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Operations and Operations Management

Operations and Operations Management

Operations and Operations Management are of strategic importance to an organization. This is because all of the aspirations that modern day organizations have to excel in any of the following – mass customization, lean production, agile manufacturing, customer-centric provision and so on – depend on the ability of the organizations to actually do these things and such capabilities reside within operations.

This is very important because it brings together a number of key issues that need to be in place if we are to understand the profound importance of, and the contribution made by, operations management. The ability to enter and compete in both new and existing markets is very dependent on operation capabilities. Of course, other areas are also vitally important – marketing, finance and other major functions – and we are not seeking to play operations against these other areas.

In Operations Management there has been a need to include a number of important areas that fall under the responsibility of operations management. They are

  • Management of value
  • Capacity management
  • Location decisions
  • Process Management
  • Managing technology
  • Human resources management
  • Integration and affiliation

Today, operations management is not only seen as an organizational wide issue, but also includes activities across organizations. Obviously, an important part of the transformation process will include purchasing goods and services from other organizations. In the modern era of operations management, organizations no longer see themselves as a standalone element – the ‘processes’ – but will instead see themselves as part of a wider, extended enterprise. The operations management model for current and future operations is no longer limited to an organization-specific arena. This means that the organization has to be willing to look outside of itself and to form strategic relationships with what were formerly viewed as competitive organizations.

Operations Management has gone through three periods of change from craft, through mass production, to the present era. We know that different sectors of many economies have gone through these periods at different rates. In some, the transition has been incremental, in others spasmodic, in response to some new industries. We know that in some industries there has been almost complete transition from the old approach to the newest, whereas in others there remains a high proportion of craft manufacture or old style service delivery.

There have been three forces to date that have influenced people. They have been economic forces, social forces and technological forces. Putting it simply, wealth, fashion and invention. Wealth influences economic activity and hence operations management in two main ways. The aspiration to become wealthy provides a highly proactive workforce, while attainment of wealth creates a growing market of all kinds of goods and services. When a significant proportion of a population is relatively poor, goods and services have to be provided at the lowest possible cost and consumers are prepared to accept standardization. The wealthy can afford customized products and indeed demonstrate their wealth by doing so.

The operations strategy includes both manufacturing and service activities and that these need to be integrated into a combined, holistic manner. However, we have identified that these sectors may well process different things, which have been categorized as materials, customers and information. This may have implications for the specific implementation of strategy, but not for operations management principles or issues. Comparing manufacturing and service industries can be useful, but in an operations management context, some of the divisions are overstated.

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This article is in continuation with our previous articles on Operations Management such as Control Charts, Demand Chase, Enterprise Resource Planning, ABC Analysis

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