Sie sind auf Seite 1von 4


The importance of operations Management

Citeman Network Online Business Community Knowledgebase C I TEM AN C I TEHR C I TEF I N C I TES ALES C I TEO P S C I TELEGAL J O BS ABO UT C O N TAC T TES TI M O N I ALS

The importance of operations Management

by Sree Rama Rao on September 22, 2010 Operations management refers to the complex set of management activities involved in planning organizing leading, and controlling an organizations operations. At one time, operations management was considered the backwater of management activities a dirty, drab necessity. This view has changed in recent years, as more and more managers realize how operations can be a beehive of activity with major financial consequences for any organization. For instance, to support the work of Johns Hopkins University Hospital in Baltimore, the facilities department each year handles more than 40,000 work orders, oversees hundreds of construction projects, and manages an annual capital budget nearing $200 million. Operations management also includes something seemingly as mundane as mailing. Many, many companies spend millions annually on mailing costs. With rising Postal Service rates and widening global business operations, managers pay very close attention to mailing costs and alternatives. Indeed, a whole new industry has emerged in competition with the Postal Service as managers take mailing operations. Some prominent players in that industry are United Parcel Service (UPS) and Federal Express. Operations management is important to an organizations managers for at least two reasons. First, it can improve productivity, which improves an organizations financial health. Second, it can help organizations meet customers competitive priorities. To improve productivity: A measure of efficiency Productivity, the ratio of output to input, is a measure of a managers or an employees efficiency in using the organizations scarce resources to produce goods and services. The higher the numerical value of this ratio, the greater the efficiency. Ernst & Young managers use hoteling to affect to affect both parts of this ratio. They seek to cut inputs (space cost) and to boost the output of traveling accountants. A total Quality approach to operations improvement: The quality movement, with such approaches as small scale continuous improvement processes and the large scale radical redesign of processes, is directly affecting productivity and measures of efficiency. Take, for example, the Dutch telecommunications company Philips Business Communication Systems (PBCS). PBCS was long sheltered by import barriers and captive government contracts. Recently it has found itself in a competitive global economy and a deregulated, privatized network where customers shop around for services. When David Kynaston became managing director of the company in 1990 be found much in need of change: Poor service had damaged sales, and profits had declined to the point where the parent company, Philips Electronics, could no longer support the company. Assisted by a team of London based consultants from Coopers & Lybrand, PBCS strove to cut cost while improving services. The focus was on the supply chain, partly because that was where a great amount of working capital was being wasted and partly because to provide the catalyst for reviewing all components of the operation. Calculations showed that logistics improvements changes in how material and goods are procured, transported and stored could reduce stocks by 30 percent and raise the speed and quality of service by more than 20 percent. Improvement has advanced primarily through more efficient order processing. Goods are now ordered centrally and shipped directly to clients from the companys three factories in Europe. The financial health of the company has improved dramatically. Changes arising from increased employee involvement are anticipated to deliver another 10-15 percent savings in working capital. Kynaston and the team also believe that reengineering approaches will yield additional savings from increased efficiency and other improvements. In filling a customer order, for example strategic control points would occur when the purchase order becomes an invoice, when an inventory item becomes an item to be shipped, and when an item to be shipped becomes part of a truckload of goods to be delivered. Any of these strategic control points is potential sources of confusion and inefficiency, as work is passed from one set of workers to another. An unclear form or a confusing policy say, for handling out-of-stock items creates the risk that orders will be lost or mishandled, wasting valuable time, money, or energy. From this vantage point, the operations system looks like a sieve that can leak valuable resources unless it is managed efficiently. Productivity offers one measure of this efficiency.


Related Ads

Operations Management Productivity HR Services

Want an Online MBA? Enroll in an Executive MBA instead! ITM Weekend MBA. Learn More.



The importance of operations Management


Leave a message...


Com m unity


No one has commented yet.

C o m m e n t fe e d

Su b s cri b e vi a e m a i l

Previous post: Catalyser where do you stand? Next post: How do we Improve Productivity?

You can send in your case-studies and articles to Cite.Communities KnowledgeBase.

for publication and distribution on



Knowledge grows when shared.


"Like" to get updates via Facebook

Like 14,862 people like Citeman.Network.

F acebook social plugin

41074 Browsing KnowledgeBase



The importance of operations Management

Finance Management (1309) General / Interesting (1010) Human Resource Management (3925) Operations Management (1202) Sales/Marketing Management (2248)

Related Network Material

What is the difference between Management and leadership? how they are different? Please explain with examples. Discussion in

Administrative works...
Administration consists of the performance or management of business operations and thus the making or implementing of major decisions. Administration can be defined as the universal process of organi

Discussion in

Business management & administration

1 what i s the difference between management and administration? 2 what is the role of managing director as a manager and administrator? Discussion in

Definition-human resource department

Can anyone please give me the definition of Human Resource Department with a clear expalnation. Its urgent. Please help... Regards Mithila Discussion in

Hr planning
Can somebody please help me with this question? "Why do some organizations require relatively complex and comprehensive HR planning systems than do others? "
Discussion in

Recent Posts Development of Marketing Decision Criteria Delegation to Staffing 3/4


The importance of operations Management

Job Design Results of Current Sales Objective Job Stress, Counselling and Mentoring Selection Process Techniques and Instruments

QuickBooks Online QuickBooks Online is now in India. A Must Software for SMEs. Try Free!

Operation and Maintenance Reach energy cost reduction goals and improve utility efficiency.

CFA Level 1,2,3 Coaching India's Largest CFA Prep Provider ETEN FinanceRegister Now!

Supply Chain Management International Certification Course Rs.6742 only. Limited time Offer!

Copyright 20082013 or respective authors. All rights reserved.

Get published on as Guest Contributor - send your articles, case studies to .

Disclaimer | Terms Of Service | Privacy Policy