The operations management of any organization involves the design, operation, and improvement of the systems that create and deliver the primary products and services of the organization. From an organizational point of view, operations management may be defined as the management of the direct resources that are required to produce and deliver organizational goods and services. Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. It is also the management of resources and the distribution of goods and services to customers. However, people tend to misunderstand operations management with the subject of operations research. 

 

            During 1940s, scientists of established reputation accepted the challenge of attempting to understand a host of common processes in military operations. Their team effort was called operations research and the focus of their attention was the science of military systems. Hence the world war 11 with its complex problems of logistic control and weapon systems design, provided the impetus for the development of interdisciplinary, mathematically oriented field of operations research.(OR).

 

            Operations Research, or simply OR is an interdisciplinary science which deploys scientific methods like mathematical modeling, statistics, and algorithms to decision making in complex real-world problems which are concerned with coordination and execution of the operations within an organization. The nature of organization is essentially immaterial. The eventual intention behind using this science is to elicit a best possible solution to a problem scientifically, which improves or optimizes the performance of the organization. Hence, Operations Research brings together practitioner in diverse fields such as mathematics, psychology, and economics etc. Specialists in these fields customarily formed a team to structure and analyze a problem in quantitative terms so that a mathematically optimum solution can be obtained. OR today provides many of the sophisticated quantitative tools in operations management (OM).

 

            Operations research also closely relates to industrial engineering which takes more of an engineering point of view, and industrial engineers typically consider OR techniques to be a major part of their toolset.

 

            Some of the primary tools used by operations researchers are statistics, optimization, and simulation. Because of the computational nature of these fields OR also has ties to computer science, and operations researchers regularly use custom-written or off-the-shelf software. Operations research is distinguished by its ability to look at and improve an entire system, rather than concentrating only on specific elements (though this is often done as well). An operations researcher faced with a new problem is expected to determine which techniques are most appropriate given the nature of the system, the goals for improvement, and constraints on time and computing power. For this and other reasons, the human element of OR is vital. Like any other tools, OR techniques cannot solve problems by themselves.

 

A few examples of applications in which operations research is currently used include designing layout of a factory for efficient flow of materials, constructing a telecommunications network at low cost while still guaranteeing quality service if particular connections become very busy or get damaged, road traffic management and ‘one way’ street allocations, determining the routes of school buses so that as few buses are needed as possible, designing the layout of a computer chip to reduce manufacturing time (therefore reducing cost), managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products, efficient messaging and customer response tactics, roboticizing or automating human-driven operations processes, globalizing operations processes in order to take advantage of cheaper materials, labor, or other productivity inputs, managing freight transportation and delivery systems, network data traffic: these are known as queuing models or queuing systems, sports events and their television coverage, blending of raw materials in oil refineries, etc, etc.

 

 

There was a lack of emphasis on operations management in the post war ii years, for many reasons.

 

(1) Following World War II, the United States was the obvious world leader in manufacturing. US dominance was the result of several factors including the virtually total destruction of most of the production capabilities of the other leading industrialized nations of the world.

 

(2) Under foregoing conditions, the lack of foreign competition till for some years resulted in lack of emphasis on operations management since most of the countries were not so serious about global market infiltration, with the collapse of technological power had before the war.

 

(3) With the demand significantly exceeding capacity during the post war period, emphasis was placed on output, and the operations function typically related to situations only when they occurred. Corporate managers during this period usually told operations managers to focus only on controlling production costs, rather than focusing on other aspects related to operations management.

 

It is also important to notice the resurgence of interest in OM today, mainly on the reasons as follows;

 

The ever increasing standard of living in society is a one of major factors that inspires resurgence of interest in operations management today. Operations management enables to increase productivity and better quality goods and service delivery. High productivity is the result of increased efficiency in operations, which in turn translates into lower cost goods and services. Thus higher productivity provides consumers with more discretionary income, which cintr9butes to their higher standard of living. The increased use of automation and robotics also improves the quality of goods.

Most companies today are taking up the challenge to producer environmentally friendly products with environmentally friendly processes all of which falls under the purview of operations management.

 

Operations management is continuously changing to meet the new and exciting challenges of today’s business world. This ever changing world is characterized by increasing global competition and advances in technology. To survive and prosper in such a global market, companies must excel in more than one competitive dimension. The rise of the global economy and the trend towards globalization has placed emphasis on the issues associated with logistics, quality, productivity and customer satisfaction which operations management made them integral in production sector.

