Operations Management

Operations Management Definition

• "The on-going activities of designing, reviewing and using the operating system, to achieve service outputs as determined by the organisation for customers" 

•  The efficient and effective implementation of the policies and tasks necessary to satisfy an organisation’s customers, employees, and management (and stockholders, if a publicly owned company).

• Operations management teams design the method of conversion of inputs (materials, labor, proprietary information, etc.) into outputs (goods, services, value-added products, etc.) that is most beneficial to the organization. Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.

• Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. Operations management is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.

• The management of systems or processes that create goods and/or provide services

• Operations management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilisation of resources that firms need to deliver the goods and services their clients want.

What do operations managers do?

Strategic (long term) Level

– Responsible for, and decisions about:

o What to make (product development)

o How to make it (process and layout decisions) – or should we buy it?

o Where to make it (site location)

o How much is needed (high level capacity decisions)

Tactical Level (intermediate term)

– Address material and labour resourcing within strategy constraints, for example:

o How many workers are needed and when (labour planning)

o What level of stock is required and when should it be delivered (inventory and replenishment planning)

o How many shifts to work. Whether overtime or subcontractors are required (detailed capacity planning)

Operational Level

– Detailed lower-level (daily/weekly/monthly) planning, execution and control decisions, for example:

o What to process and when (scheduling)

o The order to process requirements (sequencing)

o How work is put on resources (loading)

o Who does the work (assignments)