Operations Management as a Central Function in Organization

What is operations management?

Every organization makes product. At the heart of an organization is the set of activities directly concerned with making this product. These activities are the operations, and are the organization’s most important function. Operations management is concerned with the way the operations are performed.

Operations Management is often used along with the term Productions Management. Productions Management refers to the application of management principles to the production function in a factory.

Operations Management is the systematic direction, control, and evaluation of the entire range of processes that transform inputs into finished goods or services. It is consist of activities such as scheduling work, assigning resources ie; people, equipment, managing inventories, assessing quality standards etc. operations management is a process through which resources and inputs are converted into more useful products.

Operations management is the management function that is responsible for all the activities directly concerned with making a product. It is responsible for collecting various inputs, and converting them into desired outputs.

How operations convert inputs to desired output

Organizations take variety of inputs and perform the operations needed to convert these into desired outputs. The input include raw materials, money, people, machines, time, and other resources. Operations include manufacturing, assembly, packing, serving, training, and so on. The output include goods, services, staff wages, and waste materials. To give specific examples:

• A car assembly plant takes inputs of components, materials, energy, robots, people and so on; its operations of pressing, welding, assembly, painting, finishing; the outputs include cars, and spare parts.
• A makeup organization takes inputs of components, raw materials, energy, water, chemicals, people and so on; its operations of heating, cooling, steam generation, cleaning, sanitizing procedures of machines; the outputs include cosmetic, make up, and wages.
• A restaurant takes inputs of food, chefs, kitchen, energy, waiters, tables, and so on; it perform operations of food preparation, cooking, serving; outputs include meals and satisfied customers.
•   A university takes inputs of students, books, buildings, staff, and so on; it perform operations of teaching, research, administration, service; outputs include better educated people, research findings, and new books.

The operations management works in all kinds of organizations. These can be:

• Primary industries - agriculture, mining, and quarrying.
• Secondary industries- manufacturing and construction.
• Tertiary industries – which are all the services.

It is important to emphasize that product can be either tangible goods or intangible services, and operations are any activities that produce these.

The importance of operations management

Managers make the decisions that keep an organization working effectively. Their decisions affect inputs, operations, and outputs. Then they use feedback on performance and other relevant information to make further decisions.

Operations management has an effective role in the fulfillment of pre-determined goals of an organization. It ensures that all activities are going as planned by constantly monitoring all operations of organization.

Operations management improves the productivity of employees. It checks and measures the performance of all people working in the organization.  It helps in motivating the employees towards their roles. Operation managers guide all peoples in performing their roles and provide them with better environment.

Operations management ensures that quality products are delivered to all customers that could provide them better satisfaction and makes them happy. It focuses on optimum utilization of all resources of the organization. Operation managers keep a check on all activities and ensure that all resources are utilized on only useful means and are not wasted.

Central functions in an organization

The main purpose of an organization is to produce goods and services that satisfy customer demand. From this statement you can identify three central functions that must exist in all organizations.

1-    Sales/ marketing: this identifies customer demand, stimulates new demand, collect and analyses information on customer needs, organizes advertising, take orders, makes sure that products are delivered to customers, gives after-sales service, and so on.

2-    Operations management: this is responsible for actually producing the goods and services.

3-    Accounting/finance: this raises capital, invests funds, records financial transactions, collects money, pays bills, collects cost information, maintains accounts, and so on.

Operations management functions

Operations Management is a branch that deals with managing operations and processes within the organization. Effective management of operations ensures successful delivery of the project. The operation managers optimizes the operations by making rational use of resources and capital. Some of the key functions of an Operations Manager includes:

Finance- Finance plays a leading function in operations management. The operation manager should not waste finance in non-productive tasks. He should ensure that all finance of the organization is utilized for the manufacturing of useful goods or services which may satisfy consumer needs.

Operation– The function of operation management is basically concerned with planning, organizing, directing and controlling of daily routine operations of an organization. The operation manager ensures that all activities are going effectively and efficiently.

Strategy– The strategy formulation is also the leading function of operation management. The operation manager should have pre-planned tasks. Formulation of plans and tactics helps the organization in optimizing their resources and developing a competitive edge over competitors.

