What is Operations Management?

[Music] all of us are consumers we consume a variety and multitude of products and services in our daily lives from the food we eat in the morning to the clothes we wear the cars we use to go to work the tools and machines that make our work easier and faster the smartphones and other devices we hold in our hands the various services we availed when we book for a hotel and flight dine in a restaurant and when we transact with different financial institutions hospitals schools entertainment houses among others are all created and offered by organizations we are all consumers and around us are different organizations who produce goods and services to meet our needs and wants it is seldom that a single person can produce at his own effort and resources everything he needed to live a normal life we need the operation of organizations to produce the products and services that we need to support our lifestyle for that reason we expect from them that they must provide us with quality products and services at a reasonable price but have you ever wondered or asked yourself how do organizations produce the products and services they offer to us do you know that before you consume a product or service it undergoes different processes and steps they consider a lot of factors such as where to get the raw materials how to produce the products how many to produce where and when to produce they will also consider how when and where to store deliver and sell the product let's take for example the production of wine many of us enjoy a glass full of wine after a long tiring day during a holiday or at social events and gatherings but have you ever wondered how this wine is actually made yes we do know it is made from grapes but what are the stages involved in the process the first step in making wine is harvesting the moment at which the grapes are picked from the vineyard is what actually determines the sweetness flavor and acidity of the wine once grapes are picked they are taken to the winery and are then sorted in bunches under-ripened rotten grapes are removed step two is crushing the grapes once the grapes are sorted in bunches now it is time to distem them and crush them this crushing process used to be done by feet in the past however the majority of the winemakers now do this crushing process mechanically there are mechanical presses available which trod or stomp the grapes into must step 3 fermentation crushing and pressing are followed by the fermentation process must naturally start fermenting within 6 to 12 hours when wild yeast is added to it this fermentation process continues until all the sugar is transformed into alcohol resulting in the production of dry wine the total fermentation process can take about a week to a month and even more step 4 clarification after fermentation it's time for clarification now this is the process in which tannins proteins and dead yeast are removed from the wine for this the wine is transferred into stainless steel tanks or oak barrels after the clarification process the wine is transferred to another tank and prepared for aging or bottling the final stage of this process is aging and bottling the wine the wine can be instantly bottled or the wine maker can give additional aging to the wine for aging the wine is transferred to oak barrels stainless steel tanks or bottles once the aging process finishes the wine is then bottled with a screw cap or cork after the five stages the wines are ready to be delivered to different wine stores locally and globally the wines being sold will now be purchased by consumers for their consumption after a long tiring day when at a holiday or during special occasions and gatherings the series of the different activities in the creation of wine is generally called as productions or operations of an organization operations are what the company use to transform resources into goods or services another way to think about operations is that operations is what the company does to identify the role of operations with an individual organization ask the question what do you do amazon the world's largest online retailer might answer that question with we sell books and other goods online isn't selling different from operations in this case no because here selling involves the operations of transferring the ownership of products from the retailer to the buyer amazon.com frontline sales process works so well that the company's customers come back repeatedly a hospital treats patients and so we might ask isn't that medicine it is but if you look beyond the doctors and nurses who treat patients a whole organization exists to supports their work such as facilities management staffing catering and so on all of this comes under the responsibility of operations management so it's important to bear in mind that operations take place throughout an organization it's often impossible to speak of operations taking place in just one specific area operations will take place in different ways in the entire organization most of an organization's financial and human resources are invested in operations so operations management is critical to the success of an organization it is also important to understand that when operations go wrong this can impact badly on an organization's revenues competitiveness or reputation operations are a set of methods that produce and deliver products and services in pursuit of specific goals it is the heartbeat of every kind of organization from iron foundries and hospital emergency wards to high finance and professional services well-designed operations enhance profitability poor operations at best equal ineffective processes and wasted resources at worst poor operations can drive a company out of business therefore managing operations with competence is vital to meeting strategic goals and surviving financially what is operations management when most people think of operations management if any picture comes to mind at all an image of a large factory billowing smoke often emerges and yes factories that below smoke are indeed performing operations but they're only a small subset of everything that's involved with operations management operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs it is the management of the transformation process that converts labor capital materials information and other inputs into products and services for customers the role operations management is to design plan direct and improve all the activities involved in producing goods and services it is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible therefore operations management covers much more than smokestacks or manufacturing parts and products it also encompasses services and all sorts of projects and initiatives that groups of people undertake together from restaurants and fast food joints to medical services art galleries and law firms operations management ensures that organizations minimize waste and optimize output and resource use for the benefit of customers and their various stakeholders activities creating goods and services take place in all organizations in manufacturing firms the production activities that create goods are usually quite obvious in them we can see the creation of a tangible product such as a samsung tv apple smartphones or ferrari in an organization that does not create a tangible good or product the production function may be less obvious we often call these activities services the services may be hidden from the public and even from the customer the product may take such forms as the transfer of funds from a savings account to a checking account the transplant of a liver the filling of an empty seat on an airplane the education of a student or getting a haircut regardless of whether the product is a good or service the production activities that go on in the organization are often referred to as operations or operations management