Understanding the Aims of Operations Management

Every organization makes a product. This product may be goods or services or a combination of the two. Operation management is concerned with the way the product is made. The purpose of any organization is to make product. This seems reasonable for manufacturers which clearly make tangible goods, but it is also true for organizations that provide a service, anything an organization produces must be a product, so all organizations make a product. This product can be physical goods such as computer, washing machine or car, or intangible service such as education, insurance or television programme.

At the heart of an organization are the activities that make this product. These activities are the operations, they form part of cycle, where customers demand products that are supplied by operations.

The operations in an organization consist of all activities that are primarily concerned with making the organization’s products. These products may be either goods or service.

Differences between Manufacturing and Service Organizations

Organizations can be divided into two broad categories: manufacturing organizations and service organizations, each posing unique challenges for the operations function. There are two primary distinctions between these categories. First, manufacturing organizations produce physical, tangible goods that can be stored in inventory before they are needed. By contrast, service organizations produce intangible products that cannot be produced ahead of time. Second, in manufacturing organizations most customers have no direct contact with the operation. Customer contact occurs through distributors and retailers. For example, a customer buying a car at a car dealership never comes into contact with the automobile factory. However, in service organizations the customers are typically present during the creation of the service. Hospitals, schools, theaters, and barber shops are examples of service organizations in which the customer is present during the creation of the service.

The differences between manufacturing and service organizations are not as clear-cut as they might appear, and there is much overlap between them. Most manufacturers provide services as part of their business, and many service firms manufacture physical goods that they deliver to their customers or consume during service delivery. For example, a manufacturer of furniture may also provide shipment of goods and assembly of furniture. A barber shop may sell its own line of hair care products. You might not know that General Motors’ greatest return on capital does not come from selling cars, but rather from post-sales parts and service.

Different types of organization can have similar operations

Simply, operations what the organization does. Operations in cars factory make cars; in hospitals they care sick people; in schools they educate children, on farms they grow food.

When you look at different organizations, it might seem that their operations have little in common. At the first sight the operations of cars factory, for example, seem completely different to the operations of self- employed picture frame. But if you look closer there are surprising similarities. Both have to choose the best location for their operations. They both buy raw materials and use these to make products. They sell these products to customers. They forecast demand for their products and then calculate the capacity they need. They organize resources to meet the demand. They are concerned with cash flows and human resources. They want efficient operations and high productivity. They look for reliable suppliers.

Objectives of operations management

The prime objectives of the Operations Management can be largely classified in to resource utilization and customer service.

Customer Service

The primary objective of operations management, is to utilize the resources of the organization, to create such products or services that satisfy the needs of the consumers, by providing “right thing at the right price, place and time”. To achieve this objective, it also involves the functions such as manufacturing, transportation, supply chain, and service. In general, any organization would always put its best efforts to achieve the standards as mentioned above.

Resource Utilization

 To make the best possible use of the organization’s resources to satisfy the needs of the consumers, is important objective of the operations management. To realize the customer satisfaction, an organization has to use their resources effectively and efficiently. Operations management’s more focus on resource utilization to reduce their losses, underutilization of waste in order to make the maximum benefits. The other functions that are also equally important are time utility, space, and activities in the process.

Types of decisions needed in an organization

Managers must start planning with decisions about their aims, which are to provide first class products, then they make decisions about the best location, demand for their products and how this demand can be met. They make sure there is enough capacity for products, and make decisions about a whole range of resources. Some of these decisions are long term called “strategic decisions”, such as building new facilities; some are medium term called “tactical decisions”, such as the recruiting and training of staff; some are short term called “operational decisions”, such as buying supplies and preparing meals.