Operations Management in the UAE - Essay Example

Operations Management in the UAE Introduction We live in an era of technological wizardry. There is a product for practically any conceivable humanneed or want – not just the basic food, clothing or shelter, but even the need to walk to music (iPod), get to places casually (BMX), or in style (BMW), chat with someone across the oceans (Yahoo Messenger) or send them a picture (Nokia). At any one time, there are a hundred and one individual brands of good or services within reach, from the denim pants we are wearing to the cable program we are currently watching. Taken for granted is how this product was created, transported, and marketed even before it was needed. Operations Management The manner of creating these goods and services is the purview of operations management. As a field of endeavour, operations management “deals with the design and management of products, processes, services, and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want.” (MIT Sloan School of Management, 2009) It may be said that the operations function is the heart and soul of business. It is that organizational activity which actually gives birth to the good or service which is the reason for the firm’s existence. The operations manager stands at the helm of the operations department, and plans, organizes, directs and controls its performance. He determines, in line with the organization’s overall goals, the strategic, tactical, and operational activities undertaken. Strategic issues involve the implementation of long-term goals of the corporation, and are usually decided upon by the corporation’s board of directors, or the owner or proprietor of the small firm. Issues decided by the operations manager that are within the scope of strategic management are those that yield decisions of a relatively permanent nature, and usually require substantial capital outlay. They include determining the size of the manufacturing plants or the capacity of the equipment, as well as their location, deciding which telecommunications networks to have installed, and designing technology supply chains. Should the operations manager make a mistake in planning and implementing strategic issues, it would profoundly compromise the company’s survival. The operations manager also deals with tactical issues the operations manager. These decisions involve the relatively medium-term prospects of the business, and while not as far-ranging as strategic issues, could also entail a substantial loss for the company if not done prudently. Tactical issues would address considerations such as the layout and structure of the plant, the methods of project management, and the selection and replacement of equipment. Finally, operational issues attended to by the operations manager are those that address the day-to-day decisions during the conduct of the production process. They are of short duration, and while its consequences are also short-term and may not impact upon the company so seriously, they impose upon the operations manager the task of thinking quickly and decisively. Operational issues include the preparation of the production schedule, control of inventory, quality, and the trafficking and handling of materials, as well as maintenance procedures and policies. The operations manager also coordinates with the financial manager on matters such as the availability of funds for the procurement of raw materials and supplies and the control of the cost of operations; and the marketing manager on things such as product design and development and the deployment of the finished product. He is responsible to the chief executive officer or general manager, to see to it that the performance of his department advances the overall goals and thrusts of the entire organization, and that it meets performance standards. The operations manager’s role is of such importance that were he to renege on his duties or attend to them but incompetently, the entire firm will fail, because the quality of the conduct of operations determines the very goods and services that will reach the market. Poorly constructed goods or delivered service will find disfavour in the market, resulting in lackluster sales and financial loss for the company. Operations Management in the UAE Of critical importance is operations management in the UAE and its bid for economic progress. According to the World Factbook compiled by the Central Intelligence Agency, the UAE has an open economy with a high per capita gross domestic product (GDP) of $39,900 in PPP or purchasing power parity (ranked 21st highest in the world) and a GDP real growth rate of 7.4% for 2008 (ranked 27th highest in the world). It has a sizeable yearly trade surplus, with 2008 exports estimated at $210.5 billion against $145.8 billion in imports. Industry accounts for 62.7% of the country’s GDP, while services comprise 35.7%. Top on the list of UAE’s imports are capital goods in the form of machinery and transport equipment, as well as chemicals and food. Interesting to note, the significant portion of imports that goes to machinery and other durable goods are not for consumption, but for increasing productive capacity to pave the way for more goods and services. The progress of a country’s economy is dependent upon the production of goods and services either for consumption in the domestic market or for export abroad. Needless to say, operations management will play the central role in the push towards sustaining this economic expansion. Without the expertise of the operations manager in bringing together the productive resources – that is, manpower, money, machinery and materials – in order to convert these to the finished product, then there would be no economy, let alone economic progress, to speak of. All throughout, news abound with situations about UAE’s need for operations managers, but for lack of the current capability in this area, it had to rely on the expertise of foreign contractors. For instance, in February of 2008, MWH Wet Infrastructure, a British waterworks firm turned global, won a US$11 million project with Abu Dhabi Sewerage Services Company (ADSSC) in conducting a review of sewerage and treatment assets. The project’s operations manager will design and tender documentation with the ADSSC, and upon approval will collaborate with the execution of the sewerage system upgrade. (WET News, 2008) At about the same time, European firm Veolia Water was contracted to fulfil the operations and maintenance functions of a reverse-osmosis (RO) desalination plant in the UAE. The project is a new addition to another one likewise awarded to Veolia in 2007. The project will also include a 2,000 megawatt power plant, which will allow for the optimal use of electricity that is generated by the power plant. (Wet News, 2008) In a slightly earlier news bit, a road network project around the Dubai International Airport in the UAE involved a 1.6 kilometer-long tunnel