Operations ManagementHuman Computer Interaction
Operations Management
CONTENTS
S. No. Description Page No
Understanding the Role of Operations Management within Organisations 2
The role and characteristics of operations management within organizations 2
Operations management supports organizational success 3
Understanding the Role of Operations Management and the Inportance of meeting
Operational Performance Targets 4
Links between strategy and operational performance targets. 4
Conflict between different performance targets. 6
Strategic Operations Management. 7
Understanding How and why Organisations use Performance Evalution 7
Performance measurement techniques. 7
Role of Key performance Indicators (KPI) in Operations Management. 11
The Impact of a Range of Quality Improvement Techniques on Competitive Advantage 12
The concept of the value chain as a means to identify competitive advantage 12
Quality Improvement Techniques 12
the role of standard-setting bodies in quality improvement 13
The impact of quality improvement techniques on the competitive advantage of 13
specific organizations.
References 14
The role of operations management
Introduction
Operations management is the business function that starts with producing and delivering the products and services to the customers. Now, organizations have understood the importance of managing the operational activities and organizing them within the organization to improve the company’s performances and the customer’s service as well. The operations management is built upon the foundation of the planning, organizing, coordinating, and controlling the use of resources that are needed in the entire process to produce the products and services of the company. The entire operational functions are connected to other functional departments within the organization because they are also actively involved in producing the company’s products and services. It manages all the resources of the organization such as machines, technology, people, and raw materials and produces products and services as per the market requirements, and managed to be competitive in the market. The foundation of operations management includes planning, process, efficiency, cost control, quality, continuous improvement, technology, profitability (Eby, 2017). As the foundation of the operational management has been discussed it seems that all work together as the engine room for the organization which starts from planning and drives it towards making profitability.
1.1. The role and characteristics of operations management within organizations
The key roles of operations management within the organizations include a diverse set of functions and roles. The role of operations management is divided into input, transformation process, and output which include human resources as input like workers, managers, IT developers. The transformational processes include equipment, machines, materials, etc (UKessays, 2015). The operational management transforms all the resources as taken as inputs into outputs in terms of the products and services of the company. It handles all the issues within the entire process like designing of the system, operation of it, and maintenance of the system which is used to produce the company’s products and services. The management has the responsibility to make balance use of the resources like human resources and inputs which are required in the processes. As the functions depend on the size of the companies and the type of the industries. There is some function which has been included in planning and implementation of manufacturing plants, managing projects, planning information systems and use of the latest technology, to solve the issue related to the design and helps in the development of the products and services, manages the inventory through the supply chain, time management to deliver the products and services to the customers on time, optimize quality control, conduct procurement and manage logistics and enterprise resource planning, helps in optimizing resource usage, eliminating waste and continuously improving processes, helps in executing a company’s strategic plan. These are the tasks which are the responsibilities of the operations manager to do it in an organized way. As the operations managers are capable of organizing the activities, have the analytical and creative skills, and also should be aware of the leading technology in the market with the change in technology and the change in the market. They must be a good decision maker and problem-solving skills as they have to make decisions regularly and to its daily operational activities and also to succeed in this technology-driven business which directly impacts the company’s ability to succeed and achieve the goal of the organization (UKessays, 2017).
1.2. Operations management supports organizational success
In the e-commerce sector, for example, operations management can be the determining factor for success. Like well-planned operations strengthen the ordering of goods which gets fulfilled and gets delivered on time which satisfy the customers and the happy customers result in the success of the e-commerce. Take an example of the Flipkart Company which starts its business from a two-bedroom apartment. Operations management drives the business towards developing India’s largest e-commerce enterprise (digitalLEARNINGNetwork, 2019). This shows that operations management is the core function and strategies which need to be organized in the company to plan every single aspect of the business including capacity planning, productivity analysis, and quality assurance. Operations managers are the one who positively contributes to all the aspects of the planning as per the organizational strategy to succeed the business. Another example. , Toyota uses the lean manufacturing system to produce products and services. Lean manufacturing comes when the company ran out of raw materials, finance, and human resources then this system is introduced and known as the Toyota production system which is popular in the world. The lean manufacturing system uses the idea of elimination of the wastes, cost reduction, and employee empowerment. This system aims to eliminate the wastes to reduce cost, bring more sales, increase and generate capital, and stay in the competitive growing market which also shows that Toyota is the largest automobile market by sales. After the above discussion of two popular companies named Flipkart and Toyota of different industries shows that the establishment of the right operation management strategies in the company is important to succeed the business and these two companies have shown that how the establishment of proper operation management helps in succeeded their businesses as the operational management in the business serves as an engine room which drives the business towards the success.
