▪ Monitoring operations budget to ensure expenditure is aligned to budget allocations

▪ Regularly initiating cost saving projects to reduce operating costs

▪ Conducting regular operational and performance auditing

▪ Driving operational performance

4. Operational Performance Management

▪ Driving operational performance

▪ Managing the performance of direct reports, ensuring performance goals are achieved

▪ Conducting regular operational and performance auditing

▪ Utilizing data to produce insights for making operational decisions to reduce cost and improve
operational efficiencies

5. People Management

▪ Providing leadership and creating a high performing operations team

▪ Recruiting new staff members in collaboration with the Human Resources team

▪ Developing succession plans with the direct reports for the operations department

▪ Coaching and mentoring direct reports and the team to foster personal growth and teamwork,
ensuring that the operations department is fully resourced to meet the business objectives

6. Stakeholder Management

▪ Engaging with all stakeholders to address operations performance issues, identify solutions and
make the necessary adjustments to the operating business model

▪ Supporting the collaboration across functions to resolve operations challenges

▪ Developing and maintaining good relationships with all stakeholders to ensure business
continuity and smooth running of operations

Product design is cross-functional, knowledge-intensive work that has become increasingly

important in today's fast-paced, globally competitive environment. It is a key strategic activity in
many firms because new products contribute significantly to sales revenue. When firms are able
to develop distinctive products, they have opportunities to command premium pricing. Product
design is a critical factor in organizational success because it sets the characteristics, features,
and performance of the service or good that consumers demand. The objective of product design
is to create a good or service with excellent functional utility and sales appeal at an acceptable
cost and within a reasonable time. The product should be produced using high-quality, low-cost
materials and methods. It should be produced on equipment that is or will be available when
production begins. The resulting product should be competitive with or better than similar
products on the market in terms of quality, appearance, performance, service life, and
price.Product design is more important than ever because customers are demanding greater
product variety and are switching more quickly to products with state-of-the-art technology. The
impacts of greater product variety and shorter product life cycles have a multiplicative effect on
the number of new products and derivative products that need to be designed. For example, just a
few years ago, a firm may have produced four different products and each product may have had
a product life cycle of ten years. In this case, the firm must design four new products every ten
years. Today, in order to be competitive, this firm may produce eight different products with a
life cycle of only five years; this firm must introduce eight new products in five years. That
represents sixteen new products in ten years or one product every seven and one-half months. In
this fast-paced environment, product design ceases to be an ad hoc, intermittent activity and
becomes a regular and routine action. For an organization, delays, problems, and confusion in
product design shift from being an annoyance to being life threatening.Product design can also
be an important mechanism for coordinating the activities of key supply chain participants. As
organizations outsource the production of sub-assemblies and components, they also may be
asking suppliers to participate in product design. As they outsource design capabilities it is
essential that they manage and coordinate the flow of information among the supply chain
participants. This can be especially important as firms outsource components to two or more
suppliers. Now, there may be important design interfaces among two, three, or more suppliers.
These interfaces must be properly managed to ensure cost effective and timely designs. Clearly,
information and communication technologies become important parts of this effort.

Process Design is the act of transforming an organization’s vision, goals, and available resources
into a discernible, measureable means of achieving the organization’s vision.Process design may
start with process analysis; best practices from similar organizations; process reference models
from industry‐standards organizations (e.g., SCOR or eTOM) or third party consultants; or
“green field” — ideas coupled with the experience and insights of the process design team.
Process design focuses on defining what the organization will do to achieve its financial and
other goals.Process DesignProcess design is concerned with the overall sequence of operations
required to achieve the product specifications. It specifies the type of work stations that are to be
used, the machines and equipment necessary and the quantities in which each are required.

The sequence of operations in the manufacturing process is determined by

1. The nature of the product

2. The materials used

3. The quantities being produced

4. The existing physical layout of the plant.

Operations Design

Operations design is concerned with the design of the individual manufacturing operations .It
consists of examining the man-machine relationship in the manufacturing process for converting
the raw materials into the finished or semi-finished product .Operations design must specify how
much of man and machine time is required for each unit of production.

Frame Work for Process Design

The design of the transformation process requires answers to several questions given below:

1.What are the characteristics of the product or service being supplied or offered to the
customer?

2.What is the expected volume of the output?

3.What kinds of equipment or machinery are available?

4.Should the equipment or machinery be custom built?

5.What is the cost of equipment and machinery needed?

6.What types of labor skills are available, in what quantities and at what wage rates?

