OPERATIONS MANAGEMENT

Operations Management (OM) is deIined as the design, operation and improvement oI the
systems that create, and deliver the Iirm`s product and services. OM is a Iunctional Iield oI
business with clear Management responsibilities. It is a work Iunction that oversees making
goods and providing services. It is involved in the entire system that produces a good or
delivers a service.
OM designs, operates and improves productive systems systems Ior getting work done.
Operations managers design systems, ensure quality, produce products and deliver services.
They work with customers and suppliers, the latest technology and global partners. Solving
problems, reengineering processes, innovating and integrating are part oI the duties oI an
operations manager. As popularly stated, OM is more than planning and controlling, it is
doing. Doing is related to transIormation process.
Inputs such as Materials, Machines, Men, Methods and Money are transIormed into outputs
in the Iorm oI products and services. The objective oI OM is to ensure that the
transIormations are perIormed eIIiciently so that the output is oI greater value than the sum oI
the inputs. The role oI OM is to create value. By itselI, the transIormation process can be
viewed as a series oI activities along the value chain extending Irom supplier to customer.
All activities that do not add value are superIluous and need to be eliminated. Products may
have items to be made and items to be bought, may be sold directly to customers or through
distributors to customers or through distributors to retailers to customers. All these
alternatives make the scope oI the OM Iunction wide and can take ever so many Iorms.
The transIormation process can be
(i) Physical ManuIacturing operations
(ii) Location Transportation or Warehousing operations
(iii) Exchange or Trade - Retail operations
(iv) Physiological - Health care
(v) Psychological - Entertainment
(vi) InIormation - Communication
Having a wide scope, numerous management inIluences are inevitable and decisions are
required. They may be classiIied as Long Term, Intermediate Term and Short Term.
It commences with Long Term or Strategic decisions. These decisions are based on the
mission oI the company or organization and aligned with inIormation and data Irom other
Iunctions like Marketing and Finance. These issues encompass questions such as
1. What is the product to be made?
2. What is the process to be Iollowed to make the product?
3. Where do we locate the Iactory or Iacility?
4. What shall be the installed capacity?
5. How long will it take to commence production?
6. When do we add capacity?
Etc..
This is Iollowed by the next level oI decision making Intermediate Term or Tactical
decisions. Here the Iocus is on tactical planning. Tactical Planning aims at eIIicient
execution oI the work. Questions such as
1. Manpower required
2. Amount oI material in stock
3. Quantity oI Iinished goods to be held to satisIy customer needs
4. Manpower skills required
5. Number oI hours to be worked every day / week
6. Number oI shiIts to be worked every day

. Frequency at which materials should be delivered

8. Frequency at which scrap should be cleared
9. Frequency at which machines should be maintained
10.Number oI hours oI in-house training to be imparted
11.Number oI persons to be trained Ior Iire Iighting
12.Number oI persons to be trained Ior Iirst-aid services
Etc..
The third level oI decision making is Short Term decisions. Short stands Ior short time
horizon and deals with issues that pertain to the current week or day or shiIt as the case may
be. Common subjects are
1. Number oI persons absent
2. Assigning work to available staII keeping in mind the priority jobs and the available
skills
3. Booking overtime
4. Available oI material at the tail end
5. Quantum oI WIP and reasons Ior accumulation
6. Immediate steps to liquidate WIP to optimal levels
Etc..
A process is a series oI activities or steps that are goal oriented. Process steps are the
operations or stages within the manuIacturing cycle required to transIorm components into
intermediaries or Iinished goods. A process is also stated as an activity or group oI activities
that takes one or more inputs and transIorms them into one or more outputs Ior its customers.
An automobile is made Irom several components and subassemblies. Here more than one
input is taken and these are transIormed into one output. A cheI or baker or cook takes one
or more inputs but can transIorm them into diIIerent outputs based on his recipes.
OM is the systematic design, direction and control oI processes that transIorm inputs into
products and services Ior internal as well as external customers. Goods or products are the
tangible outputs while service is the intangible output oI a process.
In any enterprise or organization, the Sales and Marketing personnel bring in orders or
convey inIormation on customers` needs or requirements. With this lead, the R & D
department prepares a schematic representation oI the likely product and provide estimates oI
the materials that need to be used and the kind or level oI Iinish every component requires.
Based on this data, the Finance department judiciously balances the probable receipt oI Iunds
with the probable expenses that would be incurred to arrive at the probable resultant surplus.
The HR department projects the requirement oI additional personnel and the additional
expenses in terms oI salary and welIare.
The activity or task oI producing goods and products that would Ietch revenue to the
enterprise is the Iunction oI operations. This stretches to eIIectively and eIIiciently utilizing
the available resources men, materials, machines, method and money that Sales and
Marketing may keep up their promises to the customers and in return collect the related
revenue and Finance may ensure a robust and healthy bottom line Ior the enterprise.
Men - Optimal number oI employees Ior the process
Machines - Minimal downtime
Materials - High yield, low scrap and rework
Method - Low cycle time, multiple products per cycle, one man two/three machines
Money - Low overtime, low rejections, low downtime, proper sale oI process scrap