Operations management - An introduction
Operations management (OM) is the management of systems and processes
that creates goods and services. The creation of goods and services involves
transforming inputs into outputs.
The scope of the operations management and decision making ranges across
the organisation. Operations management people are involved in goods and
service design, process and capacity design, quality, location selection, layout
design, people and work systems, supply chain management, inventory, scheduling
and maintenance.
Operations managers apply a process which consists of planning, organising,
staffing, leading and controlling when making decisions on OM functions in an
organisation.
OM is studied by many because its one of the three major functions in an organisation,
to know how goods and services are produced and finally to know how to manage
such a costly part of the organisation.
Operations management - An introduction
Goods and service design - This task defines the scope of the transformation
process in operations management. Costs, quality and human resource
decisions interact strongly with the goods and services design process. A higher
quality for a lower cost is always encouraged.
Process and capacity design - Process options are available for design of products
and services with regard to specific technology, quality, human resource use and
maintenance. These expenses and capital commitments will determine the basic
costs structure of an organisation.
Quality - Policies and procedures should be determined to achieve a specific quality in
order to satisfy customers.
Location selection - Location of the facilities for both manufacturing and service
organisations will establish the firm's ultimate success. Any errors made at this point
will overwhelm other efficiencies.
Layout design - The relevant processes and materials should be sensibly located
in relation to each other. Capacity needs, personnel levels, purchasing decisions,
inventory management etc influences this layout.
Operations management - An introduction
People and work systems - People are an integral part of the whole system. The
talent levels, skills, quality of work life provided and their costs must be
determined beforehand.
Supply chain management - An ambiance of mutual trust and respect between
the buyer and supplier is essential for effective purchasing. The decisions determine
what's to be made and purchased and consideration is also given to quality, delivery,
innovation and price.
Inventory - Inventory related decisions can be optimised by concentrating more
on customer satisfaction, suppliers, production schedules and human resources
planning.
Scheduling-Efficient schedules of production should be developed while determining
and controlling the demand on human resources and facilities.
Maintenance - Plans for implementation and control of maintenance systems are
necessary. Decisions should also be made regarding the desired level of maintenance
needed.
Operations Management & Decision Making
WHAT - what resources will be needed in what amounts?
WHEN - when will the resources be needed? When should the work schedule begin?
When should the materials and other suppliers be ordered? When is corrective action
needed?
WHERE - where will the work be done?
HOW- how should the products and services be designed? How will the work be
done? How will resources be allocated?
WHO - who will do the work?
Different Business Sectors
Primary sector
The primary sector includes various businesses involved in extracting or
harvesting products from nature. They produce commodities for raw materials in the
secondary sector. Some are also for final consumption, such as staple foods.
The primary sector includes a variety of sub-sectors, including:
Agriculture Forestry
Fishery
Excavation Mining
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Simple processing activities such as packaging and processing of raw materials
are also considered part of this sector.
Different Business Sectors
Secondary sector
The secondary sector includes various businesses involved in processing raw
materials into outputs. Output can be finished or semi-finished goods. Semi-
finished goods then go into other businesses in this sector. So, overall, this
sector produces the final output.
The secondary sector consists of manufacturing, construction, and utility businesses.
Then, for a manufacturing business, it can be very diverse, for example:
Foods
Beverages
Tobacco products
Textile
Apparel
Paper
Base metal
Electronic
Furniture
Different Business Sectors
Tertiary sector
The tertiary sector includes various businesses involved in providing services. They
provide commercial services to businesses in the primary and secondary sectors and to
the general public. They include:
Wholesale and retail
Warehousing and logistics
Transportation
Bank
Insurance Restaurant Hotel
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In developed countries, businesses in this sector account for a significant share
of the economy's output and employment.
Different Business Sectors
Quarter sector
The quaternary sector is an intellectual-based service sector. Examples are
computing services, information technology, research and development, and
internet services. Some classifications may still categorize it as a tertiary sector.
However, this sector has become a separate sector in developed countries
because of its significant contribution to the economy.
Businesses in this sector provide services to the other three sectors. For
example, information technology companies provide their services to
manufacturing companies, agribusiness companies, and companies in the
tertiary sector such as banking and hotels.
Different Business Sectors
Nonprofit Organization
A nonprofit organization is one that qualifies for tax-exempt status by the IRS
because its mission and purpose are to further a social cause and provide a
public benefit. Nonprofit organizations include hospitals, universities, national
charities and foundations.
Similar to a nonprofit, a not-for-profit organization (NFPO) is one that does not
earn profit for its owners. All money earned through pursuing business activities
or through donations goes right back into running the organization.
Different Business Sectors
Nonprofit Organization
There are four key differences between a nonprofit and a not-for-profit:
Nonprofits are formed explicitly to benefit the public good; not-for-profits exist to
fulfill an owner's organizational objectives.
Nonprofits can have a separate legal entity; not-for-profits cannot have a separate legal
entity.
Nonprofits run like a business and try to earn a profit, which does not support any single
member; not-for-profits are considered "recreational organizations" that do not
operate with the business goal of earning revenue.
Nonprofits may have employees who are paid, but their paychecks do not come
through fundraising; not-for-profits are run by volunteers.
Different Business Sectors
For-profit organization
A for-profit organization is one that operates with the goal of making money. Most
businesses are for-profits that serve their customers by selling a product or service.
The business owner earns an income from the for-profit and may also pay
shareholders and investors from the profits.
Whether you decided to start a for-profit, not-for-profit or nonprofit, the first steps
to creating your entity are the same. Start by filing for a business entity in the
state in which you wish to run your operations. Your business entity might be a
corporation, LLC, sole proprietorship or partnership.