2.1. Links between strategy and operational performance targets
The strategic plan of any business and company outlines the goals and objectives of the company and to identify the approach to achieve the objective to the company whereas the operational plan is the thorough process where each department uses its resources in order to achieve the company goals. There are strong links between the strategic plan and the operational plan that can together achieve the company’s goals and allow the company to operate smoothly and efficiently. There are links between strategy and operational plan is listed below (Root III, 2021):
A budget is a primary link between a strategic plan and an operational plan. The strategic plan gives the estimated budget based on the project planning and the operational plan provides the accurate budget which is used to drive the success of the strategic plan. If the operational budget is more than the strategic plan budget then it has to work on the plan.
Resources Allocation is the link in which the operational plan determines the use of resources like machinery, human, facilities and a strategic plan determines what kind of resource allocation is done to achieve the objective of the company. They both work side by side in order to analyze the most effective resource allocation for each department to achieve the goals of the strategic plan.
Performance management is another link in which an operational plan is dependent on performance management. If the manufacturing department is expected to produce 15 units per hour but the current personnel allows only 10 units per hour then the performance management indicates more personnel requirements. The performance management is set in the strategic plans. But the decision is made by the operational plan that there is the need for more personnel to achieve the expectation of the manufacturing department to produce 15 units per hour. The operational plan determines if the personnel is required or not and what are the requirements would need to achieve the goal of the strategic plan.
Details are another link in which the operational plan does the depth analysis and provides the information which is needed to achieve to execute the strategic plan. For example, if the strategic plan is to develop a new warehouse then the operational plan would be responsible for getting the details of the contractors, land, permissions, to start the new plan in the state and involving the employees in order to achieve the strategic plan and communicate between the departments to facilitate it smoothly.
2.2. Conflict between different performance targets
In an organization, conflicts mean the difference in opinions and the potential conflicts between various performance measures which measure the customer service targets and those which measures productivity. These conflicts happen when the management have not a clear understanding of the expectation s of the customer’s needs. The need for performance management in the company is to achieve the company’s goals of using the potential resources of the system as productive and to achieve customer satisfaction services. To achieve a high level of customer service it costs with the immoderate use of the resources which can cause a major problem on the availability of the resources. It is important to create a balance between resources to be available and the service is given to the company’s customers at the same level.
Figure 1: Conflicting performance gaps
Sources: (Wright, 1998)
2.3. Strategic Operations Management
Strategic operations management is the direction and plan of the business and the plan might be a short-term plan or a long-term plan. The main goals of any business are to maximize profit by reducing costs. So here the strategic operations management deals with managing the costs in the operation functions which can maximize the profits which depend on the products which have been produced. The manager finds a way to reduce the cost of production. They find a way to distinguish their products from the competitors.
3.1. Performance measurement techniques:
Performance measurement is the monitoring of the organization’s targets that how well all the targets have been achieved by the company and how well the company and its employees are working as a whole and as individuals to achieve the goal of the company efficiently. It monitors the budget, targets to achieve, expected results from actual results. Performance management is set in every organization to monitor the achievement of the organization’s objective. The techniques which are used by the organizations to evaluate performance are (Kaplan, 2021):
Financial Performance measures:
Financial performance measures are used to measure the inflows i.e. revenues and outflows i.e. costs and the management of the overall money of the businesses. They evaluate the data from the statement of profit and loss and the statement of financial position of the businesses. For example, if in a company cost control is the critical success factor then this appropriate performance indicator would be cost-based performance measures which are calculated as simple cost per unit of output. For any company, the objective is to maximizing profitability. So here are the three profitability ratios which are used to monitor the achievement of profitability (Kaplan, 2021):
ROCE – Return on capital employed which is a key measure of profitability and is the operating profit in which measures that how much profit is generated from each amount of the capital employed in the business.
Return on Sales is the operating profit which indicates the sales price, volumes, and the costs control in which high return is expected and is measure as a percentage of revenue.
Gross margin indicates sales prices, volumes, and production costs which focus on the trading activity of the business.
The financial activity also gets measured and investigated which includes asset turnover, inventory days, receivable days, and payable days.
Non-Financial performance indicators
In any business, they have their own set of non-financial performance indicators which measure the success of the business as productivity and quality. The examples of the non-financial performance indicators are customer satisfaction measurements, utilization of the resources, quality measurements. The two categories in which non-financial performance indicators are grouped:
Productivity measures are the measurement of the efficiency of the operation which is also known as resource utilization. Types of productive measures are production-volume ratio assessed the overall production related to its plan and its budget, capacity ratio assesses the terms of the working hour for the production and efficiency ratio assesses the productivity based on the output compared to its inputs.
Poor Quality acts as an issue from which a company can harm its reputation and loss businesses. Some examples of the non-financial performance indicators which is used to monitor quality which includes wastage levels, customer complaints, returns of the products, new customers, speed and accuracy of the delivery, growth in sales, repeat in sales, meeting customers and staffs needs, selling of the new products, evaluation of the development plans (Kaplan, 2021).
The Balanced Scorecard
For an effective performance appraisal, financial and non-financial measures need to be considered. It acts as a linking device through which managers set the targets and link with the specific objectives and performance measures. The below framework has the four perspectives and the organizations see the performances and strategies from these four points of view which include financial, customer, internal efficiency, learning, and growth.
