Operations Management

Operations management consists of all the activities that managers engage in to create products (goods, services, and ideas). Operations are as relevant to service organizations as to manufacturing firms. In fact, production is the conversion of resources into goods or services.

1. A technology is the knowledge and process the firm uses to convert input resources into output goods or services. Conversion processes vary in their major input, the degree to which inputs are changed, and the number of technologies employed in the conversion.

2. Operations management often begins with the research and product development activities. The results of R&D may be entirely new products or extensions and refinements of existing products. The limited life cycle of every product spurs companies to invest continuously in R&D.

3. Operations planning is planning for production. First, design planning is needed to solve problems related to the product line, required production capacity, the technology to be used, the design of production facilities, and human resources. Next, operational planning focuses on the use of production facilities and resources. The steps in this periodic planning are (1) selecting the appropriate planning horizon, (2) estimating market demand, (3) comparing demand and capacity, and (4) adjusting output to demand.

4. The major areas of operations control are purchasing, in­ventory control, scheduling, and quality control. Purchasing involves selecting suppliers and planning purchases. Inventory control is the management of stocks of raw materials, work process, and finished goods to minimize the total inventory cost. Scheduling; ensures that materials are at the right place at the right time — for use within the facility or for shipment to customers. Quality control ensures that products meet their design specifications.

5. Automation, the total or near-total use of machines to do work, is rapidly changing the way work is done in factories and offices. A growing number of industries are using programmable machines called robots to perform tasks that are tedious or hazardous to human beings. The flexible manufacturing system combines robotics and computer-aided manufacturing to produce smaller batches of products more efficiently than the traditional assembly line.

Vocabulary