Introduction to Operational Management

Operations Management

 It deals with management and operations and assists the individual in

comprehending production and manufacturing planning, coordination, and
supervision.
 It is the use of best business practices to maximize the efficacy and efficiency of
firm resources. This comprises suitable material, machinery, technology, and
labor management in order to produce high-quality items and services that
improve the business.

Supply Chain

 Supply chain is the centralized administration of the flow of goods and services,
which encompasses all processes that convert raw materials into finished items.

Relation of Operation management to Supply chain

 In business organizations, the operations management is in charge to manage

processes engaged in production, distribution of products/ or services. Supply on
the other hand is the sequential system that begins with beginning sources up
until the final customers of the system, in which operation and supply chain is
interrelated one exist without the other thus firms cannot operate without both.
 The supply chain oversees obtaining and transporting both raw materials and
completed goods. The section in the middle, where the product is made from raw
materials, is known as operations management.
 The supply chain is the process of obtaining goods and delivering them to clients
While the way you make it is through operations.
The scope of Operations Management

1. Location of Facilities
 The most essential decision in operations management is the site choice, which
necessitates a long-term commitment to the geographically static characteristics that
effect a company. It is crucial for an organization's strategic decision-making. A suitable
location should be taken into consideration since it is a must in order to avoid sheer
waste of investments

2. Product Design
 Business organization must design, develop and introduce new products in order
to prosper and grow. It is a comprehensive process that begins with the assessment of
consumer demands and ends with the creation of a product, including design and
marketing, product development, and market introduction. Simply deals with conversion
of ideas into reality.

3. Plant Layout and Material Handling

 refers to the physical arrangement of personnel, machines, equipment, inventory

and other facilities that is involved in the production process. It is the configuration of
departments, work centers and equipment in the conversion process. The goal of the
plant layout is to create a physical configuration that meets the desired output quality
and quantity in the most cost-effective way possible.

4. Process Design
 The macroscopic decision-making of an overall process route for turning raw
materials into finished items is known as process design. These considerations include
process selection, technology selection, process flow analysis, and facility layout.

5. Production planning and Control

 Production planning and control can be defined as the process of planning
production ahead of time, determining the exact path of each item, determining the start
and finish dates for each item, issuing production orders to shops, and monitoring
product progress in accordance with orders.

6. Quality Control
 a mechanism for maintaining a product's or service's intended level of quality. It
is the systematic monitoring of numerous aspects that influence the product's quality.
Quality control focuses on defect avoidance at the source and relies on a good
feedback system and corrective action mechanism. It is the full set of actions that
ensures that the business produces the highest quality products at the lowest possible
cost.

7. Material Management
 Materials management is a managerial function that is primarily concerned with
the acquisition, control, and use of materials as well as the flow of goods and services
associated with the manufacturing process in order to achieve predefined goals. To
purchase, receive, transport and store materials efficiently and to reduce the related
cost, cut down costs through simplification, standardization, value analysis to develop
cordial relations with them in order to ensure continuous supply at reasonable rates.

8. Maintenance Management
 Equipment and machinery play a critical role in the overall production effort. As a
result, their idleness or downtime is quite costly. As a result, regular maintenance of the
plant machinery is critical.  Maintenance management aims to minimize breakdowns
and keep conditions of equipment and machinery at a good condition at lowest possible
cost and ensure that other parts of the factory have access to the machines, buildings,
and services they need to accomplish their functions at the best possible return on
investment.

Operations Management and Decision Making

One of the most crucial tools for the successful functioning of a corporation is decision
making. Many issues may develop during the course of operations at various times and
in various settings. Managers and leaders are responsible for making decisions. It
necessitates defining the issue or problem as well as identifying the factors that
influence it. This can influence the choice between alternatives by helping to create a
clear understanding of what needs to be decided.

 Designs or Strategic Decision

Human factors, such as ergonomics and cognitive ability, are factored into design
decisions. A good solution must be practical and usable. The nodal firm makes
the decisions about placement and capacity for the facilities/plant locations that it
owns. Aside from manufacturing locations and capacities, the company must
also consider warehousing locations and capabilities.
 Operations Decision
To maintain the efficiency of operations and an optimized flow of products,
choices are taken on a weekly, daily, or hourly basis, focusing primarily on the
intricacies of operations, day-to-day resource allocation, inventory control, and
delivery routing. Once supply chain design decisions are in place, the firm has to
take decisions regarding the management of supply chain operations for shorter
horizons. operations decisions involve the following areas:

1. Goods and services

2. Quality Management
3. Process and Capacity Design
4. Location
5. Layout Design and Strategy
6. Human Resources and Job Design
7. Supply Chain Management
8. Inventory
9. Scheduling
10. Maintenance
Decision Areas in Operation Management
 Location

The choice of locations for both production and distribution facilities is referred to as the
location decision. The geographical positioning of an operation in relation to input
resources, other operations, or customers with whom it interacts is referred to as
location. It has a big impact on cost and service speed, Attracting labor, Raw material
availability.

