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Operational Management can be defined as the supervision of the business practices followed in an organization that raise the efficiency level at the highest point. It focuses on managing materials and labors, then converting them into a finished good to a consumer at the lowest possible cost that will increase the profit of an organization. It is considered as the backbone of an organization, without it one cannot run the organization in a proper manner. It is based on the processes which consist of chain of activities that include designing, manufacturing, production, quality control, distribution, etc. The main purpose of operation management is to reduce the cost of input and increasing the number of outputs (McNamara, 2015).
In every organization there are a number of people who are assigned to manage the operations of an organization. Those people work as a team in an organization who design methods and processes by which an organization increases its efficiency level which can maximize the profit. Team members have the responsibility to design the methods in an efficient manner that will balance the cost of input and output. The purpose of those methods is to convert the inputs which include materials, labors, capital requirement, and information into outputs that include value added products, goods and services. Managing the operations of an organization increases the level of efficiency, simultaneously; it gives you an idea how an organization can work more effectively (McNamara, 2015).
Operational management is a part of management that has four main functions which include planning, organizing, leading and controlling. Planning is a process which involves categorizing a goal and defines the best possible way how to achieve that goal. Organization is a function which involves how one can effectively distribute the resources among the employees and how one can implement the plan by using their employees. Leading is also a function of the management, which includes governing of plan by communicating, motivating, and inspiring their employees. Controlling is a function that includes evaluation of a plan, whether it is going in a right direction or we have to do some modification in a plan to do it in the right way.
Basically, there are four main dimensions of operations management, which include finance, customers, internal processes and learning and innovations. All these dimensions of operations management are the result of the research of Robert S. Kaplan and David P. Norton.
The ultimate aim of all the businesses is to earn the profit as much as they can earn that is why finance is considered as the crucial dimension of any business. Sometimes the businesses can outsource some of their value chain activities which give them some benefit on the other hand that will create the value in the product.
Businesses cannot run without the customers, as they are the major stakeholders of a business. The aims of the managers of an organization are to maximize the flow of customer in an organization by their goods and services which the customer is using. It is necessary for the marketing department to target the right audience or who actually in need of our product. Eventually, by doing this it will increase the flow of customers in the organization.
Internal processes refer to the tools and techniques by which an organization can carry out their business practices in a manner that will convert their inputs into outputs. Furthermore, the manager has the responsibility to design the process in a manner, which minimizes the level of cost that can occur in designing a product and maximize the level of profits by increasing the level of efficiency. Internal processes include production, shipping, quality assurance activities etc.
Learning and innovations are always helping you in improving business processes. Without learning from past experiences, whether it is good or bad it may help one to achieve success in the future. Simultaneously, innovation is also important for the business otherwise one will lose their identity. Innovation can give a competitive edge while doing the business because the customers who are using the products after sometime demands for the change in the product otherwise they will get bored from the product.
Operations management is a method to achieve the key objectives of the businesses by increasing the level of efficiency in the business which means to reduce the cost of input and increase the level of profits and gain a competitive edge in the industry compared to their competitors. The primary advantage of the operation management is its increase the business revenues by cutting down the cost of production of goods. By producing and selling the goods at a low price, it increases the satisfaction level of a customer. It increases the flow of customers in the organization as I have mentioned before that the flow of customers is very essential for the organization’s productivity and profitability. By getting all those advantages, an organization can build a structure that will lead the organization towards profitability and help it to produce its products and provide them a chance to become a market leader.
The success of any team plan is decided when all the workers on the team are working collectively and taking their responsibilities and manage each other’s works. This type of working leads the teams towards the success and the team is known as a successful team. The problem started when the departments of an organization who are following an operational plan are failing to communicate with each other. This happened because the lack of communication between the departments, inefficient resources of an organization, political fights is prevailing between the employees of the organization. All those weaknesses represent the flaws in the operational plan of an organization. We can also observe that when each department of an organization puts their utmost efforts only for their benefits, then the actual goal is lost and ultimately the operation becomes useless.
