Operation Management

Operation Management

Introduction

Industries, whether manufacturing, processing or service-oriented, require a department that understands strategic objectives, develops strategies to operate required inputs, designs, plans and controls processes to ensure desired output is acquired. Therefore, operation management is a department in an organization that manages required resources and inputs to ensure production of expected output. It entails forecasting, capacity planning, scheduling, inventory management, quality assurance, employee motivation, facility location and equipment management among others (Singh, 2008).

History of operation management

Understanding the current nature and scope of operation management activities requires understanding its history and evolution over the years. The concept of operation management has existed since ancient times with the olden days of manufacturing entailing craft production. Craft production system comprised skilled workers using simple tools to produce customized products. Industrial revolution completely changed the way of doing things in most industries due to introduction of machines to replace human effort. It was a platform to more capital-intensive systems of production over labor intensive ones (Hopp & Spearman, 2001). Mass production was enabled by the machines which also enabled incorporation of concepts of labor division and interchangeable parts. Division of labor ensured operations were divided into groups of small tasks and workers assigned to specific duties. Interchangeable parts enabled standardization of production parts which phased out the costly and time consuming process of customization.

Scientific management era followed industrial revolution which emphasized on observation, measurement, analysis and improvement of work methods in output maximization. However, this era over-exploited workers which led to the humans relation movement era that focused on the importance of motivating workers to ensure quality and quantity productivity (Steveson, 2008). The Second World War necessitated use of quantitative techniques in output manufacturing. There was extensive operation research that led to development of models and computers (Singh, 2008). Models enabled fields of forecasting, production planning, and project management in operation management. Computers facilitated electronic data exchange, enterprise resource planning, sales coordination, material management and financial processes. Japanese manufacturers’ approaches to management have also greatly impacted operation in many industries globally. They focus on quality and continuous improvement, teamwork, and customer satisfaction. Lean production system that uses skilled workers and flexible equipments for high volume at low unit cost and more batch production (Hopp & Spearman, 2001).

Input-process-output model

The input process output model seeks to explain the role of operation management as designing, planning and controlling, operation strategy, operation performance and improvement in the transformation of inputs to outputs. It requires facilities and employees to transform resources like raw materials, information and customers to required products and services for human consumption. Facilities of transformation generally include buildings, plant and process technology, equipments among others while employees include all staff that operate, maintain, plan and manages operations. Product standardization, process type, and production differentiate operations systems between organizations. Degree of standardization determines if systems are focused on product uniformity or specialization for specific cases.

Operation performance aims at increasing competitiveness through emphasis on speed, cost, quality, flexibility, and dependability. It aims at succeeding in these five objectives to ensure quick delivery, fast throughput, lower unit cost at maximum value, quality and products and services free from errors and flexibility in variety production (Hines, Holweg & Rich, 2004: 31). Operation strategy focuses on long term goals therefore objectives are set directing an organization towards their achievement. Designing comprises job, process, layout and flow. Job design focuses on how people, jobs and the organization interact. It looks into the environmental conditions of a workplace, technology and its use, task allocation and duration of completion, the number of employees needed and role of operation management at maintaining employee commitment to achievement of company goals. Process design focuses on unique designing of processes to ensure effective production of goods and services by industries flows (Thierry et al., 1995: 130).

Duties of operation managers

Role of operations managers vary between organizations but they are generally managerial. They include coordination of resources through planning, organizing, controlling, and directing. Planning entails decisions on capacity, location, mix of products and services, production process and layout. In organizing they make decisions on the degree of centralization, departments, subcontracting, suppliers, and staffing. Directing comprises scheduling, delegation of duties, issuance of work related assignments, purchasing, and logistics. Controlling is on inventory, quality, production speed, motivation, and cost. Operations managers therefore require technical skills, competence, and good code of conduct to ensure achievement of organizational objectives (Steveson, 2008).

