Paper Example on 10 Decision Areas of Operations Management

Introduction

Operations Management (OM) is a key factor in the success of businesses. It focuses on 10 areas. Companies that align their business activities and strategies with these 10 decision areas will be more efficient and productive in their operations, which in turn will lead to higher profitability. Let's now explore this topic in the "10 Critical Decisions of Operations Management Essays". These are the 10 areas of OM:

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Design of Goods and Services

Selling goods and services to customers is how businesses make their money. Customers expect the best from their products and services in order to retain and attract them. Businesses need to continuously improve their products and services. They also need to constantly invent and launch new products. Market research could help you make this OM decision. Market research can be a powerful tool that could provide valuable information. Based on market research, businesses could develop new products.

Managing Quality

Customers expect certain quality and consistency when they pay for goods or services. It is difficult to manage quality and ensure consistency in goods and services. However, it is essential for businesses to do so. When the quality or consistency of the goods and services is poor, customers lose trust and confidence which can lead to lower sales. A customer purchased a set of European dining tables and chairs from a luxury furniture store. The customer received the goods and found that a portion of the table had been chipped. Also, the chairs were painted in different colors. The whole dining set does not work together when put together. This bad experience will make it unlikely that the customer will purchase furniture from this retailer again. Businesses should have a quality control/quality assurance department in order to reach this OM decision.

Design of Process and Capacity

The production outputs should be able support the demand for goods and services. Businesses need to have the processes and capabilities that are efficient and capable of supporting production goals. To meet daily demand for breakfast, the bakery must bake 200 buns. The owner decided to buy a home oven instead of a commercial oven that bakes large quantities of buns. This oven is usually used for domestic baking. The purchase of a home oven saved the company a lot of money in the short-term. But, it led to loss of sales in the long-term as customers don't want to wait longer for their buns to bake. The home oven cannot support the production requirements of the business. Businesses must first understand their production requirements and then purchase the equipment that will support them.

Location Strategy

When locating a business, location is a key consideration. For service and retail industries that are customer-oriented, location is particularly important. A manufacturing plant wouldn't choose to be in a shopping area, while a fast-food restaurant would prefer to be in densely populated areas. Businesses must be able to understand their industry and their customers in order to determine if the rental price is reasonable and affordable. It is not a good idea to choose a prime location if the rent is high.

Layout Strategy

The layout strategy of a facility is crucial for businesses because it can affect operational efficiency and effectiveness. If the kitchen crew has all the ingredients at their fingertips, they can assemble a hamburger in less than 2 minutes. If ingredients are not placed at the same work station, it means that time spent walking from stations to stations can be lost and assembling a hamburger could take up to 4 minutes. Inefficient layout strategies reduce worker efficiency, which reduces production output. Businesses must continuously improve their workflows until they achieve the best output to reach this OM decision.

Designing Jobs and Human Resources

Your company's greatest asset is your employees. Employee motivation can be maintained by providing competitive remuneration, job empowerment, supportive leadership, and a safe working environment. High-motivated employees are a great asset to businesses. They will produce more output and their productivity will be greatly increased. Businesses should have regular conversations with employees to reach this OM decision. These communications will help businesses make improvements in their processes and provide training for employees who have skills gaps. Recognize and reward employees for outstanding performance through reviews and appraisals.

Management of the Supply-Chain

Manufacturers have to decide whether they want to make or purchase their supplies. Complex components may not be possible to find suppliers that have the stock, or they might charge high prices for the niche component. If the company has the ability to manufacture such components, it's better to make its own supplies. This would require the necessary equipment, expertise, and knowledge to make the component. A company can gain a competitive edge by being able to produce complex, niche components. Businesses should consider purchasing supplies from outside suppliers for general components like the battery and liquid crystal display (LCD), of a mobile device. Management must assess the complexity of the supply chain and determine if they are able to produce their own supplies to reach this OM decision. To ensure that components are always available, the company must source an external supplier if making is beyond their capabilities.

Inventory, Material Planning, and JIT (Just in Time)

Inventory is money. Stockpiles in excess reduce cash flow. If the sales projections are incorrect, the inventory could become obsolete or impossible to sell. A sufficient stockholding will ensure a quicker response to customer orders. These stocks could be used as buffer stocks to protect suppliers from delays in shipment. Proper inventory management techniques must be in place to achieve this OM decision. Par-level setting and First-in, First-out (FIFO), are two examples of useful inventory management techniques. To help with re-ordering, the company can also analyze their inventory turnover cycle.

Short-Term and Intermediate Scheduling

Businesses need to be flexible and adaptable to changing business requirements. With the help of ongoing trends, it is possible to anticipate normal day-to-day operational requirements. A cafe in an office tower might expect a crowd on weekday lunch hours. The cafe would employ manpower according to peak and lull times to meet its operational needs. Businesses should keep a long-term pool of part-time workers to achieve the OM decision. The company could instead of paying fixed monthly salaries to full-time workers, but deploy these workers as and when the operational requirements arise.

Maintenance

To aid and streamline operations, processes are created. These processes need to be updated and improved in order to keep up with changing business requirements. To remain competitive and relevant, it is essential to continuously review existing processes. It is essential to communicate with users of the processes to get real feedback and improve them in order to reach this OM decision. Maintaining machines in good condition is also part of maintenance to meet ongoing operational requirements.