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Operations management may be considered, as a discipline, to be one of the orphans of the business world. It attracts, comparatively speaking, little internet either from graduates or from the press and public in general. Operations management extends beyond the area of manufacturing and includes the management of service industries, distribution, quality control and other disciplines.
Every business function could make claim to being the most important; operations is no exception. Operations management deals with producing quality products, in sufficient quantities, getting these products to customers in a timely fashion and doing so in a cost-efficient way. Operational strategies deal with how these things are achieved, underpinned by operational objectives that determine which strategies, for a given business, are the most significant. Successful operational strategy for one firm may involve a pursuit of quality, with other factors being largely secondary to this. For another firm, competitive advantage may be gained through a low-cost approach. The nature of such operational objectives and the factors that influence their relevance to different firms and potential for successful implementation are explores throughout this section.
Indeed, operations management was once known as 'production management', but it is now a far more all- embracing discipline that encompasses all of the areas already mentioned and many of those allied to these areas of business. From the extraction of raw materials, through their processing to finished goods, their storage and their distribution, to the complexities of service-based operations management, there are systems, processes, checks and controls to ensure quality and adherence to standards.
Operation management is not a discipline solely concerned with the maintenance of robotic systems which make, move and store products. It is a discipline deeply involved with innovation, quality, performance and, above all, those who design, run and maintain the systems of factories, call centres, distribution centres and a host of other organizations concerned with the discipline.
Strategy is the determination of the long-term basic goals and objectives of an enterprise, and the adoption of course of action and the allocation of resources necessary for carrying out these goals. Chanlder(1962).
A strategy is a pathway of intentionality. It is the essential dynamic direction in which an organization's resources are deployed. This articulated sense of direction must correspond with the aspirations of key stakeholders. It must also give to competitive advantage. This needs to be sustainable in a changing environment.
Friedman (1962) considers shareholder gain to be the only proper aim for a company. In practice most firms acknowledge some stakeholder interests and may also express their aims in terms of an overarching social or human purpose.
By contrast, operations strategy is concerned less with individual processes and more with the total transformation process that is the whole business. If it is a large business, its relationship is with other parts of the corporation to which it may belong and with the commercial environment outside the business. It is concerned with how the competitive environment is changing and what the operation has to do in order to meet current and future challenges. It is also concerned with the long-term development of its operations resources and processes so that they can provide the basis for a sustainable advantage.
'Location is the key to most businesses; entrepreneurs typically build their reputation at a particular spot […think Starbucks, Seattle…Microsoft, Redmond…' Schlafly (2003). Many businesses depend on their location for success (for instance, a newsagent's is dependent on passing foot/vehicle traffic; few people would travel significantly out of their way to reach one). As a business grows, the need to expand capacity might require expansion of current premises or a complete relocation. For some businesses, the need to remain competitive and thus a need to keep costs down may lead to certain functions being located overseas. In other cases, a business may be 'pushed' from its current location due to rising costs, falling demand or increased competition.
Learn production systems answer to their target market. This sounds a reassuringly stable idea, but is can actually imply being subject to whirlwinds of barely predicable, even chaotic change. We have already seen that the rate of change in markets is accelerating and that any map of consumer preferences is unstable and dynamic by its very nature. This makes product range and segmentation models contingent, transient statements that are always in the process of revision or reinvention. This is a world where the ground moves under moving targets and shooting has to be from the hip.
Flexibility is about the ability to respond aptly and swiftly to change. Rigidity or even a state of equilibrium in the relationship between a firm and its market is extremely dangerous. As the quantity and nature of products demanded change. So the quantity and nature of the firm's output must change too. Firms that are slow to respond or that offer an inappropriate response will find their demand functions or value frontiers shrinking towards the origin. Conversely, firms that are faster than their competitors to respond, or that find a uniquely successful response, will experience advancing demand functions and new strategic options.
Capacity of an operation is the maximum level of value-added activity over a period of time that the process can achieve under normal operating conditions. Many organizations operate at below their maximum processing capacity, either because there is insufficient demand completely to 'fill' their capacity or as a deliberate policy, so that the operation can respond quickly to every new order. Often, though, organizations find themselves with some parts of their operation operating below their capacity while other parts are at their capacity 'ceiling' which are the capacity constrain for the whole operation.
Total quality management (TQM) has probably been the most significant approach to managing operations improvement. Few, if any, managers in any developed economy have not heard of TQM and its impact on avoiding errors. Total quality management is a philosophy of how to approach the organization of quality improvement. This philosophy, above everything, stresses the 'total' of TQM. It is an approach that puts quality and indeed improvement generally) at the heart of everything that is done by an operation and including all activities within an operation.
Render (2006) considers the personal component of service is more difficult to measure than the quality of the tangible component. Generally, the user of a service, like the user of a good, has features in mind that form a basis for comparison among alternatives. Lack of any one feature may eliminate the service from further consideration. Quality also may be perceived as a bundle of attributes in which many lesser characteristics are superior to those of competitors. This approach to product comparison differs little between goods and services.
The operations manager plays a significant role in addressing several major aspects of service quality. First the tangible component of many services is important. How well the service is designed and produced does make a difference. This might be how accurate, clear , and complete your checkout bill at the hotel is, how warm the food is at taco bell, or how well your car runs after you pick it up at the repair shop.
Valuable and rare resources can be a source of competitive and advantage. However, it is also important to consider the ease with which competitors can copy a valuable and rare resource possessed by an organisation. In effect, this analysis is concerned with determining the sustainability of the competitive advantage in the resource. Valuable and rare resources can be a source of sustainable competitive advantage if organisations are faced with a cost disadvantage in duplicating the valuable resources of a successful organisation. Resources that exhibit these characteristics are described as imperfectly imitable (Lippman and Rumelt, 1982; Barney, 1986). Dierickx and Cool (1989) habe identified five main factors that can impedeimitation of valusble and rare resources.