Operations management is a specialised field of management that focuses on the conversion of resources into services and products as per customer requirements. Previously, the term was largely used for manufacturing. The difference between a manufacturing firm and a service firm has now blurred with a greater portion of economic activity being devoted to services.
The term operations management (OM) is now used as generic term for describing the activities related to producing both products and services. Some people incorrectly assume that the tools and techniques of operations management cannot be applied to service firms or service activities. Fundamentally, all organisations have to deal with the same issue within operations whether they are transforming resources into physical products or intangible services.
People incorrectly believe that operations management is just about making products. Even some people also incorrectly think that operations management is only about specialised function without organisational or strategic importance. Nothing could be further from the truth. All organisations compete and thrive in large measure to the extent that they produce a service or product with the quality and quantity desired by customers.
For an organisation to survive in a long run, it must do this while maintaining a positive profit margin between its costs and the business revenue it receives. Regardless of the specific strategy pursued by the firm, OM is applicable to all organization and at all levels. Whether a firm is charging a premium or discount price relative to competitors, it still needs to ensure that the costs associated with operations help the firm to maintain a positive profit margin. The company is also required to ensure that the outcome of the operations function enhances customer satisfaction and revenues.
In this context, leaders or managers working in operations have four related overall objectives.
(1) Managers are concerned about managing activities that are designed to ensure that the services and products produced for customers have the appropriate quality.
(2) Operations managers also have to use tools and techniques in order to ensure that the right quantities of the products and services are produced by the company.
(3) They must use certain techniques to ensure that the products and services get to the customer at the right time.
(4) Operations managers must also focus on delivering the three previous objectives at the best possible cost.
Al the three objectives can have direct cost implications. However, operations managers must determine a number of other factors to ensure that the right quality, quantity, and timing objectives are met at the best possible cost.