The Environment of Operations Management - Term Paper Example

Operations Management - An Overview The business environment is becoming increasingly challenging. In certain countries like India, firms have to deal with several bottlenecks such as outdated technology, underdeveloped infrastructure, inappropriate payment systems and ineffective scheduling and control systems, which have hampered their progress. The opening up of economies across the world to global competition has increased the level of competition has increased the level of competition that domestic companies have to face. Domestic companies operating in automobiles, steel, electronic and other manufacturing sectors have to overcome the threat to their market share posed by foreign companies. The need for operations managers to reduce manufacturing costs, optimize productivity and improve product quality in order to stay in the market has become imperative. Many organizations now recognize the importance of automation, optimization of scheduling and a proper inventory management system, and are incorporating total quality management and total quality in their operations. Today, the ordinary customer has become more sophisticated and demanding, and expects more variety, lower costs and better quality. Customers therefore drive demand and the industry has to meet this demand. Inter-firm rivalry and competition have also increased manifold. In line with these changes, organizations are replacing production-driven systems involving mass production, by market-driven systems to enable them to corner market share. This scenario has increased the importance of operations management in an organization, as it is directly responsible for the final product. As a result, operations management is gaining more significance and has become a key discipline in management science. Until recently, the field of operations of management was considered relevant only to the manufacturing sector. But with the increasing influence of service industries, the scope of operations management has widened. [ICMR, 2003] Operations Management can be defined as the management of direct resources like machine, material and manpower which are required to produce goods and services. The following are the five key elements of Operations Management: Planning Organizing Controlling Directing Coordinating The following are the activities carried out by the Operations Manager. 1. Planning: Plan product and service mix Location and capacity planning Decide upon production methods to use for each item. Plan procurement of equipment. 2. Organizing: Centralize or decentralize operations. Decide upon functions, products, or hybrid organization structure. Establish work center assignments. Assign responsibility for every activity. 3. Controlling: Encourage pride in performing as expected. Compare costs to budget. Compare actual labor hours to standards. Inspect the quality levels. 4. Directing: Establish provisions of union contracts. Establish personnel policies. Establish employment contracts. Issue job assignments and instructions. 5. Coordinating: Coordinate through use of common forecasts and master schedules. Observe actual performance and recommend needed improvement. Report, inform and communicate. Respond to customer inquiries about status of orders. [ ICMR, 2003] In order to succeed in all the above activities, an operations manager should have both technical and behavioral skills. Budget Airlines - What are they' There has been a revolutionary increase in the number of low-cost airline which are otherwise called the budget airlines in the aviation industry over the last few years. The budget airlines are usually operators who provide low-cost travel options for the passengers. The budget airlines try and cut the indirect costs to the maximum possible extent. Passengers are not offered wet towels, meals etc. Sometimes it may even happen that they do not even offer water to the passengers flying the budget airlines. [(Phillip), 2002] Scheduled airlines are regular airlines that offer considerably high-cost air travel. Though these airlines charge higher prices for the tickets, they offer an extremely high level of customer service which cannot be expected in the budget airlines. Passengers are offered wet towels, water bottles, snacks and meals, (Kingfisher Airlines) and customers can expect a wonderful ambience in the aircrafts. The leg and elbow room in these scheduled airlines are more. Even the frequency of aircrafts in the scheduled airlines is very high unlike the budget airlines. (Wee) Differences between scheduled and budget airlines 1. Revenue Generation - Revenue Generation is one of the most important aspects that Budget airlines give more importance, to the extent that most of the budget airlines have a position that is unique to this particular industry - "Chief Revenue Officer" (AIR DECCAN) whose sole responsibility is to focus on revenue generation from all possible sources. Unlike the scheduled airlines, they sell the maximum possible space they can. They sell space on the aircrafts in order to give advertisements. They even sell the space on the rear side of the boarding passes. (Palanikumar) 2. Cost cutting - The main focus of any budget airways will be on reducing costs to the maximum extent they can. This is not the case with the scheduled airways. The budget airlines go to the ridiculous extent that they even cut costs on the kind of paper that they use. If scheduled airlines use a 120 gsm (grams per square meter) paper, the budget airlines would not mind using an 80 or even a 70 gsm paper for the same purpose which would mean direct reduction in stationery. Another aspect where cost reduction happens with respect to the budget airlines is that they try and keep their aircrafts in the air for as long as possible to increase flying revenues and cuts costs in areas like usage of aerobridges - aerobridges are expensive. 3. Adherence to schedules - If a budget airline finds that it has just about enough numbers to fly a sector, but has fewer than needed numbers for the return or ongoing sector, they wouldn't hesitate to cancel the entire schedule because they can divert the aircraft to a sector with more number of passengers while all they do to the affected passengers is to refund the ticket charges. This will save on parking charges, landing charges, ATC charges while they do not have the necessary revenue. But the scheduled airlines are more polished in their approach and try and build long-term customer loyalties to ensure that the passengers come back to them which are a benefit for them in the long-run and they can actually afford to do this. 4. Animal comforts for employees - In case of Scheduled airlines, the comfort levels of the employees are extremely high. The scheduled airlines use different cars for different crew levels whereas the budget airlines use a car pool. The schedule airlines make sure that the cabin and the cockpit staff stays in luxury hotels for transit accommodation. This is not the case with the budget airlines. The transit accommodation for their employees is arranged at economy hotels. (Arckatty) Similarities between scheduled and budget airlines While there are umpteen differences in the operations of both the budget and scheduled airlines, at the same time there are similarities which are more statutory and dire necessity in nature outlined below. 1. Competencies of staff - Competencies of both flying and ground staff, most often than not, are governed by statutory requirements. Like a commander of an aircraft needs to be trained, certified and hold valid legal flying licenses and the approvals of the local flight governing agencies like DGCA (Director General of Civil Aviation in India), US Flight Safety Board. 2. Qualifications - The essential educational qualification for any pilot, be it a budget or scheduled airline wanting a license, private pilots license or commercial pilot license is matriculation (10+2 level) with mathematics and physics. 3. Compensation structures - The employee compensations are comparable in both the budget and scheduled airlines may be more out of necessity and competition for talent acquisition where demand constantly outstrips supply. 4. Employee satisfaction levels - The level of employee satisfaction is high in both types of airline but surprisingly may be higher in budget airlines because of the HR policies being different and ownership levels are higher. (Keerti.) Bibliography 1. AIR DECCAN. AIR DECCAN - Simplifly. 20 February 2006. 3 November 2007 . 2. Arckatty, DR. Suresh. I CAN. Hyderabad: Radian Publishers, 2005. 3. ICMR. "Operations Management." Research, ICFAI Center for Managment. Operations Management. Hyderabad: ICFAI Center for Managment Research, 2003. 2,3,7. 4. Keerti., DR.B. Head - Employee Engagement Rajyalakshmi. 26 January 2007. 5. Kingfisher Airlines. Kingfisher Airlines. 16 March 2007. 3 November 2007 . 6. Palanikumar, DR Anbu. Head - Finance Rajyalakshmi. 15 October 2007. 7. Phillip, Jill. http://www.guardian.co.uk/travel/2002/jul/01/budgetingforyourholiday. 1 July 2002. 8. Wee, Roger Chung -. Airline Types - Scheduled Versus Charter. 23 April 2001. . Read More