Operations management is the activity of managing the resources which are devoted to the production and delivery of products and services. The operations function is the part of the organization that is responsible for this activity. Every organization has an operations function because every organization produces some type of products and/or services.
However, not all types of organization will necessarily call the operations function by this name. Operations managers are the people who have particular responsibility for managing some, or all, of the resources which comprise the operations function. Again, in some organizations the operations manager could be called by some other name. For example, he or she might be called the ‘fleet manager’ in a distribution company, the ‘administrative manager’ in a hospital or the ‘store manager’ in a supermarket.
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Operation Management is the design, operation and improvement of the production system that create the firm’s primary product or services like marketing and finance. Operation management is a functional field of business with clear line management responsibilities. This point is important because operation management is frequently confused with operations research and management science and industrial engineering. Operation management of main business activity is the organizing and controlling of the fundamental business activity of providing goods and services to customers. Many of the developing countries have achieved quick development through industrial development. Most developed countries are industrially developed. These development activities are maintained by production and operation management.
Vegmeal makes a range of vegetarian soups which are sold to retailers in the UK. The business was set up by Peter Andrews, at the age of 16. He was selling hot soups from a stall that he cooked in a local market. They were popular and he was encouraged to produce the soup in larger quantities.
When he left school he rented some premises and began producing batches of soup for local retailers and other customers. He circulated information showing that he could produce up to 25 different soups. However, it became obvious that four of the soups were considerably more popular than the others. These were,
Lemon and white bean
Spicy green pea and coriander
Mediterranean vegetable and pasta
Gradually, he cut back on the range so he could produce larger batches of the more popular soups. He knew that this would lower costs. For three years Peter enjoyed a steady and profitable period of growth
1.2 The focus of operations management
Managing operations can be enclosed in a frame of general management function. Operation managers are concerned with planning, organizing, and controlling the activities which affect human behavior through models.
The first focus of operating systems is to utilize resources for the satisfaction of customer wants. Therefore, customer service is a key focus of operations management. Peter must provide something to a specification, which can satisfy the customer in terms of cost and timing. These aspects of customer service specification, cost and timing. They are the principal sources of customer satisfaction and must therefore be the principal dimension of the customer service objective for operations managers.
Generally, Vegemeal aim reliably and consistently to achieve certain standards and operations manager will be influential in attempting to achieve these standards. Hence, this objective will influence the operations manager’s decisions to achieve the required customer service.
Competing based on cost means offering a product at a low price relative to the prices of competing products. The need for this type of competition emerges from the business strategy. The role of the operations strategy is to develop a plan for the use of resources to support this type of competition. Note that a low-cost strategy can result in a higher profit margin, even at a competitive price. Also, low cost does not imply low quality. Let’s look at some specific characteristics of the operations function we might find in a company competing on cost
Many companies claim that quality is their top priority and many customers say that they look for quality in the products they buy. Yet quality has a subjective meaning; it depends on who is defining it. Quality as a competitive priority has two dimensions. The first is high performance design. This means that the operations function will be designed to focus on aspects of quality such as superior features, close tolerances, high durability, and excellent customer service. The second dimension is goods and services consistency, which measures how often the goods or services meet the exact design specifications.
Time or speed is one of the most important competitive priorities today. Companies in all industries are competing to deliver high-quality products in as short a time as possible
As a company’s environment changes rapidly, including customer needs and expectations, the ability to readily accommodate these changes can be a winning strategy. This is flexibility. There are two dimensions of flexibility. One is the ability to offer a wide variety of goods or services and customize them to the unique needs of clients. This is called product flexibility. A flexible system can quickly add new products that may be important to customers or easily drop a product that is not doing well. Another aspect of flexibility is the ability to rapidly increase or decrease the amount produced in order to accommodate changes in the demand. This is called volume flexibility. They can see the meaning of flexibility when you compare ordering a suit from a custom tailor to buying it off the rack at a retailer.
1.3 The key environmental factors affecting operations management
Today’s OM environment is very different from what it was just a few years ago. Customers demand better quality, greater speed, and lower costs. In order to succeed, companies have to be masters of the basics of operations management.
Marketers are influenced by the regulatory environment. This has implications for their obligations to customers and the wider public. Customers are increasingly able to seek redress for faulty products, and those who live near manufacturing soups are able to claim compensation for food poison.
The political environment around the world has recently favored the privatization of Vegemeal. Such company has also been able to compete more freely in the private sector. Political changes in vegemeal have also meant that these markets are now open to marketers from around the company.
The supermarket order looked very impressive even though production would have to be stepped up greatly. This would mean some major investment and probably a switch in production methods.
Markets require buying power as well as people. The economic environment consists of factors that affect consumer purchasing power and spending patterns. Marketers should aware of the following predominant economic trends. Nation varies greatly in their levels and distribution of income.
Vegmeal have industrial economies, which constitute normal markets for many different kinds of soups. At the other extreme are subsistence economies-they consume most of his own soups output and offer few market opportunities.
Changing economic conditions can have a huge impact on even vegemeal. This distribution of income has created a tiered market. Changes in major economic variables such as income, cost of living, interest rates, and savings and borrowing patterns have a large impact on the marketplace. Vegemeal should watch these variables by using economic forecasting.
Businesses do not have to be wiped out by an economic downturn or caught short in a boom. With adequate warning, they can take advantage of changes in the economic environment.
The economic environment is important to marketers because it affects the amount of money people have to spend on products and services. One of the components of the economic environment is the distribution of income. Economies around the world not only vary in their absolute or total level of wealth but also in how their wealth is spread within the population. The economic problems faced by vegemeal have meant that some international marketers cannot be paid in hard currency. To make sales, therefore, they have had to barter their products.
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Vegmeal may be classified either as those which have a highly unequal spread of wealth or those where it is more evenly shared. For an example, Peter had been to a trade fair that year and knew that plant could be installed capable of producing several different varieties soups. The cost of this would be huge and the changes in working practices might be a stumbling block for peter’s production staff.
Technology /Facilities Failure
By ‘technology and facilities’ we mean all the IT systems, machines, equipment and buildings of an operation. All are liable to failure, or breakdown. The failure may be only partial, for example a machine that has an intermittent fault. Alternatively, it can be what we normally regard as a breakdown – a total and sudden cessation of operation. Either way, its effects corral brings a large part of the operation to a hart. For example, a computer failure in a supermarket chain could paralyze several large stores until it is fixed.
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