7.How much money can be spent on the manufacturing process?

8.Should the process be capital intensive or labor intensive?

9.Should the components or parts be made or purchased ?(Make or buy decision)

10.Which would be the best way to handle the materials?

System Approach to Process Planning and Design

1. Inputs

• Product/service information such as product/service demand, prices/volumes, competitive

environment , customer needs/wants and desired product characteristics

• Production system information such as resource availability, production economics,

available technologies and technologies that can be acquired and predominant strengths and
weakness of the firm.

• Operations strategies, such as positioning strategy, competitive strategy, focus of factory and
service facilities and allocation of resources.

Product design can be defined as the idea generation, concept development, testing and
manufacturing or implementation of a physical object.Product designers conceptualize and
evaluate ideas, making them tangible through products in a more systematic approach.Aesthetics
is considered important is product design.

Process design is the act of transforming an organization’s vision, goals, and available resources
into a discernible, measurable means of achieving the organization’s vision.Process design may
start with process analysis; best practices from similar organizations; process reference models
from industry‐standards organizations or third party consultants; or “greenfield” — ideas
coupled with the experience and insights of the process design team. Process design focuses on
defining what the organization will do to achieve its financial and other goals.
Operational strategies refers to the methods companies use to reach their objectives. By
developing operational strategies, a company can examine and implement effective and efficient
systems for using resources, personnel and the work process. Service-oriented companies also
use basic operational strategies to link long- and short-term corporate decisions and create an
effective management team.

main benefits of operations management include the following:

Profitability Management - With proper operations management, executives are able to rely on
the activity and find ways to come up with new ideas on how to potentially increase sales. With
an experienced operations manager, monitoring revenue and expenses becomes much easier and
can dive into statements of income and profitability trends. Overall, profitability management
enables you to get a much better understanding of your revenue stream.

Competitive Advantage - A business that can manage their operations can get a handle on any
key internal and external factors. Internal factors can include operating policies, average attrition
rate, and intellectual capital. External factors pertain to the state of economy and any rival
strategies. When helping a firm understand internal and external factors, operations management
improves the competitive standing of the company.

Regulatory Compliance - Analyzing operating activities enables corporate management to rid

themselves of the days of considerably large government fines and adverse regulatory decisions.
The heads of the department are able to set adequate internal controls to ensure that tasks are
performed in a lawful manner.

Manufacturing Edge - Changing or improving the way a good is produced can save a facility a
large sum of money in the long run. With operations management, you are able to change or
improve the way a product is made, as well as how to store raw materials more effectively. This
extremely advantageous benefit aids the manufacturer through preventing a deterioration in
affordability of debt. Overall, this component will aid the facility immensely and will utilize
tools such as production software, defect-tracking programs, warehouse management software,
and process re-engineering applications.

Lean Supply Chain Management

Lean supply chain management is about removing waste or unwanted components from a
process. Most often this process is applied to manufacturing, where supplies can be ordered as
they are needed rather than back-stocking a lot of inventory. With a lean approach, it is important
for organizational leadership to identify the value and non-value parts of the supply chain. By
identifying what is of value in the supply chain, a determination can be made on how to focus the
business on those valued parts. Equally, non-valued parts can be eliminated to keep cost and
inefficiency at a minimum. Non-valued parts are those parts in the process that have zero or
negative return on investment. The elimination of non-valued parts has positive or no impact on
the outcome of the process.
A lean approach occurs in business, but there are also reflections of it in our daily lives. For
example, you wouldn't buy a year's worth of groceries and store them all at home, right? The
produce would go bad, you wouldn't know exactly how much you would need of each item, and
you may not know what your family will like to eat nine months from now. Not to mention all
the money that could potentially be wasted with this system! With a lean approach, you get what
you need more often to reduce waste.

Supply Chain Breakdown

Key elements of a lean supply chain include warehousing, transportation, and lean customers.

Warehousing
Warehousing from a lean perspective includes inventory on demand, which means only the
inventory currently needed is ordered and stored. Lean warehousing enables organizations to
save cash flow for other urgent needs.

Transportation
Lean transportation can include multiple stops on delivery routes, lower fuel costs, better
customer service for on-time delivery, and larger payloads for efficient distribution. Automated
functions for drivers would ensure more timely use of vehicles by eliminated paper waste and
more organized information.

