Operation and Competativeness

Production & Operations Management: 

Operations management refers to the activities, decisions and responsibilities of managing the resources which are dedicated to the production and delivery of products and services.

The part of an organization that is responsible for this activity is called the operations function and every organization has one as delivery of a product and/or service is the reason for existence.

Operations managers are the people who are responsible for overseeing and managing the resources that make up the operations function. The operations function is also responsible for fulfilling customer requests through the production and delivery of products and services.

OM designs and operates productive systems- systems for getting work done. Operations managers are found in banks, hospitals, factories and in government organizations. They design system, ensure quality, produce products and deliver services. They work with customers and suppliers, the latest technology and global partners. The food we eat, the movie we watch, the book we are reading are provided by the people in operation.

Operation: Operation is a function or system that transforms inputs into outputs of grater value.

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Inputs                                                                        Output

• Materials                                                        Goods / Products
• Machines                                                        Services
• Labor
• Management
• Capital                                Feed Back

        Requirement

The transformation process itself can be viewed as a series of activities along a value chain extending from supplier to customer. Any activities that do not add value are superfluous and should be eliminated.

The operations function & its activities: The four primary functional areas of a firm are marketing, finance, operations and human resources. For most firms operation is the technical core or ‘hub’ of the organization, interacts with other functional areas to produce goods and provide services for customers. For example to obtain monetary resources for production, operations provide finance and accounting with production and inventory data, capital budgeting requests and capacity expansion and technology plans. Finance pays workers and suppliers, performs cost analysis, approves capital investments and communicates requirements of shareholders and financial markets.

Activities in operations management include organizing work, selecting processes, arranging layouts, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory and planning production.

Operations managers deal with people, technology and deadlines. These managers need good technical, conceptual and behavioral skills. There activities are closely intertwined with other functional areas of a firm, including the following scopes, issues, concepts and techniques associated with the field of OM.

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Fig: Operations as the Technical Core (Ref: 4)

1. Strategy: Strategy is a common vision that unites an organization, provides consistency in decisions and keeps the organization moving in the right direction. Strategy formulation consists of five basis steps:

i. Defining a primary task: The primary task represents the purpose of a firm- what the firm is in the business of doing. It also determines the competitive arena. The primary task is usually expressed in a firm’s mission statement. The mission may be accompanied by a vision statement that describes what the organization sees itself becoming.

.        ii. Assessing core competencies: Core competency is what a firm does better than anyone else, its distinctive competence. A firm’s core competence can be exceptional service, higher quality, faster delivery or lower cost.

        iii. Determining order winners and order qualifiers: Order qualifiers are the characteristics of a product or service that qualify it to be considered for purchase by a customer. A order winner is the characteristic of a product or service that wins orders in the marketplace- the final factor in the purchasing decision. For example, when purchase a CD player customer may determine a price range (order qualifier) and then choose the product with the most features (order winner) within the price range. Or they may have a set of features in mind (order qualifiers) and then select the least expensive CD players ( order winner) that has all the required features.  

        iv. Positioning the firm: A firm’s positioning strategy defines how it will compete in the marketplace- what unique value it will deliver to the customer. An effective positioning strategy considers the strengths and weaknesses of the organization, the needs of the marketplace and the position of competitors.

        v. Deploying the strategy: Strategy deployment converts a firm’s positioning strategy and resultant order winners and order qualifiers into specific performance requirements. Companies struggling to align day-to-day decisions with corporate strategy have found success with two types of planning systems-policy deployment and the balanced scorecard.

2.        Forecasting demand for Products and Services: Forecasting involves using a number of different methods and quantitative techniques to provide accurate estimates of demand, which are later used to make production decisions.

3.        Production Planning and Scheduling: Production planning represents a major area of decision making in operations management. ‘ Capacity and Aggregate Planning’, ‘Inventory Management’, ‘Enterprise Resource Planning’, ‘Just-in-Time and lean Production’ are the topics of production planning and scheduling.