Product Design– It is the responsibility of operations manager to design the product according to the market trends and demands. He should ensure that innovative techniques are incorporated within the product and its quality is maintained.

Maintaining Quality– Operations managers should ensure a best quality of products. The manager should not compromise with the quality of Products. They should work on quality management and should supervise all tasks. If any defects are found they should take steps to rectify such defects.

Supply Chain Configuration– The main motive of Supply Chain Configuration is to ensure effective management, monitoring and controlling of all the main activities that are held in a firm. The supply chain configuration starts from the supply of the raw materials and continues till the production of the final product and then their selling to the customers which will satisfy their needs and wants.

Forecasting– Forecasting refers to the process of making an estimation regarding certain events that might occur in the future. In operation management, forecasting refers to the estimation of customer’s demand so that production can be done accordingly. Through this, the manager gets to know what to produce, when to produce and how to produce in accordance with the customer’s needs.

The operations management approach to problems

Another view of operations management looks at the way it tackles problems. It does this in four stages:

1-    Observation: managers realize there is a problem and that something must be done about it. They examine the problem, collect data, set objectives, consider the context and discuss various ideas.

2-    Formulation: this is where people with appropriate skills review the data, build models of the situation, fined solutions to the models, and suggest alternative actions.

3-    Analysis: managers examine the alternatives, give values to parameters, identify the best decisions and make recommendations.

4-    Implementation: this is where managers make final decisions, implement the solution, monitor actual performance, collect feedback and keep results up to data.

 

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.       

 

Director of Operations Description

Project Manager/Director of Operations Description

Whenever you look at an organization; whether it is a factory, shop, university, bank, office complex or hospital there is someone in charge of the operations. These people may not be known as operations managers, but that is certainly their job. Their title may include operations managers, but that is undoubtedly their job. Their titles may include production manager, plant manager, site manager, material controller, postmaster, operations director, and so on.

there are so many different operations kinds that we might not know exactly what a specific operations manager dose, but we do know they are involved in managing the central function that makes their organization's products.

Directors of operations definition

Directors of operations, often known as chief operations officers or chief operating officers in big organizations, are typically charged by the chief executive to supervise and manage an organization's day-to-day activities. To ensure the favor performance of a company, a director of operations needs to have excellent communication and authorization skills.

A director of operations is responsible for the direction and coordination of an organization. A strong director of operations is important for any organization looking to succeed. These business professionals are in charge of making hard decisions and creating and implementing policies that help the organization achieve its goals.

Generally, a Director of Operations is responsible for the development and profitability of an organization. This role may involve expense control, staff management, goods production and department supervision.

Director of operations job duties

The daily duties of a director of operations will vary highly from organization to organization. They can be in charge of supervising the operation of each department such as purchasing, sales, research and development, human resources and manufacturing, or they may specialize in particular areas of an organization that are in lack of attention. Areas of appraisal and potential improvement include employee productivity and revenue margins, all of which a director of operations aims to optimize to increase overall profitability.

Director of operations job responsibilities

•         Manage and control all Production, Purchasing and allocation employees to ensure that they are appropriately motivated, trained and hold their responsibilities to the required standard.
•          Contribute to the development of the organization's corporate strategy and driving strategy development in the areas of Production, Purchasing and Distribution to ensure that organization fulfills its short and long-term objectives.
•     Develop and implement all policies and procedures needed to ensure that the production, purchasing and distribution functions fulfill their business objectives.
•        Establish and control the budget for the operations department to ensure that the department has all the resources necessary to meet its objectives within agreed financial parameters.
•      Direct and control the production function to ensure that finished goods of the required standard are available to customers within agreed costs and at the quite times.
•         Direct and control the purchasing activities to ensure that the company has all the resources necessary for production purposes within agreed costs, quality standards and at the quite times.
•         Direct and control the storage and distribution functions to ensure that customers are supplied with the proper quantities of goods at the quite times.
•         Develop all necessary policies and steps to ensure that a safe and healthy working environment is maintained at all organization's sites.
•         Maintain an efficient working relationship with all other directors to ensure that there is efficient coordination of all organization activities in support of corporate objectives.
•         Act as the organization's main adviser on all cases relating operational functions and keep alongside of latest developments to ensure that the organization maintains its competitive position.