Operation management comprises of the different fields of management such as products and service management, supply chain management, quality management, inventory management and a few others. All the given fields of the management are directly or indirectly linked with the management of operations. Some of the fields which are the part of operations management are listed below:
Management of products and services include the activities that can manage the product or services of an organization. The activities include creation, designing, manufacturing, distribution and sales of a product or services. In all of the activities, the first activity is named as the idea of a product. Second is product development, then the third is production of a product and in the last is the distribution of a product. Moreover, promotion is done through advertising and then sales and services.
Quality management is one of the essential elements of operations management. It takes place when an organization is in the phase of finished their products and services and they are ready to transfer it to their customer. Quality management is a process of evaluating the quality of a goods or services provided by the manufacturer to the users. There are some standards of quality measurement set by the higher authorities due to which the manufacturer can ensure the quality of a goods or services whether it is acceptable or not. Those standards are Benchmarking, ISO9000, Total Quality Management (TQM) and Six Sigma. Benchmarking is a measurement standard for the goods or services that is helping you to compare your goods or services against the competitors’ goods or services. ISO9000 is the international standard to measure the quality. It has an instruction that helps an organization to achieve the quality of ISO9000. Total quality management is also known as the TQM, which involves the process of continuous improvement which fulfill the needs of the customers. Six Sigma is an approach which is used to minimize the level of wastage whereas; it is used in the production of goods and services.
Inventory management is the management of allocating the inventory of particular goods of an organization. There are few methods for managing the inventory like just in time method, which reduces the storage cost of an organization.
Supply Chain is the process of a set of activities that describe the flow of goods and services from the production house to the end user. Supply chain management is the management of organizing all those activities, whether they are coordinating with each other or they are processed in the right way.
Logistics and transportation management is defined as the overseeing of the activities of logistics and transportation that include the flow of materials from the suppliers to the manufacturer, goods from the suppliers to the distribution channels. Furthermore, the activities also include goods from the distribution channels to the end user, who also keeps in mind the cost effectiveness and the level of efficiency.
Enterprise Resource Planning (ERP) is a software which is used in business management. It is a software which can be used to collect, store and manages the data and information about the products and services that can be interpreted through many business activities in an organization. The activities which are included in this process are planning of a product, product manufacturing, inventory management, sales and marketing of a product and shipping and payment of the product.
The bottleneck is the concept in the operations management, which states that it is the point where the production of an organization is becoming limited or it reaches at the highest level of production, but still the organization does not has the ability to meet the demands of the consumers. It is not quite often that the demand of the product is high and that the organization is not in a position to fulfill its customer’s demands because they don’t have enough production capacity. It is the responsibility of a manager to manage the bottleneck of an organization because it is considered as a key of profitability and productivity of an organization.
There are many ways to get rid of this bottleneck situation such as not over producing the inventory. Overproduction often occurs because of the lack of information about the inventory or the organization does not have enough resources that will guide it about the inventory level of an organization. Sometimes the manufacturer thinks that they have enough production capacity without knowing that each operating plant has the equal capacity of producing the goods. The manager should work on how he can manage the production plant efficiently, which do not face the problem of bottlenecks.
Another good solution for the organizations that are in a state to face to bottleneck problem is to increase the production capacity of an organization. There are some ways to increase the production capacity:
It can be concluded that the operation management can manage the activities of the organization in a manner that can raise the level of efficiency by reducing the cost of inputs against the level of outputs. It has four main dimensions which include finance, customer, internal processes and learning and innovation. Each of them is equally important when someone is designing the operational plan. The advantages of operations management are that it reduces the level of cost of cost of production and increasing business revenues. Simultaneously, it is a chance for an organization to make innovation in their products and earn a competitive edge compared to the other competitors. The disadvantage of operations management is the communication gap between the organization’s department while they are following the operation plan, then the plan will automatically lead towards the failure. There are numerous functions in operations management, which help in making the operational plan successful. Lastly, there is a concept of bottleneck that is discussed in the article. The bottleneck occurs when the organization does not meet its customers’ demand due to the lack of production capacity.
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