The Operations Management Century

Briefly describe the term operations management

Operations management is the process of administering business practices in order to create organizational efficiency. Most times, it is a process that entails a conversion of various resources like human effort or raw materials into services and goods that an organization can sell for a profit. In order to achieve the latter goal, operations management balances the costs of production with revenues earned. Additionally, the operations management function is responsible for converting input into an output. Some typical examples of input include human resources, raw materials, or privileged information. Outputs could be services, manufactured goods, or non manufactured ones. Operations management is that bridge between the final outcome and initial investment in a business.

Identify the three major functional areas of business organizations and briefly describe how they interrelate

The three key functional areas of business include operations, finance, and marketing. The operations function accounts for service delivery or production of goods. This aspect of the business is prevalent in every single product or service sold and is the engine of any trade. The finance function accounts for the management of financial resources. It ascertains that organizational processes stick to a set budget. Additionally, it is also responsible for the efficient allocation of company resources along with all processes.

When a new investment opportunity arises, this function will analyze the feasibility of the proposal. Alternatively, when operations need to take place, then the finance function is responsible for the provision of finances for the undertaking. The marketing function accounts for the sale of goods or services. Companies achieve this by assessing consumer needs as well as determining the most appropriate promotional strategies for a business.

Describe the operations function and the nature of the operations manager’s job

As mentioned earlier, the operations function dwells on the transformation of inputs into output. At the heart of this process is the addition of value. A company must add value to its inputs in order to justify the extra cost of the commodity upon sale. The higher the value addition, the higher the end price and the greater the profits a company can enjoy. Additionally, this difference is used to develop the business further and to meets its obligations to its employees or other stakeholders. Operations management may involve work system designs, forecasting, planning for a business location and facilities, use and control of technology, quality improvement, or product/service design (Wisner & Stanky, 2008).

The operations manager is a decision-maker who selects key aspects of business operations. For instance, he may decide on the placement of equipment or where to buy them. The person may also arrange departmental tasks. He or she is responsible for the system design, measurement, and control of business processes and provision of feedback to affected stakeholders. Additionally, the person does inventory planning, quality assurance, or management of people and projects.

List five important differences between goods production and service operations; then list five important similarities

Services differ from goods because of their intangibility. A good is tangible in that it possesses physical dimensions while services do not. As a result, businessmen can obtain patents for their goods but the same is not true for services. Secondly, services require a greater level of interaction with clients than goods. On the other hand, goods can be made at a distant location away from the consumer as minimal interaction is necessary. Thirdly, services are heterogeneous, which means that they vary depending on the environment. Customer care companies can receive plenty of training but no one can predict consumers’ moods.

On the flipside, goods can be made with specific specifications and they can stay the same for years. Fourthly, services are time-dependent as they cannot be reworked when missed. Goods are not as perishable since firms can store them. Lastly, product definition can depend on one aspect of the senses while services depend on a range of features for completeness (Crainer, 2000).

One of the key similarities between good and service operations is the prevalence of a process that adds value. Additionally, these entities entail the use of technology, they are concerned with quality, customer satisfaction as well as capacity decisions on how much of the good or service should be produced.

Briefly discuss each of these terms related to the historical evolution of operations management:

Industrial revolution

This was a period in history that started in the 18th century when people engaged in the production of goods through the use of machines rather than people. Typical examples include the use of the loom within the textile industry or the application of steam power in the production of metals. It was a period in which production increased because entrepreneurs took advantage of economies of scale and production processes were fast (Womack et. al., 2007).

Scientific management

This is a management principle that aims at maximizing a company’s efficiency. In this school of thought, one must observe, measure, and analyze work methods in order to improve upon them. It involves the careful selection of employees, matching incentives with employee capabilities, and planning production. Proponents argued that managers have the responsibility for planning thus they should separate management from task functions.

Interchangeable parts

These are standardized or gauged products that mass producers depend on to achieve high production rates. Such parts normally belong to one aspect of an assembly line and can be fitted into another part without customizing them. As a result, the time it takes to produce an item is dramatically reduced as products do not have to spend a lot of time in production. Interchangeable parts are uniform and widely used in the automobile industry.

Division of Labour

This is the process of dividing a production process into several minuscule tasks that are each performed by a single person. Consequently, laborers do not require a lot of skill to perform that task. This minimizes the costs of production as entrepreneurs do not have to pay their employees a lot for skill contributions. It also reduces time as task focus is quite narrow.

Why are services important? Why is manufacturing important? What are the non-manufactured goods?

Services are crucial because they are responsible for the creation of outputs that are crucial but difficult to identify. For instance, service operations are vital in the hospitality and banking sectors. If they did not exist, then people would not enjoy such benefits. Certain aspects of human behavior require immense customization. For example, a person who is buying a wedding dress will need some assistance concerning the best fabric or the most suitable outfit for her shape. The customisability of services is essential in meeting unique customer needs. Since people are different, they require things that suit them, and services enable that customization. Services take into account consumers’ environment such that their experiences can be improved (Fitzsimmons and Fitzsimmons, 2004).

