Operation management (OM) includes organizational processes such as technology (information and engineering), accounting, finance, and human resources. Procurement and inbound logistic as well as warehousing and outbound logistics are examples of macro operations of operation management. Other operations include customer service, marketing, and sales. Operation management also involves the planning, execution, and control of inputs, process, and outputs.
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Inputs include materials, labor, and overheads while process involves value creation through production of goods and services. Systems used in operation management should be effective and efficient. Operation management aims to achieve efficiency in performance, manufacturing and service product-process matrix. OM has evolved significantly due to changing industry dynamics that include power shift toward customers and the growth of the digital economy.
The pre-industrial, industrial, post-industrial, and digital ears have experienced different levels of evolution. Business drivers (value, velocity, and volatility) have played key roles in the evolution of OM. Increased customer expectation, shorter product cycles, and increased competition have necessitated the pursuance of efficiency, value, and flexibility in OM. There are several operating business models that aim to achieve service, operational, and innovation excellence. Different companies adopt these models for varied reasons.
Two Important Points
Evolution of OM and Competition-Performance Dynamics
This has been caused by changing industry dynamics and the three business drivers. In modern business environments, power has shifted toward customers as businesses aim to provided the best customer service, satisfy customer needs, and develop customer loyalty. The business environment has changed immensely because of the emergence of the digital economy. The contemporary economy is data driven primarily due to technological advancements.
The 3Vs that drive business include value, velocity, and volatility. Customer expectations are increasing and resulting in value addition that produces better and cheaper products. Technological advancements have resulted in shorter lifecycle and flexible processes. Stiff competition among businesses and industrial globalization are also major drivers of business today.
Business Model (BM)
There are three major business models adopted by businesses today to run their operations. They include the service excellence, operational excellence, and innovation excellence business models. The model aims to prepare for the unforeseen and control quality. It involves gathering and maintaining information and enhancing service and relationship management. Improving customer service and enhancing personnel training are keys ways of reducing perceived risk. Operation excellence model reduces networks costs through outsourcing, standardizes customer service, and manages transactions efficiently. Innovation excellence model encourages a culture of innovation, promotes change, and encourages risk-taking.
Personal Understanding of Operations Management’s Characteristics
Based on the lecture PowerPoint presentation, characteristics of operation management include flexibility, quality, effectiveness, evaluation, speed of execution, coordination, and monitoring. Other characteristics include analysis, structural organizational flexibility, and value. These characteristics are evident in both macro and micro operations. The planning, execution, and control of operations must be effective and timely. The main focus of operations management is the production of a certain service or product. The aforementioned characteristics are incorporated in the processes involved in the production of goods and services.
Ideas and technologies are applied in order to improve the velocity, flexibility, and efficiency of operations. The rapidly changing customer needs are necessitating the implementation of enhanced designs for products, processes, and facilities. Implementation is a major characteristic of OM. After a product is designed, the manufacturing system must be implemented and managed. The rapidly changing customer expectations and increasing competition have necessitated the improvement of operation management functions.