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Operations Management

What is Operations Management?

Operations management is the administration of business practices to create maximum efficiency within an organization. The aim of maximising efficiency is to augment the profit of an organization and it is often concerned with converting materials and labour into goods and services in order to do so. Operations management involves using resources from staff, materials, equipment and technology. The function of operations management teams is to balance costs with revenue to achieve the highest net operating profit possible. They handle diverse strategic concerns, for example determining the size of manufacturing plants and project management methods and implementing the structure of information technology networks. It also entails studying the use of raw materials and preventing as much waste as possible. To do this, operations managers employ numerous formulas, such as the economic order quantity formula to determine when and how large of an inventory order to process and how much inventory to keep.

The two key terms of Operations Management:

Operations Management has foundations in both supply chain management and logistics. Understanding these key terms will help to provide a more precise understanding of operations management. For example, to meet client demand, an understanding of global trends in supply chain management is critical. Logistics, a careful use of resources, and cost-effectiveness has become increasingly important in an era in which resources can often be in short supply and customer expectations have skyrocketed.

What are some systems of Operations Management?

Modern operations management revolves around four theories: business process redesign (BPR), reconfigurable manufacturing systems, Six Sigma, and lean manufacturing.

Business Process Redesign: focused on analysing and designing workflow and business processes within a company. The goal is to help companies considerably restructure the organization by designing the business process from the ground up.

Reconfigurable Manufacturing Systems: designed to incorporate accelerated change in structure, hardware, and software components. The system can thus adjust quickly to the capacity to which they can continue production and how efficiently they function in response to market or intrinsic system changes.

Six Sigma: focused on equality. There are six control limits which are placed at six standard deviations from the normal distribution mean. The Six Sigma process utilizes tools such as tending charts, potential defect calculations, and other rations.

Lean Manufacturing: systematic elimination of waste within the manufacturing process. The idea is that resource use for any reason other than value creation for customers is wasteful and, therefore, it seeks to eliminate wasteful resource expenditure as much as possible.

What is an example of Operations Management?

Operations management is very frequently employed in the healthcare sector. The current healthcare system overuses expensive, technological, and emergency-based treatment. Indeed, high costs from care often remain uncompensated due to uninsured patients. The existence of such services in expenses settings creates a burden on taxpayers, health insurance holders, and healthcare institutions themselves.

For more on operations management:

From the corporate finance institute

For a detailed and informative Sweet Process Blog

For an Introduction to Operations Management of Products and Services: Overview and Resources

For Definitions, Pro Tips and Trends

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