Process design, layout and flow

Process design in an organization looks at supply network design, layout and flow, technology, product or service design and job design. Product design, process design and marketing are intertwined. Product design stipulates how products and services should be in designed for effective creation and its impact on process design. Depending on whether a commodity is a product or service, types of processes are defined by volume and variety. Manufacturing processes are categorized onto continuous process, mass process, batch process, jobbing process and project process. Service processes include mass service, service shop, and professional service. The line of natural fit of process type against volume-variety characteristics shows the flexibility of processes and cost implication they cause (Slack, Chambers & Johnston, 2010). Flow and layout stipulates how resource transformation methods are placed next to each other and therefore shows the flow of inputs in an operation. Basic types of layout range from fixed position layout, functional layout, cell, and product layout. They yield to detailed design layout which entails physical position of transforming resources to ensure there is flow of transformed resources. Flow of transformed resources is also influenced by allocation of tasks to resource transformation.

Toyota production system is a mass process. It has higher volume than variety in its production with car parts or products being highly standardized and repeated severally. Toyota standardizes products rather than customizing which is enables save on high cost of customization while increases fast delivery incase spare parts are ordered. Employees require few skills with almost none or instantaneous set-ups (Toyota 2013). Toyota has cell and product layouts. Cell layout describes Toyota as to have good compromise, fast throughput, teamwork, and costly to rearrange layout. Product layout has high volume at low unit cost characteristic which is what is achieved through lean systems of production. There is low mix and flexibility which can be costly according to natural line of fit graph. Production process is capital-intensive or equipment based with production focusing mostly on assembling of cars and manufacture of high quality spare parts. Customer contact is therefore quite limited with most contact being done by contracted suppliers (Hines, Holweg & Rich, 2004: 34).

John Hopkins Hospital is a professional service process. There are high levels of customer contact because employees at the hospital directly deals with offering medical services to patients therefore doctors have to personally examine patients. Patients or customers spend some amount of time in the professional service process (Stevenson & Hojati, 2007). This is attributable to the fact that doctors have to run tests on patients and they also need attention and care to ensure full recovery. John Hopkins is highly customized such that physicians have diverse specific qualifications for attendance to specific unique needs of customer (John Hopkins Medicine, 2013). Customized services by physicians are therefore highly adaptable to specific unique needs of customers. There are high levels of customer discretion since customer information according John Hopkins’ and international medical codes of conduct is private and should not be disclosed to anyone expect in a few circumstances. It is customer-oriented with medical practitioners caring about the health of customers and their health status (Slack, Chambers & Johnston, 2010). In the natural fit graph, Hopkins tend to fall under more process flexibility than is needed side which causes high costs therefore requires reduction in flexibility to exactly fit the volume-variety characteristics against process type. It has fixed position layout and partially functional layout too. The two layouts say that there is high product and mix flexibility with high variety of tasks and high unit costs and complex flows (Thierry et al., 1995: 135).

Job design

Job design looks into the environmental conditions of work, technology, tasks, and duration taken in job completion. Ergonomics in an organization discusses how workers are adapted to changing environmental conditions (Slack & Lewis, 2002).

Toyota production system has the Kaizen concept that ensures quality and quick problem solving by focusing on employees (Toyota 2013). Employees are trained to enable development of skills and knowledge for quality production coupled with emphasis from team leaders on improvement in production. Kaizen motivates workers to seek new improved working methods (Stevenson & Hojati, 2007). Toyota emphasizes on teamwork allowing open communication within the organization. It therefore fosters combined involvement of employees and management in the production process. This enables management learn and experiment on new ideas that workers offer. It therefore gives the company a competitive advantage over others since consensual decision making within the organization increases productivity (Schmenner, 2001). Toyota has adapted highly advanced technology in manufacturing of cars which has in turn minimized of workforce required in assembling of car parts. Employees are highly skilled with division of labor bracing management sector to ensure effective, efficient processes in the automobile industry. Environmental matters like working condition of workers in terms of safety, cleanliness, technology, and welfare of are highly valued. It also has benefit obligations in terms of contribution plans for employees’ retirement benefits. Therefore, Toyota uses these fundamental concepts of job design to increase quality, speed, dependability, and flexibility in competitiveness (Slack & Lewis, 2002).

