ACLC COLLEGE OF TACLOBAN

Tacloban City

BUSINESS AND ACCOUNTANCY DEPARTMNENT

OPERATIONS MANAGEMENT

LESSON 1: Operations Management: Defined

2. Services and Manufacturing
3. Strategic Role of Operations Management

Organizations need to have well-thought-out and well-designed operating systems,

organizational control systems, and quality programs to survive in today’s increasingly
competitive global environment. And it is the manager’s job to manage those system and
programs.

OBJECTIVES:

At the end of the lesson student is expected to:

1. Define Operations Management

2. Distinguish services from manufacturing
3. Identify the role of Operations Management

Operations management refers to the transformation process that converts resources into
finished goods and services.

This illustration portrays process in the simplified fashion. The system takes in inputs –
people, technology, capital, equipment, materials and information – and transforms them through
various processes, procedures, work activities, and so forth into finished goods and services.
Because every unit in an organization produces something, managers need to be familiar with
operations management concepts in order to achieve goals efficiently and effectively.

Operations Management is important to organizations and managers for three reasons:

 ACLC COLLEGE OF TACLOBAN
Tacloban City

BUSINESS AND ACCOUNTANCY DEPARTMNENT

1. It encompasses both services and manufacturing

2. It is important in effectively and efficiently managing productivity
3. It plays a strategic role in an organization’s competitive success

Services and Manufacturing

Every organization produces something. Unfortunately, this fact is often overlooked except
in obvious cases such as in the manufacturing of cars, cell phones, or lawnmowers.

Manufacturing organizations – produces physical goods. It is easy to see the operations

management (transformation) process at work in these types of organizations because raw
materials are turned into recognizable physical products.
Service organizations – produce non-physical outputs in the form of services. For example,
hospitals provide medical and health care services that help people manage their personal health,
airlines provide transportation services that move people from location to another. Example, a
cruise line provides a vacation and entertainment services, military forces provide defense
capabilities and the list goes on and on.

Managing Productivity
Productivity is a composite of people and operations variables. To improve productivity,
managers must focus on both. The late W. Edwards Deming, a renowned quality expert, believed
that managers, not workers, were the primary source of increased productivity. Some of his
suggestions for managers included planning for a long-term future, never being complacent
about product quality work, and so forth. The truly effective organization will maximize
productivity by successfully integrating people into the overall operations system. For example,
at Simplex Nails Manufacturing in America, employees were an integral part of the company’s
much needed turnaround effort. Some production workers were redeployed on a plant-wide clean
up and organization effort, which freed up floor space. The company’s sales force was retained
and refocused to sell what customers wanted rather than what was in inventory.

Strategic Role of Operations Management

The success that US manufacturers experienced during World War II led manufacturing
executives to believe that troublesome production problems had been conquered. This
executives focused, instead, on improving other functional areas such as finance and marketing
and paid little attention to manufacturing.
However, as the US executives neglected production, managers in Japan, Germany, and
other countries took the opportunity to develop modern, computer-based and technologically
advanced facilities that fully integrated manufacturing operations into strategic planning
decisions. Finally, by the late 1970’s US executives recognized that they were facing a true crisis
and responded. They invested heavily in improving manufacturing technology, increased the
corporate authority and visibility of manufacturing executives, and began incorporating existing
and future production requirements into the organization’s overall strategic plan.
 ACLC COLLEGE OF TACLOBAN
Tacloban City

BUSINESS AND ACCOUNTANCY DEPARTMNENT