Figure 1: Balanced Scorecard Perspectives
Sources: (Kaplan, 2021)
The financial perspective has suitable performance measures such as return on capital employed and return on shareholder’s funds.
The customer perspective measures customer satisfaction by measuring the customer’s point of view. The appropriate performance measures are customer satisfaction timelines and customer loyalty.
The internal business process perspectives measure the organization’s outcome in terms of the customer needs and the performance measures for this would be unit costs and quality measurements.
The learning and growth perspectives are the measures that measure the need for improvements in the existing products and to develop it in a way that satisfies the needs of the customers and the performance measures include the training days per employee and percentage of the revenue related to the new products.
Benchmarking
Benchmarking is the technique to improve the performances, the idea of the benchmarking is to assess the performances by comparing the products and services; performances, and practices of the organizations with the others best practices. It assesses the overall organization in terms of the acknowledgment of the need for the change, learning from the comparison to improve the company’s performances. There are different types and levels of benchmarking which is used to measure the company against the other one which includes internal benchmarking, competitive benchmarking, functional benchmarking, and strategic benchmarking (Kaplan, 2021).
3.2. The role of Key Performance Indicators (KPIs) in operations management.
Key performance indicators demonstrate that how the company is achieving its goals efficiently. It is used at different levels to evaluate the success of achieving the targets. For example, if in the company the critical success factor of the company is to deliver the products to their customers on time then the company uses the KPIs to measure the ways so that the employee works according to that to get the products on time to their customers. The characteristics of the KPIs are all the KPIs are non-financial, KPI do constant monitoring 24/7, daily, weekly, KPIs should be handled right and that’s why CEO has individually control o this, it shows the actions that are to be needed to make the improvements (Behzadirad & Stenfors, 2015). The KPIs are the most commonly used tools within the organization to measure the performance and plan for the future accordingly. The need of the KPIs and managers uses it for multiple reasons which include determining the progress and status and how the performances look like from previous, tracking the change in the project and the progress of change, planning the project as per the study, and what to achieve and plan accordingly, and helps in identifying the ways to achieve the objective and success (Behzadirad & Stenfors, 2015). The 5 key performance indicators that must be monitored for operational success return on investment (ROI), operating margins show that how successfully the company’s is generating the income from the operations of the business, productivity, customer satisfaction score which helps the company to know the process gap and operational failures within the organization and last employee turnover rate (Haliva, 2016).
The concept of the value chain as a means to identify competitive advantage
Value chain analysis is the process followed by the company in order to identify its primary activities and secondary activities which add value to its products and services and to analyze whether the activities are crucial for the company or not and which of them needs to be improved to create a competitive advantage (Edrawmax, 2021). The competitive advantage makes the products and services of the company superior from all the other choices of their customers. It allows the company to implement some strategy and activities into the practice includes offering the lower cost to customers and be the cost leadership, analyze the buyers and select the element that the buyer wants and allocate it to the premium price which acts as differentiation and the focus is on implementing each activity as per each market segment (Visual Paradigm, 2021).
Quality Improvement Techniques
Quality is the most important thing which should be maintained and handled by every company because for most of the companies their reputation is based on the quality of the products and services. There are quality improvement techniques namely total quality management (TQM), six sigma, top-down and bottom-up approach, ISO standards, cost of quality, and Kaizen (Sharma, 2021). The company should select the right techniques as per their functions and products and services.
the role of standard-setting bodies in quality improvement
The quality standards are the documents which provide requirements, specifications, and guidelines are used to ensure that the materials, products, and services fit as per their needs. The objective of implementing quality standards is to satisfy their customers whose priority is the quality, to ensure that their products and services are safe, complying with regulations, producing their products while taking environmental consideration, and ensures the internal processes are in a controlled way (ASQ, 2021). The quality management standards are ISO international standards which is a set of quality standards in the world. The ISO 9001:2015 specifies quality management system requirements (Nibusinessinfo, 2021). The ISO 9000 is a body of standards which is a family of quality improvement standards which helps the organizations to take steps to create and maintain quality management system. It provides a foundation for the company to think about quality (Business as an Art®, 2020).
The impact of quality improvement techniques on the competitive advantage of specific organizations.
The quality improvement technique is the source of the competitive advantage. For example, take TQM – total quality management which is a technique to improve performances and quality in order to satisfy the customers. Take the example of a company that has not a single concept of quality, no mission, and vision, and any quality-related policy, no one has an understanding of the modern concept of quality and challenges it. After the implementation of the quality improvement techniques total quality management (TQM) in the organizations, the service quality has gone up, market share has increased lower operational costs and overall unit costs and simultaneously increase in profit also. This implementation gave the firms a competitive edge and achieved all three of porter’s competitive strategies which include increasing customer value, cost leadership, and differentiation. It shows that total quality management is the source of the competitive advantage (Korankye, 2013).
References:
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