John Hopkins Hospital has written medical staff bylaws, rules and regulation, which enable achievement of mission, vision and values of the hospital (John Hopkins Medicine, 2013). These by laws cover entire range of the diverse departments dictating how staff should work and respond to emergencies globally. The hospital ensures that working conditions of workers are safe and flexible with incorporation of advanced technology through purchase of important equipment for quality care. Here, job design concept is more labor intensive with highly skilled workers and more specialized as compared to Toyota production (John Hopkins Medicine, 2013). John Hopkins emphasizes on increasing dependability, quality, speed and flexibility through equipping of staff with relevant interpersonal skills for competitive advantage.

Operation performance

Operation management can break or make an organization through its operation performance that is measured in terms of speed, quality, dependability, flexibility, and cost. Therefore, operation management is concerned with stakeholders that are either directly or indirectly affected by the operation of an organization. These include suppliers, management, staff and their representative bodies, consumers, government, regulatory bodies, interest groups, shareholders and society (Schmenner, 2001). The five competitive objectives of operations performance contribute to competitiveness. Enable lower capital requirements through higher capacity utilization. Secure revenue by enhanced services and increases future capabilities. Process efficiency of organizations enables lower production costs and high volumes. Quality emphasis lowers operational risks through production of error-free commodities hence advocating more resilience and keenness of employees (Cooper, Lambert & Pagh, 1997: 8).

Toyota production system is based on the lean manufacturing principle that aims at minimizing waste and cost reduction. It includes customer relations, product design, supplier networks and operations in manufacture of high quality cars at lower costs. Lean manufacturing also controls flow of materials and resource utilization. This principle has efficiently improved the quality of cars by Toyota creating a competitive advantage over other automobile companies globally. Its production systems are based on other principles like Kaizen, Kanban and Jidoka. Kanban system focuses on speed, flexibility and dependability. It aims at providing workers with the right product at the right time hence ensuring there is no waste due to overproduction and lowering inventory cost. Kaizen principle focuses on continuous improvement through elimination of non-value adding activities hence ensuring quality assurance (Toyota 2013). It also emphasizes on continuous innovation for increased variety. Toyota has incorporated Jidoka principles of automation that balance machines and humans. There has been division of labor between workers and teamwork that has enabled workers manage their work and implement their improvement initiatives (Slack & Lewis, 2002). This has increased flexibility in production systems. These production systems have improved quality in terms of reliability and specification. Enabled fast delivery of cars and their spare parts and considerably lowered production cost (John Hopkins Medicine, 2013).

John Hopkins Hospital is considered among the leading health centers with improved performance leadership. It has incorporated research and education to ensure that patients receive high quality services. The hospital has included measures on quality of care, operational efficiency and financial performance. These measures have saved more lives, seen to fast discharge of patients and reduced health complications concurrently lowering production costs. Its operational staff has also facilitated organizational efforts in process improvement, integrating and redesign systems and solution development (John Hopkins Medicine, 2013). Staff in categorized into active, courtesy, teaching, administrative, affiliate, and contract physician which enables specific staff do specific duties hence increasing delivery speed and dependability of the hospital. Quality therefore requires staff give correct treatment to patients, respect patient decisions and offer informed advice regarding their health. Hospital speed is ensured through fast attendance to emergencies and minimized waiting time for doctor’s attention. Dependability of the hospital has been ensured through adherence to strict time schedules whether in appointments or feedback on test results (John Hopkins Medicine, 2013).

