Operations Management:
Nature, Scope &
Fundamentals
MARGE ETHAN A. URBIZTONDO, PhD BM
Contents:
Overview of Operations and Productions
Management
Objectives of Operations Management
Scope Of Operations Management
What Are The Goals Of Operations
Management?
Components of Operations Management
Operations management refers to the
practice of planning, organizing, and
overseeing business processes to maximize
efficiency by effectively utilizing resources like
labor, equipment, and raw materials to
produce goods or deliver services, aiming to
optimize value and profitability within a
company; essentially, it's the management of
the day-to-day operations that keep a
business running smoothly.
Production management is the process of
overseeing all activities involved in converting
raw materials, labor, and capital into finished
products, aiming to optimize efficiency and
ensure the production of goods in the right
quantity and quality, while meeting deadlines
and staying within budget; essentially, it's the
management of the entire production process
from start to finish, including planning,
coordination, monitoring, and quality control.
While production management focuses
specifically on the processes involved in
manufacturing goods, operations
management takes a broader view,
encompassing all aspects of a business
including production, service delivery, and
other operational functions
Objectives of Operations Management
Operations management is a field concerned
with designing, planning, controlling, and
operating an organization’s production
systems. The objectives of operations
management are to:
Scope Of Operations Management
It is the process of planning, organising, directing, and
controlling the resources needed to produce goods and
services. The scope of operations management includes all the
activities necessary to plan, design, and manage the
production and distribution process.
The eight scopes of operations management are as follows:
1) Facility layout planning: This step involves deciding how
best to utilize the space in a factory or office to optimize
workflow.
2) Workforce planning and management: This includes
ensuring that there are enough employees with the right skills
to do the work required and managing employee performance.
3) Inventory management: This encompasses everything
from raw materials to finished products and ensuring that
inventory levels are maintained at an optimum level.
4) Scheduling: This is creating a production
schedule that meets customer demand while
maximising efficiency.
5) Quality control: Quality control is essential to
ensuring that products meet customer expectations
and standards.
6) Transportation and logistics: Operations
managers must plan to move goods from suppliers
to customers efficiently.
7) Maintenance: Regular maintenance is necessary
to keep equipment and facilities running smoothly.
8) Project management: Many operations require
project management to ensure that they are
completed within time and budget.
What Are The Goals Of Operations Management?
The goal of operations management is to ensure that all
processes within the organisation are running smoothly and
efficiently. It includes everything from product development
and manufacturing to distribution and customer service.
Ultimately, the aim is to minimise waste and maximise
resources to improve profitability.
To achieve these goals, operations managers must have a
strong understanding of all aspects of the business and how
they communicate with one another. They must also be able
to identify areas for improvement and put in place systems
and controls to monitor performance. Regular reviews and
audits are essential to improve efficiency levels
continuously.
Components of Operations
Management
Forecasting
Forecasting is a critical component and nature of
operations management. It helps organisations make
informed decisions about future production needs and
capacity requirements. There are several vital elements
to consider when developing a forecasting system,
including:
The type of product or service being produced
The underlying demand for the product or service
The lead time required to produce the product or service
The amount of variability in the production process
The level of inventory desired
An effective forecasting system takes all of these factors
into account and provides accurate information that can
be used to make sound operational decisions.
Total Quality Management is a strategic
approach to improving an organization’s
competitiveness. It is a philosophy that
emphasizes the need for continuous
advancement in all aspects of an
organization’s operations, with the ultimate
goal of providing customers with products and
services that meet or exceed their
expectations.
The basic components of TQM are:
1) Quality planning: This involves setting quality
objectives and goals and developing plans to achieve
them.
2) Quality control: This is the process of monitoring
and measuring the quality of products and services to
ensure they meet desired levels. It also includes taking
corrective action when necessary.
3) Quality assurance: This entails developing and
implementing procedures and processes to prevent the
occurrence of defects in the first place.
4) Quality improvement: This encompasses continual
efforts to identify and eliminate sources of defects and
variation to improve overall quality levels.
Materials Requirement Planning
In materials requirement planning (MRP), the
timing of production activities is planned to
ensure that materials are available when
needed. This type of planning is necessary
because many manufacturing processes
require the use of raw materials, which must
be obtained from suppliers and often have
lead times that must be taken into account. In
addition, finished products are often required
for assembly or other downstream processes
before they can be shipped to customers.