Manufacturing is crucial because it leads to the production of tangible goods, which people need to carry out their daily functions. Examples include automobiles, sodas, and drugs. Through manufacturing, consumers can benefit from uniformity as they can always count on the standardization of certain products. Manufacturing makes goods available at low costs and in large numbers. Through product focusing or process focusing, companies can predict total output and increase efficiency. This allows companies to offer their products at affordable prices.

Non manufactured goods are tangible items that do not require processing in order to be sold. For instance, fruits, vegetables and plenty of agricultural products are non manufactured. Customers pay for the effort that the entrepreneur put into accessing the product, and its distribution to their geographical locations.

Describe each of these systems: craft production, mass production, and lean production

Craft production involves the production of goods through the use of specialists. A craftsman is responsible for the production of all parts of a good. It is an uneconomical process as production costs increase with increases in the number of units made. Therefore, craftsmen cannot produce large volumes within short amounts of time. However, the concerned apprentice is highly skilled and can make a good in accordance with a client’s specification. For instance, a craftsman would be responsible for the creation of a horse-drawn carriage starting from the spokes and wheels to the seating compartment.

Mass production is the exact opposite of craft production because it a system of manufacture in which companies make standardized commodities in large volumes. It depends on the effort of low-skilled employees who only focus on one aspect of production; together all specialists contribute towards the production of a product. Mass production succeeds at this high level of production owing to its reliance on technology or specialized equipment.

Lean production refers to a production approach in which companies strive to produce goods of high quality at reduced times using flexible methods. It also emphasizes the use of teamwork and the reduction of organizational hierarchies. A system is lean if it minimizes the use of employees, inventory, and space. Its propensity for flexibility and highly skilled employed borrows aspects of craft production. Conversely, the reduction of resources also borrows aspects of mass production such as low costs and high volumes.

Discuss the various impacts of outsourcing

Companies that engage in outsourcing have enjoyed cost savings. A number of them take their commodities to low-cost economies that have cheap labor and high availability of workers. Additionally, some firms have gained from the use of an external expert who is highly specialized in a certain aspect of production. As a consequence, many of them have improved their service offerings. Some of them have grown tremendously because they have accessed new technologies and specialized in their core competencies. On the other hand, outsourcing leads to political backlash, especially in the US.

Some legislation has been passed to curb the practice. In addition, difficulties in legal structures, infrastructure development (like power blackouts), and poorly motivated employees have led to failures in certain instances. It has also fuelled unethical behavior such as child labor owing to high expectations and disconnectedness between the outsourcing firm and the target nation.

Discuss the term sustainability and its relevance for business organizations

Sustainability refers to the process of consuming resources without destroying the ability of future generations to do the same (Bowie, 2002). In business organizations, many enterprises are under pressure to comply with sustainability regulations. They aim at minimizing their green house emissions through the management of their processes. Many green measures are relevant to operations management as initiatives like better water use, packaging, and reduced wastage all apply to operations management.

View all of the Week 1 Videos and give a brief summary 1/3 to 1/2 page of any two videos. The summary needs to include what you feel are the important lessons from operations management to be learned from the videos

The first video concerns St. Alexius Medical Centre, which discusses the use of operations management at a health facility. The firm’s pediatric center has specifically benefited from meticulous operations management. The company realized that it needed to maintain a certain flow of patients, so it created a circular layout. However, this impeded nurse’s ability to administer medicine quietly. Therefore the company created a private room for the same. Additionally, the company wanted to increase its efficiency rate, so it introduced a computer system that would control vitals and medicine dispensation.

Staff members received training on how to use the equipment effectively such that they would not compromise on quality (McGraw-Hill, 2013b). This case study illustrates how lean management can be applied to a service organization. The company needed to increase the volume of transactions through machines, but it also needed to increase flexibility by training nurses.

The second video focuses on BP and its sustainability measures. The company set a target of reducing its greenhouse gases by 10% in 2 decades. It achieves this by prioritizing key areas, identifying where to perform the changes, and selecting projects needed to achieve them. In essence, BP proves that sustainability yields monetary rewards in organizations while still benefiting the environment (McGrawhill, 2013a).


Bowie , N. (2002). The Blackwell Guide to Business Ethics. Malden, MA: Blackwell.

Crainer, S. (2000). The Management Century. New York: Jossey-Bass.

Fitzsimmons , J. and Fitzsimmons, M. (2004). Service Management. New York: McGraw-Hill /Irwin.

McGrawhill, I. (2013a). BP and reducing greenhouse gas emissions. Web.

McGrawhill, I. (2013b). Operations Management and St Alexius Medical Centre. Web.

Wisner, J. & Stanky, L. (2008). Process management: Creating value along the supply chain. Mason, OH: Thomson South Western.

Womack , J. , Jones, D. and Roos, D. (2007). The Machine That Changed the World. New York: Harper.

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