 Production

Costs of production and shipping, as well as delivery lead periods, are crucial.
Decisions on production and distribution are based on what customers want, when they
want it, and how they want it. In production planning, the first decision involves which
type of production process—the way a good or service is created—best fits with
company goals and customer demand. An important consideration is the type of good
or service being produced, because different goods may require different production
processes.

 Distribution

Because transportation costs generally account for a large fraction of total costs,
transportation prices and delivery durations have a significant impact on distribution
options. Furthermore, delivery options are inextricably linked to decisions on production
and inventory.

 Inventory

Inventory decisions are concerned with determining inventory requirements as well as

coordinating production and stocking decisions across the supply chain. When it comes
to inventory selections. Inventory decision involves the process of ordering, storing,
using, and selling a company's inventory. This includes the management of raw
materials, components, and finished products, as well as warehousing and processing
of such items. Thus, logistics management is crucial
The Historical Evolution of Operations Management

The traditional understanding of factory management dates back to Adam Smith's

recognition of the economic benefits of worker specialization in the seventeenth century.
He suggested that jobs be broken down into subtasks and that workers be assigned to
specialized duties in which they may 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.
 1776 -Specialization of labor in manufacturing -Adam Smith
 1799 -Interchangeable parts, cost accounting -Eli Viihitney and others
 1832 -Division of labor by skill; assignment of jobs by skill; basics of time study -
Charles Babbage
 1900- Scientific management time study and work study developed; dividing
planning and doing of work -Frederick W. Taylor
 1900- Motion of study of jobs -Frank B. Gilbreth
 1901- Scheduling techniques for employees, machines jobs in manufacturing -
Henry L. Gantt
 1915 -Economic lot sizes for inventory control -F.W. Harris
 1927 -Human relations; the Hawthorne studies -Elton Mayo
 1931 -Statistical inference applied to product quality: quality control charts -W.A.
Shewart
 1935 -Statistical sampling applied to quality control; inspection sampling plans -
H.F. Dodge &H.G. Roming
 1940- Operations research applications in World War ll - P.M. Blacker and
others.
 1946- Digital computer -John Mauchlly and J.P. Eckert
 1947-Linear programming -GB. Dantzig, Williams & others
 1950- Mathematical programming, on-Iinear and stochastic processes –A.
Charnes, W.W. Cooper & others
 1951- Commercial digital computer; large s-cale computations available. -Sperry
Univac
 1960- Organizational behavior; continued study of people at work -L. Cummings,
L. Porter
 1970- Integrating operations into overall strategy and policy. Computer
applications to manufacturing. Scheduling and control. Material requirement planning
(MRP)-W. Skinner J. Orlicky and G. Wright
 1980-Quality and productivity applications from Japan robotics. CAD-CAM -W.E.
Deming and J. Juran

From the 1930s to the 1950s, the term "production management" became accepted.
Managers developed approaches that focused on economic efficiency in production as
F.W. Taylor's books became more generally known. Workers were scrutinized in great
detail in order to minimize inefficient attempts and increase efficiency. Simultaneously,
psychologists, socialists, and other social scientists began to research people and
human behavior in the workplace. Newer, more complex analytical methodologies were
also given by economists, mathematicians, and computer socialists. With the arrival of
the 1970s, two major shifts in our perspectives appear. The most visible of them was a
shift in the economy's service and manufacturing sectors, which was reflected in the
new term operations management. The shift from 'production' to 'operations'
emphasized the widening of the service sector as it became increasingly dominant.
 Refences:

Kanya. (2021, December 29). Operations Management: Definition, Principles and

Strategies. https://www.hashmicro.com/blog/operations-management/

Jason Fernando. (January 29, 2022). Supply Management Chain (SCM).

Retrieved from https://www.investopedia.com/terms/s/scm.asp

Adam Hayes. (August 29, 2021). Operations Management (OM). Received from

https://www.investopedia.com/terms/o/operations-management.asp

Appeal to authority. (2016). 10 Critical Decisions of Operations Management.

https://online.kettering.edu/news/2016/09/21/10-critical-decisions-operations-
management

Bansal, S. P., Joshi, S., Singla, V. (2017) Operations Management and Its Role
in Decision Making retrieved from
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pdf

Yonas, T. (2019). Historical Evolution of Operations Management [Lecture

notes]. https://theintactone.com/2018/02/21/om-u1-topic-2-historical-evolution-of-
operations-management/