operations management gives us a way of thinking about operations that help us design manage and improve the organization's operations in an orderly fashion operations managers are the people who design manage and improve how organizations get the work done the study of operations management is highly relevant to whatever work you do or plan to do most managers are involved in some aspect of operations every day but many never realize it familiarity with operations enables managers to manage their responsibility better whether they are directly responsible for the organization's goods and service outputs or not similarly studying operations management is useful for all business and management students because you can apply operations concepts to everyday aspects of your study and work activities also because operations management is at the core of what any organization does it has important connections with other functions including marketing human resource management and finance we discussed earlier how operations management involves converting different inputs into outputs these inputs and outputs shall contain elements which are tangible and intangible in a factory manufacturing materials and development phases are clearly evident but in many service operations the method of converting from inputs into finished products is not so obvious service organizations including banks hospitals social care and universities all convert inputs into outputs however here we will distinguish between the role that operations undertake in terms of the process of transformation and the role of an operations manager in putting together all the elements required to allow the process to take place operations are concerned with those activities that enable an organization to turn a variety of inputs materials energy needs of customers knowledge skills and other resources into outputs for the manufacturing and service companies these are different the figure in your screen is the simple model of input slash outputs operations management's function is to turn the inputs from a business into the finished products or services inputs include human resources such as managers and workers facilities and processes such as buildings and equipment and materials technology and information outputs are the products and services that the industry creates the figure demonstrates the phase of transformation the transformation at a factory is the physical transformation of raw materials into goods such as converting leather and rubber into shoes denim into jeans or plastic into toys at an airline it is the efficient movement of passengers and their luggage from one location to another it organizes services at a hospital such as physicians medical treatments and medicines to turn sick people into healthier ones feedback plays an important role in the operations managers as you can see from the figure such feedback allows managers to make changes and increase the quality of the products and services obtained by consumers and clients for operations managers the input process is an important one which may come from both internal and external sources internal sources will include the monitoring assessment and continuous development of procedures and products external sources will include those involved in supplying and customers as well as customer input this basic model can be used in production and service settings as well as in the private and public sectors manufacturing transformation for a manufacturing company the process of transformation is more evident materials are processed and their form is being transformed the materials which take different forms and decide the nature of the process of transformation usually an operation may be a manufacturer of raw materials a consumer of raw materials mixing or converting them into pieces that are then assembled into components or finished products by another process examples of each are shown in the table [Music] service transformation service operations generally transform information people or animals physical items or ownership examples of each of these transformations are given below [Music] differences between service and manufacturing organizations can be categorized into two distinct categories manufacturing and service organizations each presenting specific challenges to the functioning of the operations in those divisions there are two key distinctions firstly manufacturing companies manufacture real visible items that can be processed until they are needed in the inventory service companies on the other hand produce intangible products which cannot be produced in advance second most consumers don't have direct contact with the process of manufacturing organizations customer touch happens by retailers and distributors a customer who purchases a vehicle at a car dealership for example never comes into contact with the automotive industry however consumers are usually present in service organizations when the business is being developed hospitals schools theatres and barbershops are examples of service companies whether client is present as the service is being produced the distinctions between manufacturing organizations and service organizations are not as clear-cut as they may seem and they overlap a lot as part of their business most manufacturers offer services and many service firms produce physical products that they sell to their customers or receive during service delivery for example a furniture manufacturer may also pay for goods shipping and furniture assembly a barber's store can sell its own hair care items live you may not realize that the greatest return on capital for general motors does not come from selling vehicles but rather from parts and service after sales the figure below shows the disparities between manufacturing and services with an emphasis on product tangibility dimensions and the degree of customer touch it demonstrates both the extremes of pure production and operation and the contrast between them although it would be much easier if we could separate organizations so neatly into manufacturing and service operations in real life most organizations produce both services and products for their customers and only a few could be called pure manufacturing or pure services manufacturing and service are often different in terms of what is done but quite similar in terms of how it is done consider these points of comparison degree of customer contact many services involve a high degree of customer contact although services such as internet providers utilities and mail service do not when there is a high degree of contact the interaction between server and customer becomes a moment of truth that will be judged by the customer every time the service occurs uniformity of inputs service operations are often subject to a higher degree of variability of inputs each client patient customer repair job and so on presents a somewhat unique situation that requires assessment and flexibility conversely manufacturing operations often have a greater ability to control the variability of inputs which leads to more uniform job requirements measurement of productivity measurement of productivity can be more difficult for service jobs due largely to the high variations of inputs thus one doctor might have a higher level of routine cases to deal with while another might have more difficult cases unless a careful analysis is conducted it may appear that the doctor with difficult cases has much lower productivity than the one with the routine cases quality assurance quality assurance is usually more challenging for services due to the higher variation in input and because delivery and consumption occur at the same time unlike manufacturing which typically occurs away from the customer and allows mistakes that are identified to be corrected services have less opportunity to avoid exposing the customer to mistakes ability to