The management of conversion or transformation process which accepts inputs and delivers usable goods and services is what is called “operations management.” The inputs may be in the form of, capital, material, labor, technology, information, machines etc. The process takes place in an effective and efficient manner through operations planning, design, management and control. Earlier it was called, production or manufacturing management. Since operation is a general term in a productive environment whose output may be goods or services, the term operations management has become more appropriate.
The aim of a good operational management would be
Production or operation in the three important sectors of an economy, namely, agriculture, industry and service, creates national wealth and serves as an index for the growth of that economy. One has to understand the link between operations management and other functional areas to appreciate its scope. The goals of the operations strategy has to necessarily be in tandem with the overall corporate strategy to accomplish the goals of a firm.
From marketing department, cues regarding customer preference and market segmentation in terms of product, price and volume are supplied to the production department, based on which the production planning is concluded. From Research and development comes the product design and process technology. Human resource is an integral part of production process and also a crucial input. Man power planning by the human resource department plays a major role in recruiting, selecting, training, evaluating and empowering labor force.
The great diversity in products and services available in the market should be taken into consideration before deciding on your operations strategy. At one end we have custom made products that are designed and manufactured to suit the specific needs of the consumers. For instance, custom made shoes, shirts, suits, furniture etc. Here the emphasis is on quality and delivery where the customer is not very much bothered about the price. At the other end manufacturers go for highly standardized products that are available “off the shelf.” Say, home appliances, detergents, soaps etc., here the product differentiation is very minimal and the focus is on competitive pricing as the material is available in plenty.
Economy of Scale:
A customized product would require a manufacturing set up that can handle a wide variety of general products. The sequence of operations for each product would vary in the manufacturing system making a customized product. So, a process oriented manufacturing system is designed, where similar facilities doing similar operations are grouped together and departmentalized. Standardized products go for a product focused manufacturing system, to reduce the “through put” time as large volumes are required. To be cost effective, each product should have a dedicated line of production to take advantage of the “economy of scale.”
Intermediate types of products also find their place in the market and they are produced in a production layout that has a mix of product and process orientation. Here a whole range of products and services are created for the benefit of the customers. In a long term basis, manufacturers should aim to develop new technology, environmentally viable products, increase R and D activity, update skills of work force and managers and focus on development of new products, process and innovations.