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Posted: June 27th, 2023
According to Collins English Dictionary (1986), an operation is defined as “a process, method or series of acts especially of practical nature”.
According to Galloway (1993) “operations management is concerned primarily with manufacturing or the change of state of physical goods”.
However, Galloway (1993) argues that “the operations management is all about effective and efficient management of any operation irrespective of whether a physical good is involved or not”.
According to Kumar & Suresh (2009) “Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level. Management is the process, which combines and transforms various resources used in the operations subsystem of the organization into value added services in a controlled manner as per the policies of the organization. The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management”.
In modern days operations management is seen in completely different way, it is seen as set of activities which carefully plans, organises, leads and controls the organisation’s operation. This shows the importance of the operations management, the effective handling of the operations can prove very effective and profitable on the other hand failing to handle it in a proper way could spell disaster to the company (Karlsson & Voss, 2009).
The common belief amongst the people was to believe that the operations management was important only in the manufacturing industry. The belief was supported with the fact that the manufacturing industry had to take care of more number of processes and operations starting from obtaining the raw materials till the goods are sold and also in many cases after sales assistance was also was considered hence creating the belief that the operations management is important to manufacturing industry (Chase & Zhang, 1998). In case of the service industry they have various amounts of process involved starting from understanding the customer needs to getting a feedback on the service and hence at some point the service industry tells the manufacturing industry what they want and hence to manage operations within the service industry is as important as managing the operations within the manufacturing industry. Whenever a company is offering a product or a service then that company has to make sure that the customers’ needs and demands are met at all time. This is a very important process and hence the marketing team plays a vital role in understanding what customers’ want and how to fulfil it. The marketing team collects details from the customers’ and uses it as the input for the design of products and services (Gupta & Boyd, 2008).
So any operations management involves similar management tasks irrespective of what industry or business one operates. It involves Planning, Staffing, Controlling, Directing, Motivating and Organising. Irrespective of business, the operations management ranges across the organisation as part of strategic and tactical operations (Voss et al., 2002).
To understand the importance of operations management IKEA is taken as an example.
IKEA is a Swedish company which sells ready to assemble furniture, appliances and home accessories. With net income of 3.202 Euros in the year 2012, IKEA is one of the biggest businesses in the world. IKEA gets the products and furniture designed in Sweden however the manufacturing is done mostly in the developing countries in order to keep the costs down. IKEA has suppliers from almost 50 countries. The biggest of the entire supplier for the IKEA is China (Johansson, & Thelander, 2009).
The case of IKEA is perfect to explain why Operations Management is important to all types of business, at the production or manufacturing section the company aims to reduce the wastages, increase productivity and time and resources management in order to make sure that the production cost is low and at the stores the company aims to make sure that they warehouse is utilised properly, customers are explained the details and finally the product is delivered without issues so that the shifting cost is low. Also the stores have to take care of marketing and sales which involves their own process. So this indicates that there will always be set of operations irrespective of what field a business is in and at the end of the day successful businesses are those which manage their operations effectively and efficiently.
The operations management has two primary objectives that needs to achieve and in many ways it can be said that both these objectives are interrelated. The objectives are customer service and resource utilisation.
The customer service is the main objective any company because at the end of the day irrespective of all the strategy, marketing and operations management if the customer is not happy with the product or the service then the purpose of the entire enterprise is fallen. So the operations management makes sure that all the customers’ needs and demands are met and do that the company also has to make sure that it makes use of the resources effectively. If the resources are not used carefully then there are chances that the production cost increasing and hence the overall profit margin will reduce and the enterprise objective has failed. So both the objectives must be met in a complementary way so that the company benefits out of it.
The objectives of the IKEA are to make sure that the quality is managed at all times and yet making sure that the operations are done effectively to save the resources so that the company can benefit out of it.
Business dictionary defines process as “Sequence of interdependent and linked procedures which, at every stage consume one or more resources to convert inputs into outputs”.
According to Kumar & Suresh (2009) “Strategic planning is the process of thinking through the current mission of the organization and the current environmental conditions facing it, then setting forth a guide for tomorrow’s decisions and results. Strategic planning is built on fundamental concepts: that current decision is based on future conditions and results”.
So from this it can be understood that the strategic decision of the company are all considered as the process and because the strategic decisions are all made by the managers it can be said that all operations managers manage processes.
The ten principles of managing by process are:
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