Lean Customers
It is an advantage for a customer to know what they want and have a shared interest in the
efficiency of the process. When a customer understands their needs and can relay that to the
business, both sides benefit. A good example of this phenomenon is when a customer is a repeat
wholesale customer and an order can be made for exactly what is needed. When the supplier can
order for the customer the exact supplies needed rather than having to choose from items on
hand, the costs are driven down, which benefits both the business and the consumer.

Tools for Success

For companies to be successful in lean supply chain management there has to be:
• Open communication and collaboration between the company and the supplier. Open
communication allows the needs of both parties to be met and reduces waste from the supplier
and the company. Getting supplies at the right time is critical for success in lean supply chain
management or there is a risk of ordering what is not needed, causing added costs.
• Management occurring at a high level so as to have visibility on the entire process from the
beginning to the end. Management at the top of the business process can see and communicate,
reduce redundancy, see deficiencies, and increase quality.
• An elimination of redundancy in procurement, so multiple parties are not paying higher prices
due to different purchasing sources. For example, on a local level, supplies could be bought at
discounted prices that the corporate level may not be aware of. Having designated purchasing
agents for certain items ensures the best price is obtained.

Definition of Operation Management

Operations management 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.

“Operations management is concerned primarily with manufacturing or the change

of state of physical goods”.
Functions of Operations Management in an
Organisation
Functions of Operations Management
 Finance- Finance plays a main function in operations management. The
operation manager should not waste finance in unproductive tasks. He should
ensure that all finance of the organization is utilized for the manufacturing of
useful goods or services which may satisfy consumer wants.
 Operation– The function of operation management is basically concerned with
planning, organizing, directing and controlling of daily routine operations of an
organization. The operation manager ensures that all activities are going
effectively and efficiently.
 Strategy– The strategy formulation is also the main function of operation
management. The operation manager should have pre-planned tasks.
Formulation of plans and tactics helps the organization in optimizing their
resources and developing a competitive edge over competitors.
  Product Design–  It is the duty of operations manager to design the product
according to the market trends and demands. He should ensure that innovative
techniques are incorporated within the product and its quality is maintained. 
 Maintaining Quality–  Operations managers should ensure a better quality of
products. The manager should not compromise with the quality of Products.
They should work on quality management and should supervise all tasks. If any
defects are found they should take steps to rectify such defects.
Importance of Operations Management in an
Organisation
 Helps in achievement of objectives: Operations management has an effective
role in the achievement of pre-determined objectives of an organization. It
ensures that all activities are going as per plans by continuously monitoring all
operations of organization.
 Improves Employee productivity: Operation management improves the
productivity of employees. It checks and measures the performance of all
people working in the organization. Operation manager trains and educate their
employees for better performance. 
 Enhance Goodwill: Operation management helps in improving the goodwill
and presence of the organization. It ensures that quality products are delivered
to all customers that could provide them better satisfaction and makes them
happy.
 Optimum utilization of resources: Operation management focuses on
optimum utilization of all resources of the organization. It frames proper
strategies and accordingly continues all operations of the organization.
Operation managers keep a check on all activities and ensure that all resources
are utilized on only useful means and are not wasted.
 Motivates Employees: Operation management helps in motivating the
employees towards their roles. Operation managers guide all peoples in
performing their roles and provide them with better atmosphere. Employees are
remunerated and rewarded according to their performance level.
 Importance of Operations Management

Nature of Operation Management

Nature of Operation Management
 Dynamic- Operations management is dynamic in nature. It keeps on changing
as per market trends and demands.
 Transformational Process– Operation management is the management of
activities concerned with the conversion of raw materials into finished
products.
 Continuous Process– Operation management is a continuous process. It is
employed by organizations for managing its activities as long as they continue
their operations.  
 Administration– Operation management administers and controls all activities
of the organization. It ensures that all activities are going efficiently and there is
no underutilization or mis-utilization of any resource.
Key Approaches to Operations Management
 The first approach of operations management is to Design of goods and
services, that will attract customers.
 To manage the Quality of products or services.
 Location Strategy is also a key approach of operations management.
 To manage Supply Chain Management.
 To create Accountability of operations managers.
 To accept the Change.
Operations Management Examples
Suppose A company wants to manufacture Mobile in India. The company needs to
take some operations decisions. For example:

 Purchasing of Raw material from China(assumed).

 To hire skilled and qualified employees.
 To set Manufacturing units.
 To make sure the supply chain of mobile phones.
 To set services center across the country.
If the organization makes good operations decisions, Then the company will be able
to produce affordable, functional, and attractive Mobile phones.