Unit 34 Operations Management in Business

Introduction

Aim

To provide learners with an understanding of the role and importance of operations management (OM) in the efficient and effective production of goods and services.

Unit abstract

Operations management is the area of business activity concerned with the production of goods and services. It includes the responsibility of ensuring that all business/organisational operations are efficient in terms of minimising costs by using as few resources as possible, and effective in terms of maximizing quality and meeting customer requirements. It is concerned with managing the transformational processes that convert inputs (in the form of materials, labour and energy) into outputs (in the form of goods and services). It is important therefore that learners seeking employment in the business world realise that the ‘proper’ organisation of productive systems, and their interfaces with internal as well as external customers and suppliers, is essential if goods/services are to be produced on time, to cost and within the law.

Learning outcomes

1 Understand the nature and importance of operational management

Operational management: a definition of OM and its key elements
Business logic: the production of goods or services safely, on time, to cost, to quality and within the law; the role of OM in achieving strategic objectives
System theory: open; closed; probabilistic and deterministic systems; subsystems and system-interfaces

2 Understand the link between operations management and strategic planning

The 3 Es: economy; efficiency and effectiveness
The paradox: efficiency (thrift) versus effectiveness (quality)
The five OM performance objectives: cost; dependability; flexibility; quality and speed

3 Understand how to organise a typical production process

Linear programming: definition and applications
Critical path analysis: dependent and independent tasks; flow charts; network planning
Operational planning and control: capacity planning; inventory planning; project management and quality assurance/control

4 Be able to apply relevant techniques to the production of an operational plan for a typical business

Outcome determination: the five performance objectives
Network plan: critical path analysis
Monitoring and control:quality assurance and quality control mechanisms (Q.A.C); fish bones; quality circles; variance analysis, six sigma, etc