Lecture 1.

Operations Management in a Nutshell

Introduction
This provides an introduction to the field of operations management, the
simplicity in its concept and the complexities in its implementation.

Student Learning Objectives (SLO)

 Define operations management
 Explain the distinction between goods and services
 Identify the difference between production and productivity

Operations Management: The tip of the iceberg

Production/operations management is the process, which combines and
transforms various resources used in the production/operations subsystem of the
organization into value added product/services in a controlled manner as per the
policies of the organization. Therefore, it is that part of an organization, which is
concerned with the transformation of a range of inputs into the required
(products/services) having the requisite quality level.
The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management. If the same
concept is extended to services management, then the corresponding set of
management activities is called as operations management.

What is Operations Management [Theory & Practice]

According to Tallyfy (2020), operations management is the administration of
business practices aimed at ensuring maximum efficiency within a business, which in
turn helps to improve profitability. It involves resources from staff, materials,
equipment, and technology, converting these inputs into efficient and effective outputs
on both day-to-day and strategic levels within an organization. It involves getting the
most out of the company resources. These can involve the employees (doing more
work that creates value), technology (maximum efficiency in manufacturing, for
example), equipment (help employees do more work), and so on.
 Since operations management involves dealing with a lot of different areas, it’s
important for COO (chief operations officer) to have a background in all sorts of
disciplines, from manufacturing to people-management.

What Does an Operations Manager do?

Depending on the organization, an operations manager can be responsible for
a lot of different things. Unlike other executive positions, operations management is
cross-department. A CMO specifically works with the marketing department, CFO
with finance, and so on. A COO, on the other hand, might need to work with just
about every department (if there’s need for it).

In most cases, their work involves…

Process Design – Figuring out the exact steps needed to be carried out so that the
organization meets its business goals. This can mean helping plan out a one-time
project or creating procedures for repeatable work. A real-life example of operations
in projects would be, for example, creating a timeline for developing some software
for the client. For a process example, the COO could create a structured employee
onboarding procedure to make the whole onboarding more efficient.

Standard Management – Helping create and optimize budgets, scheduling equipment

maintenance, ensuring that the employees are following standard procedures, etc.

Process Improvement and Optimization – Most businesses have a “don’t fix what’s
not broken” policy towards their processes. The COO is supposed to make sure that
all processes are as efficient as they can be.

Why Operations Management is Important?

In smaller companies, operations are very simple and straightforward. Everyone takes
part in managing the processes, and more or less, things go smoothly.

The same, however, doesn’t apply to companies with 20+ employees. That’s when
things start getting complicated. You can’t just rely on your employees to do work
right – the need to have standardized procedures to ensure that everything is as
efficient as possible.

If done right, operations management can lead to…

Better Output – The operations manager optimizes and improves processes that have
a heavy impact on the product or service. This usually leads to higher output, lower
defect rates, lower costs, and so on.

Competitive Advantage – Better output leads to a better product or service. This

allows your organization to stand out from the competition, gaining new customers.

Higher Profits – As a combination of the first two, the company could end up
improving the company bottom line and making more profits.

HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS MANAGEMENT

For over two centuries operations and production management has been
recognized as an important factor in a country’s economic growth.
The traditional view of manufacturing management began in eighteenth century
when Adam Smith recognized the economic benefits of specialization of labor. He
recommended breaking of jobs down into subtasks and recognizes workers to
specialized tasks in which they would become highly skilled and efficient. In the early
twentieth century, F.W. Taylor implemented Smith’s theories and developed scientific
management. From then till 1930, many techniques were developed prevailing the
traditional view.

OM’s Transformation Process

OM’s Transformation Role
To add value - Increase product value at each stage
Value added is the net increase between output product value and input
material value
Provide an efficient transformation
Efficiency – means performing activities well for least possible cost

References
Collier, D., Evans, J. & Lindsay, W. (2020). Operations management and total quality
management. Singapore: Cengage Learning Asia Pte Ltd.

Heizer, J., Render, B., & Munson, C. (2017). Operations Management Sustainability
and Supply Chain Management. Twelfth Edition. US: Pearson Education, Inc.

Stevenson, W. (2018). Operations Management. Thirteenth Edition. New York:

McGraw-Hill Education

Tallyfy (2020). What is Operations Management? Retrieved September 1, 2020 from

https://tallyfy.com/guides/operations-management/
Prepared:
Checked: Approved:
______________
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______________________ ____________________
JANET T.
Dr. RANDY M. BAJA
COMETA