MANAGING PRODUCT AND SERVICES

Operations

Operations is the work of managing the inner workings of your business

so it runs as efficiently as possible. Whether you make products, sell
products, or provide services, every small business owner has to oversee the
design and management of behind-the-scenes work.

The specific definition of operations will depend on your industry and the
stage your business is in. Sometimes, improving operations means thinking
strategically about your systems and processes. Other times, it means being
part of the on-the-ground work to bring every aspect of a project, from tiny to
huge, to reality.

IMPORTANCE OF OPERATIONS MANAGEMENT

1. Product Quality
The first unit in a typical firm that checks durability and reliability in a
product is the operations management. Operations management sees to
quality of products or goods which would suit customers on and after delivery.
When a product is of quality, it gives you an edge compared to your
competitors.

2. Productivity
Productivity is defined as the ratio of input to output and it is the only way
to verify employees input. Operations management ensures appropriate
staffing of employees to resources so as to get maximum result. The only way
to ensure productivity is through an effective operations management.

3. Customer Satisfaction
There is no feeling for a manager or an employee as a customer getting
the utmost satisfaction ever. Operations management rightly ensures this
coupled with quality product. Customers make organization thrive and they
must be treated well in every way necessary and possible.

4. Reduced Operating Cost

Through productivity, quality products and customer satisfaction, cost
incurred on products servicing is maximally reduced. This simultaneously
leads to increased revenue. Only operations management can make this
possible. In reducing operating cost, there is also waste reduction. Exact
number/size of products is produced as requested via a proper operations
management.
TYPES OF TRANFORMATION PROCESS

 manufacture – the physical creation of products (for example cars)

 transport – the movement of materials or customers (for example
a taxi service)
 supply – change in ownership of goods (for example in retailing)
 service – the treatment of customers or the storage of materials
(for example hospital wards, warehouses).
Several different transformations are usually required to produce a good or
service. The overall transformation can be described as the macro operation,
and the more detailed transformations within this macro operation as micro
operations. For example, the macro operation in a brewery is making beer
(see the figure below). The micro operations include:
 milling the malted barley into grist
 mixing the grist with hot water to form wort
 cooling the wort and transferring it to the fermentation vessel
 adding yeast to the wort and fermenting the liquid into beer
 filtering the beer to remove the spent yeast
 decanting the beer into casks or bottles.

IMPORTANT PART OF PRODUCTIVE SYSTEM

Product Design
Customers expect that the products they buy would perform according
to assigned functions. A good product design assures that this will be so.
Customers avoid buying products with poor product design. An example is
that certain brand of ball pen which fails to write after one or two days of
actual use. This happens because of poor product design.
Product design refers to “the process of creating a set of product
specifications appropriate to the demands of the situation.”
 Companies wanting to maintain or improve its market share keeps a
product design team composed of engineers, manufacturing, and
marketing specialists.

Production Planning and Scheduling

Production planning may be defined as “ forecasting the future sales of

a given product, translating this forecast into the demand it generates for
various production facilities, and arranging for the procurement of these
facilities.”
Production planning is a very important activity because it helps
management to make decisions regarding capacity. When the right
decisions are made, there will be less opportunities for wastages.
Scheduling is the “phase of production control involved in developing
timetables that specify how long each operation in the production process
takes.” Efficient scheduling assures the optimization of the use of human
and nonhuman resources.

Purchasing and Materials Management

Firms need to purchase supplies and materials required in the various

production activities. The management of purchasing and materials must
be undertaken with a high degree of efficiency and effectiveness specially
in firms engaged in high volume production. The wider variety of supplies
and materials needed adds to the necessity of proper managing and
purchasing of materials.
Materials management refers to “the approach that seeks efficiency of
operation through integration of all material acquisition, movement, and
storage activities in the firm”.

Inventory Control

Inventory control is the process of establishing and maintaining

appropriate levels of reserve stocks of goods. As supplies and materials
are required by firms in the production process, these must be kept
available when they are needed. Too much reserves of stocks will
penalize the firm in terms of high storage costs and other related risks like
obsolescence and theft. Too little reserves, on the other hand, may mean
lost income opportunities if production activities are hampered. A balance
between the two extremes must be determined.
There are ways of achieving proper inventory control. These are as
follows:
1. determining reorder point and reorder quantity
2. determining economic order quantity
3. the use of just-in-time (JIT) method of inventory control
4. the use of the material requirement planning (MRP) method of planning
and controlling inventories.
 Work-Flow Layout

Work-flow layout is the process of determining the physical

arrangement of the production system. In the transformation process, the
flow of work may be done either haphazardly or orderly.
The job of the operations manager is to assure that coost-effective
work-inflow layout is installed. A good work-flow layout will have the
following benefits.
1. Minimize investment in equipment.
2. Minimize overall production time.
3. Use existing space most effectively.
4. Provide for employee convenience, safety, and comfort.
5. Maintain flexibility of arrangement and operation.
6. Minimize material handling cost.
7. Minimize variation in types of material-handling equipment.
8. facilitate the manufacturing (or service) process.
9. Facilitate the organizational structure.

Quality Control

Quality control refers to the measurement of products or services

against standards set by the company. Certain standard requirements are
maintained by the management to facilitate production and to keep
customers satisfied.
Poor quality control breeds customer complaints, returned
merchandise, expensive lawsuits, and huge promotional expenditures.