patent product designs are often easier to patent than service designs and some services cannot be patented making them easier for competitors to copy another insight is provided by norman when he distinguishes between manufacturing and service environments under a number of key headings as shown in the table [Music] [Music] my [Music] scope of production and operations management the following are the activities which are listed under production and operations management functions 1. location of facilities 2. plant layouts and material handling 3. product design for process design five production and planning control six quality control seven materials management 8. maintenance management location of facilities location of facilities for operations is a long-term capacity decision which involves a long-term commitment about the geographically static factors that affect a business organization it is an important strategic level decision making for an organization it deals with questions such as where our main operations should be based the selection of location is a key decision as the large investment is made in building plant and machinery an improper location of the plant may lead to waste of all the investments made in plant and machinery types of equipment hence the location of the plant should be based on the company's expansion plan and policy diversification plan for the products changing sources of raw materials and many other factors the purpose of the location study is to find the optimal location that will results in the greatest advantage to the organization plant layout and material handling plant layout refers to the physical arrangement of facilities it is the configuration of departments work centers and equipment in the conversion process the overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically material handling refers to the moving of materials from the storeroom to the machine and from one machine to the next during the process of manufacture it is also defined as the art and science of moving packing and storing of products in any form material handling devices increases the output improves quality speeds up the deliveries and decreases the cost of production hence material handling is a prime consideration in the designing new plant and several existing plants product design product design deals with the conversion of ideas into reality every business organization must design develop and introduce new products as a survival and growth strategy developing new products and launching them in the market is the biggest challenge faced by organizations the entire process of need identification to physical manufactures of the product involves three functions marketing product development manufacturing product development translates the needs of customers given by marketing into technical specifications and designing the various features into the product to these specifications manufacturing has the responsibility of selecting the processes by which the product can be manufactured product design and development provides a link between marketing customer needs and expectations and the activities required to manufacture the product process design process design is a macroscopic decision making of an overall process route for converting the raw material into finished goods these decisions encompass the selection of a process choice of technology process flow analysis and layout of the facilities hence the important decisions in process design are to analyze the workflow for converting raw material into the finished product and to select the workstation for each included in the workflow production planning and control production planning and control can be defined as the process of planning the production in advance setting the exact route of each item fixing the starting and finishing dates for each item to give production orders to shops and to follow up the progress of products according to orders the principle of production planning and control lies in the statement first plan your work and then work on your plan main functions of production planning and control include planning routing scheduling dispatching and follow-up quality control quality control qc may be defined as a system that is used to maintain a desired level of quality in a product or service it is a systematic control of various factors that affect the quality of the product quality control aims at the prevention of defects at the source relies on effective feedback system and corrective action procedure quality control can also be defined as that industrial management technique by means of which product of uniform acceptable quality is manufactured it is the entire collection of activities which ensures that the operation will produce the optimum quality products at minimum cost materials management materials management is the aspect of management function which is primarily concerned with the acquisition control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view maintenance management in modern industry equipment and machinery are an especially important part of the total productive effort therefore their idleness or downtime becomes are expensive hence it is very important that the plant machinery should be properly maintained let us discuss also the different key issues for today's business operations [Music] there are a number of issues that are high priorities of many business organizations although not every business is faced with these issues many are chief among the issues are the following 1. economic conditions the lingering recession and slow recovery in various sectors of the economy have made managers cautious about investment and rehiring workers that had been laid off during the recession second issues is innovating finding new or improved products or services are only two of the many possibilities that can provide value to an organization innovations can be made in processes the use of the internet or the supply chain that reduce costs increase productivity expand markets or improve customer service third quality problems the numerous operations failures mentioned at the beginning of the chapter underscore the need to improve the way operations are managed that relates to product design and testing oversight of suppliers risk assessment and timely response to potential problems fourth risk management the need for managing risk is underscored by recent events that include the crisis in housing product recalls oil spills and natural and man-made disasters and economic ups and downs managing risks starts with identifying risks assessing vulnerability and potential damage liability costs reputation demand and taking steps to reduce or share risks lastly environmental concerns concern about global warming and pollution has had an increasing effect on how businesses operate stricter environmental regulations particularly in developed nations are being imposed furthermore business organizations are coming under increasing pressure to reduce their carbon footprint the amount of carbon dioxide generated by their operations and their supply chains and to generally operate sustainable processes sustainability refers to service and production processes that use resources in ways that do not harm ecological systems that support both current and future human existence sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision-making there you are my dear students the overview of operations management hope you appreciate the topic because someday you might be called to become an operations manager in the next video we will tackle supply chain management until then have a great day and don't forget to be curious be kind and be incredible [Music] you

Channel: HR Learning Hub PH

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Keywords: Operations Management, TQM, OM

Id: Opr3a895iWs

Length: 29min 30sec (1770 seconds)

Published: Wed Sep 16 2020