OPERATIONAL MANAGEMENT MODULE 1
What is Operation Management?
• Operations management is the branch of management that administers the complete
production timeline of a service/ product from the input stage to the finished stage, including
planning, organizing, and supervising the operations, manufacturing and production processes,
and service delivery to lead to the desired output.
Importance of Operations Management
• Helps to achieve the objectives
• Improves the productivity of employees
• Improves Goodwill
• Presence of the organization
• Able to Utilize resources
Operations management is essential for organizations to manage their daily activities seamlessly.
Operations management controls all the processes and handles issues including design, operation,
maintenance, and improvement of the systems.
Historical Evolution of Production & Operation Management
• The traditional view of manufacturing management began in eighteenth century when Adam Smith
recognized the economic benefits of specialization of labor. He recommended breaking of jobs down into
subtasks and recognizes workers to specialized tasks in which they would become highly skilled and
efficient.
•In the early twentieth century, F.W. Taylor implemented Smith’s theories and developed scientific
management. From then till 1930, many techniques were developed prevailing the traditional view.
Historical Evolution
• 1776-Specialization of labor in manufacturing -Adam Smith
•1799-Interchangeable parts, cost accounting -Eli Viihitney and others
• 1832-Division of labor by skill; assignment of jobs by skill; basics of time study -Charles Babbage
•1900- Scientific management time study and work study developed; dividing planning and doing of
work -Frederick W Taylor
•1900- Motion of study of jobs -Frank B. Gilbreth
•1901- Scheduling techniques for employees, machines jobs in manufacturing -Henry L. Gantt
•1915 -Economic lot sizes for inventory control -F.W. Harris
•1927-Human relations; the Hawthorne studies -Elton Mayo
•1931-Statistical inference applied to product quality: quality control charts-W.A. Shewart
•1935-Statistical sampling applied to quality control; inspection sampling plans -H.F. Dodge &H.G.
Roming
•1940- Operations research applications in World War II-P.M. Blacker and others.
•1901- Scheduling techniques for employees, machines jobs in manufacturing -Henry L. Gantt
•1915 -Economic lot sizes for inventory control -F.W. Harris
•1927-Human relations; the Hawthorne studies -Elton Mayo
•1931-Statistical inference applied to product quality: quality control charts-W.A. Shewart
•1935-Statistical sampling applied to quality control; inspection sampling plans -H.F. Dodge &H.G.
Roming
•1946-Digital computer-John Mauchlly and J.P. Eckert
•1947-Linear programming -GB. Dantzig, Williams & others
•1950-Mathematical programming, on-linear and stochastic processes-A. Charnes, W.W. Cooper &
others
1951- Commercial digital computer; large scale computations available Sperry Univac
1960-Organizational behavior; continued study of people at work-L. Cummings, L. Porter
1970- Integrating operations into overall strategy and policy. Computer applications to manufacturing,
Scheduling and control. Material requirement planning (MRP)-W. Skinner J. Orlicky and G. Wright
1980-Quality and productivity applications from Japan robotics, CAD-CAM-W.E. Deming and J. Juran
Goals of Operation Management
The goal of operations management is to help maximize efficiency within an organization, increase the
organization’s productivity, increase profits while reducing costs, and ensure the production and delivery
of high-quality products or services that suit consumers’ needs.
Costumer satisfaction
Operational Management
Utilization of resources Profit maximization
• Functions of operations management and skills needed
• Operational planning – Resourcefulness
• Finance – Financial planning
• Product design – Data interpretation
• Quality control – Conflict management
• Forecasting – Data-driven decision makings
1. Operational planning is the foundational function of operations management. Your duties within
this function may include:
• Monitoring daily production of goods
• Managing and controlling your inventory
• Keeping tabs on team member performance and well being
• Production planning
You may wonder how the financial duties of the operation team differ from those in the finance
department. The finance department will handle everything from revenues to salaries.
2. Finance is an essential-and universal-function of operations management because every company
strives to reduce costs and increase profits. As an operations manager, you’ll ensure company leaders
keep the budget in consideration when they make important decisions. Some of your tasks may include:
• Creating budgets to moot production goals
• Finding investment opportunities
• Allocating budgets and managing resources
4. Product design
Product designers may be the creatives of the team, but the operations team is the eyes and ears that
gathers information from the market. Once you identify customer needs and marketing trends, you’ll
relay what you’ve learned back to the designers so they can make a strong product:
• Specific tasks your team may handle in this function include
• Consolidating market research into digestible results
• Communicating results to a product design team
• Offering design direction to help designers devise a product
• Documenting any defect or deficiencies of products.
4. Quality control
Quality control goes hand in hand with product design. After the production team creates a product, the
operations team will ensure it meets quality standards. You’ll need to test the product to quarantee
there are no defects before releasing it to the public. Your tasks for quality control may include
• Performing risk analysis to identify potential problems
• Inspecting products to make sure they meet
• Creating tests to control your product quality
5. Forecasting
Forecasting isn’t just a term for the weather-operations teams also use forecasting to predict the
demand for a product Your team can master forecasting by trying to answer hypothetical questions like
• What will the domand for this product be in the future?
• What marketing and promotions should we plan for this product
• What sales initiatives should we plan for this product?
• Can we estimate the storage costs we’ll need for inventory?
• Can we determine the cost of sourcing and raw materials?
6. Strategy
Strategy is a broad function of operations management that can involve operational planning,
monitoring, and analysis. The goal of strategic management is to make sure production decisions align
with business goals Your company’s business objectives may include:
• Prioritizing customer satisfaction
• Improving the production system
• Controlling costs while maintaining a competitive edge
7. Supply chain management
If your company produces products or services, your company will need supply chain management for
sourcing, producing, and shipping. You may have a separate department for the supply chain, but supply
chain issues related to internal production will be yours to handle. The supply chain should now in a
cyclical fashion as follows:
• Raw materials
• Supplier
• Production/manufacturer
• Distributer
• Retallor
• Consumer
The supply chain is cyclical because once you analyze consumer demand, you'll source more raw
materials and go down the chain again.
