Key areas of operations management
Operation management is one of the critical areas of business management which deals with various functions in internal organisational control such as supply chain and logistics, quality management, inventory management and warehouse management and productions management. It can be defined as a part of administrative functions for any company that can help the organisation in boosting its overall market performance in both long and short-term. Hence, the critical areas of operations management involve the areas of organisational management as mentioned above (Jacobs et al., 2014). However, to understand the vital areas of operations control, it is necessary to understand the various strategic frameworks of operations management.
Strategic frameworks of operations management:
Heizer (2016) identified that at present operations management comprises of holistic concept that involves many processes which contain only strategic frames. Different experts at different times have developed different vital structures that leading organisations can follow. Similarly, leading business enterprises have also developed different strategic frameworks over time. In this article, 6 different strategic contexts can be identified for operations management. These are
1. Lean operations management implementing continuous improvement (CI),
2. Business process reengineering (BPR),
3. Enterprise Resource Planning (ERP),
4. Total quality management (TQM),
5. Agile supply chain,
6. Lean supply chain and
7. Quick Response Manufacturing (QRM).
While all the processes as mentioned above are different frameworks of operations management, Hill framework describes a framework for formulating operations strategy (Meyer et al., 2017). Hill framework describes 5 steps in developing operations strategy which is as follows.
- Defining corporate strategy
- Determining market strategies for meeting organisational objectives
- Assessing the way by which different products can gain competitive advantage
- Establishing more suitable mode of delivering products
- Providing infrastructure to support operations management
Each of the above mentioned different steps can use the strategic frameworks discussed above. The strategic context of
- Lean Operations- aims towards eliminating wastes and bringing a culture of continuous improvement through lifelong learning. It uses the concept of Kaizen for moving tactic knowledge to explicit knowledge.
- BPR- on the other hand, can be explained as a basic reconsidering and radical design applied by the business process so that dramatic improvements can be achieved in critical yet contemporary measures of performance which are cost, speed, quality and service.
- Enterprise resource planning or ERP- is an information system used as a strategic framework for operations management in which large amounts of data associated with organisational functions and performance are managed computationally (Johnson, 2014).
- TQM- is a framework of quality management which takes a philosophical approach whereby it aims to achieve high quality as per consumer perceptions using processes like statistical process control SPC, SIX Sigma, DMAIC cycle and PDCA cycle.
- Agile supply chain- aims towards overcoming lead time gap by functioning through demand-driven order thus making the supply chain much shorter.
- Lean supply chain-on the other hand, aims towards reducing wastes regarding time, cost and quality in the supply chain.
- Quick Response manufacturing or QRM- is an organisation broad strategic framework aiming towards lowering enterprise-wide lead time. Apart from strategic frameworks, operations management also involve specific design factors that shape operations management (Hitt et al., 2016).
Design factors shaping operations management:
Operations management for any organisation such as One ELM pub involves specific design factors which are fundamentally nothing but influencing factors that help in shape the basic and advanced operations management. Factors like organisational complexity, resource dependence, competition, suppliers, customers, substitute products and new market entry. For instance,
- organisational complexity-is determined by the type of organisational structure such as bureaucratic, divisional, matrix, functional or tall decide which strategic framework the organisation will follow for executing functions of supply chain and logistics, quality management, inventory management and warehouse management and productions management
- resource dependence- is a factor that determines how the organizational resources both external and internal decide operational behaviour or strategic factors (Van Der Aalst et al., 2016). For instance, resource need may help an organisation like One ELM pub to undertake ERP for resource management computationally.
- Competition- or rivalry helps an organisation in designing its production, quality framework or supply chain strategy so that market advantage can be retained. Factors like
- customers- shape operations management function on quality and cost front. Consumer perceptions of quality and cost as well as their expectations shape operations strategy relating which quality framework will be applied to managing quality of the product for instance SIX-sigma.
- Suppliers- are a crucial factor which most influences the supply chain management decisions of operations management. For example, whether an organisation is to use agile supply chain or lean supply chain is highly dependent on the numbers of suppliers available, the type of suppliers and their capabilities.
- Newmarket entry- strong influences operations management significantly unless they come up with such an innovative idea that grasps customer attention promptly. Lastly,
- substitutes- are nothing but substitute products available in the market which shapes operational, strategic decisions relating to production management. Based on the number of substitute products available and their popularity operations management for an organisation is shaped towards innovative functions and processes (Krajewski et al., 2016).