Construction operations director roles and responsibilities

Construction operations directors are responsible for monitoring work on construction projects. They ensure jobs are completed on time and within budget, to the standard expected of the company. Construction operations directors manage schedules of work and delegate tasks to senior colleagues and their teams, to ensure that each phase of the construction is completed as planned.

Construction director could be:

•         Supervising the logistical requirements of a project
•         Mandating work to senior colleagues and their teams
•         Meeting regularly with clients and managers to report on progress
•         Setting objectives and responsibilities for all supervised staff
•         Review timings, budget, labor, risk and project plans to ensure work on track
•         Reporting to clients on project progress
•         Supplying financial records
•         Recommending policy and procedure improvements
•         Monitoring performance against agreed criteria
•         Ensuring contractual obligations are accomplished
•         Ensuring the delivery of high-quality work within contract time schedule
•         Dealing with contract disputes and mitigating the impact of any issues
•         Working in office and on construction site.

Operations Management And The Relationship Between Operations Management And Project Management

What is operation?

     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.

     This seems reasonable for manufacturers like which clearly make tangible goods. But it is also true for organizations that provide a service, like the BBC, Prudential Insurance or the Post Office. Anything an organization produces must be a product so all organizations make a product. This can be physical goods such as computer, washing machine or car or intangible services such as education, insurance or television program.

     At the heart of an organization are the activities that make this product. These activities are the operations which describe what the organization does. Operations in car factory make cars; in a computer company they make and sell computers; in hospital they cure sick people; in schools they educate children; in bank they borrow and land money; on farms they grow food.

What is operations management?

     At the heart of an organization is the set of activities directly concerned with making a product, these activities are the operations, and are the organization’s most important function. Operations management is concerned with the way the operations are performed.

     Organizations take a variety of inputs and perform the operations needed to convert these into desired outputs. The inputs include raw materials, money, people, machines, time, and other resources. Operations include manufacturing, assembly, packing, serving, training, and so on. The outputs include goods, services, staff wages, and waste material. The operations management works in all kinds of organizations. These can be:

•          Primary industries; agriculture, mining and quarrying
•          Secondary industries; manufacturing and construction
•          Tertiary industries; which are all the services.

 Operations management in manufacturing industry

     All manufacturers plan to perform the same basic function that converts resources into finished goods. To perform this function in nowadays business environment, manufacturers must continually aim to improve operational efficiency. They must adjust their production processes to concentrate on quality, to minimize the costs of materials and labor, and to eliminate all costs that don’t add value to the finished product. Making the decisions concerned with the effort to achieve these goals is the job of the operations manager. That person’s responsibilities can be classified as follows:

• Production planning: During production planning, managers determine how goods will be produced, where will be produced and how manufacturing facilities will be laid out.
• Production control:  Once the production process is getting started, managers must continually schedule and monitor the activities that form that process. They must encourage and respond to feedback and make modification where needed. At this stage, they also supervise the purchasing of raw materials and the handling of inventories.
• Quality control: Finally, the operations manager is directly involved in efforts to ensure that goods are produced meeting the specifications and that quality standard are complied.

Operations management in construction industry

     The construction industry is characterized by fragmentation, each actor having their own goals in the value chain. The complexity of products delivered is regarded to be high. A contractor is generally hired to undertake some of the work directly and supervise the overall project, but 75-80% of the work is subcontracted. Projects are executed by temporary organizations assembled to deliver a specific artifact to a client, while a contractor is a permanent organization designed to organize projects. A contractor and projects have overlapping interests in firm resources.

