Operations management is the management of systems or processes that convert or transform resources into goods and services. Operations management is responsible for managing the core processes used to manufacture goods and produce services.
2. Explain operations management's role in business.
The scope of the operations management ranges across the organisation and includes many interrelated activities, such as forecasting, capacity planning, scheduling, managing inventories, assuring quality, motivating employees, deciding where to locate facilities and more. To be effective, the operations manager must have access to real-time, accurate data to support their decisions. Below is an example of an airline companies operations managements activities:
- Forecasting - seats, weather and landing conditions.
- Capacity planning - maintaining cash flow and increase revenue.
- Scheduling - airline operates on tight schedules that must be maintained including flights, pilots, flight attendants, ground crews, baggage handlers and routine maintenance.
- Management inventory - inventory of such items as foods, beverages, first-aid equipment, in-flight magazines, pillows, blankets and life jackets.
- Assuring quality - quality is indispensable in an airline where safety is the highest priority.
- Motivating and training employees - employees must be highly trained and continually motivated.
- Locating facilities - key questions facing airlines include which cities to offer services, where to host maintenance facilities and where to locate major and minor hubs.
3. Describe the correlation between operations management and information technology.
Managers can use information technology to heavily influence operations management decisions including productivity, costs, flexibility, quality and customer satisfaction. One of the great benefits of IT on operations management is in making operational decisions because operation managers exerts considerable influence over the degree to which the goals and objectives of the organisation are realised.
However there are some problems that operations managers face, including: disparate systems in different business units hamper the flow of information and material between operations often times inflating costs and inventories, and aging and inconsistent technology platforms lead to increasing IT maintenance and support costs.
4. Explain supply chain management and its role in a business.
Supply chain management involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability. It is a network of organizations and facilities that transforms raw materials into products delivered to customers. Customers order from retailers, who in turn order from distributors, who in turn order from manufacturers, who in turn order from suppliers. The supply chain also includes transportation companies, warehouses, and inventories and some means for transmitting messages and information among the organizations involved.
5. List and describe the five components of a typical supply chain.
The five components of a typical supply chain are:
1. Plan - A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers.
2. Source - Companies must carefully choose reliable suppliers that will deliver goods and services required for making products. Companies must also develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving the relationship.
3. Make - This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging, and preparing for delivery. This is by far the most metric-intensive portion of the supply chain, measuring quality levels, production output and worker productivity.
4. Deliver - This step is commonly referred to as logistics. Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers. During this step, companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.
5. Return - This is typically the most problematic step in the supply chain. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products.
6. Define the relationship between information technology and the supply chain.
Information Technology's primary role in supply chain management is creating the integrations or tight process and information linkages between functions within a firm - such as marketing, sales, finance, manufacturing and distribution - and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers and transportation providers across the supply chain. Information Technology integrates planning, decision making process, business operating processes and information sharing for business performance management.
There are 4 factors that drive the supply chain management:
1. Visibility - supply chain visibility is the ability to view all areas up and down the supply chain.
2. Competition - supply chain planning (SCP) software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain, and supply chain execution (SCE) software - automates the different steps and stages of the supply chain.
3. Speed - competition often equates to speed. Advances in IT are delivering this speed. Factors fostering speed include pleasing customers, need for reducing inventory and strategic planning requirements.
4. Consumer behaviour - companies can respond faster and more effectively to consumer demands through supply chain enhances. Demand planning software generates demand forecasts using statistical tools and forecasting techniques.
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