2 Operations, operations management and operations managers
2.1 Operations, operations management and operations managers
Every organisation has an operations function, whether or not it is called ‘operations’. The goal or purpose of most organisations 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 organisation's goods or services to its customers or clients.
Within large and complex organisations operations is usually a major functional area, with people specifically designated to take responsibility for managing all or part of the organisation's operations processes. It is an important functional area because it plays a crucial role in determining how well an organisation 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 organisations, 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 organisation's goods or services. The majority of most organisations’ financial and human resources are invested in the activities involved in making products or delivering services. Operations management is therefore critical to organisational success.
For each of the following businesses, identify the main output of the operation:
You probably found it quite easy to identify the main output of a brewery as beer, and of a publisher as books or newspapers. However, the others are a bit trickier: a satisfied customer (hotel) and a customer bearing less financial risk (insurance company). Operations management deals with producing not only physical goods, but also satisfied customers.
An understanding of the principles of operations management is important for all managers, because they provide a systematic way of looking at an organisation'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.