Operations Management Enhances Competitiveness
Production and Supply Chain Operations Impact Cost and Quality
Feb 1, 2009
Operations management refers to the way an organization manages its core operations, involving in a broad sense:
- Obtaining raw materials and supplies that it needs,
- Converting raw materials into finished products and
- Distributing products to its customers
The more efficiently and effectively these are carried out, the lower will be the costs of production and better the quality of the products. Lower costs and better quality confer distinct competitive advantages for the business.
Operations Management on the Ground
Operations management covers a diverse range of activities and calls upon the concepts of several disciplines. Selection of manufacturing methodology, supply management, facilities management, facility operations management, shipping and receiving operations management and transportation management all come within its scope.
The following is a typical list of common operations that need attention and possible improvement:
- Facilities management to create a workplace that enhances productivity of production and material handling operations
- Purchasing to ensure that acceptable quality supplies are procured in a timely manner at best possible prices
- Inventory management policies and practices that minimize inventory holdings and maximize availability of needed materials for production
- Production Scheduling systems that optimizes the productivity of available equipment and manpower
- Quality assurance procedures that maximizes the percentage of acceptable quality output and minimizes rejections
- Maintenance scheduling and practices that minimizes repair downtime and prolongs the working life of equipment
- Warehousing practices that results in quick retrieval of needed merchandise and speedy receiving and shipping operations
- Distribution channels that maximizes sales volumes and minimizes shipping operations
- Logistics operations that ensure optimal transport operations, minimizing costs while maximizing speed and safety of distribution
It is evident that managers will have to call upon different tools and skills to manage such diverse activities. Modern tools like ERP software have specific modules such as Supply Chain Management and Customer Relationship Management that each cover several of the above tasks. These tools make complex tasks manageable within reasonable times.
Operations Management in Service Industries
Operations management is important for service industries also. In the case of a bank, for example, back office and front office operations are integrated in a way that maximizes customer satisfaction while minimizing operating costs. Internet banking is one prime example of such a solution.
Internal audits and customer complaints monitoring are examples of controls for checking whether systems are operating as intended. These practices can also highlight any system problems.
Operations management is thus the day-to-day implementation of business strategies and tactics on the ground. It seeks to reduce costs, enhance quality of products and services, and thus gain a competitive advantage. It calls upon different branches of engineering and even mathematical modeling to develop the best operating environments and practices.
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