Introduction to Operations Management

1. Introduction to Operations Management

Every organization has an operations function, whether or not it is called ‘operations’. The goal or purpose of most organizations involves the production of goods and/or services. To do this, they have to procure resources, convert them into outputs and distribute them to their intended users. The term operations embraces all the activities required to create and deliver an organization's goods or services to its customers or clients.

Within large and complex organizations operations is usually a major functional area, with people specifically designated to take responsibility for managing all or part of the organization's operations processes. It is an important functional area because it plays a crucial role in determining how well an organization satisfies its customers. In the case of private-sector companies, the mission of the operations function is usually expressed in terms of profits, growth and competitiveness; in public and voluntary organizations, it is often expressed in terms of providing value for money.

Operations management is concerned with the design, management, and improvement of the systems that create the organization's goods or services. The majority of most organizations’ financial and human resources are invested in the activities involved in making products or delivering services. Operations management is therefore critical to organizational success.

Activity 1

For each of the following businesses, identify the main output of the operation:

· Publisher

· Hotel

· Bank

· Insurance company

· B.S.A Crescent University

An understanding of the principles of operations management is important for all managers, because they provide a systematic way of looking at an organization's processes. The need to manage manufacturing and service operations efficiently and effectively has led to a considerable increase in interest in operations management in recent years. However, the concept of operations is not new.