Operations management is the administration of business practices to create the highest possible level of efficiency within an organization. It deals with converting materials and labor into goods and services in the most efficient way possible to maximize the profits of an organization. To successfully produce items and deliver them to customers on time, there are many components that need to be addressed. There are 12 major components of operations management that can be identified.
Forecasting is the first component and is related to the use of the organization's historical data, facts and figures, the statistics collected and the details when making production decisions. These decisions are made for future productions based on previous available data. An accurate forecast should be able to decide the volume of production that is needed for a specific period of time. This will help the company avoid keeping excess inventory in the company or facing an inventory shortage in the production process.
The second component is location strategies. It is considered one of the important components of operations management. The company must select the right location for its existence and growth. There are a lot of factors that need to be considered when selecting the right location for the business.
The company must be located in a place where it can easily access the raw material for production, must have sufficient space to maintain inventory, costs such as transportation must be reasonable, environmental factors must be favorable (weather conditions, political and economic conditions) and must have convenient access to the target market. In addition to these identified factors, the company must be established in the selected location at a reasonable cost. Maintenance is another component that highlights the importance of scheduling all periodic maintenance, checks and adjustments of machinery and equipment related to the production process. This is to ensure the safety of the production process, as well as to improve quality and productivity. Regular maintenance checks can prevent sudden injuries, breakdowns and faults.
In addition to that, it also helps to maintain the quality of production. Purchasing is also considered one of the important components of operations management. This component ensures that the business organization has sufficient raw materials for production to meet future market demand. The purchase of commodities can be carried out as a centralized, decentralized or combined strategy. Centralized purchasing is when a single department is responsible for purchasing raw materials for the entire production process.
Decentralized purchasing occurs when each department or branch of the production process buys its own raw materials separately based on their individual needs. Programming consists of assigning the right job function to the right person. It can be for employees or for machinery. Assigning the most appropriate responsibilities to the right party helps to increase the productivity of the production process and also to minimize or eliminate faults. This can help the company reduce costs, increase revenues and achieve a competitive advantage in the market. Total Quality Management (TQM) is a strategy used by companies to create a seamless, customer-centric production process that can help increase the level of customer satisfaction.
The primary approach to total quality management helps the company to maintain adequate supply chain management throughout the business process and to achieve the organization's objectives with continuous improvement. Material Requirements Planning (MRP) ensures that the production process receives the right material at the right time and in the right quantity to ensure a smooth production process and timely completion. It involves identifying currently available inventory and meeting additional material requirements as well as scheduling purchasing processes. Good operations management system software should be able to collect data and provide you with data-backed reports that allow your team to make informed decisions. The detailed analyses will also provide you with information on your business operations' state as well as your production capacity requirements. In addition, you can easily identify high-performing actions and make adjustments to strategies that don't drive business results. Using an WHO with a detailed analysis panel makes it easy to know when an objective has been achieved.
Process and system performance is one of operations management's main components which is measured by examination, capacity utilization or production process. Finally, operations management takes comments received and distributes relevant information across departments for use in improving processes. To be an effective operations management professional, one must understand processes essential to what a company does and ensure they flow together seamlessly. Operations managers are involved in coordination and development of new processes while reevaluating current structures.
Within this process, operations managers use organization and productivity to achieve their main objectives. Operations management addresses procurement of materials and use of labor in timely and cost-effective manner to meet customer expectations. Operations management also often follows up with customers to ensure products meet quality and functionality needs. It offers complete view of operations management and can take manufacturing operation to next level in terms of efficiency and optimization.
When automating aspect of your operations management system, be sure use program that fits your company or industry.
