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Introduction to Operations Management
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This note gives us an introduction to Operations Management. It describes it relevance, various types and also an insight into the Operations Strategy.
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Lecture 1Operation’s management is one the three primary functions of an organization. The other two
include marketing and Research and Development (R&D). Accounting, Human resource are
examples of secondary functions.
Our main focus for this module is Operations Management which is responsible for converting
input into output. For example operations management helps a wholesaler in distributing goods
in the market. “Operations Management is the activity of managing the resources which
produce and deliver products and services. (Slack et all, 2013)
The output can be both -
1) Pure Goods which are tangible, can be stored and transported etc.
2) Pure services which are intangible, cannot be stored or transported and the
consumption is parallel to production.
Operations Management could be done at three levels - the process, the operation and the
supply chain. These three form the hierarchy of Operations management.
Importance of Operations Management arises from the fact that it can directly affect business
strategies. It could bring to light the methods of cost reduction, improving customer
satisfaction, reducing risk to system breakdown and could help in policy making for the future.
We measure the performance on the basis of Quality, speed, dependability, flexibility and cost.
This is explained as follows –
1) Quality – it’s generally easy to measure the quality and it should match customer
expectations.
2) Speed – this is based on the idea that the production methods are quickest.
Alternatively it could mean more efficient supply methods reducing inventory and risk.
3) Dependability – this is based on the efficiency of the operation’s process for example
whether it succeeds in saving time and money etc.
4) Flexibility – How easy is it to bring change in the process for example changing the
product/service itself or the volume etc.
5) Cost – very vital as decreasing cost of production is very important for the functioning
of a business. Productivity is derived for performance measures.
Operations Strategy is the sum of all the decisions and policies for a firm that has a potential to
affect the long term direction. There are three types of strategy –
1) Corporate Strategy – this strategy involves decisions like the type of business to invest
in, the allocation of cash to different businesses etc.
2) Business Strategy – defining various objectives of the business for example sales target
etc.
3) Functional strategy – working on the decisions prior to this and improvising on it further.
The four perspectives on operations strategy are –
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