     Like every firm, a contractor must have a business strategy and an operations strategy. The business strategy frames what products and on what market (where) they are offered. Construction contractors can either develop a ‘fast-cycle’ competence in multiple modes of strategy-making or “throw process to the wind” or concentrate on the content of business. An operations strategy is a long-range plan for the operations function. An operations strategy frames how operations should be conducted to support a business strategy. This is the guiding idea on the tactical level, often emergent and traceable as a pattern of decisions. A popular example of an operations strategy is Lean Construction. Other functional strategies are designed e.g. for marketing and finance.      Operations capabilities can even determine a business strategy, especially in environments that are difficult to forecast. Situations in construction are often highly changeable and difficult to forecast. Thus, the analysis of operations strategies among construction contractors should provide indications about how they balance engagement in temporary projects versus sustained survival.

Project management and operations management

     Although both professions focus on oversight in pursuit of a business objective, operations management and project management are two distinct roles. An investigation will be conducted on the difference between operations management and project management; and the common aspects between the two positions.

Project Management

     According to the PMBOK® Guide – Sixth Edition, project management professionals oversee organizational projects, determining the scope and objectives, planning the project stages, managing the execution, and closing the project. Resources are typically assigned to the project for a specific duration, and the project manager is responsible for coordinating those resources to ensure the project is carried out correctly, on time and in budget.

Operations Management

     Operations management is responsible for overseeing, directing, and controlling business operations. Production operations, manufacturing operations, accounting operations, and maintenance are examples of operations management.

It makes sure that the businesses operations are creative, minimum resources are used, and customers’ expectation and requirements are satisfied. Operations deliver products, fulfill quality, and create services.

How are operations and project management Differ?

     The main difference between these roles comes down to the definition of a project vs. operations.

    The Project Management Institute, better known as PMI, defines a project as a temporary endeavor undertaken to create a unique product, service, or result, whereas operations, are continuous activities that produce long-term, repetitive outputs, such as manufacturing products or supplying services.

    Consequently, an operations manager’s role is continuous, whereas a project manager’s role is temporary in nature in regards to a specific project.

Other main differences between the two positions are concentrating on specific responsibilities, skills, and education required for success.

Features of operations management include:

•         Generates a fixed output
•         Must be profitable
•         Does not produce new outcomes
•         Produce the same product or outcome recurrently
•         Earn a profit and maintain the system Smoothly

     The responsibilities of operations managers often include, but are not limited to:

•         supervising daily operations
•         Determining and directing problems and opportunities
•         Managing the budgeting, planning, reporting, and auditing
•         Ensuring regulatory compliance
•         Developing operational policies and procedures

     While features of project management include:

•         Creates a unique output
•         Operates on a fixed budget
•         Produces new outcomes to fulfill business goals
•         The project ends, once the new product or service is complete

     The roles and responsibilities of project managers are expected to:

•         Manage teams
•         Define and Plan projects
•         Coordinate and supervise the carrying out of projects
•         Manage the schedule
•         Monitor and control the budget
•         Measure and report progress

How are operations and project management Similar?

     Looking at differences in project management and operations management, it is also important to think about the areas in which they interfere.

There are cases where the role of a project manager will interfere with operations management.

·          When a need emerge to significantly change a part of business operations then the change will often be managed as a project.  Once the project has delivered the change, operations will restart concentrate on preserving, operating, and supporting the products or services produced as a result of the project.

·            Project managers and operations often cooperate at a project’s closeout phase to start transitioning responsibility of any ongoing maintenance and operations related with the deliverable or service.

     In these cases, project managers and operations managers must cooperate to share deliverable and information to ensure favorable outcomes for the business. These roles are also similar in that they have one individual at the management, they requiring comprehensive planning and supervision, and they are often resisting limited resources.

Experimental topic

Difference between Supplier & Subcontractor

Traditionally, the distinction between a supplier and a subcontractor was that a supplier provided goods only, whereas a subcontractor provided goods and services.

 Suppliers were considered to be organizations contracted to provide physical supplies such as goods, materials, plant, and so on, either directly to the client or to the contractor or subcontractors.

Sub-contractors are appointed by main contractors to carry out part of the works on their behalf. As construction has become more complicated and more specialist construction techniques have been developed, it has become increasingly common for contractors to sub-contract others rather than employing a large workforce themselves.