Operations Management Is Very Vital to Every Organization - Essay Example

?Operation Management Introduction Background Information Many a times when we want to spend some money on some goods and services, we expect the quality goods and services that are delivered timely according to our expectations. One thing we never want to do is to spend much money for the services or for the goods either. Take for example, when one visits a restaurant; they require good quality food served to them quickly and at a cheaper price. Same to when we visit a hospital, we expect the doctor or nurse to attend to us quickly and give to us the best care. But one thing we wouldn’t like to do is to pay much for such services. To be able to deliver quality services and goods to the customers, there are management skills that are needed. Operations management therefore focuses on such management skills that lead to higher productivity and increase responsiveness, providing more choice to customers and delivering quality standards. In short, operations management involves analyzing business processes and how to improve them (Investopedia, 2013). Progressing further, operations, management can be defined as the administration of business practices in order to create the highest level of efficiency in an organization. It is thus concerned with converting materials and labor into goods and services in an efficient way in order to maximize the profit of an organization. Therefore, the operational management team is concerned with designing the inputs (materials, labor, and overhead) conversion methods, into outputs (goods, services and value added products), that brings benefits to the organization. Arguably, one would say that high level efficiency in an organization may be attained without employing certain administrative practices; hence operational management has no importance in making the business attain efficiency or maximize profit. This paper is meant to find out the solution between either using operation management or no operation management to achieve organizational efficiency. Nonetheless, one would wonder if firms that do not employ proper operations management techniques would also be able to maximize on their profits as they improve on the efficiency of the firms. This is as opposed to those firms that are keen about the kind of operations management techniques that are employed in their daily operations. Obviously, it becomes very necessary for all types of organizations to consider operations management since they all produce a mixture of some goods and services. In smaller organizations, many operations management activities are done by the other employees who are involved in many other operations of the firm such as marketing staff and accountants. Operations management is considered important in any organization as it aids in making the decisions that would impact the costs of producing the products and services that the firm is involved in. It also aids in making a decision that would impact how well the products and services are delivered, which then is critical to the revenue that the organization receives. This would then mean that, when good operations management programs are put in place, the cost of production would be less while the products and services delivered would be of high quality, hence the resulting revenue that would be received by the organization will be high. When poor operations management programs are put in place, less revenue will be earned, hence good operations techniques are essential for profit maximization in any organization. Following that, to illustrate this fact, a certain restaurant has employed two different operations management techniques in order to compare the cost of operations involved in running the restaurant. For the first three months, the restaurant hired excess workers and used to purchase materials in excess so that extra material could be given to the workers to avoid going bad. After the here months, a new management was put in place and there was a difference in the operations management techniques that were employed. The table below illustrates this example. 1st 3 months Units cost per month After 1st 3 months Units cost per month Direct Labor 100 $ 200, 000 50 $100, 000 Direct materials 5,000 $ 300, 000 2,000 $120, 000 Manufacturing Overhead 2,000 $200,000 1, 000 $100, 000 Total 7, 100 $700, 000 3, 050 $320, 000 It is quite evident that the cost of operation reduced by more than 50% when the new operations technique was employed by the new management. This was possible by the management reducing the unnecessary units of materials, labor and MOH that was not to any efficiency of the firm. This can be compared in a more logical manner using graphs as shown below; In operations, transformed resources include a mixture of materials, information and customers. Here, the issue to note is that, although most operations process the three types of transformed resources, one resource is usually the most important. The most important resource to an organization like a hospital is processing information in the form of the patients’ medical records. Apart from the records, it will devote some of its resources into producing processing materials such as, in a way, producing meals for the patients. The resources are divided considering the order of priorities given to the type of products to be produced hence efficiency is achieved. The main operations task to a hospital however, is to serve customers in such a way that will satisfy the patients, maximizes the quality of health care and minimizing the cost. Therefore, a hospital is predominantly a customer processing operation (Nigel, Staurt, & Robert, 2010). On the other hand, a hospital could be having a lot of resources without well formulated operations. When the hospital has misplaced priorities such as majoring in the commercial sale of drugs to the chemists around and to other customers, it will devote most of its resources to purchasing such drugs. The quality of health care will deteriorate since the patients will not be satisfied with the kind of care given. This definitely will reduce the profitability level of the hospital considering that it did not prioritize well with its resources. From the above examples, it is evident that with good operations techniques, a lot of wastage can be avoided through proper planning of resources, that will definitely lead the firm into making maximum profits. In summary, operations management is very vital to every organization. Operations management ensures predetermined materials are transformed to efficiently produce goods and services. High quality products and services are calculatedly delivered to the customers through such good practices. With good operations management techniques, a firm is bound to earn much revenue when the cost of production is reduced. This ensures that the firm maximizes on the profits. In this case, when one compares two firms: one with poor operations management techniques and one with efficient operations management techniques, it is very obvious that maximize profits, high quality products and efficiency in production will only result from the firm that maintains efficient operations management techniques. In conclusion, it is very necessary and very fundamental for every firm to consider employing good operations management techniques. This is because it becomes so necessary in reducing the cost of production as well as doing away with unnecessary purchases and budgets that can the firm can actually run without to increase efficiency in production and service delivery. Firms that make much profit employ efficient operations management techniques. References Investopedia. (2013). Definition of Operations Mnagement. Retrieved December 16, 2013, from Investopedia: http://www.investopedia.com/terms/o/operations-management.asp Nigel, S., Staurt, C., & Robert, J. (2010). Operations Mnagement. New York: Pearson Education. Read More