 

Advances in technology in recent years also have had a significant impact on the operations management function. Information technology (IT) now allows us to collect detail customer data so that we customize products to meet the needs of individual customers..

 

Operations management provides a systematic way of looking at organizational processes. OM uses analytical thinking to deal with real world problems. It sharpens our understanding of the world around us, whether we are talking about how to compete with competitors or how many lines to add the bank teller’s window.

 

OM presents interesting career opportunities which can be in direct supervision of operations or in staff positions OM specialties such as quality assurance.

 

However, the reality is not always the same. Technology has raised the performance bar in both manufacturing and services sector by allowing firms to compete on several dimensions (low cost, quality, speed of delivery, customization etc) simultaneously. For example, firms using technology such as Dell Computer can produce and quickly deliver individually customized products at a very competitive price.

 

Automation is a result of technology advance that relate to the automatic operation of a production process. Some major developments in manufacturing automation include machining centers, numerically controlled machines, industrial robotics, computer aided design and manufacturing systems, flexible manufacturing systems, computer integrated manufacturing and islands of automation.

 

Advances in technology, including improved automated equipment, voice recognition systems, high speed data transmission lines like broadband, and faster and more powerful computers also have had a significant impact on services. Contributing to the growing trends in services is the fact that large amounts of data are readily accessible and can be transmitted inexpensively over long distances. Increase in self service, decrease on the importance of the location and the shift from time dependant to non-time dependant transactions and the increase in disintermediation are the results of technological advances in the services sector. Technology also has created the concepts of global and green village for the betterment of the humankind as a reply to its negative impacts such as mechanized human elements in a factory layout for instance.

Under circumstances, the author envisages the future role of the OM function as follows;

             In the new world of e-business, competition takes on a new intensity and a variety of flavors. The unique dynamics of the international online marketplace often requires organizations to pursue multiple, simultaneous, and seemingly contradictory strategies. To identify what is both possible and advantageous, organizations must learn to think smarter and act faster – more so than the toughest competitors they can possibly imagine. This means moving beyond market leadership to another level – one that enables an enterprise to “leapfrog” the competition.

 

            International e-business success starts with world-class supply chain management and an enabling infrastructure that is a critical component of today’s global enterprise not to be overlooked. E-business is obviously the future, and the Business-to-Business (B2B) component is taking the lead in defining what success will look like in this future. Additionally, in this emerging world of business, adaptation to constant change will prove an important ingredient for success. The future role of operations management should taker the above factors into serious consideration if any firm seeks to secure and sustain in competitive edge.

 

            Future opportunities are hard to estimate, and many change programs are therefore built on limited information. Case decisions are often made on the basis of previous internal successes and failures rather than a fact-based market review.

Companies often set targets for change without having the full picture of the current environment, which means that either the outcome of the change is not considered optimal or the costs of the change are deemed too high to generate a net benefit.

Too many Business Process Re-engineering projects have been launched with great expectations and end with disappointing results.

 

            Strategy should be based on a concrete understanding of market capabilities, practices and processes, to allow specific operational targets to be clearly articulated and demonstrated. A framework needs to be put in place to accurately describe current and future operational performance, in order to increase confidence and credibility in the change and improvement process.

 

            Operations management as a field deals with the production of goods and services that we come in everyday contact in domestic life. Without effective management of operations, a modern industrialized society can not exist. Operations are the engine that creates wealth for the enterprise and underpins the global economy.

 

            Operations managers however have important responsibilities in the service sector as well (80% is in the service sector in USA) such as in hotels, banks airlines retail stores etc. In each of these organizations, operations mangers are responsible for providing the supply of services much like their counterparts in manufacturing product the supply of goods.

 

Managing the transformation process in an efficient and effective manner is the tasks of the operations manager in any type of organization. Wealth is created in the global economy through excellent operations management. Wealth creation occurs when the value of outputs in goods and services exceeds the cost of the inputs used. It is reflected in the standard of living of the people and is a function of constantly increasing productivity.

 

Raising productivity of operations, the ratio of output to input, is therefore the primary basis for creating wealth. A company can not prosper in ling run unless they have higher productivity than their domestic and foreign competitors. The tasks of the future operations manager can not be withdrawn from wealth creation. The future operations manager must be more sensitive and challengeable than today in creating wealth by improving productivity.

 




By: Dr. Chandana Jayalath