being constructed directly beneath the airport, and upon completion will be linked to the existing airport road. It is going to be the longest and widest tunnel in the region, and will likely cost some Dh686 million. The tunnel is expected to ease traffic problems leading to and from the airport. With its four lanes in each direction, the tunnel is predicted to handle an annual 42 million people by 2020; comparing this figure with the 13 million sojourners in 2000, it is easy to understand why this project is no small feat. Furthermore, designers aimed not only for utility, but also beauty, with its series of some 80 collages inside the tunnel that consisted of 80 collages and 75,000 cubic meters of marble. (PM Network, 2005) In the provision of services involving information technology, there is a revolutionary approach in the hospitality industry that needs a combination of hardware, software, and networking systems. The project, concentrating on the needs of hotels located in the UAE, is targeting the degree to which the hotels could use IT applications and related challenges to integrate and improve back-end operations and customer service. The operations manager may exercise the option on the focus on TQM, CRM and SCM, according to the study by Daghfous and Barkhi (2009) In still another application, the study by Avkiran (2009) highlighted the urgent need for efficiency analysis as applied to the banking industry. In this study, several UAE banks were studied in order to discover inefficiencies that are rooted in the interactions among divisions in the bank in the face of cross-border, fierce competition. The issues of inefficiency of operations and how these inefficiencies may be reduced is squarely within operations management, in this case in relation to the provision of banking services. The UAE is currently experiencing a push towards the construction and improvement of residential buildings, and one aspect of this improvement deals with the assessment of the CO2 emissions of these buildings. Radhi (2009) examines the potential impact of global warming on the UAE residential buildings, in particular on the air-conditioning energy use in the hot climate. The data showed that global warming may likely increase the energy for cooling buildings by 23.5%, increasing the net CO2 emissions by around 5.4% in the coming few decades. This is an important consideration for production management involved in the construction projects for residential, and conceivably even, commercial and industrial installations. It opens the need to devise new designs, discover new materials, and construct buildings in a new and different way in the interest of minimizing the temperature trap within these buildings and to use natural cooling to maximum extent. The challenge could also extend to finding new devices, such as solar energy capabilities or wind power, to provide sustainable sources of energy built into the buildings. Finally, Al-Qaydi (2006) touched upon a most important issue when he studied industrial solid waste disposal specifically in Dubai, but conceivably extending throughout the UAE. He states that in 1990, there were only 478 industrial establishments operating in Dubai, employing about 21,915 workers. In 2000 the number of establishments rose to 793, which comprised some 37% of the total UAE manufacturing establishments. Distributed throughout some 13 industrial zones planned by the government, these establishments employed about 61,000 workers. A majority of these firms specialized in the manufacture of fabricated metal, non-metallic mineral products, food processing, and manufacture of wood, rubber, chemicals, and other products. Out of these industries emanate an “increasingly large quantity of concentrated industrial solid waste…produced in direct correspondence to the amount of growth. Thus, the problem of managing UAE industrial waste…” (Al-Qaydi, 2006, p. 142) To address such a cumulative problem, it is imperative that the technical know-how and organizational actualization of solid waste treatment and disposal be addressed by a competent operations manager, for after all, industrial operations discharge waste, and it is an integral part of the operations management function. Summary and conclusion To recapitulate, operations management is that function tasked with the entire schema of the creation of goods and services, from the planning, organizing, execution, and control of the manpower, money, machinery, and materials involved in the process. Its output is either a good or a service that is of valuable benefit to the community. As an economy grows, so grow also its goods and services. For this reason, operations management and the operations manager’s job is seen as a most crucial and vital requisite. This writer’s personal view of operations management in the UAE is that there appears to be a lack of competent operations experts and managers to address all the developmental aspects of UAE. It is possible that growth has been too fast, and activities have multiplied so quickly, for the country’s own workforce to develop in pace. According to the CIA World Factbook, expatriates account for a significant 85% of the workforce in the country. Furthermore, many of the operations activities are being outsourced to external contractors The country is in urgent need of operations managers, and it would be highly desirable if the country could develop this need from within its populace so as not to be too dependent on expatriate help and foreign contractors. After all, without operations management, there can be no production – and without products, contemporary way of life as we know it would simply vanish. [Wordcount = 2,000 words, excluding title and references] References Al-Qaydi, S 2006 Industrial solid waste disposal in Dubai, UAE: A study in economic geography. Cities, Vol. 23, No. 2, p. 140–148. Avkiran, N 2009 Opening the black box of efficiency analysis: An illustration with UAE banks. Omega, vol 37, pp. 930-941 Daghfous A & Barkhi, R 2009 The strategic management of information technology in UAE hotels: An exploratory study of TQM, SCM and CRM implementations. Technovation vol. 29 pp. 588-595. MIT Sloan School of Management What is Operations Management? Accessed 20 September 2009 from http://mitsloan.mit.edu/omg/om-definition.php MWH wins £5.6 M Abu Dhabi deal. WET News: Water & Effluent Treatment News, Feb2008, Vol. 14 Issue 2, p4-4, Radhi, H 2009 Evaluating the potential impact of global warming on the UAE residential buildings – A contribution to reduce the COs emission. Building and Environment, vol. 44, pp. 2451-2462. The Central Intelligence Agency 2008 The UAE Economy,. The World Factbook. Accessed 20 September 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html UAE Airport Road Nears Completion. PM Network, Jul 2005, Vol. 19 Issue 7, p12-12 Veolia to run RO plant in UAE. WET News: Water & Effluent Treatment News, Feb2008, Vol. 14 Issue 2, p4-4, Read More