Operations strategy

Operation strategy is planning and setting methods of achieving long term objectives and goals. Strategic decisions therefore aim at uniting broad departments of an organization in achievement of those long term objectives. Operations strategies are therefore long term, require macro-level of analysis operation, aggregated, and philosophical in terms of abstraction level. Operation strategy aims at increasing strategic impact and operations capabilities through implementing, supporting and driving strategies. Implementation strategy ensures the best operation strategy is chosen for an organization while supporting strategy creates a connection between the strategy and operation (Cooper, Lambert & Pagh, 1997: 12). Driving strategy steers the operation of an organization by redefining expectations of an industry and providing operation advantages over other industries. Operation strategy is based on operation resource perspective, market resource perspective, top-down perspective, and bottom-up perspective. These perspectives basically deal with inbuilt strategies from within the organization and strategies determined by the environment that is consumer needs.

Toyota production system has been at the fore-front of making operations strategy based on consumer needs and its resources. Toyota has majorly made its operation strategies based on top-down perspective and operations resource perspective due to its equipment and output oriented operation nature (Toyota 2013). Operations resource perspective has strategized based on how operations resources can contribute to operation. Toyota has adopted strategies that emphasis on capabilities of the company. It has adopted the Japanese manufacturer’s production systems that emphasize on waste elimination, teamwork, and continuous improvement in resource management. Top-down perspective has been used whereby corporate strategies on what production system to use based on its long term goals. Those laid out strategies are then implemented in operation of the company. However, Toyota has also focused on the satisfaction of human needs to boost its competitive advantage over other automobile companies in the industry (Amasaka, 2002: 50).

John Hopkins Hospital operations strategies have majorly been determined by market requirement perspective and bottom-up perspective. The hospital is customer oriented with customized output. Market requirement perspective entails the hospital considering the needs of patients and how to satisfy them through quality, speed, dependability, flexibility, and costs. Bottom-up perspective is based on previous operation experiences that determine what the current strategy should be. The hospital, therefore, makes inferred decisions on the business and corporate strategy basing on its past experiences (John Hopkins Medicine, 2013).

References

Amasaka, K 2002, “New JIT: A new management technology principle at Toyota International,” Journal of Production Economics, vol. 80, Issue 2, 12- 56.

Cooper, MC, Lambert, DM & Pagh, JD 1997, ‘Supply chain management: more than a new name for logistics,’ International Journal of Logistics Management, The, vol. 8 iss. 1, pp. 1-14.

Hines, P, Holweg, M & Rich, N 2004, “Learning to evolve: A review of contemporary lean thinking,” International Journal of Operations & Production Management, vol. 24 iss. 10, 29- 49.

Hopp, WJ & Spearman, M 2001, Factory Physics: Foundations of Manufacturing Management, (2nd ed.), Irwin, Burr Ridge, IL.

John Hopkins Medicine, 2013, Operation Management, Viewed 12 December 2013, <http://www.hopkinsmedicine.org/ >.

Schmenner, RW 2001, Looking Ahead by Looking Back, Even Flow in the History of Manufacturing: Production and Operations Management, Spring, New York.

Singh, P 2008, Operations Management: An Intergrated Approach, Cambridge University Press, Cambridge.

Slack, N & Lewis, M 2002, Operations Strategy, Prentice Hall, New York.

Slack, N, Chambers, S & Johnston, R 2010, Operations management, Pearson Education, New York.

Stevenson, WJ & Hojati, M 2007, Operations management (Vol. 8), McGraw-Hill/Irwin, Boston.

Steveson, WJ 2008, Operation Management (10^th Ed.), Irwin/ McGraw-Hill, New York.

Thierry, MC, Salomon, M, Nunen, JV & Wassenhove, LV 1995, ‘Strategic issues in product recovery management,’ California management review, vol. 37 iss. 2, pp. 114-135.

Toyota, 2013, Toyota Production System, Viewed 12 December 2013, <http://www.toyota.com.au/toyota/company/operations/toyota-production-system>.