Operations Management & Supply Chains

OPERATIONS MANAGEMENT & SUPPLY CHAINS

Weekly Questions – Week Nine

Define the term operations management

Operations management is the management of systems or processes that convert or transform resources (including human resources) into goods and services. It is responsible for managing the core processes used to manufacture goods and produce services.


Click this link to find out how the development and the future put pressure on Operations Management

Explain operations management’s role in business

OM ranges across the organisation and includes many interrelated activities, such as:

-       Forecasting; E.g. estimating seat demands for flights, weather, landing conditions and estimates for growth or reduction in air travel.

-       Capacity; this is the key essential metric for the airline to maintain cash flow and increase revenues. Underestimating or overestimating flights will hurt profits.

-       Scheduling; the airline operates on tight schedules that must be maintained including flights, attendants, ground crews, baggage handlers and routine maintenance.

-       Managing Inventory; inventory of such items as goods, beverages, first-aid equipment, in-flight magazines, pillows, blankets, and life jackets is essential for the airline.

-       Assuring Quality; Quality is indispensable in an airline where safety is the highest priority. There is also an emphasis on efficiency, courtesy and high quality customer service during ticketing, check in and in flight service.

-       Motivating and Training Employees; Airline employees must be highly trained and continually motivated, especially when dealing with frustrated airline travellers.

-       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.

A diagram of Operations Management

Describe the correlation between operations management and information technology

Managers can use IT to heavily influence OM decisions including productivity, costs, flexibility, quality, and customer satisfaction. It makes operational decisions because OM exerts considerable influence over the decisions involve many possible alternatives that can have varying impacts, therefore OM information systems are critical for managers to be able to make well informed decisions which then evolve strategic business systems.

Explain supply chain management and its role in a business

A supply chain consists of all parties involved, directly or indirectly, in the procurement of a product pr raw material. Supply Chain Management (SCM) involves the management of information flows between and among stages in a supply chain to maximise total supply chain effectiveness and profitability. There are five key components for a supply chain management – plan, source, make, deliver and return.

This video further explains the role that supply chains play in a successful organisation.

List and describe the five components of a typical supply chain

The five basic supply chain management components:

1.     Plan; the strategic portion of SCM. Companies must have a plan for managing all the resources that go toward meeting customer demand for products and services. This also involves developing a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality value to customers.

2.     Source; reliable suppliers who will deliver the goods and services required for making products must be chosen. A set of pricing, delivery and payment processes with suppliers must be developed, and metrics for monitoring and improving the relationships should be created.

3.     Make; this is where companies manufacture their products or services. This can include scheduling activities necessary for production, testing, packaging, and preparing for delivery. This is the most metric-intensive portion of the supply chain, measuring quality levels, production output and worker productivity.

4.     Deliver; commonly referred to as logistics, which is the set of processes that plans for and controls the efficient and effective transportation and storage supplies from suppliers to customers. During this step companies must be able to receive orders from customers, fulfil 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 the most problematic step. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products.

This is a simple diagram of the Supply Chain Fundamentals.

Define the relationship between information technology and the supply chain.

Information technology’s primary role in SCM 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, synchronised flow of both information and product between customers, suppliers and transportation providers across the supply chain. IT integrates planning, decision making processes, business operating processes and information sharing for business performance management.