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Application of fundamental operational improvement concepts:
Organizations having established a well-shaped operations management also consider operational improvement concepts. These concepts involve elements like Asset Optimization, Quality Improvement, Safety Performance, Project Execution, Supply Chain, Process Improvement, Shutdown Management, Reliability, Inventory Management and Value Engineering. Each of these concepts has specific applications within operations management for improving its overall functionality. For instance,
- Asset Optimisation- helps in organisational resource planning thus reducing waste and internal costs. Consequently,
- quality improvement- concepts such as six-sigma, TQM helps in updating the definition of product quality concerning performance, features, reliability, durability, serviceability aesthetics and cost (Berenguer et al., 2015).
- Safety performance- is concerned with safety management in organisational functions such as product safety, safety in logistics and supply chain.
- Operational improvement- concept associated to project management focus on ensuring that project aims are accomplished within stipulated time and without exceeding the perceived costs as well as meets the expectations related to outcomes.
- Supply chain- involves concepts like lean and agile supply chain for continually improving their supply chain, logistics and inventory management. Contrarily,
- process improvement- is more concerned with improving the established organisational process concerning reducing time, cost, labour and waste (Harvey et al., 2016).
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Application of the concepts of quality management to organisations:
quality management of organisations use concepts such as TQM, Six-sigma SPC, DMAIC and PDCA cycle.
- TQM: fundamentally TQM is a broader concept in which customer defined the quality concept. The necessary application of TQM involves that quality maintenance and management becomes a responsibility of all employees and all parts of the organisation rather than being the responsibility of operations management or quality team. TQM also results in identifying and minimising all costs associated with quality. TQM functions for establishing continuous improvement culture within the organisation. Its purpose also involves using systems and standards of quality measurement such as European Quality Standard or ISO9000 (Smith et al., 2014).
- SIX-sigma: The application of Six-sigma involves achieving a quality level which falls within 6 sigma controls. It helps in improving the effectiveness and efficiency of a product or process within an organisation. It compares process outputs with customer requirements.
- SPC: SPC or statistical process control examines the quality of a process or product by identifying the nature of variation in a process which can either be caused by chance cause or assignable cause.
- DMAIC: DMAIC framework functions by executing quality assessment functions. It identifies the potential areas of improvement for defining the scope, decides the characteristics of the requirements of the processes for measuring. Also, it uses the information gathered during the measurement and document current performance for analysing. It brings holistic improvement for eliminating the cause associated with non-random variations. Lastly, it imparts control over the functions by verifying and embedding changes (Johnson, 2014).
Role of operations within a range of business organisations:
Throughout the article, fundamental concepts and areas of operations management have been discussed, however; this discussion remains incomplete unless the primary roles of operations management are outlined within a range of organisations. Following are the critical roles of operations management in different organisations.
- Resource management
- Production management
- Quality management
- Supply chain and logistics management
- Inventory management
- Human resource management
- Financial management
- Organizational goal setting
- Improving internal communications
- Asset management and
- Cost management.
From the roles mentioned above, it is clear that operations management is a multifaceted and organisation extensive function that works by interdisciplinary action. Therefore, the holistic role of operations control is ensuring excellent organisation improvement in different areas so that overall performance of the organisation reaches efficiency (Heizer, 2016).
The article ends with the concluding note that strategic operations management is an essential task for an organisation for achieving efficiency and ensuring effectiveness in their output.
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- Berenguer, G., Keskinocak, P., George Shanthikumar, J., Swaminathan, J.M. and Wassenhove, L.V., 2015. Special Issue of Production and Operations Management: Not for Profit Operations Management. Production and Operations Management, 24(1), pp.179-180.
- Harvey, J., Heineke, J. and Lewis, M., 2016. Editorial for Journal of Operations Management special issue on" Professional Service Operations Management (PSOM)". Journal of Operations Management, 42, pp.4-8.
- Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.
- Hitt, M.A., Xu, K. and Carnes, C.M., 2016. Resource based theory in operations management research. Journal of Operations Management, 41, pp.77-94.
- Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
- Johnson, P.F., 2014. Purchasing and supply management. McGraw-Hill Higher Education.
- Krajewski, L.J., Ritzman, L.P. and Malhotra, M.K., 2015. Operations management: processes and supply chains. New York, EEUU: Prentice hall.