An analytical study of the approaches to operations management

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This report is aimed at comparing and contrasting the approaches to operations management in at different types of organisations. Operations management is a core contributor to a firm’s success and developing competency is widely recognized as a key factor in determining the strategic and competitive advantage of the firm. The author has chosen two broad categories of organizations i.e. product based and service based to analyse the practises and mutual differences between the approaches. The report begins by identification of different types of operations/transformation process in the chosen organizations and analysis of their suitability and adequacy. This is followed by a critical analysis of principles and concepts in terms of capacity planning, inventory management, supply chain design, performance measures and total quality management. The report concludes with an evaluation of the combination of these factors and its impact on competitiveness, innovation and sustainability of the different types of organizations being studied in this academic exercise. Operations Management – an overview Operations management is an important area in managing a firm. It can be defined as the area of management related to design and operation of business processes in production of goods or services. In a nutshell, it is the transformation of resources into product and/or services as depicted in figure 1. The competitive advantage of a firm is directly impacted by the efficiency of utilization of available resources satisfying customer demand. (Slack et al 1995, Voss, 1995) Figure 1: Operations Management ( from sussex.ac.uk) Operations management serves the function of managing the process of converting ‘inputs’ in terms of materials, labor, and energy into ‘outputs’ in the form of goods and/or services. It is critical to ensure that the strategic direction of the firm is maintained by executing the tactical decisions of resource utilization to ensure that competitive advantage is maintained (Schmenner et al, 1998). A suitable example of efficient operations management is Apple Inc. Apple is a multinational corporation that designs and markets computers and related products and services. The firm manages its operations in a way that it ensures that the demand is met by the supply but at the same time it doesn’t need to stock large quantities of products in warehouses (figure 2) i.e. Apple has a fast inventory turn over rate. (Gamet, 2009) Figure 2: Warehouse solution for a fast inventory turn over organization Operations Management encompasses a number of theoretical concepts, suitability and application of which varies within and across the organizations (Figure 3). Key factors include but are not limited to capacity planning, inventory management, supply chain design, performance measures and total quality management. In goods based organizations the concepts of inventory, supply chain, quality and capacity planning are highly critical. Where as, in service based organizations factors relating to human resources, performance and quality management are given prime importance. (Bayraktar et al, 2007) Figure 3: Factors in Operations management The concept of operational strategies encompasses the plans for ordering raw material, converting them to finished product, storing and selling to the customer.

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