Consider the ingredients of your breakfast this morning. Unless you live on a farm and produced them yourself, they passed through a number of different processing steps between the farmer and your table and were handled by several different organisations. Similarly, your morning newspaper was created and delivered to you through the interactions of a number of different organisations.
Every day, you use a multitude of physical objects and a variety of services. Most of the physical objects have been manufactured and most of the services have been provided by people in organisations. Most of us give little thought to the organisational processes that produce these goods and services for our use. The study of operations management deals with how the goods and services that you buy and consume every day are produced.
Every organisation has an operations function, whether or not it is called ‘operations’. The goal or purpose of most organisations involves the production of goods and/or services. To do this, they have to procure resources, convert them into outputs and distribute them to their intended users. The term operations embraces all the activities required to create and deliver an organisation's goods or services to its customers or clients.
Operations management is concerned with the design, management, and improvement of the systems that create the organisation's goods or services. The majority of most organisations’ financial and human resources are invested in the activities involved in making products or delivering services. Operations management is therefore critical to organisational success.
Within large and complex organisations operations is usually a major functional area, with people specifically designated to take responsibility for managing all or part of the organisation's operations processes. It is an important functional area because it plays a crucial role in determining how well an organisation satisfies its customers. In the case of private-sector companies, the mission of the operations function is usually expressed in terms of profits, growth and competitiveness; in public and voluntary organisations, it is often expressed in terms of providing value for money.
An understanding of the principles of operations management is important for all managers, because they provide a systematic way of looking at an organisation's processes. The need to manage manufacturing and service operations efficiently and effectively has led to a considerable increase in interest in operations management in recent years. However, the concept of operations is not new.
The role of the operations manager involves, amongst other roles, decision-making with long, mid and short-term consequences. These decisions must be made to support the strategic direction of the organisation and will not be made in isolation to the decisions made by other senior managers.
These decisions will concern:
• the initial design of the product or service,
• the equipment and assets required for the production process,
• the skills needed by employees during the transformation process,
• employee remuneration details,
• the location of organisational operations,
• organisational capacity, and
• internal facility layout.